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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
Agree Realty Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
[AGREE REALTY CORPORATION LOGO]
AGREE REALTY CORPORATION
31850 Northwestern Highway
Farmington Hills, MI 48334
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 2003
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NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of AGREE
REALTY CORPORATION, a Maryland corporation, will be held at 11:00 a.m. local
time, on May 5, 2003, at the Courtyard by Marriott (formally Best Western
Executive Hotel & Suites), 31525 West 12 Mile Road, Farmington Hills, Michigan
for the following purposes:
1. To elect two directors to serve until the annual meeting of stockholders
in 2006, or until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Stockholders of record at the close of business on March 21, 2003 will be
entitled to notice of and to vote at the annual meeting or at any adjournment
thereof.
Stockholders are cordially invited to attend the meeting in person. WHETHER
OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO COMPLETE, DATE, SIGN
AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A POSTAGE PAID RETURN
ENVELOPE IS PROVIDED. If you decide to attend the meeting, you may revoke your
proxy and vote your shares in person. It is important that your shares be voted.
By Order of the Board of Directors
/s/ Kenneth R. Howe
Kenneth R. Howe
Vice President, Finance and
Secretary
March 24, 2003
Farmington Hills, Michigan
[AGREE REALTY CORPORATION LOGO]
AGREE REALTY CORPORATION
31850 Northwestern Highway
Farmington Hills, MI 48334
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 2003
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GENERAL
This proxy statement (the "Proxy Statement") is furnished by the Board of
Directors of Agree Realty Corporation (the "Company") in connection with the
solicitation by the Board of Directors of proxies to be voted at the annual
meeting of stockholders to be held on May 5, 2003 (the "Annual Meeting"), at the
Courtyard by Marriott (formally Best Western Executive Hotel & Suites), 31525
West 12 Mile Road, Farmington Hills, Michigan, and at any adjournment or
adjournments thereof, for the purposes set forth in the accompanying notice of
such meeting. All stockholders of record at the close of business on March 21,
2003, will be entitled to vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at the Annual Meeting in accordance with the directions of the
stockholder. If no directions are specified, the proxy will be voted for the
proposal set forth in this Proxy Statement. Any stockholder giving a proxy has
the power to revoke it at any time before it is exercised. A proxy may be
revoked (i) by delivery of a written statement to the Secretary of the Company
stating that the proxy is revoked, (ii) by preparation at the Annual Meeting of
a subsequent proxy executed by the person executing the prior proxy, or (iii) by
attendance at the Annual Meeting and voting in person.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting, and the inspectors, assisted
by the Company's Secretary, will determine whether or not a quorum is present.
The election inspectors will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence or absence of a
quorum, but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders.
Broker non-votes occur when proxies submitted by a broker, bank or other
nominee holding shares in "street name" do not indicate a vote for some or all
of the proposals because they do not have discretionary voting authority and
have not received instructions as to how to vote on those proposals. We will
treat broker non-votes as shares that are present and entitled to vote for
quorum purposes. However, broker non-votes will not be counted as votes cast on
a proposal and will have no effect on the result of the vote on that proposal.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company also may solicit proxies by telephone or telecopy or in
person. All of the expenses of preparing, assembling, printing and mailing the
materials used in the solicitation of proxies will be paid by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting materials, at the expense of the Company,
to the beneficial owners of shares held of record by such persons. It is
anticipated that this Proxy Statement and the enclosed proxy card first will be
mailed to stockholders on or about March 24, 2003.
As of March 21, 2003, 4,479,345 shares of the Company's Common Stock
("Common Stock"), $.0001 par value per share, were outstanding. Each share of
Common Stock entitles the holder thereof to one vote on each of the matters to
be voted upon at the Annual Meeting. As of the record date, executive officers
and Directors of the Company had the power to vote approximately 4.80% of the
outstanding shares of Common Stock. The Company's executive officers and
Directors have advised the Company that they intend to vote their shares of
Common Stock in favor of the proposal set forth in this Proxy Statement.
