ACPT 2007 Proxy Statement
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
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[
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Material Pursuant to §240.14a-12
American
Community Properties Trust
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AMERICAN
COMMUNITY PROPERTIES TRUST
222
SMALLWOOD VILLAGE CENTER
ST.
CHARLES, MD 20602
April
23,
2007
Dear
Shareholders:
On
behalf
of the officers and trustees of American Community Properties Trust (the
"Company"), you are cordially invited to attend the Company's Annual Meeting
of
Shareholders to be held at 10:00 a.m. EDT, on Wednesday, June 6, 2007, at the
Holiday Inn, James Craik Room, 45 St. Patrick's Drive, St. Charles,
Maryland.
At
the
meeting, shareholders of the Company will be asked to consider and act upon
the
election of two trustees to serve until 2010 as described in the accompanying
Notice of Meeting and Proxy Statement.
The
trustees of the Company unanimously recommend that all shareholders of the
Company vote in favor of the proposal presented. Your vote is important
regardless of the number of shares you own. We strongly encourage all
shareholders of the Company to participate by voting their shares by proxy
whether or not they plan to attend the meeting. Please sign, date and mail
the
enclosed proxy as soon as possible. If you do attend the meeting, you may still
vote in person.
Sincerely,
/s/
J.
Michael Wilson
J.
Michael Wilson
Chairman
and
Chief
Executive Officer
AMERICAN
COMMUNITY PROPERTIES TRUST
222
SMALLWOOD VILLAGE CENTER
ST.
CHARLES, MD 20602
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD JUNE 6, 2007
TO
THE
SHAREHOLDERS OF AMERICAN COMMUNITY PROPERTIES TRUST:
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Shareholders of American Community
Properties Trust (the "Company") will be held on Wednesday, June 6, 2007, at
10:00 a.m. EDT at the Holiday Inn, James Craik Room, 45 St. Patrick's Drive,
St.
Charles, Maryland, for the following purposes:
| (1) |
To
elect two trustees of the Company to serve until the Annual Meeting
of
Shareholders in 2010; and
|
| (2) |
To
transact such other business as may properly come before the meeting
or
any adjournments or postponements of the
meeting.
|
The
Board
of Trustees has fixed the close of business on April 6, 2007 as the record
date
for the determination of the shareholders entitled to notice of and to vote
at
the meeting and at any adjournment or postponement of the meeting.
Shareholders
are invited to attend the meeting. Whether or not you expect to attend, we
urge
you to sign, date and promptly return the enclosed proxy card in the enclosed
postage prepaid envelope. If you attend the meeting, you may vote your shares
in
person, which will revoke any previously executed proxy.
If
your
shares are held of record by a broker, bank or other nominee and you wish to
attend the meeting, you must obtain a letter from the broker, bank or other
nominee confirming your beneficial ownership of the shares and bring it to
the
meeting. In order to vote your shares at the meeting, you must obtain from
the
record holder a proxy issued in your name.
By
Order
of the Board of Trustees
/s/
Cynthia L. Hedrick
Cynthia
L. Hedrick
Secretary
St.
Charles, Maryland
April
23,
2007
AMERICAN
COMMUNITY PROPERTIES TRUST
222
SMALLWOOD VILLAGE CENTER
ST.
CHARLES, MD 20602
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
To
Be Held June 6, 2007
This
proxy statement is furnished in connection with the solicitation of proxies
on
behalf of the Board of Trustees of American Community Properties Trust, a
Maryland real estate investment trust (the "Company" or "ACPT"), for the 2007
Annual Meeting of the shareholders of the Company (the "2007 Annual Meeting")
to
be held at the Holiday Inn, James Craik Room, 45 St. Patrick's Drive, St.
Charles, Maryland on Wednesday, June 6, 2007 at 10:00 a.m. EDT. The Notice
of
the 2007 Annual Meeting, this proxy statement and the accompanying proxy card
are first being mailed on or about April 23, 2007 to shareholders of record
of
the Company's common shares ("Common Shares") as of the close of business on
April 6, 2007. You can ensure that your shares are voted at the meeting by
signing, dating and promptly returning the enclosed proxy card in the envelope
provided. Each share entitles the registered holder to one vote. As of April
6,
2007, there were 5,229,954 Common Shares outstanding and entitled to vote at
the
2007 Annual Meeting. Sending in a signed proxy will not affect your right to
attend the meeting and vote in person. You may revoke your proxy at any time
before it is counted by notifying the Secretary of the Company in writing,
or by
executing a subsequent proxy, which revokes your previously executed proxy.
Additionally, if you attend the meeting, you may vote your shares in person,
which will revoke any previously executed proxy.
At
the
2007 Annual Meeting, shareholders will have the opportunity to elect two
trustees to serve until the Annual Meeting in 2010 and to transact such other
business as may properly come before the meeting.
The
Company's principal executive offices are located at 222 Smallwood Village
Center, St. Charles, Maryland, 20602.
VOTING
OF PROXIES
Proxies
will be voted as specified by the shareholders. Where specific choices are
not
indicated, proxies will be voted FOR the election of all nominees for trustee.
The presence in person or by proxy of shareholders entitled to cast a majority
of all votes entitled to be cast at the 2007 Annual Meeting constitutes a
quorum. A properly executed proxy marked to withhold authority with respect
to
the election of a trustee nominee will not be voted with respect to such
nominee, although it will be counted for purposes of determining whether there
is a quorum. Accordingly, "withhold authority" votes will have the effect of
a
vote against the election of the nominee. The election of trustees requires
the
affirmative vote of a plurality of the votes cast at the 2007 Annual Meeting,
which means the nominees who receive the most votes will be elected. Votes
submitted by mail must be received on or before June 5, 2007.
ELECTION
OF TRUSTEES
At
the
2007 Annual Meeting, the shareholders will be voting for two nominees to serve
as trustees until the Annual Meeting in 2010. The two nominees for election
until the 2010 Annual Meeting are J. Michael Wilson and Thomas J. Shafer. Mr.
Wilson has been a trustee since March 1997. Mr. Shafer has been a trustee since
August 1998. Information regarding the Board's nominees for trustees is set
forth below. Information regarding the other trustees whose terms expire in
2008
and 2009 is also set forth below.
Pursuant
to the Company's Bylaws, the Board of Trustees consists of not less than three
nor more than nine trustees, with the present number of trustees set at six.
The
Board of Trustees is divided into three classes serving staggered terms, with
each class consisting of one-third of the total number of trustees.
The
accompanying proxy, if signed and returned, will be voted for election of the
Board's nominees unless contrary instructions are given. If the Board's nominees
are unable to serve, which is not anticipated, the persons named as proxies
intend to vote, unless the number of trustees is reduced by the Board of
Trustees in accordance with the Bylaws, for such other person as the Board
of
Trustees may designate.
Recommendation
of the Board of Trustees
THE
BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ELECTION OF MR. J. MICHAEL WILSON
AND MR. THOMAS J. SHAFER AS TRUSTEES.
Nominees
for Election to the Board of Trustees for a Three Year Term to Expire at the
2010 Annual Meeting of Shareholders
J.
Michael Wilson, 41. Mr. Wilson has been a trustee of the Company since March
1997 and has served as Chairman and Chief Executive Officer of the Company
since
July 1998. Mr. Wilson was a Director of Interstate General Management
Corporation (“IGMC”), the managing general partner of Interstate General Company
L.P. (“IGC”), the predecessor to the Company, from 1996 to 1998 and from January
1997 to November 1998 was Vice Chairman, Secretary, and Chief Financial Officer
of IGC. He has been President and Chief Operating Officer of Interstate Business
Corporation ("IBC"), a general partner of IGC, since 1994 and a Director of
IBC
since 1991. He served as Vice President of IBC from 1991 to 1994. He has been
a
director of Wilson Securities Corporation since 1991, and President since March
1996. He was Vice President of Wilson Securities Corporation from 1991 to 1996.
He has been Vice President of Interstate Waste Technologies, a subsidiary of
IGC, since 1994 and in July 2006 was appointed to their Board of
Directors.
Thomas
J.
Shafer, 77. Mr. Shafer has been a trustee of the Company since August 1998.
