American Campus Communities / Form DEF 14A
SCHEDULE
14A INFORMATION
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 [ ]
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the
appropriate box:
[
] Preliminary Proxy Statement
[
] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
[
] Definitive Additional Materials
[
] Soliciting Material under Rule 14a-12
AMERICAN
CAMPUS COMMUNITIES
Name
of
the Registrant as Specified In Its Charter
(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)(4) and
0-11.
1.
Title
of each class of securities to which transaction applies:
2.
Aggregate number of securities to which transaction applies:
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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fee paid:
[
] 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:
2.
Form,
Schedule or Registration Statement No.:
3.
Filing
Party:
4.
Date
Filed:
805
Las Cimas Parkway, Suite 400
Austin,
Texas 78746
April
6,
2006
Dear
Stockholder:
You
are
cordially invited to attend the Annual Meeting of Stockholders of American
Campus Communities, Inc. to be held at 10:00 a.m. (Central Time) on Thursday,
May 11, 2006, at The Driskill Hotel, 604 Brazos Street, Austin, Texas. A notice
of the meeting, a proxy and a proxy statement containing information about
the
matters to be acted upon are enclosed.
Following
the formal business session, there will be an opportunity for questions of
general interest to the stockholders.
It
is
important that your shares be represented and voted whether or not you plan
to
attend the Annual Meeting in person. If you choose not to attend and vote at
the
Annual Meeting in person, you may vote by completing and mailing the enclosed
proxy card. Voting by written proxy will ensure your shares are represented
at
the Annual Meeting. Please review the instructions on the proxy card or the
information forwarded by your bank, broker or other holder of record regarding
each of these voting options.
On
behalf
of the Board of Directors,
|
Sincerely, |
|
/s/ William C. Bayless Jr.
|
|
WILLIAM
C. BAYLESS JR. |
|
President
and
Chief
Executive Officer
|
American
Campus Communities, Inc.
805
Las Cimas Parkway, Suite 400
Austin,
Texas 78746
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 11, 2006
To
the
Holders of Common Stock of
AMERICAN
CAMPUS COMMUNITIES, INC.:
The
2006
Annual Meeting of Stockholders of American Campus Communities, Inc., a Maryland
corporation, will be held at The Driskill Hotel, 604 Brazos Street, Austin,
Texas on Thursday, May 11, 2006, at 10:00 a.m. (Central Time) to consider and
take action upon the following:
(i) |
To
elect nine directors to a one-year term of office expiring at the
2007
Annual Meeting of Stockholders or until their successors are duly
elected
and qualified;
|
(ii)
|
To
ratify Ernst & Young LLP as our independent auditors for 2006;
and
|
(iii)
|
To
consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements
thereof.
|
The
enclosed proxy card is solicited by our Board of Directors, which recommends
that our stockholders vote FOR the election of the nominees named therein.
The Audit Committee, which has the sole authority to retain our independent
auditors, recommends that you vote FOR the ratification of Ernst & Young as
our independent auditors for 2006. Please refer to the attached Proxy Statement
for further information with respect to the business to be transacted at the
Annual Meeting.
The
Board
of Directors has fixed the close of business on March 24, 2006 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting and at any adjournments or postponements thereof. Only
stockholders of record of our common stock at the close of business on that
date
will be entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.
Whether
or not you plan to attend the Annual Meeting in person, please mark, execute,
date and return the enclosed proxy in the postage-prepaid envelope provided.
Should you attend the Annual Meeting in person you may, if you wish, withdraw
your proxy and vote your shares in person.