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS
The Board of Directors of the Company currently consists of five Directors.
The Directors currently are divided into three classes, consisting of two
members whose terms expire at the Annual Meeting, one member whose term expires
at the 2004 annual meeting of stockholders and two members whose terms expire at
the 2005 annual meeting of stockholders. At the Annual Meeting, two Directors
will be elected and qualified. Gene Silverman and Farris Kalil are nominees for
election as Directors at the Annual Meeting, each to hold office for a term of
three years until the annual meeting of stockholders to be held in 2006. The
term of Ellis Wachs expires in 2004 and the terms of Richard Agree and Michael
Rotchford expire in 2005. Directors are elected by a plurality of the votes cast
at the Annual Meeting either in person or by proxy.
NOMINEES FOR ELECTION AS DIRECTOR
THE FOLLOWING INDIVIDUALS ARE NOMINATED FOR ELECTION AS DIRECTORS AT THE
ANNUAL MEETING:
Gene Silverman, 69, has been a director of the Company since April 1994.
Mr. Silverman has been a consultant to the entertainment industry since 1996.
From July 1993 until his retirement in December 1995, Mr. Silverman served as
the President and Chief Executive Officer of Polygram Video, USA, a division of
Polygram N.V., a New York Stock Exchange listed company. Prior thereto, he was
Senior Vice President of sales at Orion Home Video from 1987 through 1992. In
1979 Mr. Silverman founded the Detroit-based distribution company named Video
Trend, Inc. In addition, he owned and operated Music Trend, Inc. and Merit Music
Distribution, Inc. in Detroit. Mr. Silverman is a nominee for a three-year
period expiring in 2006.
Farris G. Kalil, 64, has been a Director of the Company since December
1993. Mr. Kalil has been a financial consultant since June 1999. From November
1996 until his retirement in May 1999 Mr. Kalil served as Director of Business
Development for the Commercial Lending Division of Michigan National Bank, a
national banking institution. From May 1994 to November 1996, Mr. Kalil served
as a Senior Vice President for Commercial Lending at First of America
Bank -- Southeast Michigan, N.A. Prior thereto, Mr. Kalil served as a Senior
Vice President of Michigan National Bank where he headed the Commercial Real
Estate Division, Corporate Special Loans, Real Estate Asset Management/Real
Estate Owned Group, and the Government Insured Multi-Family Department. He had
been with Michigan National Corporation since 1960. Mr. Kalil received his B.S.
from Wayne State University and continued his education at the Northwestern
University School of Mortgage Banking. Mr. Kalil is a nominee for a three-year
period expiring in 2006.
OTHER DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
Ellis G. Wachs, 73, has been a Director of the Company since 1993. Mr.
Wachs is one of the four founders of Charming Shoppes, Inc. where, for a forty
year period ending in 1991, he held various positions, including Executive Vice
President, with various responsibilities including merchandise acquisition, real
estate leasing and site location. Since 1991 he has served as a consultant to
Charming Shoppes, Inc. and he currently is a real estate investor. He is a
graduate of the University of Illinois and a board member of the Philadelphia
Free Library.
2
Richard Agree, 59, has been President and Chairman of the Board of
Directors since December 1993. Prior thereto, he worked as managing partner of
the general partnerships which held the Company's properties prior to the
formation of the Company and the initial public offering and was President of
the predecessor company since 1971. Mr. Agree has managed and overseen the
development of over 5,000,000 square feet of anchored shopping center space
during the past 31 years. He is a graduate of the Detroit College of Law and a
member of the State Bar of Michigan and the International Council of Shopping
Centers.
Michael Rotchford, 44, has been a Director of the Company since December
1993. He is a Senior Managing Director for Cushman & Wakefield, Inc., a company
specializing in real estate services. Prior to joining Cushman & Wakefield in
2000 he served as Managing Director of The Saratoga Group, an investment banking
organization specializing in tax and asset-based financing. Mr. Rotchford had
been with The Saratoga Group since 1991. Prior to 1991, Mr. Rotchford was a
Director in the investment banking division of Merrill Lynch & Co. where he
managed the commercial mortgage placement group. Mr. Rotchford holds a
bachelor's degree, with high honors, from the State University of New York at
Albany. He is also a licensed real estate broker.