He
is a registered professional engineer specializing in real estate evaluation
and
land development. Prior to his retirement in 1997, he was a partner in Whitman,
Requardt and Associates, LLP ("Whitman Requardt"), an engineering and
architectural firm from 1976 through 1997 and its managing partner from 1989
through 1997. He was a director of IGMC from January 1998 to June 2000. He
is a
member of the Urban Land Institute, the American Society of Professional
Engineers and numerous other technical organizations. Whitman Requardt has
provided engineering services to the Company for over thirty years.
Members
of the Board of Trustees Continuing in Office with a Term to Expire at the
2008
Annual Meeting of Shareholders
T.
Michael Scott, 48. Mr. Scott has been a trustee of the Company since December
1999. Mr. Scott has served as President of Cambridge Holdings, a real estate
company in Fairfax County, Virginia, since 1992. He has been a principal of
the
Cambridge companies since 1986. Mr. Scott also serves on the Board of Directors
of Tier Technologies, Inc. He is a member of the National Association of
Industrial and Office Properties and serves on the Executive Committee of the
Washington/Baltimore Chapter of the Young President's Organization. He received
a B.S. in Engineering from Cornell University and an MBA from Harvard
University.
Thomas
S.
Condit, 65. Mr. Condit has been a trustee of the Company since January 2003.
Prior to his retirement, he served as President and Chief Executive Officer
of
Craver, Mathews, Smith & Co., Inc., a fundraising and membership development
firm, from 1993 to 1995. Prior to that, he served as President and Chief
Executive Officer of the National Cooperative Bank in Washington, D.C. He has
extensive experience in mortgage banking, investment banking, consumer financial
services, federally insured depository services, and community economic
development. He earned his juris doctorate from the National Law Center at
George Washington University, and a Bachelor of Arts degree from Stanford
University.
Members
of the Board of Trustees Continuing in Office with a Term to Expire at the
2009
Annual Meeting of Shareholders
Antonio
Ginorio, 64. Mr. Ginorio has been a trustee of the Company since January 2001.
Prior to his retirement in 2000, he was a Senior Audit Partner in the San Juan
Office of PricewaterhouseCoopers, a globally-recognized public accounting firm,
for 36 years. He has extensive audit experience in banking, manufacturing,
retail and real estate.
Edwin
L.
Kelly, 65. Mr. Kelly has been a trustee of the Company since March 1997 and
has
served as President and Chief Operating Officer of the Company since July 1998.
Mr. Kelly was President and Chief Operating Officer of IGC and IGMC from 1997
to
1998. Prior to that, he served as Senior Vice President and Treasurer of IGC
and
Senior Vice President of IGMC since their formation in 1986. He has served
in
various executive positions with IGC and its predecessor companies since 1974,
including as a Director of IGMC from 1986 to 1998.
BOARD
AND COMMITTEE MATTERS
Requirements
of Board Members
Pursuant
to the Company's Declaration of Trust not fewer than two of the members of
the
Board of Trustees must be persons who are not employed by (i) the Company,
(ii)
any Affiliate of the Company, or (iii) a member of the family of James J.
Wilson, the President and Chief Executive Officer of IGC and the father of
J.
Michael Wilson.
During
the fiscal year 2006, the Board of Trustees held four regular meetings and
one
special meeting. All trustees attended at least 75% of the total meetings of
the
Board of Trustees and committees of the Board on which they served. In
accordance with Company policy, all members of our Board attended last year's
annual meeting.
Trustee
Independence
The
Company has established Trustee independence standards to assist the Board
in
determining Trustee independence in accordance with the requirements of the
American Stock Exchange’s (“AMEX”) corporate governance listing standards. The
Company considers all relevant facts and circumstances in making an independence
determination. To be considered “independent” under our independence standards,
our Board of Trustees must determine that the trustee has no material
relationship with us (other than as a trustee) directly or indirectly, that
would interfere with the exercise of independent judgment.
Our
Board
has affirmatively determined that Mssrs. Shafer, Scott, Ginorio and Condit
are
independent pursuant to our independence standards and have no material
relationship with us, directly or indirectly, that would interfere with the
exercise of independent judgment. Mr. Shafer has a consulting agreement with
the
Company, described below under the heading “Compensation Committee Interlocks
and Insider Participation” which does not interfere with his independence as a
Trustee, but does preclude him from being able to serve as a member of the
Audit
Committee.
Committees
of the Board
The
Board
of Trustees has established three committees: the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.
The charters for the Audit Committee and the Nominating and Corporate Governance
Committee may be found on our website at www.acptrust.com.
You may
also obtain a copy of the Audit Committee and the Nominating and Corporate
Governance Committee charters without charge by writing to the Secretary of
the
Company at the principal executive offices of the Company.
Audit
Committee.
The
Audit Committee consists of three members, each of whom qualifies as an
independent trustee under AMEX listing requirements. The responsibilities of
the
Audit Committee include the appointment and termination of the independent
auditors, reviewing the plans for and results of the annual audit engagement
with the independent auditors, approval of any other professional services
provided by the independent auditors, approval of the fees paid to the
independent auditors for audit and non-audit services, and periodically
reviewing, with the assistance of the independent auditors, the adequacy of
ACPT's internal accounting controls. The members of the Audit Committee for
2006
were Messrs. Ginorio (Chairman), Condit and Scott. The Audit Committee held
five
meetings during the year ended December 31, 2006.
The
Board
of Trustees has determined that each member of the Audit Committee is, as
required by AMEX rules, able to read and understand fundamental financial
statements and that at least one member of the committee, Mr. Ginorio, Chairman
of the Audit Committee, is "financially
sophisticated"
under
the AMEX rules and is an "audit
committee financial expert"
as
defined in Item 407(d)(5) of Regulation S-K.
Compensation
Committee.
The
Compensation Committee consists of four members, each of whom is an independent
trustee under the AMEX listing requirements. The Compensation Committee does
not
currently have a charter. However, as an organized subcommittee to the Board
of
Trustees, it is responsible for approving the compensation of the executive
officers of ACPT, including the CEO and for the administration of the Share
Incentive Plan. The members of the Compensation Committee for 2006 were Messrs.
Shafer (Chairman), Condit, Ginorio and Scott. The Compensation Committee met
three times during 2006.
Nominating
and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee consists of four members, each
of
whom is an independent trustee under the AMEX listing requirements. The
Committee assists our Board with: identifying qualified individuals to become
members of our Board in the event of any vacancy on the Board, recommending
to
the Board from time to time the member who should serve as Chairman of the
Board, determining the composition of the committees of the Board, recommending
to the Board, on an annual basis, trustee nominees for the Board to be presented
at the annual shareholders meeting, monitoring a process to assess Board
effectiveness and developing and implementing our corporate governance
guidelines. The members of the Nominating and Corporate Governance Committee
for
2006 were Messrs. Scott (Chairman), Condit, Ginorio, and Shafer. The Nominating
and Corporate Governance Committee met twice during 2006.
There
are
no differences in the way the Nominating and Corporate Governance Committee
evaluates nominees suggested by shareholders from those suggested by Board
members or management.
INDEPENDENT
AUDITOR FEES AND SERVICES
The
following table sets forth the aggregate fees for professional services rendered
by Ernst & Young LLP, the Company's independent registered public accounting
firm, for the audit of the Company's annual financial statements for the years
ended December 31, 2006 and December 31, 2005 and fees billed for other services
rendered by Ernst & Young LLP during those periods.
| |
|
|
2006
|
|
|
2005
|
|
| |
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$
|
802,400
|
|
$
|
753,235
|
|
|
Audit-Related
Fees
|
|
|
28,200
|
|
|
22,235
|
|
|
Tax
Fees
|
|
|
186,326
|
|
|
261,143
|
|
|
All
Other Fees
|
|
|
-
|
|
|
-
|
|
Audit
Fees
Audit
fees in 2006 and 2005 represented fees for professional services provided in
connection with the annual audit of our financial statements reported on Form
10-K and review of our quarterly financial statements reported on Form
10-Q.
Audit
fees in 2006 also included fees for professional services rendered in connection
with the audit of the Company’s adoption of Emerging Issues Task Force (EITF)
04-05 on January 1, 2006. Fees billed by Ernst & Young in 2005 also included
fees related to the restatement of our Form 10-K for the year ended December
31,
2004 and Form 10-Qs for the periods ended March 31, 2005 and June 30, 2005
of
$138,500.