|
By Order of the Board of
Directors, |
|
/s/ Brian B. Nickel
|
|
BRIAN
B. NICKEL |
|
Chief
Financial Officer and
Secretary
|
Austin,
Texas
April
6,
2006
TABLE
OF CONTENTS
Questions
and Answers
|
1
|
|
|
Election
of Directors
|
3
|
|
|
Board
of Directors
|
3
|
Board
Composition
|
3
|
Board
Committees
|
5
|
Consideration
of Director Nominees
|
6
|
|
|
Governance
of the Company
|
7
|
Board
Independence and Meetings
|
7
|
Director
Qualifications; Limits on Board Service
|
7
|
Term
Limits; Retirement Age
|
8
|
Board
and Committee Evaluations
|
8
|
Number
of Directors; Director Vacancies
|
8
|
Stockholder
Approval of Amendment of Our Charter and Bylaws and Transactions
Outside
the Ordinary Course of Business
|
8
|
Guidelines
on Governance and Codes of Ethics
|
9
|
Communication
with the Board of Directors
|
9
|
Stock
Ownership Guidelines
|
9
|
Management
Succession
|
10
|
Compensation
of Directors
|
10
|
|
|
Executive
and Senior Officers
|
11
|
Executive
Officers
|
11
|
Senior
Officers
|
11
|
|
|
Security
Ownership
|
13
|
|
|
Section
16(a) Beneficial Ownership Reporting Compliance
|
14
|
|
|
Compensation
Committee Report on Executive Compensation
|
15
|
|
|
Compensation
|
17
|
Executive
Officer Compensation
|
17
|
Common
Units / PIUs
|
17
|
Outperformance
Bonus Plan
|
18
|
Employment
Contracts, Termination of Employment and Change-In Control
Arrangements
|
18
|
Compensation
Committee Interlocks and Insider Participation
|
19
|
|
|
Certain
Relationships and Related Transactions
|
20
|
|
|
Common
Stock Performance Graph
|
21
|
|
|
Audit
Committee Information
|
22
|
Report
of the Audit Committee
|
22
|
Independent
Auditor Fees
|
23
|
Ratification
of the Selection of Independent Auditors
|
24
|
|
|
Stockholder
Proposals
|
24
|
|
|
2005
Annual Report
|
24
|
|
|
APPENDIX
A: Audit Committee Charter
|
|
American
Campus Communities, Inc.
805
Las Cimas Parkway, Suite 400
Austin,
Texas 78746
__________________________
PROXY
STATEMENT
__________________________
The
accompanying proxy card, to be mailed to stockholders together with the Notice
of Annual Meeting of Stockholders and this Proxy Statement on or about April
7,
2006, is solicited by the Board of Directors of American Campus Communities,
Inc. in connection with the Annual Meeting of Stockholders (“Annual Meeting”) to
be held on May 11, 2006.
QUESTIONS
AND ANSWERS
A:
|
Election
of nine directors to hold office for a one-year term and ratification
of
Ernst & Young LLP as our independent auditors for
2006.
|
Q:
|
Who
is entitled to vote?
|
A: |
Stockholders
as of the close of business on March 24, 2006 are entitled to vote
at the
Annual Meeting. Each share of common stock is entitled to one
vote.
|
A: |
Sign
and date each proxy card you receive and return it in the prepaid
envelope. If you do not mark any selections, the proxy holders
named on
your proxy card will vote your shares in favor of all of the director
nominees and in favor of the ratification of Ernst & Young LLP as our
independent auditors for 2006. You may change your vote or revoke
your
proxy at any time before the Annual Meeting by submitting written
notice
to our Secretary, submitting another proxy that is properly signed
and
later dated or voting in person at the Annual Meeting. In each
case, the
later submitted votes will be recorded and the earlier votes revoked.
If
you hold your shares in street name, please follow the procedures
required
by your bank, broker or other nominee to revoke a proxy. You should
contact that firm directly for more information on these
procedures.
|
|
In
their discretion, the proxy holders are authorized to vote on any
other
matters that may properly come before the Annual Meeting and at any
postponement or adjournment thereof. The Board knows of no other
items of
business that will be presented for consideration at the Annual Meeting
other than the proposals described in this Proxy Statement. In addition,
no stockholder proposals or nominations were received on a timely
basis,
so no such matters may be brought to a vote at the Annual
Meeting.
|
Q: |
Is
my vote confidential?
|
A: |
Yes.
Proxy cards, ballots and voting tabulations that identify individual
stockholders are confidential. Only the inspectors of election and
certain
employees associated with processing proxy cards and counting the
vote
have access to your card. Additionally, all comments directed to
management (whether written on the proxy card or elsewhere) will
remain
confidential, unless you ask that your name be
disclosed.
|
Q: |
Who
will count the vote?
|
A:
|
All
votes will be tabulated by the inspector of election appointed for
the
Annual Meeting, who will separately tabulate affirmative and negative
votes and withheld votes and abstentions. In order to be elected
as a
director, a nominee must receive a plurality of the votes cast at
the
Annual Meeting at which a quorum is present. In order for Ernst &
Young LLP to be ratified as our independent auditors for 2006, the
proposal must receive a majority of the votes cast at the Annual
Meeting
at which a quorum is present. For purposes of calculating votes cast
on a
proposal, abstentions and broker non-votes will not be counted as
votes
cast and will have no effect on the result of the vote on the proposal.