The Board of Directors met five times during fiscal year 2002. During the
year ended December 31, 2002, each Director attended 75 percent or more of the
aggregate of both (i) the total number of the meetings of the Board of
Directors, and (ii) the total number of meetings held by all committees of the
board on which each such Director served.
COMPENSATION OF DIRECTORS
Directors of the Company were paid an annual fee of $10,000. In addition,
the chairman of the Audit Committee received an annual fee of $4,000. Directors
traveling from outside the Farmington Hills, Michigan area, are reimbursed for
out-of-pocket expenses in connection with their attendance at meetings. For the
year ended December 31, 2002, the Company paid total compensation of $44,000 to
the Directors. No fees are paid to Directors who are employees of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has three standing committees: the Executive
Committee, the Audit Committee and the Executive Compensation Committee. The
Board of Directors does not have a standing nominating and corporate governess
committee.
The Executive Committee is composed of Messrs. Agree, Rotchford and Wachs.
The committee has the authority to acquire and dispose of real property and the
power to authorize, on behalf of the full Board of Directors, the execution of
certain contracts and agreements, including those related to the borrowing of
money by the Company, and generally to exercise all other powers of the Board of
Directors except for those which require action by a majority of the independent
Directors or the entire Board. The Executive Committee met once during 2002.
The Audit Committee is composed of Messrs. Kalil, Wachs and Silverman, each
of whom is independent (as defined in Section 303 of the New York Stock
Exchange's Listed Company Manual). The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls. The Audit Committee met two (2) times during 2002.
In addition, on four (4) occasions the Audit Committee authorized Farris Kalil,
Chairman to act on behalf of the Committee in reviewing with management and the
Company's independent public accountants, quarterly financial statements of the
Company. Mr. Kalil conducted such reviews.
The Executive Compensation Committee is composed of Messrs. Kalil,
Silverman and Wachs. The Executive Compensation Committee determines
compensation for the Company's executive officers, in addition to administering
the Company's stock option and other employee benefit plans,
3
including the Company's 1994 Stock Incentive Plan (the "Stock Incentive Plan").
The Executive Compensation Committee met two (2) times during 2002.
The Directors do not have a nominating committee but act as a group on such
matters.
EXECUTIVE OFFICERS
The following sets forth certain information with respect to Mr. Howe, Mr.
Schaefer, Mr. Prueter and Mr. Coburn the only executive officers that are not
Directors of the Company.
Kenneth R. Howe, 54, has been Vice President, Finance of the Company since
June 1994 and Secretary of the Company since November 1993. Prior to being
appointed as Vice President, Finance, Mr. Howe served as Chief Financial Officer
of the Company since November 1993. From 1989 to April 1994 he was Controller of
Agree Development Company, a predecessor of the Company. From 1984 to 1989, he
was a partner in Straka, Jarackas and Company, a public accounting firm with
which he was employed since 1974. He is a graduate of Western Michigan
University and a certified public accountant.
Mr. Bruce J. Schaefer, 59, has been Vice President, Leasing of the Company
since January 1, 1998. Prior to being appointed to this position, Mr. Schaefer
had directed the Company's leasing activities since April 1994. From 1988 to
April 1994 he coordinated all leasing activities for Agree Development Company.
Mr. David J. Prueter, 47, has been Vice President of the Company since
January 10, 2000. From 1997 until joining Agree Realty Corporation Mr. Prueter
was Director of U.S. Real Estate for Borders, Inc. Prior to joining Borders,
Inc. Mr. Prueter served as the Senior Manager of Real Estate Operations for the
Kroger Co. Mr. Prueter is a state committee member of the Michigan chapter of
the International Council of Shopping Centers, holds a MCR from NACORE and is a
graduate of Western Michigan University.