Audit-Related
Fees
Audit-related
services in 2006 and 2005 included the audit of the Retirement Benefit Plan,
the
Company’s subscription to Ernst & Young's on-line accounting and auditing
research tool and technical accounting assistance.
Tax
Fees
We
use
Ernst & Young for tax services, including tax compliance, tax advice and tax
planning. Also included in the tax fees for 2006 and 2005 are amounts relating
to assisting the Company in reaching a Closing Agreement with the IRS.
Other
Fees
We
did
not engage the independent auditor to provide services other than those
identified in the above categories for us in 2006 or 2005.
Pre-Approval
Policies and Procedures
The
Audit
Committee adopted a policy that requires approval in advance of all audit,
audit-related, tax services, and other services performed by the independent
auditor outside of the audit engagement letter. The policy provides for
pre--approval by the Audit Committee of specifically defined audit and non-audit
services. The policy states that the Audit Committee must pre-approve the
permitted service before the independent auditor is engaged to perform it.
The
Audit Committee reports that all services rendered in fiscal year 2006 were
pre-approved.
Appointment
of Principal Independent Auditor for 2008
The
Audit
Committee of the Board of Trustees has appointed Ernst & Young LLP as the
Company's independent registered public accounting firm for fiscal 2007. Ernst
& Young LLP has served in this capacity since May 15, 2002. Ernst &
Young LLP will audit and report to shareholders on the consolidated financial
statements of the Company and its subsidiaries.
Representatives
of Ernst & Young LLP will be present at the annual meeting, will have an
opportunity to make a statement if they so desire, and are expected to be
available to respond to appropriate questions.
AUDIT
COMMITTEE REPORT
With
respect to the Company’s financial reporting process, the management of the
Company has the primary responsibility for establishing and maintaining internal
controls and preparing the Company’s consolidated financial statements. The
independent registered public accounting firm, Ernst &Young LLP, is
responsible for auditing these financial statements. It is the responsibility
of
the Audit Committee to oversee these activities. It is not the responsibility
of
the Audit Committee to prepare or certify the Company’s financial statements or
guarantee the audits or reports of the independent auditors, nor is it the
duty
of the Audit Committee to certify that the independent auditor is “independent”
under applicable rules. These are the fundamental responsibilities of Company
management and the independent auditors. In the performance of its oversight
function, the Audit Committee has:
| · |
Reviewed
and discussed the audited financial statements with the independent
registered public accounting firm and management, including a discussion
of the quality, not just the acceptability, of the accounting principles,
the reasonableness of significant judgments, and the clarity of
disclosures in the financial
statements;
|
| · |
Discussed
with the independent registered public accounting firm the matters
required to be discussed by the Statement on Auditing Standards No.
61,
Communication with Audit Committees, as currently in
effect;
|
| · |
Received
the written disclosures and the letter from the independent registered
public accounting firm required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, as currently
in
effect, and has discussed with the independent registered public
accounting firm their independence;
|
| · |
Considered
whether the provision of non-audit services is compatible with maintaining
the independent registered public accountant’s independence;
and
|
| · |
Concluded
that the independent registered public accounting firm is independent
from
the Company and its management.
|
The
Audit
Committee discussed with the Company’s independent auditors the overall scope
and plans for their respective audits. The Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the Company’s internal controls, and the
overall quality of the Company’s financial reporting.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Trustees (and the board has approved) that the
audited financial statements for 2006 be included in the Annual Report on Form
10-K for the year ended December 31, 2006 filed with the Securities and Exchange
Commission.
Audit
Committee
Antonio
Ginorio, Committee Chairman
Thomas
S.
Condit
T.
Michael Scott
April
23,
2007
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
General
Overview
The
Compensation Committee of our Board of Trustees (the “Committee”), comprised of
members previously identified, is responsible for establishing and implementing,
and monitoring adherence with, the Company’s compensation philosophy. This
responsibility also includes establishing and approving the compensation and
benefit programs of all officers of ACPT, which the Committee believes is fair,
reasonable and competitive. Additionally, the Committee seeks to maintain the
continuity of our management team, and especially the continuity of our senior
executive officers.
The
Compensation Committee understands the unique nature of the Company’s
diversified operations and relative size in the marketplace. Accordingly, the
Compensation Committee considers, but does not rely heavily on comparative
compensation data from one specific industry. Rather, the Compensation Committee
utilizes comparative compensation data for publicly-held organizations of
similar size in both the land development and REIT sectors. A variety of
external compensation sources and data is used, which includes compensation
information extracted from our identified peer group’s proxy statements. The
peer group companies we specifically track include: Acadia Realty Trust;
American Campus Communities; Associated Estates Realty Trust; Cedar Shopping
Centers Inc.; Consolidated Tomoka Land Co.; Stratus Properties Inc.; and Tejon
Ranch Co. These companies were chosen for comparison due to their relative
size
and/or their principal business.
Compensation
Philosophy and Objectives
ACPT’s
executive compensation program is designed to attract, retain and motivate
highly qualified individuals for senior management positions whose goal is
to
achieve superior operating performance that is critical to the long term success
of the company. This objective can best be obtained by developing both annual
and long term goals and relating compensation to the progress made in meeting
these goals. The compensation program for ACPT officers consists of a base
salary adjusted annually and performance based compensation that includes
bonuses and may include share based grants. In addition, with the exception
of
J. Michael Wilson, the Chief Executive Officer of ACPT, the officers are
entitled to participate in the Company’s qualified defined contribution
retirement plan. Stock price performance is reviewed for comparison to peer
companies, but is not a significant factor in determining annual compensation
due to the long range nature of land development and because the price of our
common stock is subject to a variety of factors outside management’s control.
For this reason, and because our Chief Executive Officer’s family owns a
controlling interest in the Company, we do not rely heavily on share based
compensation as a significant component of our compensation program.
In
implementing this overall compensation philosophy for the Company’s named
executive officers, the Committee believes that the Company must offer
competitive total compensation to recruit key executive talent when necessary,
and to provide meaningful rewards to our named executive officers so that they
are encouraged to remain with the Company and work to enhance shareholder value.
Specifically, the Committee seeks to provide base salaries in the upper quartile
of the prevailing market practices and annual bonuses derived from progress
made
in achieving the management goals described in more detail below. In addition,
the Committee seeks to provide moderate retirement and health and welfare
benefits to the named executive officers in the context of their compensation
program as the Committee considers these benefits to be important for each
employee.
The
Committee annually evaluates the Company’s performance, as well as the personal
performance of the Chief Executive Officer and the other officers of the
Company. After
reviewing the compensation policies and the results of our survey of peer
companies, the Committee has adopted guidelines for the determination of
executive compensation. Comparisons with peer groups include trends in revenues,
net income, dividends, share price and earnings per share evaluated on both
an
annual and five year basis. The
Committee believes that it has designed and implemented a compensation structure
that provides appropriate awards and incentives for the Company’s executive
officers as they work to sustain and improve the Company’s overall performance.
Compensation
will be determined by assigning a base salary at the beginning of each calendar
year and a bonus to be determined after year end based on the performance of
each officer. The maximum bonus amount awarded to each executive will not exceed
fifty percent of his or her base salary for the calendar year.
Role
of Executive Officers in Setting Executive Compensation
The
Compensation Committee approves all compensation awarded to ACPT’s named
executive officers. The President and Chief Executive Officer make
recommendations to the Committee regarding all compensation to be awarded to
other officers, which are generally accepted by the Committee. These
recommendations are based on salary information for comparable positions at
other similarly sized, publicly traded companies, as well as individual performance.
The Committee deliberates on and establishes the compensation of the President
and Chief Executive Officer in executive session of the Committee, without
the
presence of the President or the Chief Executive Officer.
Elements
of Compensation
Base
Salary
The
purpose of the base salary is to provide fair compensation for the
responsibilities of each office and the market value of each position. Base
salaries are determined annually by the performance in that position, by
comparison with the compensation paid by our peer group companies reflected
in
their proxy statements and by other recognized business indices for comparable
positions in the real estate industry. The Company believes that the retention
of key executives stabilizes the Company and is consistent with the long term
goals of the Company.
For
2006,
the Committee reviewed the relevant market data and considered individual
performance of the named executive officers, as well as certain other factors
described below, and determined that the base salaries should be adjusted as
follows:
|
Name
|
Title
|
2005
Base
Salary
|
2006
Base
Salary
|
%
Change
|
|
J.