“Broker non-votes” are proxies from brokers or other nominees indicating
that such person has not received instructions from the beneficial
owner
or other person entitled to vote the shares that are the subject
of the
proxy on a particular matter with respect to which the broker or
other
nominee does not have discretionary voting
power.
|
Q:
|
What
constitutes a quorum?
|
A: |
As
of the record date for the Annual Meeting, 17,203,573 shares of common
stock were issued and outstanding. A majority of the outstanding
shares,
present or represented by proxy, constitutes a quorum for the transaction
of business at the Annual Meeting. Abstentions and broker non-votes
will
be counted in determining the presence of a
quorum.
|
Q:
|
Who
can attend the Annual
Meeting?
|
A: |
All
stockholders of record as of March 24, 2006 can
attend.
|
Q:
|
Who
pays for this proxy
solicitation?
|
A: |
We
will bear the entire cost of solicitation of proxies, including
preparation, assembly and mailing of this Proxy Statement, the proxy
card
and any additional information we furnish to stockholders. Copies
of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding shares of our common stock in
their
names that are beneficially owned by others to forward to these beneficial
owners. We may reimburse persons representing beneficial owners for
their
costs of forwarding the solicitation material to such beneficial
owners.
Original solicitation of proxies by mail may be supplemented by telephone,
facsimile, electronic mail or personal solicitation by our directors,
officers or employees. We will not pay any additional compensation
to
directors, officers or employees for such
services.
|
ELECTION
OF DIRECTORS
There
are
currently nine directors on the Board. The Nominating and Corporate Governance
Committee of the Board has selected each of the current directors as a nominee
for election at the Annual Meeting. Directors elected at the Annual Meeting
will
hold office for a one-year term.
All
nominees have consented to serve as directors. The Board has no reason to
believe that any of the nominees will be unable to act as director. However,
if
a director is unable to stand for re-election, the Board may either reduce
the
size of the Board or the Nominating and Corporate Governance Committee may
designate a substitute. If a substitute nominee is named, the proxies will
vote
for the election of the substitute.
Directors
are elected by a plurality of the votes cast at the Annual Meeting, which means
the nine nominees who receive the largest number of properly cast votes will
be
elected as directors. Each share of our common stock is entitled to one vote
for
each of the nine director nominees. Cumulative voting is not permitted. It
is
the intention of the proxy holders named on the enclosed proxy card to vote
the
proxies received by them for the election of the nominees named below unless
authorization to do so is withheld.
The
employment agreements with each of Messrs. Bayless and Nickel provide that
such
executive will be nominated as a director. See “Compensation - Employment
Contracts, Termination of Employment and Change-In-Control Arrangements.” In
connection with formation transactions consummated in connection with our
initial public offering, or IPO, we agreed to nominate Mr. Rechler to be a
director at the 2005 and 2006 Annual Meetings. In connection with our
acquisition of a portfolio of properties from entities affiliated with Royal
Properties, we agreed, for so long as recipients of units of limited partnership
interest in our operating partnership continue to beneficially own, on an as
if
converted basis, units comprising at least 10% of our then outstanding fully
diluted shares of common stock, to nominate Mr. Henneman as a director. For
a
further discussion of the agreements relating to Messrs. Rechler and Henneman,
see “Certain Relationships and Related Transactions.”
BOARD
OF DIRECTORS
Board
Composition
The
following pages contain information concerning the nominees, based upon
information furnished us by each nominee.
William
C. Bayless, Jr.
has been
our President and Chief Executive Officer since October 2003 and has served
on
our Board of Directors since August 2004. Mr. Bayless is a co-founder of our
company and participated in the founding of the student housing business of
our
predecessor entities. Mr. Bayless served as Executive Vice President and Chief
Operating Officer of our predecessor entities from July 1995 to September 2003,
where he directed all aspects of our predecessor entities’ business segments
including business development, development and construction management,
acquisitions and management services. He served as our Vice President of
Development from the inception of our predecessor entities in 1993 until July
1995. Mr. Bayless served as the Director of Operations for Century Development’s
student housing division from 1991 to 1993. From 1988 to 1991, Mr. Bayless
served as the Director of Marketing responsible for business development and
marketing for the student housing division of Cardinal Industries. Mr. Bayless
began his career in student housing with Allen & O’Hara where he held the
positions of Resident Assistant, Resident Manager and Area Marketing Coordinator
from 1984 to 1988. He received a B.S. in Business Administration from West
Virginia University. Age: 42.
R.D.