Mr. Nicholas Coburn, 31, has been Vice President of the Company since
January 17, 2001. Prior to being appointed to this position, Mr. Coburn had
directed the Company's development activities since December 1997. From 1996
until joining Agree Realty Corporation Mr. Coburn was employed at Lewiston-Smith
Realty Company. Mr. Coburn is a member of the State Bar of Michigan and the
American Society of Civil Engineers. He holds a J.D. from the University of
Detroit School of Law and a B.S. in Civil Engineering from the University of
Colorado.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and Directors, and
persons who beneficially own more than 10% of the Common Stock ("10%
Stockholders"), to file reports of beneficial ownership and changes in ownership
on Forms 3, 4 and 5 with the Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange. Executive officers, Directors and 10% Stockholders
are required by SEC regulations to furnish the Company with copies of all Forms
3, 4 and 5 which they file.
To the best of the Company's knowledge, based upon copies of Forms
furnished to it and written representations from executive officers, Directors
and 10% Stockholders, all applicable Section 16(a) reporting requirements were
complied with during the year ended December 31, 2002.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The beneficial ownership of the Common Stock (the Company's only
outstanding class of equity securities) with respect to each Director of the
Company, each executive officer of the Company, each person known by the Company
to be the beneficial owner of more than five percent of the outstanding shares
of Common Stock, and all Directors and executive officers of the Company as a
group as of March 15, 2003 is set forth below.
<Table>
<Caption>
AMOUNT AND
NATURE OF
NAME AND BUSINESS ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNERS(1) OWNERSHIP(2) OF CLASS
------------------------- ------------ --------
Richard Agree................................ 485,585 9.38%
Edward Rosenberg............................. 257,794 4.98%
David J. Prueter............................. 51,620 *
Kenneth R. Howe.............................. 38,250 *
Bruce J. Schaefer............................ 20,175 *
Gene Silverman............................... 20,159 *
Nicholas Coburn.............................. 19,965 *
Farris G. Kalil.............................. 8,000 *
Ellis G. Wachs............................... 1,000 *
Michael Rotchford............................ 1,000 *
------- ------
All directors and executive officers as a
group (9 persons).......................... 645,754 12.48%
======= ======
</Table>
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* Less than 1%
(1) The address of each person is c/o the Company at 31850 Northwestern Highway,
Farmington Hills, MI 48334
(2) Includes shares of Common Stock issuable upon conversion of limited
partnership units held by Messrs. Agree and Rosenberg in Agree Limited
Partnership, the Company's operating partnership. These units entitle
Messrs. Agree and Rosenberg to acquire 347,619 and 257,794 shares of Common
Stock, respectively. These numbers also include shares of Common Stock
subject to options exercisable within 60 days granted to Messrs. Agree and
Howe of 18,375 and 4,900, respectively, and 60,000 shares of Common Stock
assigned by Mr. Agree to his children's irrevocable investment trusts. These
numbers also include 48,400, 32,750, 19,150, 10,000 and 14,000 shares of
restricted stock held by Messrs. Agree, Howe, Schaefer, Prueter and Coburn
respectively.
5
EXECUTIVE COMPENSATION
ANNUAL COMPENSATION
The Company pays compensation to its executive officers for their services
in such capacity. The following Summary Compensation Table sets forth the annual
and long-term compensation paid by the Company to each executive officer of the
Company (the "Named Executive Officers") for, or with respect to, the fiscal
periods ended December 31, 2002, 2001 and 2000.