Michael Wilson
|
Chairman
& Chief Executive Officer
|
$350,000
|
$375,000
|
7.14%
|
|
Edwin
L. Kelly
|
President
& Chief Operating Officer
|
$375,300
|
$400,300
|
6.66%
|
|
Carlos
R. Rodriguez
|
Executive
Vice President
|
$260,300
|
$300,300
|
15.37%
|
|
Cynthia
L. Hedrick
|
Executive
Vice President and Chief Financial Officer
|
$225,300
|
$250,300
|
11.10%
|
|
Jorge
Garcia Massuet
|
Vice
President
|
$190,300
|
$200,300
|
5.25%
|
The
Committee also considers the limited number of officers on staff and the wide
range of responsibilities for each of these officers in determining the base
salary adjustments. Mr. Wilson and Mr. Kelly received salary increases of 7.14%
and 6.66%, respectively. These increases reflect our understanding of economic
trends and the compensation of comparative executive positions. The Committee
also noted that Mr. Wilson serves as Chairman of the Board of Trustees without
additional compensation and does not participate in the Company’s retirement
plan. The base salary increase of 15.37% for Mr. Rodriguez represented an
incentive to retain his services for an additional year as a result of his
expressed desire to relocate. Ms. Hedrick’s salary was increase by 11.10% due to
increased responsibilities and time commitment required to satisfy the new
and
increasing SEC reporting requirements. The base salary adjustment of 5.25%
for
Jorge Garcia Massuet maintains his salary within the upper quartile of salaries
for comparable positions. The Committee’s decisions regarding base salaries do
not affect its decisions with regard to any other element of compensation (e.g.,
annual incentive amount or the amount of the long-term incentive
award).
Annual
Incentive Compensation
As
described above, the Company’s compensation philosophy is to have a significant
portion of the total compensation based on performance. The Committee has
adopted a benchmark of fifty percent of base salary that may be awarded as
an
annual incentive bonus. Fifty percent was selected as a maximum bonus because
the overall goal to enhance shareholder value is necessarily long range due
to
the process of land development. Annual bonuses are designed to reflect the
progress made on these goals and are not considered the primary factor in
determining total compensation.
Performance
based incentives reflect both business and individual accomplishment. Incentives
are tied to not only the Company’s operating results, but also to senior
management’s ability to manage the Company effectively and create long term
value for the shareholders. In this regard, assessment of performance should
take into account factors, such as the impact of economic and industry trends
in
the Company’s business.
Management
proposes annual performance goals which are reviewed by the Compensation
Committee and either modified or approved by the Committee. These goals are
divided into five major areas as follows:
The
goals
in this area include the development of long range strategic plans, monitoring
or modifying the company structure to maximize the benefit to shareholders,
minimizing tax impact to shareholders, and promoting public relations and the
company image.
The
goals
in this area include the development and sale of residential land and buildings,
leasing of commercial and residential units, and maximizing net operating income
from rental properties.
The
goals
in this area include obtaining the best available bank loans where necessary
for
construction or working capital, refinancing of investment properties to obtain
the best available long term rates and to provide cash for capital funding,
managing cash flow to provide for acquisitions and return to
shareholders.
The
goals
in this area include establishing a succession plan for key executives,
evaluating employee benefits, hiring new staff where a need has been identified,
training and expanding the responsibilities of employees.
The
goals
in this area include the development of new commercial and residential product,
acquisition of investment properties and land available for future development,
analyzing new opportunities and markets for the company.
While
the
Compensation Committee considered these performance factors in making individual
compensation decisions, the Committee applied its own business judgment
in making final determinations.
The
maximum bonus amount awarded to each executive will not exceed fifty percent
of
his or her base salary for the calendar year. For the year 2006, the total
bonus
awarded to the CEO and four other named executive officers represented 21.6%
of
total base salaries of these named executives, as detailed below on the Summary
Compensation Table.
Long-Term
Incentive Compensation
The
Company has established a Share Incentive Plan, the details of which are
discussed below under the heading “Share Incentive Plan.” The
Share
Incentive Plan authorizes the Compensation Committee to determine the exercise
price and manner of payment for Options and the base price for Share
Appreciation Rights (“SARs”). The Compensation Committee also is authorized to
determine the duration and vesting criteria for awards, including whether
vesting will be accelerated upon a change in control of ACPT. As noted above,
we
do not rely heavily on share based compensation in our compensation program.
For
2006, the Committee did not issue any equity compensation under the Share
Incentive Plan.
Other
Compensation
The
Committee believes that an appropriate level of retirement and health and
welfare benefits should be available to all employees, with no distinction
made
among any groups of employees other than as required by applicable tax rules.
ACPT has established a qualified defined contribution retirement plan (the
"Retirement Plan") for eligible employees of the Company. Employees are
generally eligible to participate when they complete one year of service.
Contributions from the Company to the plan are 5.7% of base salaries and wages
not in excess of the U.S. Social Security taxable wage base, and 11.4% of
salaries (limited to $220,000) that exceed that wage base. In addition, the
Retirement Plan contains a profit sharing provision allowing ACPT to award
annual cash bonuses to the officers and employees in reasonable amounts
reflecting their contributions to the Company. The awards are determined by
the
Compensation Committee. A portion of each bonus is contributed on behalf of
the
employee to the Retirement Plan. No annual cash bonuses were made under the
Retirement Plan in 2006. All of the named executive officers participate in
the
Retirement Plan except for the Chief Executive Officer.
Other
perquisites are provided to certain named executive officers, primarily the
payment of country club and other dues on behalf of the officers, use of Company
automobiles or car allowance and cellular phones. The Committee believes that
the perquisites offered represent market practice and serve to minimize
distractions and enable the named executive officers to efficiently and
effectively conduct business. The Committee also notes that these perquisites
do
not represent a significant portion of the named executive officers total
compensation.
Change
in Control Agreements
None
of
ACPT’s named executive officers have change of control agreements with the
Company.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee of the board of trustees of ACPT has reviewed and
discussed the Compensation Discussion and Analysis required by Item 402(b)
of
Regulation S-K with the Company’s management and, based on this review and
discussions, the Committee recommended to the Board of Trustees that the
Compensation Discussion and Analysis be included in ACPT’s proxy statement and
annual report on Form 10-K.
Compensation
Committee
Thomas
J.
Shafer, Committee Chairman
Thomas
S.
Condit
Antonio
Ginorio
T.
Michael Scott
SUMMARY
COMPENSATION TABLE
The
following table sets forth certain information concerning the compensation
of
the Chief Executive Officer and the four other most highly compensated executive
officers of the Company (the "Named Executive Officers") during the Company's
last fiscal year.
|
Name
& Principal Position
|
Year
|
Salary
($)
|
Annual
Bonus
($)
|
Stock
Awards
($)(1)
|
Other
($)(2)
|
Total
Compensation
($)
|
| |
|
|
|
|
|
|
|
J.
Michael Wilson (3)
|
2006
|
375,000
|
95,000
|
--
|
--
|
470,000
|
|
Chairman
& Chief Executive Officer
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Edwin
L. Kelly
|
2006
|
400,300
|
105,000
|
--
|
24,224
|
529,524
|
|
President
& Chief Operating Officer
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Carlos
R. Rodriguez
|
2006
|
300,300
|
50,000
|
(1,287)
|
25,569
|
374,582
|
|
Executive
Vice President
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Cynthia
L. Hedrick
|
2006
|
250,300
|
30,000
|
--
|
27,746
|
308,046
|
|
Executive
Vice President & Chief Financial Officer
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Jorge
Garcia Massuet
|
2006
|
200,300
|
50,000
|
(573)
|
18,230
|
267,957
|
|
Vice
President
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
(1)
|
No
stock awards were granted in 2006. However, the outstanding SARs
were
re-measured for financial reporting purposes and the amount included
above
reflects the change in fair value recorded during the period as required
by SFAS 123(R). The Company used the Black-Scholes model to value
its SARs
assuming a volatility of 44.72% and a risk free interest rate equally
to
the US Treasury Daily Yield Curve Rates as of December 31,
2006.
|
|
(2)
|
Detail
of Other: |
|
Name
|
Contribution
to
Qualified
Defined
Contribution
Plan
($)
|
Country
Club
and
Other
Dues
($)
|
Car
and
Other
Allowances
($)
|
Total
Other
($)
|
|
J.