Burck
has been
our Independent Chairman of the Board since August 2004. Mr. Burck retired
from
the position of chancellor of The University of Texas System in 2002. He
currently serves as the first advisory director appointed by The University
of
Texas Investment Management Co., a non-profit corporation created by the
University of Texas Board of Regents to manage the investment of all assets
over
which the board has fiduciary responsibility. Mr. Burck joined the University
of
Texas System in 1988 to serve as the vice chancellor of business affairs and
then as executive vice chancellor for business affairs before being appointed
by
the Board of Regents as interim chancellor in June 2000 and chancellor six
months later in December 2000. Mr. Burck worked worldwide for Getty Oil Co.,
headquartered in Los Angeles, from 1955 to 1984. In 1979, he was involved in
the
creation
and
served as director, as well as vice president, of ESPN, the first cable TV
sports network. Mr. Burck is currently a member of the board of directors of
infiNET, Inc., Celo Data, Inc. and Frost Bank, a Senior Client Advocate for
Willis Group Holdings and the Chairman of the Advisory Board of Patton Medical
Devices, all of which are private companies. In addition, Mr. Burck serves
as a
member of the board of trustees of The Headliners Club. He also has been a
member of the board of the Texas Department of Information Resources, the board
of the Texas Life, Accident, Health and Hospital Service Insurance Guaranty
Association, the formal advisory committee of the Texas Higher Education
Coordinating Board, and the advisory council of the U.T. Austin College of
Natural Sciences. Mr. Burck is a former director of the National Conference
of
Christians and Jews, and a former member of the board of directors of the
American Cancer Society. Mr. Burck graduated from The University of Texas at
Austin with a B.B.A. He also attended the South Texas School of Law in Houston.
Age: 73.
G.
Steven Dawson
has
served on our Board of Directors since August 2004. He has primarily been a
private investor since 2003 and from 1990 to 2003 he served as the Chief
Financial Officer of Camden Property Trust (NYSE: CPT) and its predecessors.
Camden is a large multifamily REIT based in Houston with apartment operations,
construction and development activities throughout the United States. Mr. Dawson
serves on the boards of Trustreet Properties, Inc. (NYSE: TSY), the largest
restaurant REIT in the U.S.; Sunset Financial Resources, Inc. (NYSE: SFO),
a
mortgage REIT; AmREIT (AMEX: AMY), a retail property REIT; Desert Capital REIT,
Inc., an unlisted, public mortgage REIT; and Medical Properties Trust (NYSE:
MPW), a hospital/healthcare REIT. Mr. Dawson also serves on boards of various
private charities and civic organizations and has other private interests.
Mr.
Dawson holds a degree in business from Texas A&M University, where he serves
on the Real Estate Council of the Mays Graduate School of Business. Age:
48.
Cydney
C. Donnell
has
served on our Board of Directors since August 2004. She has been the Director
of
Real Estate Programs and an Executive Professor at the Mays Business School
of
Texas A&M University since March 2006, where she teaches in the Finance
Department. Ms. Donnell was an Executive Professor at the Mays School from
August 2004 to March 2006 and was a Visiting Lecturer from January 2004 to
August 2004. Ms. Donnell was formerly a principal and Managing Director of
European Investors/E.I.I. Realty Securities, Inc. Ms. Donnell served in various
capacities at EII and was Chair of the Investment Committee from 2002 to 2003,
the Head of the Real Estate Securities Group and Portfolio Manager from 1992
to
2002 and Vice-President and Analyst from 1986 to 1992. Ms. Donnell served on
the
Board of European Investors Holding Company from 1992 to 2005. Prior to joining
EII, she was a real estate lending officer at RepublicBanc Corporation in Dallas
from 1983 to 1986. Ms. Donnell currently serves on the Board of Directors of
Madison Harbor Balanced Strategies Inc., a closed-end investment fund registered
under the Investment Company Act of 1940. Ms. Donnell has served on the Board
and Institutional Advisory Committee of the National Association of Real Estate
Investment Trusts, or NAREIT. She has also served in various leadership
capacities for The Association of Former Students of Texas A&M University
and the Junior League of the City of New York. Ms. Donnell received a B.B.A.
from Texas A&M University and an M.B.A. from Southern Methodist University.
Age: 46.
Michael
J. Henneman
has
served on our Board of Directors since March 2006. Mr. Henneman is the Chairman
of the Board of Royal Properties and one of Royal Properties’ original partners
and continues to be a managing general partner in each of its partnerships.
He
is also an owner and the President and Chief Executive Officer of Henneman,
Raufeisen and Associates Inc., an Illinois-based architectural and engineering
firm, and a founder and managing partner of HRBR Design Build L.L.C. and HWS
Energy Partners L.L.C., affiliates of Henneman, Raufeisen and Associates Inc.