SUMMARY COMPENSATION TABLE
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<Table>
<Caption>
LONG-TERM COMPENSATION
--------------------------------
COMMON STOCK
ANNUAL COMPENSATION RESTRICTED UNDERLYING
--------------------------- STOCK STOCK OPTION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS($) AWARDS (#SHS)
--------------------------- ---- ------ ----- ---------- -------------
Richard Agree..................... 2002 $180,000 -- $114,994(1)(2) --
Chairman of the Board 2001 $165,000 -- $103,774(1) --
and President 2000 $160,096 -- $ 83,974(1) --
Kenneth R. Howe................... 2002 $120,000 $15,000 $ 64,432(1)(2) --
Vice President, Finance 2001 $106,731 $16,923 $ 51,390(1) --
and Secretary 2000 $ 95,769 $15,385 $ 44,938(1) --
Bruce J. Schaefer................. 2002 $ 96,000 $ 6,500 $ 38,875(1)(2) --
Vice President, Leasing 2001 $ 93,500 $18,886 $ 37,831(1) --
2000 $ 90,721 $41,857 $ 34,156(1) --
David J. Prueter.................. 2002 $160,000 -- $ 18,600(1)(2) --
Vice President 2001 $150,000 -- $ 6,875(1) --
2000 $137,308 $50,000 --(1) --
Nicholas Coburn................... 2002 $100,000 $10,000 $ 33,160(1)(2) --
Vice President 2001 $ 78,000 $ 8,000 $ 20,770(1) --
</Table>
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(1) The dollar value of the award of restricted stock is calculated by
multiplying the closing market price of the Common Stock on the date of the
award by the number of shares awarded. Messrs. Agree, Howe, Schaefer,
Prueter and Coburn were awarded 10,000, 5,000, 2,500, 2,500 and 3,500 shares
of restricted stock on January 1, 2003; Mr. Prueter was awarded 2,500 shares
of restricted stock on September 12, 2002; Messrs. Agree, Howe, Schaefer,
Prueter and Coburn were awarded 8,000, 4,500, 2,500, 2,500 and 3,500 shares
of restricted stock, respectively on January 1, 2002; Messrs. Agree, Howe,
Schaefer and Prueter were awarded 7,200, 4,000 and 2,500 shares of
restricted stock, respectively on January 1, 2001; Messrs. Agree, Howe and
Schaefer were awarded 7,200, 4,000, 2,500 and 2,500 shares of restricted
stock, respectively, on January 1, 2000. These shares of restricted stock
are (i) subject to restrictions on transfer which lapse in equal annual
installments over a five-year period from the date of the grant and (ii) are
entitled to and receive dividends from the date of the grant.
(2) At December 31, 2002, Messrs. Agree, Howe, Schaefer, Prueter and Coburn
owned 38,400, 27,750, 16,650, 7,500 and 10,500 shares of restricted stock,
respectively, the market value (as computed pursuant to footnote (1) above)
of which was $648,960, $468,975, $281,385, $126,750 and $177,450,
respectively.
OPTION GRANTS
During the year ended December 31, 2002, the Company did not grant any
stock options to purchase shares of Common Stock.
6
OPTION EXERCISES IN 2002 AND YEAR-END VALUES TABLE
The following table sets forth certain information with respect to
unexercised stock options held by the Named Executive Officers at December 31,
2002. None of the Named Executive Officers exercised any stock options during
the year ended December 31, 2002.
VALUE OF UNEXERCISED OPTIONS(1)
<Table>
<Caption>
NUMBER OF
UNEXERCISED OPTIONS
AT DECEMBER 31, 2002(2)
----------------------------
NAME AND PRINCIPAL POSITION EXERCISABLE UNEXERCISABLE
--------------------------- ----------- -------------
Richard Agree
Chairman of the Board and President....................... 18,375 --
Kenneth R. Howe
Vice President, Finance and Secretary..................... 4,900 --
</Table>
- ---------------------
(1) No options were in-the-money at December 31, 2002.
(2) All unexercised options are fully vested, have an exercise price of $19.50
per share and expire upon employment termination.
EMPLOYMENT AGREEMENTS
The Company's current employment agreements with Mr. Agree and Mr. Howe
became effective on July 1, 1999. Mr. Prueter's employment agreement became
effective on January 10, 2000. Mr. Schaefer and Mr. Coburn do not have
employment contracts with the Company. Mr. Agree's employment agreement,
pursuant to which he serves Chairman of the Board of Directors and President of
the Company, has a five-year term. Under his employment agreement, Mr. Agree
receives an annual base salary of $189,000, subject to annual increases at the
discretion of the Executive Compensation Committee of the Board of Directors,
and is entitled to participate in the Stock Incentive Plan and all other benefit
programs generally available to executive officers of the Company.