Michael Wilson
|
--
|
--
|
--
|
--
|
|
Edwin
L. Kelly
|
19,711
|
2,700
|
1,813
|
24,224
|
|
Carlos
R. Rodriguez
|
19,711
|
5,858
|
--
|
25,569
|
|
Cynthia
L. Hedrick
|
19,711
|
2,035
|
6,000
|
27,746
|
|
Jorge
Garcia Massuet
|
17,430
|
800
|
--
|
18,230
|
| |
|
|
|
|
|
(3)
|
J.
Michael Wilson, the CEO of ACPT and President of IBC, is on the payroll
of
IBC. ACPT reimburses IBC for his services provided to
ACPT.
|
NARRATIVE
DISCLOSURE TO SUMMARY COMPENSATION TABLE
Edwin
L. Kelly
The
Company entered into an employment agreement dated as of August 25, 1998 with
Mr. Kelly, who serves as President and Chief Operating Officer of the Company
and shall have primary responsibility for managing the day to day affairs of
ACPT and its subsidiaries. Mr. Kelly’s initial base salary was $275,000, and is
subject to review and increase, but not decrease, at the discretion of the
Board
of Trustees of ACPT. As of December 31, 2006, Mr. Kelly’s base salary was
$400,000. The agreement provides for Mr. Kelly to be eligible for such bonus
and
other benefits as may be established and conferred upon comparable senior
executives of the Company. In addition to his annual salary and benefits, Mr.
Kelly is entitled to use of a company automobile, a cellular phone and payment
of membership dues in a country club.
The
agreement contains a customary non-disclosure provision effective during the
period of his employment and for a period of three years thereafter.
Carlos
R. Rodriguez
The
Company has executed an employment agreement dated as of April 20, 2006 with
Mr.
Rodriguez, who serves as president of the Company’s subsidiary, IGP Group, Corp.
The agreement provides for an initial term expiring June 30, 2007, subject
to
extension at the Company’s option. The Company opted to extend Mr. Rodriguez’s
contract for an additional six months to December 31, 2007. Unless the agreement
is earlier terminated, upon expiration of the term of the agreement, as
extended, Mr. Rodriguez has agreed to serve as a consultant, performing not
more
than 250 hours of services in any 12 month period, until December 31,
2010.
Mr.
Rodriguez’s initial base salary is $300,000, and is subject to review and
increase, but not decrease, in the discretion of the Board of Trustees. The
agreement provides for Mr. Rodriguez to be eligible for such bonus and other
benefits as may be established and conferred upon comparable senior executives
of the Company. Under the terms of the agreement, Mr. Rodriguez will be paid
an
annual fee of $100,000 for the period he serves as a consultant following
expiration of the term of his employment. Total consulting fees for the three
year period are estimated to be $300,000.
The
employment agreement contains a non-competition and non-solicitation provision
pursuant to which Mr. Rodriguez has agreed that he will not, until June 30,
2010, provide services to, or become engaged in any capacity, including as
a
principal, agent, shareholder (other than as a passive investor of less than
5%
of the outstanding stock of any public company), consultant, employee, lender
or
surety, in, any entity that competes with the Company or its subsidiaries in
Puerto Rico. Mr. Rodriguez has also agreed that, during this period, he will
not
hire or attempt to hire any person who, during the year prior to the termination
of Mr. Rodriguez’s employment with the Company, was serving as an employee,
director or trustee of the Company or any subsidiary, or otherwise solicit
or
induce any such person to terminate his or her service with the Company. The
non-competition and non-solicitation provisions terminate upon the termination
of the employment agreement by Mr. Rodriguez upon a breach by the Company of
its
obligations thereunder.
Jorge
Garcia Massuet
Mr. Garcia entered into an employment agreement with Interstate General
Properties Limited Partnership, S.E. (IGPLP), a wholly-owned subsidiary of
ACPT,
on May 12, 2004. Pursuant to this agreement, Mr. Garcia will serve as Vice
President of Construction of IGPLP and have primary responsibility for managing
the construction and development of the real estate assets of the Company in
Puerto Rico. Mr. Garcia will receive an annual base salary of $185,000,
which salary may be increased at the discretion of the Compensation Committee
of
the Board of Trustees of ACPT. In addition to his annual salary and
benefits, Mr. Garcia is entitled to use of a company automobile, a cellular
phone and payment of membership dues in a country club. Mr. Garcia’s
employment under this agreement shall continue until his death, resignation
or
termination by the Board of Trustees of ACPT.
The
agreement contains a customary non-disclosure provision effective during the
period of his employment and for a period of three years thereafter.
SHARE
INCENTIVE PLAN
Under
the
Share Incentive Plan, the Compensation Committee of the Board of Trustees may
grant to key employees the following types of Share-based incentive compensation
awards ("Awards"): (i) options to purchase a specified number of Common Shares
("Options"), (ii) Common Shares that vest upon the occurrence of certain vesting
criteria ("Restricted Shares"), or (iii) SARs that entitle the holder to receive
upon exercise an amount payable in cash, Common Shares or other property (or
any
combination of the foregoing) equal to the difference between the market value
of Common Shares and a base price fixed on the date of grant. A total of 208,000
Common Shares have been reserved for issuance under the Share Incentive Plan.
As
noted
earlier, no equity shares were issued in 2006 to the Named Executive Officers
during the same period. However, certain Named Executive Officers hold
previously issued SARs pursuant to ACPT's Share Incentive Plan. The following
table summarizes these SARs exercised during 2006 and presents the amount of
unexercised SARs held by the Named Executive Officers at fiscal year end. The
details relating to the SARs remaining outstanding and exercised as of and
for
the year ended December 31, 2006, are presented below.
OUTSTANDING
STOCK
APPRECATION RIGHTS AT FISCAL YEAR END
|
Name
|
Securities
Underlying
Unexercised
SARs
(#)
Exercisable
|
Securities
Underlying
Unexercised
SARs
(#)
Unexercisable
|
SARs
Exercise
Price
($)
|
SARs
Expiration
Date
|
| |
|
|
|
|
|
J.
Michael Wilson
|
--
|
--
|
--
|
--
|
|
Edwin
L. Kelly
|
--
|
--
|
--
|
--
|
|
Carlos
R. Rodriguez
|
10,000
|
--
|
40,000
|
4/30/2011
|
|
Cynthia
L. Hedrick
|
--
|
--
|
--
|
--
|
|
Jorge
Garcia Massuet
|
4,000
|
--
|
16,000
|
4/30/2011
|
STOCK
APPRECIATION RIGHTS
EXERCISES
|
Name
|
Number
of Shares Acquired on Exercise (#)(a)
|
Value
Realized on Exercise
($)
|
| |
|
|
|
J.
Michael Wilson
|
--
|
--
|
|
Edwin
L. Kelly
|
--
|
98,880
|
|
Carlos
R. Rodriguez
|
--
|
--
|
|
Cynthia
L. Hedrick
|
--
|
49,440
|
|
Jorge
Garcia Massuet
|
--
|
--
|
| (a) |
No
shares were issued upon exercise of SARs. The rights were satisfied
with
cash.
|
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
As
noted
above, none of ACPT’s named executive officers have change of control agreements
with the Company. However, the employment agreements noted above include certain
termination provisions as follows:
Edwin
L. Kelly
Mr.
Kelly’s employment agreement may be terminated by either party upon 90 days
prior written notice and terminates automatically upon the death or disability
of Mr. Kelly. If the agreement terminates due to death or disability, the
Company will pay Mr. Kelly or his estate the base salary for the six months
following such termination, estimated to be approximately $200,000 as of
December 31, 2006.
In
addition, the Company may terminate the employment agreement for “cause.” As
defined in the employment agreement, “cause” means the executive’s (i) willful,
reckless or grossly negligent inattention to his duties or responsibilities
to
the Company and its subsidiaries, (ii) unethical conduct relating to the
performance of his duties and responsibilities, (iii) repeated disregard for
the
written rules, policies and regulations of the Company, (iv) conviction of
a
felony or other criminal offense relating to fraud or theft, (v) repeated
failure or refusal to perform employment obligations under the agreement or
(vi)
breach of his obligations, including without limitation the non-compete
provision described below, under the employment agreement. In the event of
termination for cause, all salary and benefit payments cease
immediately.