In
addition to his professional duties, Mr. Henneman has served as chairman of
the
Champaign County Chamber of Commerce and director of Bank Champaign and provided
additional leadership on numerous other boards and committees. He is an
affiliate of the American Institute of Architects and a member of the American
Consulting Engineering Council and the National Society of Professional
Engineers. Mr. Henneman received a B.S. in electrical engineering and an M.B.A.
from the University of Illinois. He is registered as a professional engineer
in
Illinois, Arizona, Texas, Missouri, Wisconsin and Indiana. Age: 53.
Edward
Lowenthal
has
served on our Board of Directors since August 2004. He has been President of
Ackerman Management LLC since April 2002, a private investment management and
advisory company with particular focus on real estate and other asset-based
investments. Mr. Lowenthal was a founder and served as the President of
Wellsford Real Properties, Inc. (AMEX: WRP) from 1997 until 2002, which manages
primarily multifamily and office properties as well as real estate debt held
directly and through joint ventures with institutional partners. He continues
to
serve as a director of Wellsford Real Properties, Inc. Mr. Lowenthal was a
Founder, Trustee and
President
of Wellsford Residential Property Trust, a NYSE listed multi-family real estate
investment trust, until May 1997 when it was merged into Equity Residential.
Mr.
Lowenthal has more than 30 years of real estate and merger and acquisition
experience in both public and private entities. Mr. Lowenthal serves as a
trustee of Omega Healthcare Investors, Inc. (NYSE: OHI), a healthcare REIT;
as a
director of Ark Restaurants (NASDAQ: ARKR), an owner and operator of
restaurants; as a director of Reis, Inc., a privately held real estate
information and analytics provider; and as a director of Desarrolladora Homex,
S.A. de C.V., a vertically integrated home development company focusing on
affordable entry level and middle income housing in Mexico. Mr. Lowenthal serves
as a trustee of The Manhattan School of Music and serves on its Finance and
Executive Committees and chairs its New Building Committee. He served as a
member of the Board of Governors of NAREIT from 1992-2000. He received a B.A.
degree from Case Western Reserve University and a J.D. degree from Georgetown
University Law Center, where he was an editor of the Georgetown University
Law
Journal. Age: 61.
Brian
B. Nickel
has
served on our Board of Directors since August 2004. He has served as our
Executive Vice President, Chief Financial Officer and Secretary since May 2005
and as our Executive Vice President, Chief Investment Officer and Secretary
from
October 2003 until May 2005. Mr. Nickel joined our predecessor entities in
June
1996 as Director of Business Development and has progressively contributed
to
our growth, serving in various capacities including Director of Acquisitions,
Vice President of Acquisitions, Vice President of On-campus Development, and
Senior Vice President of Development. Prior to joining us, Mr. Nickel held
positions in the investment banking firm of Kidder, Peabody Company and with
the
corporate finance group of LaSalle Partners. Mr. Nickel received a B.S. in
Economics from Northwestern University. Age: 33.
Scott
H. Rechler
has
served on our Board of Directors since August 2004. He has been Chief Executive
Officer and President of Reckson Associates Realty Corp. (NYSE: RA) since
December 2003, served as Co-Chief Executive Officer of Reckson from May 1999
until December 2003, serves as the Chairman of the Executive Committee of the
Board of Directors of Reckson and has served as a director of Reckson since
its
formation. He served as President of Reckson from February 1997 to May 2001
and
served as Chief Operating Officer of Reckson from its formation until May 1999.
Mr. Rechler is a member of the Board of Directors of the Long Island Children’s
Museum and is a member of the Board of Governors of NAREIT. Since 1997, Mr.
Rechler has served as Chief Executive Officer and Chairman of the Board of
Directors of Frontline Capital Group, and also served as the non-executive
Chairman of the Board of Directors and as former interim executive officer
of HQ
Global Holdings, Inc. Mr. Rechler is a graduate of Clark University and received
a Master’s Degree in Finance with a specialization in real estate from New York
University. Age: 38.
Winston
W. Walker
has
served on our Board of Directors since August 2004. He has been President and
Chief Executive Officer of Walker & Associates since 1993, which provides
strategic consultation primarily to clients in the healthcare and insurance
industries. From 1987 until October 1993, Mr. Walker served as the Chief
Executive Officer of Provident Life and Accident Insurance Company of America.
Mr. Walker is currently a member of the board of directors and the audit
committee chair of CBL & Associates Properties, Inc. (NYSE: CBL), a shopping
center REIT, and a member of the board of directors of MRI Medical, a private
company. Mr. Walker received a B.A. in Russian from Tulane University and a
Ph.D. in mathematics from the University of Georgia. Age: 62.
THE
BOARD RECOMMENDS THAT YOU VOTE FOR ALL OF THE NOMINEES LISTED
ABOVE.