If the Company terminates Mr. Agree's employment without cause (as defined
below), he is entitled to receive a payment equal to his annual salary (at the
then applicable rate) and has the right to continue to participate in all
benefit plans made generally available by the Company to its executives during
the agreement's Initial Term.
If a change-in-control (as defined in the employment agreement) occurs
prior to the expiration of Mr. Agree's employment agreement and within three
years after the change-in-control of the Company Mr. Agree is terminated by the
Company, Mr. Agree is entitled to be paid the greater of three times his then
compensation, or his compensation to be paid over the remaining life of the
employment agreement.
The Company may terminate Mr. Agree's agreement for "cause" which is
defined to include (i) willful failure or refusal to perform specific reasonable
written directives of the Board of Directors; (ii) conviction of a felony; (iii)
dishonesty involving the Company which results in an unjust gain or enrichment
at the expense of the Company; (iv) moral turpitude which adversely affects the
business of the Company; or (v) a material breach of the non-competition section
of the employment agreement. In the event of Mr. Agree's termination for cause
he will forfeit his right to any and all benefits entitled to be received
pursuant to his employment agreement (other than any previously vested benefits)
following the date of termination. Mr. Agree's agreement may also be terminated
if Mr. Agree dies or becomes disabled (as defined in the agreement). In the
event of termination of the agreement because of Mr. Agree's death or
disability, Mr. Agree (or his estate) shall receive for the longer of (i) the
remainder of the calendar year; or (ii) six months Mr. Agree's salary in effect
at the date of his death or disability.
7
The employment agreement with Mr. Howe, pursuant to which he serves as the
Company's chief Financial Officer and Secretary, is identical to Mr. Agree's
employment agreement, except that Mr. Howe's agreement provides for an annual
base salary of $126,000.
The employment agreement with Mr. Prueter, pursuant to which he serves as a
Vice President, is also identical to Mr. Agree's employment agreement, except
that Mr. Prueter's agreement provides for an annual base salary of $168,000. The
agreement also entitles Mr. Prueter to receive as an additional bonus 2,500
shares of restricted stock each year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No person who served as a member of the Executive Compensation Committee
during 2002 (i) was an officer or employee of the Company during such year, (ii)
was formerly an officer of the Company or (iii) was a party to any material
transaction with the Company.
No executive officer of the Company served as a member of the compensation
or similar committee or board of directors of any other entity of which an
executive officer served on the Executive Compensation Committee or the Board of
Directors of the Company.
COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee is comprised of Messrs. Kalil,
Silverman and Wachs. Members of the Executive Compensation Committee, all of
whom must be independent directors of the Company, are selected each year by the
full Board of Directors.
The Executive Compensation Committee determines compensation for the
Company's executive officers and administers any stock incentive or other
compensation plans adopted by the Company, including the Stock Incentive Plan.
The Executive Compensation Committee believes that the Company's compensation
package must be structured in a manner that will help the Company attract and
retain qualified executives and will align compensation of such executives with
the interests of the stockholders. The compensation package currently consists
of salary, bonus and long-term compensation in the form of stock options and
restricted stock awards issued pursuant to the Stock Incentive Plan.
SALARY, BONUS AND OTHER ANNUAL COMPENSATION
Salary and bonus amounts are determined by the Executive Compensation
Committee using a subjective evaluation process. In making determinations of
salary and bonus amounts, the Executive Compensation Committee considers the
general performance of the Company, the officer's position, level and scope of
responsibility and the officer's anticipated performance and contributions to
the Company's achievement of its long-term goals. The base salaries for Richard
Agree, Kenneth R. Howe and David J. Prueter were established pursuant to their
employment agreements.