If
the
Company terminates the employment agreement other than for cause, or if Mr.
Kelly terminates the agreement upon any breach by the Company of its obligations
thereunder, the Company will pay the executive’s base salary and benefits for a
period of 24 months following such termination, estimated to be approximately
$800,000 as of December 31, 2006.
Carlos
R. Rodriguez
Upon
expiration of the term of the agreement, as extended, Mr. Rodriguez has agreed
to serve as a consultant, performing not more than 250 hours of services in
any
12 month period, until December 31, 2010. Following expiration of the term
of
his employment, Mr. Rodriguez will be paid an annual fee of $100,000 for the
period he serves as a consultant. Total consulting fees for the three year
period are estimated to be $300,000.
Mr.
Rodriguez’s employment agreement may be terminated by either party upon 90 days
prior written notice and terminates automatically upon the death or disability
of Mr. Rodriguez. If the agreement terminates due to death or disability, the
Company will pay Mr. Rodriguez or his estate the base salary or consulting
fees
otherwise scheduled to be paid for the six months following such termination,
estimated to be approximately $150,000 as of December 31, 2006.
In
addition, the Company may terminate the employment agreement for “cause.” As
defined in the employment agreement, “cause” means the executive’s (i) willful,
reckless or grossly negligent inattention to his duties or responsibilities
to
the Company and its subsidiaries, (ii) unethical conduct relating to the
performance of his duties and responsibilities, (iii) repeated disregard for
the
written rules, policies and regulations of the Company, (iv) conviction of
a
felony or other criminal offense relating to fraud or theft, (v) repeated
failure or refusal to perform employment obligations under the agreement or
(vi)
breach of his obligations, including without limitation the non-compete
provision described below, under the employment agreement. In the event of
termination for cause, all salary and benefit payments cease
immediately.
If
the
Company terminates the employment agreement other than for cause, or if Mr.
Rodriguez terminates the agreement upon any breach by the Company of its
obligations thereunder, the Company will pay the executive’s base salary for the
remainder of the year of termination plus one additional year; provided that
if
Mr. Rodriguez terminates the agreement during the consultancy period, the
Company will pay all consultant fees for the remainder of the consultancy
period. Depending on which provision of the agreement applies, we estimate
that
the range of potential payment would be between $300,000 and $600,000 as of
December 31, 2006.
Jorge
Garcia Massuet
Mr.
Garcia’s employment agreement may be terminated by either party for any reason
upon 60 days prior written notice to the other. The employment agreement
automatically terminates upon the death or disability of Mr. Garcia, in which
case the Company shall pay to Mr. Garcia or his estate, a pro-rated portion
of
the base salary for a period of six months following the termination as well
as
benefits for that six-month period, estimated to be approximately $100,000
as of
December 31, 2006.
In
addition, the Company may terminate the employment agreement immediately for
“cause.” As defined in the employment agreement, “cause” means the
executive’s (i) willful, reckless or negligent inattention of the welfare of the
Company and its subsidiaries, (ii) unethical conduct, (iii) repeated disregard
for the written rules, policies and regulations of the Company, (iv) conviction
of a felony or other criminal offense relating to fraud or theft, or (v)
repeated failure or refusal to perform employment obligations under this
agreement. In the event of termination for cause, all salary and benefit
payments cease immediately.
Mr.
Garcia may terminate the employment agreement immediately upon any breach by
the
Company of any of its obligations under the agreement. In the event of a
termination by Mr. Garcia or termination of the employment agreement by the
Company for any reason other than cause, the Company shall pay to Mr. Garcia
his
base salary and benefits for a period of 24 months following such termination,
estimated to be approximately $400,000 as of December 31, 2006.
COMPENSATION
OF TRUSTEES
The
Company pays its Trustees who are not employees of the Company or any of its
affiliates fees for services as trustees. Trustees receive fees of $6,500 per
quarter plus $1,400 per Board meeting and an additional $500 fee for each
telephonic meeting. The Chairman of the Audit Committee receives an additional
$1,400 per meeting. The Trustees are also reimbursed for all reasonable expenses
incurred by them in attending Board and committee meetings.
The
following table summarizes Trustee compensation:
|
Name
|
Fees
Earned or
Paid
in Cash
($)
|
Stock
Awards
($)(A)
|
All
Other
Compensation
($)(B)
|
Total
($)
|
|
Thomas
J. Shafer
|
35,500
|
42,880
|
60,640
|
139,020
|
|
T.
Michael Scott
|
33,100
|
41,760
|
640
|
75,500
|
|
Antonio
Ginorio
|
42,500
|
41,480
|
640
|
84,620
|
|
Thomas
S. Condit
|
35,500
|
42,880
|
640
|
79,020
|
|
|
|
|
|
|
| (A) |
On
August 28, 2006, the Company awarded 8,000 shares to each of its
four
non-employee Trustees pursuant to the Trustee Share Incentive Plan.
The
shares vest annually at a rate of 1,600 per year, per Trustee, with
the
initial tranche of shares vesting immediately at the grant date.
In
accordance with SFAS 123(R), the company measured total compensation
cost
at the grant date fair value. The $42,880 included above for each
Trustee
represents the SFAS 123(R) expense recognized for financial reporting
purposes. In addition, Mssrs. Scott and Ginorio had 8,000 and 10,000,
respectively, vested SARs outstanding, which were re-measured for
financial reporting purposes and the amount included above reflects
the
change in fair value recorded during the period as required by SFAS
123(R).
|
| (B) |
Each
of the four trustees received $640 related to dividends paid on the
restricted share grant noted in (A) above. In addition, Mr. Shafer
received $60,000 related to a consulting agreement with the Company
which
is discussed further below under the heading “Compensation Committee
Interlocks and Insider
Participation”
|
Trustee
Share Incentive Plan.
The
Trustee Share Incentive Plan authorizes the Board of Trustees, in its
discretion, to grant to eligible trustees, awards of the same type and terms
as
the awards available under the Employee Share Incentive Plan discussed in this
Proxy Statement under "Executive Compensation". Only trustees who are not
employees of ACPT or any affiliated company are eligible to receive awards
under
the Trustee Share Incentive Plan. An aggregate of 52,000 Common Shares has
been
reserved for issuance under the Trustee Share Incentive Plan. During 2001,
Thomas J. Shafer, T. Michael Scott and Antonio Ginorio were awarded 10,000
SARs
each that entitle the holder to receive upon exercise an amount payable in
cash,
common shares or other property equal to the difference between the market
value
of common shares and a base price fixed on the date of grant. The base price
is
$4.00 per SAR, with the SARs vesting in equal annual installments for five
years
commencing in 2002. Also under this plan, 1,600 unregistered shares were awarded
to each non-employee Trustee in June 2005.
EQUITY
COMPENSATION PLAN INFORMATION
As
described previously, shares are available for issuance under the Employee
Share
Incentive Plan and the Trustee Share Incentive Plan. The following information
in the table below is as of December 31, 2006:
|
Equity
Compensation Plan Information
|
| |
|
Number
of Securities to be
|
|
Weighted-Average
Exercise
|
|
Number
of securities Remaining Available for
|
| |
|
Issued
Upon Exercise of
|
|
Price
of Outstanding Options,
|
Future
Issuance Under Equity Compensation
|
| |
|
Outstanding
Options, Warrants
|
Warrants
and Rights
|
|
Plans
(Excluding Securities Reflected in
|
|
Plan
Category
|
|
and
Rights
|
|
|
|
Column
(a)) (2)
|
| |
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity
compensation plans
|
|
|
|
|
|
|
|
Approved
by share holders
|
|
--
|
|
$
--
|
|
--
|
| |
|
|
|
|
|
|
|
Equity
compensation plan not
|
|
|
|
|
|
Approved
by shareholders - Employee Share Incentive
Plan
(1)
|
14,400
|
|
$4.00
|
|
193,600
|
| |
|
|
|
|
|
|
|
Equity
compensation plan not
|
|
|
|
|
|
|
|
Approved
by shareholders - Trustee Share Incentive
Plan
(1)
|
|
18,000
|
|
$4.00
|
|
400
|
| |
|
|
|
|
|
|
|
Total
|
|
32,400
|
|
$4.00
|
|
198,400
|
| |
|
|
|
|
|
|
|
(1)
ACPT maintains an employee share incentive plan and a trustee share
incentive plan ("Plans") that have a total of 32,400 outstanding
incentive
rights that do not bear an exercise price, but rather a base price
of $4
as of December 31, 2006. These rights entitle the holder to receive,
upon
exercise, an amount payable in cash, shares or other property (or
any
combination thereof) equal to the difference between the 20 day average
market value of the shares, which was $19.58 as of December 31, 2006,
and
the base price. Historically, the obligations have been satisfied
with
cash.