Board
Committees
Audit
Committee.
The
current members of the Audit Committee are Messrs. Dawson (Chairman), Burck
and
Walker. Each member of the Audit Committee satisfies the requirements for
independence set forth in Rule 10A-3(b)(1) of the Securities Exchange Act of
1934 and the New York Stock Exchange’s listing standards. The Board of
Directors, after reviewing all of the applicable facts, circumstances and
attributes, has determined that Mr. Dawson is an “audit committee financial
expert,” as such term is defined in Item 401(h) of Regulation S-K.
The
Audit
Committee operates under a written charter, which was adopted on August 17,
2004
and was subsequently amended in August 2005. The Audit Committee reviews and
assesses the adequacy of its charter on an annual basis. A copy of the original
charter was included as Appendix A to the proxy statement relating to the 2005
Annual Meeting. A copy of the amended and restated charter is included herein
as
Appendix A and can also be viewed on our website at
www.americancampuscommunities.com. The Report of the Audit Committee is set
forth beginning on page 22 of this Proxy Statement.
The
Audit
Committee’s responsibilities include assisting the Board in overseeing the
integrity of our financial statements, compliance with legal and regulatory
requirements, the independent auditors’ qualifications and independence and the
performance of our independent auditors. In addition, the Audit Committee
reviews, as it deems appropriate, the adequacy of our systems of disclosure
controls and internal controls regarding financial reporting and accounting.
In
accordance with its charter, the Audit Committee has the sole authority to
appoint and replace the independent auditors, who report directly to the Audit
Committee, approve the engagement fee of the independent auditors and
pre-approve the audit services and any permitted non-audit services that the
independent auditors may provide to us. The Audit Committee met nine times
in
2005.
Executive
Committee.
Subject
to the supervision and oversight of the Board of Directors, the Executive
Committee, which consists of Mr. Bayless (Chairman), Ms. Donnell, Mr.
Nickel and Mr. Rechler, has the authority to approve, subject to certain
limitations, acquisitions, financings and dispositions and to authorize the
execution, subject to certain limitations, of certain contracts and agreements,
including those relating to the borrowing of money, and to exercise generally
all other powers of the Board, except for those that require action by all
directors or the non-employee directors under our articles of incorporation,
bylaws or applicable law. The Executive Committee met one time in
2005.
Compensation
Committee.
The
current members of the Compensation Committee are Messrs. Walker
(Chairman), Dawson and Lowenthal. Each member of the Compensation Committee
satisfies the requirements for independence set forth in the New York Stock
Exchange’s listing standards. The Compensation Committee operates under a
written charter, which is reviewed and assessed for adequacy on an annual basis.
A copy of the charter is available on our website at
www.americancampuscommunities.com. The Compensation Committee’s responsibilities
include overseeing our compensation programs and practices and determining
compensation for executive officers. The Compensation Committee met six times
in
2005.
Nominating
and Corporate Governance Committee.
The
current members of the Nominating and Corporate Governance Committee are
Mr. Lowenthal (Chairman), Mr. Burck and Ms. Donnell. Each member
of the Nominating and Corporate Governance Committee satisfies the requirements
for independence set forth in the New York Stock Exchange’s listing standards.
The Nominating and Corporate Governance Committee operates under a written
charter, which is reviewed and assessed for adequacy on an annual basis. A
copy
of the charter is available on our website at www.americancampuscommunities.com.
The responsibilities of the Nominating and Corporate Governance Committee
include assisting the Board in promoting our and our stockholders’ best
interests through the implementation of sound corporate governance principals
and practices. The Nominating and Corporate Governance Committee is also
responsible for (i) identifying individuals qualified to become Board
members, consistent with criteria approved by the Board, and recommending to
the
Board the director nominees for the next Annual Meeting, (ii) developing
and recommending to the Board a set of corporate governance principles
applicable to us, and (iii) overseeing the evaluation of the Board and
management. The Nominating and Corporate Governance Committee met four times
in
2005.
Consideration
of Director Nominees
The
Nominating and Corporate Governance Committee will consider appropriate nominees
for director whose names are submitted in writing by a holder of our common
stock. Nominations must be addressed to Chairman of the Nominating and Corporate
Governance Committee, c/o American Campus Communities, Inc., 805 Las Cimas
Parkway, Suite 400, Austin, Texas 78746, indicating the nominee’s qualification
and other relevant biographical information and providing confirmation of the
nominee’s consent to serve as director. In order to be considered for the next
annual election of directors, any such written request must comply with the
requirements set forth in our bylaws.