STOCK INCENTIVE PLAN
The Executive Compensation Committee is responsible for administering the
Stock Incentive Plan, which includes determining the individuals to be granted
stock option awards or restricted stock grants and defining the terms of such
awards, including the number of shares, exercise price, vesting schedule and
expiration date.
The purpose of the Stock Incentive Plan is to provide compensation to
persons whose services are considered essential to the Company. By linking this
compensation to the market performance of the Common Stock and the growth in
funds from operations the Company intends to provide additional incentive for
officers and key employees to enhance the value and success of the Company and
align the long-term interests of the officers and key employees with the
interest of the Company.
8
The Executive Compensation Committee uses a subjective evaluation process
to determine whether an officer or key employee should receive a stock option
grant or receive a restricted stock award and the number of shares to be granted
or awarded to such officer or key employee. It has not set specific objective
goals or standards that an officer or key employee must meet to receive a stock
option or restricted stock award. The factors considered by the Executive
Compensation Committee include the general performance of the Company, the
position, level and scope of responsibility of the respective officer or key
employee and the officer's or key employee's anticipated performance and
contributions to the Company's achievement of its long-term goals.
In January 1998, the Committee awarded Messrs. Agree and Howe restricted
stock awards of 4,800 and 2,750 shares, respectively; in January 1999, the
Committee awarded Messrs. Agree, Howe and Schaefer restricted stock awards of
7,200, 4,000 and 2,500 shares, respectively; in January 2000, the Committee
awarded Messrs. Agree, Howe and Schaefer restricted stock awards of 7,200, 4,000
and 2,500 shares, respectively; in January 2002, the Committee awarded Messrs.
Agree, Howe, Schaefer, Prueter and Coburn 8,000, 4,500, 2,500, 2,500 and 3,500
shares, respectively; and in January 2003, the Committee awarded Messrs. Agree,
Howe, Schaefer, Prueter and Coburn 10,000, 5,000, 2,500, 2,500 and 3,500 shares
The Executive Compensation Committee did not grant any options to purchase
shares of Common Stock in 2002.
The foregoing report is given by the following members of the Executive
Compensation Committee:
Farris G. Kalil
Gene Silverman
Ellis G. Wachs
AUDIT COMMITTEE REPORT
The Board of Directors appoints an audit committee each year to review the
Company's financial matters. Each member of the Company's audit committee meets
the independence requirements set by the New York Stock Exchange. The audit
committee members reviewed and discussed the audited financial statements for
the fiscal year ending December 31, 2002 with management. The committee also
discussed (i) all the matters required to be discussed by Statement of Auditing
Standards No. 61 with the Company's independent auditors, BDO Seidman, LLP and
(ii) the independence of such independent auditors. The audit committee received
a written disclosure and letter from BDO Seidman, LLP as required by
Independence Standards Board Standard No. 1. Based on their review and
discussions, the audit committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report to
Stockholders and Form 10-K for the fiscal year ended December 31, 2002 to be
filed with the SEC.
On August 1, 2000, the Board of Directors approved a revised written
charter to govern the audit committee.
Farris Kalil, Chairman
Ellis Wachs
Gene Silverman
9
PERFORMANCE GRAPH
Rules promulgated under the Securities Exchange Act of 1934 require the
Company to present a graph comparing the cumulative total stockholder return on
its Common Stock with the cumulative total stockholder return of (i) a broad
equity market index, and (ii) a published industry index or peer group. The
graph compares the cumulative total stockholder return of the Common Stock
(NYSE: ADC), based on the market price of the Common Stock and assuming
reinvestment of dividends, with the SNL Shopping Center REIT Index ("SNL"), the
S&P 500 Total Return ("S&P 500") and the Russell 2000 Index ("Russell 2000").
The graph assumes the investment of $100 on January 1, 1997.