|
|
(2)
Shares remaining have been reduced, assuming SARs are converted for
shares, however, these obligations have historically been satisfied
with
cash. Shares remaining are also available for issuance of restricted
shares as provided for under the Incentive
Plans.
|
SHARE
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information with respect to beneficial
ownership of the Company's Common Shares by each of the Company's trustees,
the
Company's Chief Executive Officer, each of the four most highly compensated
executive officers who were serving as executive officers at the end of 2006,
other than the Company's Chief Executive Officer, all trustees and current
executive officers as a group and each person who is known by the Company to
beneficially own more than five percent of any class of the Company's voting
securities as of April 6, 2007. The Company has relied upon information supplied
by its officers, trustees, and certain shareholders and upon information
contained in filings with the SEC. Except as otherwise noted below, the address
of each person listed in the following table is: c/o American Community
Properties Trust, 222 Smallwood Village Center, St. Charles, MD
20602.
|
Name
|
|
Number
of Shares
of
Common Stock
Beneficially
Owned
|
|
Percent
of
All
Shares of
Common
Stock
|
| |
|
|
|
|
|
J.
Michael Wilson, (1)(2)(4)
|
|
107,747
|
|
2.06
|
|
Edwin
L. Kelly
|
|
54,607
|
|
1.04
|
|
Carlos
R. Rodriguez
|
|
--
|
|
--
|
|
Cynthia
L. Hedrick
|
|
--
|
|
--
|
|
Jorge
Garcia Massuet
|
|
--
|
|
--
|
|
Thomas
J. Shafer
|
|
14,600
|
|
*
|
|
T.
Michael Scott
|
|
11,600
|
|
*
|
|
Antonio
Ginorio
|
|
10,600
|
|
*
|
|
Thomas
S. Condit
|
|
9,600
|
|
*
|
|
All
trustees and executive officers of
ACPT
as a group (15 persons)(2)
|
|
214,854
|
|
4.11
|
|
The
Wilson Group (1)
222
Smallwood Village Center
St.
Charles, MD 20602
|
|
2,650,720
|
|
50.68
|
|
Interstate
Business Corporation (1)(3)(4)
222
Smallwood Village Center
St.
Charles, MD 20602
|
|
1,549,976
|
|
29.64
|
|
Wilson
Securities Corporation (1)(3)(4)
222
Smallwood Village Center
St.
Charles, MD 20602
|
|
545,673
|
|
10.43
|
|
Paul
J. Isaac (6)
75
Prospect Avenue
Larchmont,
New York 10538
|
|
510,998
|
|
9.77
|
|
Robert
Chapman (5)
Pacific
Corporate Towers, 13th
Floor
222
N. Sepulveda Blvd.
El
Segundo, CA 90245
|
|
483,200
|
|
9.23
|
*
Less
than 1%.
| (1) |
The
Wilson Group is comprised of James J. Wilson and his wife, Barbara
A.
Wilson; their six children, J. Michael Wilson (CEO and Chairman of
ACPT),
Thomas B. Wilson, Kevin J. Wilson, Elizabeth W. Weber, Mary P. Wilson
and
Brian J. Wilson; Interstate Business Corporation; Wilson Securities
Corporation; and Wilson Family Limited Partnership. The Wilson Group,
collectively, has voting and dispositive control through direct and
indirect ownership of 51% of ACPT's outstanding shares as reflected
in the
Wilson Group's Schedule 13D. The members of the group periodically
meet to
discuss matters relating to their ownership of ACPT and may from
time to
time act together with respect to the voting or disposition of common
shares. However, there is no formal arrangement among the members
of the
group in regard to their voting and dispositive voting rights and,
accordingly, the group members may not always act together with respect
to
the common shares.
|
| (2) |
Includes
21,350 shares attributable to ACPT shares held by the Wilson Family
Limited Partnership. J. Michael Wilson is a General Partner of the
Wilson
Family Limited Partnership. The management and control of the business
and
affairs of the partnership are vested jointly in the General Partners,
thus J. Michael Wilson shares voting and dispositive power over Common
Shares owned by the Wilson Family Limited
Partnership.
|
| (3) |
Interstate
Business Corporation and Wilson Securities Corporation are owned
by
certain members of the Wilson Family, including J. Michael
Wilson.
|
| (4) |
These
persons are members of the Wilson Group and their shares are also
included
with the Wilson Group.
|
| (5) |
Based
on information provided in December 2005, Robert Chapman, through
Chapman
Capital LLC, has beneficial ownership of 483,200 shares that are
directly
owned by: (i) Westlake Real Estate LLC (97,163 shares), (ii) Smallwood
Real Estate LLC (98,080 shares), (iii) Fairway Real Estate LLC (96,485
shares), (iv) Piney Reach Real Estate LLC (95,470 shares) and (v)
Wooded
Glen Real Estate LLC (96,002
shares).
|
| (6) |
Based
on a Schedule 13D/A filed December 6, 2005 and subsequent information
provided by the shareholder’s broker, Paul Isaac directly owns 73,450
shares and has beneficial ownership of 437,548 shares that are directly
owned by: (i) Isaac Brothers LLC (220,200 shares); (ii) Arbiter Partners
LP (115,698 shares); (iii) Karen Isaac (wife) and 3 children
(101,650).
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Payments
to IBC for Services Provided by J. Michael Wilson
J.
Michael Wilson, the Chief Executive Officer of ACPT and President of IBC, is
on
the payroll of IBC. During 2006, ACPT reimbursed IBC $470,000 for his services
provided to ACPT. IBC is owned by the Wilson Group, beneficial owners of 51%
of
ACPT’s outstanding shares.
Lease
Agreement
On
September 1, 2006, the Company, through one of its Puerto Rican subsidiaries,
Escorial Office Building I, Inc. (“Landlord”), executed a lease with Caribe
Waste Technologies, Inc. (“CWT”), a Company owned by the J. Michael Wilson
Family. The lease provides for 1,842 square feet of office space to be leased
by
CWT for five years at $19.00 per rentable square foot. The company provided
CWT
with an allowance of $9,000 in tenant improvements which are being amortized
over the life of the lease. In addition, CWT shall have the right to terminate
this lease at any time after one year, provided it gives Landlord written notice
six (6) months prior to termination. The lease agreement is unconditionally
guaranteed by IBC, a company owned by the J. Michael Wilson Family.
Property
Management Services
During
2006, ACPT provided management services to one multifamily apartment project
in
which ACPT is not the general partner and IBC or an IBC related entity holds
an
ownership interest. The management contract provided for fees of 4.5% of
collected rents. Total fees earned from this property in 2006 were $240,863.
Effective February 28, 2007, the Company’s management agreement with this
project was terminated upon the sale of the project to a third party.
Consulting
Agreement
American
Rental Management Company ("American Management"), a wholly owned subsidiary
of
ACPT, entered into a consulting and retirement compensation agreement with
IGC's
founder and Chief Executive Officer, James J. Wilson, effective October 5,
1998
(the “Consulting Agreement). The Consulting Agreement provides for annual cash
payments during the first two years of $500,000 and annual cash payments for
eight years thereafter of $200,000. However, if Mr. Wilson dies or ACPT is
sold
during the term of the Consulting Agreement, the agreement provides for a lump
sum payment equal to the lesser of $400,000 or the aggregate of annual payments
then payable under the agreement. During the Consulting Agreement term, Mr.
Wilson will remain available to provide consulting services requested from
time
to time by the Board of Trustees, including strategic planning and transaction
advisory services. Pursuant to the Consulting Agreement, American Rental
Management Company will reimburse the reasonable costs and expenses incurred
by
Mr. Wilson in providing requested consulting services. At the request of Mr.
Wilson, ACPT has been making payments under this Consulting Agreement to IGC.