The
Chairman of the Board or the Chief Executive Officer or Board of Directors
may
call a special meeting of the stockholders. We will call a special meeting
of
stockholders upon the written request of the stockholders entitled to cast
not
less than a majority of all the votes entitled to be cast at such meeting,
provided that such written request complies with the requirements set forth
in
our bylaws.
The
committee considers nominees for the Board from any reasonable source, including
current Board members, stockholders or other persons. While the Nominating
and
Corporate Governance Committee has the ability to retain a third party to assist
in the nomination process, we have not paid a fee to any third party to identify
or assist in identifying or evaluating potential nominees.
Each
nominee for director at the 2006 Annual Meeting currently serves as a member
of
our Board.
GOVERNANCE
OF THE COMPANY
Board
Independence and Meetings
Board
Governance Documents.
The
Board maintains charters for all committees. In addition, the Board has adopted
a written set of corporate governance guidelines and a code of business conduct
and ethics. To view our committee charters, corporate governance guidelines
and
code of business conduct and ethics, please visit
www.americancampuscommunities.com. The Board has adopted and adheres to
corporate governance practices that the Board and senior management believe
promote the highest standards of integrity, are sound and represent best
practices. The Board of Directors periodically reviews these governance
practices, the rules and listing standards of the New York Stock Exchange and
SEC regulations, as well as best practices suggested by recognized governance
authorities.
Independence;
Lead Independent Director.
Currently, the Board has nine directors. The Board of Directors has determined,
after considering all of the relevant facts and circumstances, that five
directors (Mr. R.D. Burck, Mr. G. Steven Dawson,
Ms. Cydney C. Donnell, Mr. Edward Lowenthal and Mr.
Winston W. Walker) are independent, as “independence” is defined by
the New York Stock Exchange. This means that none of the independent directors
has any direct or indirect material relationship with us, either directly or
as
a partner, stockholder or officer of an organization that has a relationship
with us. As a result, the Board has a majority of independent directors on
the
Board as required by the listing requirements of the New York Stock Exchange.
Mr. R.D. Burck serves as our Lead Independent Director.
Executive
Sessions. Independent
directors have regularly scheduled executive sessions in which they meet without
the presence of management. These executive sessions typically occur after
each
regularly scheduled meeting of the Board of Directors. Any independent director
may request that an additional executive session be scheduled. The presiding
director of these executive sessions is Mr. Burck.
Meetings.
The
Board of Directors met seven times in 2005. All directors attended at least
75%
of the total number of meetings of the Board and committees, collectively,
on
which they served during 2005. All directors are encouraged to attend our Annual
Meeting. At the time of last year’s Annual Meeting, there were eight members of
the Board, seven of whom attended such meeting.
Director
Qualifications; Limits on Board Service
The
Nominating and Corporate Governance Committee reviews with the Board on an
annual basis the appropriate skills and characteristics required of Board
members in the context of the then-current composition of the Board. This
assessment includes, in addition to qualities of intellect, integrity and
judgment, business experience and knowledge, reputation and character, issues
of
diversity, relevant industry and trade association knowledge and participation,
accounting and financial expertise, public company experience, willingness
and
ability to devote the time and effort required to effectively serve on the
Board
and relevant legal and regulatory qualifications. The committee makes this
determination in the context of an assessment of the perceived needs of the
Board at that point in time. The committee evaluates all nominees for director
based on these criteria, including nominees that may be recommended by
stockholders.
The
Board
recognizes that its members benefit from service on the boards of other
companies. We encourage that service but also believe it is critical that
directors have the opportunity to dedicate sufficient time to their service
on
the Board. To that end, individuals who serve on more than six other public
company boards will not normally be
asked
to
join the Board unless the Board determines that such simultaneous service would
not impair the ability of such individual to effectively serve on the
Board.
Term
Limits; Retirement Age
The
Guidelines on Governance provide that, as a general matter, non-employee
directors will not stand for election to a new term of service at any Annual
Meeting following their 75th
birthday. However, the Board may approve exceptions to this practice when it
believes it is in our interest to do so. The Board does not believe it should
establish term limits for director service, instead preferring to rely upon
the
mandatory retirement age and the evaluation procedures described below as the
primary methods of ensuring that each director continues to act in a manner
consistent with the best interests of us, our stockholders and the Board. The
Board believes that term limits have the disadvantage of losing the contribution
of directors who have been able to develop, over a period of time, increasing
insight into our operations and, therefore, provide an increasing contribution
to the Board as a whole.