[LINE GRAPH]
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------
PERIOD ENDING
- ---------------------------------------------------------------------------------------------------------------
INDEX 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002
- ---------------------------------------------------------------------------------------------------------------
Agree Realty Corporation 100.00 93.23 80.22 87.50 130.08 131.34
- ---------------------------------------------------------------------------------------------------------------
S&P 500 100.00 128.55 155.60 141.42 124.63 96.95
- ---------------------------------------------------------------------------------------------------------------
Russell 2000 100.00 97.45 118.17 114.60 117.45 93.39
- ---------------------------------------------------------------------------------------------------------------
SNL Shopping Center REITs 100.00 95.33 84.24 101.26 130.17 150.45
- ---------------------------------------------------------------------------------------------------------------
</Table>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company leases its executive offices, located at 31850 Northwestern
Highway, Farmington Hills, Michigan from Mrs. Arlene Agree, the wife of Mr.
Agree. Under the terms of the lease, which expires December 31, 2003, the
Company is required to pay an annual rental of $60,000 ($10.00 per square foot)
and is responsible for the payment of real estate taxes, insurance and
maintenance expenses relating to the building. Management believes that the
lease terms are consistent with leases for similar properties in the area.
INDEPENDENT AUDITORS
Upon recommendation of and approval by the Audit Committee, BDO Seidman,
LLP ("BDO") has been selected to act as independent certified public accountants
for the Company during the current year. BDO billed the Company the following
fees for the year ended December 31, 2002:
<Table>
<Caption>
FINANCIAL INFORMATION SYSTEM
AUDIT FEES DESIGN AND IMPLEMENTATION FEES ALL OTHER FEES
- ---------- ------------------------------ --------------
$32,350........................... $-0- $19,275
</Table>
10
The Audit Committee believes that the non-audit services provided by BDO
are compatible with maintaining its independence.
A representative of BDO will be present at the Annual Meeting and will be
provided with the opportunity to make a statement if such representative desires
to do so. Such representative is also expected to be available to respond to
appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those stated above. If any other business should come
before the Annual Meeting, the persons named in the enclosed proxy will vote
thereon as they determine to be in the best interests of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
It is presently contemplated that the 2004 annual meeting of stockholders
will be held in mid-May 2004. Any stockholder proposal to be considered for
inclusion in the Company's proxy statement and form of proxy for the annual
meeting of stockholders to be held in 2004 must be received at the Company's
office at 31850 Northwestern Highway, Farmington Hills, MI 48334, no later than
November 24, 2003.
Any shareholder who intends to bring business to the annual meeting in the
year 2004, but not include the proposal in our proxy statement, or to nominate a
person to the board of directors, must give written notice to our corporate
secretary, Kenneth R. Howe at the Company's office at 31850 Northwestern
Highway, Farmington Hills, MI 48334, no later than January 23, 2004.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 2002 accompanies this Proxy Statement.
OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the Notice
of Annual Meeting of Stockholders which accompanies this Proxy Statement. The
Board is not presently aware of business to be transacted at the Annual Meeting
other than as set forth in the Notice.
By Order of the Board of Directors
/S/ KENNETH R. HOWE
Kenneth R. Howe
Vice President, Finance and
Secretary
March 24, 2003
Farmington Hills, Michigan
11
DETACH HERE ZAGR72
PROXY
AGREE REALTY CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 5, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard Agree and Kenneth R. Howe as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the Common Stock of
Agree Realty Corporation held on record by the undersigned on March 21, 2003 at
the Annual Meeting of Stockholders to be held on May 5, 2003, or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES FOR DIRECTOR.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
AGREE REALTY CORPORATION
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE ZAGR71
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR EACH
OF THE MATTERS HEREON.
1. Electing two Directors: 2. In their judgment, upon such other matters as may
NOMINEES: (01) Gene Silverman and (02) Farris G. Kalil properly come before the meeting.
FOR WITHHELD
[ ] [ ]
[ ]_______________________________________
For both nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
NOTE - PLEASE COMPLETE THIS PROXY AND MAIL TO US PROMPTLY.
(Please sign exactly as your name or names appear hereon.
Where shares are held jointly both holders should sign.
When signing as attorney, executor, administrator, trustee
or guardian, please give your full title as such.)
Signature:_____________________________ Date:_______________ Signature:_______________________________ Date:______________