Mr. Wilson is the father of J. Michael Wilson, Chairman and Chief Executive
Officer of the Company.
Compensation
Committee Interlocks and Insider Participation
None
of
the members of the Compensation Committee is or has been an officer or employee
of the Company. Thomas J. Shafer, Trustee, provides engineering and consulting
services to the Company pursuant to a consulting agreement between the Company
and Mr. Shafer. During 2006, Mr. Shafer was paid $5,000 per month for these
services. The agreement may be terminated by either party upon thirty days'
notice. The Board has determined that Mr. Shafer's provision of services
pursuant to his consulting agreement is not a "material" relationship
within the meaning of the American Stock Exchange's listing rights. There are
no
interlocking relationships as defined in the applicable SEC rules.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's trustees,
officers, and persons who beneficially own more than ten percent of ACPT's
Common Shares to file with the SEC initial reports of ownership and reports
of
changes in ownership of Common Stock and other equity securities of ACPT.
Trustees, officers and greater than ten percent shareholders are required by
SEC
regulation to furnish ACPT with copies of all Section 16(a) forms they
file.
Based
solely on review of the copies of these reports furnished to the Company during
and with respect to the fiscal year ended December 31, 2006 and written
representations that no other reports were required, the Company believes that
all Section 16(a) filing requirements were complied with during the fiscal
year
ended December 31, 2006.
ANNUAL
REPORT
The
Company's audited financial statements and notes thereto, including selected
financial data and management's discussion and analysis of financial condition
and results of operations for the year ended December 31, 2006, are included
in
the Company's Annual Report, which is being mailed to all shareholders with
this
proxy statement.
Additional
copies of the Annual Report and the Company's 2006 Form 10-K are available
without charge on the Company's website at www.acptrust.com or upon written
request to American Community Properties Trust, 222 Smallwood Village Center,
St. Charles, Maryland 20602, Attention: Director of Investor
Relations.
SHAREHOLDER
PROPOSALS AND ADVANCE NOTICE PROVISIONS
Proposals
for Inclusion in 2008 Proxy Materials
If
any
shareholder intends to submit a proposal for consideration at the Company's
2008
Annual Meeting of Shareholders, such proposal must be received by the Secretary
of the Company no later than December 21, 2007, in order to be considered for
inclusion in the proxy statement and form of proxy to be distributed by the
Board of Trustees in connection with that meeting. Shareholder proposals should
be submitted to American Community Properties Trust, Attn: Cynthia L. Hedrick,
Secretary, 222 Smallwood Village Center, St. Charles, Maryland, 20602. Such
a
proposal must contain a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting
and
any material interest in such business of such shareholder and of the beneficial
owner, if any, on whose behalf the proposal is made, and all other information
required to be presented pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended. In accordance with our Bylaws, the shareholder
and the beneficial owner, if any, on whose behalf the nomination or proposal
is
made also must provide (x) the name and address of such shareholder, as they
appear on the Company's books, and of such beneficial owner and (y) the number
of each class of shares of the Company which are owned beneficially and of
record by such shareholder and such beneficial owner.
Trustee
Nominations and Other Proposals to be Addressed at the 2008 Annual
Meeting
The
Bylaws of the Company provide a formal procedure for bringing business before
the annual meeting of shareholders that also applies to matters that
shareholders wish to present, but do not wish to be considered for inclusion
in
the proxy statement and form of proxy. A shareholder proposing to present a
matter before the 2008 annual meeting but not have the proposal considered
for
inclusion in the proxy materials is required to deliver notice thereof in
writing to the Secretary of the Company at the principal executive offices
of
the Company no earlier than March 10, 2008 and no later than April 11, 2008.
If
the date of the 2008 annual meeting is advanced by more than 30 days or delayed
by more than 60 days from the anniversary date of this year's annual meeting
of
shareholders, for the notice by the shareholder to be considered timely, it
must
be delivered to the Secretary of the Company on the tenth day following the
day
on which public announcement of the date of such meeting is first made. The
notice must contain (i) as to each person whom the shareholder proposes to
nominate for election or reelection as a trustee, all information relating
to
such person that is required to be disclosed in solicitations of proxies for
election of trustees, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's written consent to being named in
the
proxy statement
as a nominee and to serving as a trustee if elected); (ii) as to any other
business that the shareholder proposes to bring before the meeting, the same
type of information required for proposals to be considered for inclusion in
the
proxy materials under the prior paragraph.
Discretionary
Authority
Pursuant
to Rule 14a-4 under the Exchange Act, if a shareholder notifies the Company
after March 6, 2008 of an intent to present a proposal at the Company's 2008
annual meeting of shareholders (and for any reason the proposal is voted upon
at
that annual meeting), the Company's proxy holders will have the right to
exercise discretionary voting authority with respect to the proposal, if
presented at the meeting, without including information regarding the proposal
in its proxy materials.
Communicating
with the Board of Trustees
Any
shareholder who wishes to communicate to the entire Board of Trustees of the
Company, or to any individual trustee, whether or not in relation to a
shareholder nomination or a shareholder proposal, may send that communication
in
writing to the Secretary of the Company at the address provided in the paragraph
above and it will be forwarded to the appropriate member (s) of the Board.
All
written shareholder communications to the Board of Trustees will be forwarded
to
the designated recipients.
Other
Matters
The
Board
of Trustees does not know of any matters other than those described in this
proxy statement that will be presented for action at the meeting. If other
matters properly come before the meeting, the persons named as proxies intend
to
vote the shares they represent in accordance with their judgment.
Expenses
of Solicitation
The
cost
of proxy solicitation will be borne by the Company. In an effort to have as
large a representation at the meeting as possible, special solicitation of
proxies may, in certain instances, be made personally, or by telephone,
telegraph, or mail by one or more Company employees. The Company will also
reimburse brokers, banks, nominees and other fiduciaries for postage and
reasonable clerical expenses of forwarding the proxy materials to their
principals, the beneficial owners of the Company's shares. The Company
anticipates these fees and expenses will be approximately $6,500.
Cynthia
L. Hedrick
Secretary
AMERICAN
COMMUNITY PROPERTIES TRUST
Proxy
for
Meeting of ACPT Shareholders on June 6, 2007
The
undersigned, a shareholder of American Community Properties Trust, (the
"Company") hereby appoints Edwin L. Kelly and Cynthia L. Hedrick, and each
of
them individually, as Proxies to represent and vote all of the Company's Common
Shares held of record by the undersigned, each with full power of substitution,
at the Annual Meeting of Shareholders of the Company, to be held at the Holiday
Inn, James Craik Room, 45 St. Patrick's Drive, St. Charles, Maryland, on
Wednesday, June 6, 2007 at 10:00 a.m., EDT, or at any adjournment or
postponement thereof, as follows on the reverse side.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE BELOW. IF A CHOICE IS NOT INDICATED
WITH
RESPECT TO ITEM (1) BELOW, THIS PROXY WILL BE VOTED "FOR ALL NOMINEES". THIS
PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
| 1. |
To
elect two trustees of the Company for a three-year term to expire
at the
2010 Annual Meeting of
Shareholders.
|
Nominees:
(a) J. Michael Wilson and (b) Thomas J. Shafer
[
] FOR
ALL NOMINEES [
]
WITHHELD FROM ALL NOMINEES
[
] _______________________________________________
For
all
nominees except as noted above
| 2. |
In
their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
or
postponement thereof.
|
MARK
HERE
FOR ADDRESS CHANGE AND NOTE AT LEFT [
]
The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and accompanying Proxy Statement dated April 23, 2007.
Please
complete, sign, and date this proxy card and return it promptly in the enclosed
postage prepaid envelope or otherwise to P.O. Box 2637, Waldorf, Maryland
20604.
|
_______________________________________
Name
of Shareholder
|
______________________
Number
of Shares Held
|
|
_______________________________________
Signature
|
______________________,
2007
Date
|
|
_______________________________________
Title
or Authority, if applicable
|
|
|
Note:
|
If
Shares are registered in more than one name, the signatures of all
such
persons are required. A corporation should sign in its full corporate
name
by a duly authorized officer, giving his or her title. A partnership
should sign in the partnership name by an authorized person. Trustees,
guardians, executors and administrators should sign in their official
capacity, giving full title as
such.
|
PLEASE
COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT
PROMPTLY