Board
and Committee Evaluations
Our
Corporate Governance Guidelines require the Board and each committee of the
Board to conduct an annual self-evaluation to determine whether the Board or
respective committee is functioning effectively. The reviews focus on the
performance of the entire Board or the respective committee. In connection
with
each annual performance evaluation, the Board or committee surveys and receives
comments from each director or committee member regarding an assessment of
the
Board’s or the committee's performance. The Board also reviews the Nominating
and Corporate Governance Committee’s recommendations concerning the performance
and effectiveness of the Board and each of its committees. The Nominating and
Corporate Governance Committee will also review the individual performance
of a
director as circumstances warrant.
Number
of Directors; Director Vacancies
Our
bylaws provide that at any regular meeting or at any special meeting called
for
that purpose, a majority of the entire Board of Directors may increase or
decrease the number of directors, provided that there cannot be less than three
directors. The tenure of office of a director will not be affected by any
decrease in the number of directors. Our bylaws also provide that if any or
all
the directors cease to be directors, any vacancy, other than vacancies that
result from an increase in the number of directors or from the removal of a
director, may in general be filled solely by a majority of the remaining
directors, even if the remaining directors do not constitute a quorum. Any
vacancy that results from an increase in the number of directors constituting
the entire Board of Directors may be filled by a majority of the entire Board
of
Directors. Any vacancy that results from the removal of a director may be filled
either by a majority of the remaining directors or our stockholders. Any
director elected to fill a vacancy will hold office until the next annual
election of directors and until a successor is elected and
qualified.
Stockholder
Approval of Amendment of Our Charter and Bylaws and Transactions Outside the
Ordinary Course of Business
Our
charter, including its provisions on removal of directors, may be amended by
the
affirmative vote of the holders of at least a majority of all of the votes
entitled to be cast on the matter. Our bylaws may be amended only by a majority
of our directors.
Our
charter provides that we may not merge with or into another entity, sell all
or
substantially all of our assets, engage in a share exchange or engage in similar
transactions outside the ordinary course of our business unless the transaction
or transactions are approved by the affirmative vote of the majority of all
of
the votes entitled to be cast on the matter, except if:
· |
the
merger will merge one of our 90% or more owned subsidiaries into
us
without amending our charter other than in limited respects and without
altering the contract rights of the stock of the subsidiary (in which
case
only the approval of our Board of Directors and the board of directors
of
the subsidiary is necessary);
|
· |
we
are the successor corporation in a share exchange (in which case
only the
approval of our Board of Directors is necessary);
or
|
· |
we
are the survivor in the merger and the merger does not change the
terms of
any class or series of our outstanding stock, or otherwise amend
our
charter, and the number of shares of stock of each class or series
outstanding immediately before the merger does not increase by more
than
20% of the number of shares of each such class or series of stock
that was
outstanding immediately prior to effectiveness of the merger (in
which
case only the approval of our Board of Directors is necessary).
|
Guidelines
on Governance and Codes of Ethics
During
2004, the Board adopted Guidelines on Governance to address significant
corporate governance issues. These guidelines provide a framework for our
corporate governance initiatives and cover a variety of topics, including the
role of our Board, Board selection and composition, Board committees, Board
operation and structure, Board orientation and evaluation, Board planning and
oversight functions and stock ownership guidelines. The Nominating and Corporate
Governance Committee is responsible for overseeing and reviewing the guidelines
and reporting and recommending to the Board any changes to the
guidelines.
Also
during 2004, the Board of Directors adopted a Code of Business Conduct and
Ethics, which is designed to help officers, managers and employees resolve
ethical issues in an increasingly complex business environment. It covers topics
such as reporting unethical or illegal behavior, compliance with law, share
trading, conflicts of interest, fair dealing, protection of our assets,
disclosure of proprietary information, internal controls, personal community
activities, business records, communication with external audiences and
obtaining assistance to help resolve ethical issues. The Board also adopted
a
Code of Ethical Conduct for Senior Financial Officers, which is applicable
to
our principal executive officer, principal financial officer, principal
accounting officer or controller and persons performing similar
functions.
You
may
obtain a copy of the committee charters, Guidelines on Governance, Code of
Business Conduct and Ethics and Code of Ethical Conduct for Senior Financial
Officers on our website at www.americancampuscommunities.com.
Communication
with the Board of Directors
Stockholders
who wish to communicate with any member of the Board of Directors may do so
in
writing to the following address:
Mr.
R. D.
Burck
Chairman
of the Board
c/o
American Campus Communities, Inc.
805
Las
Cimas Parkway, Suite 400
Austin,
Texas 78746
Mr. Burck will
review all correspondence addressed to the Board, or any individual Board
member, for any inappropriate correspondence and correspondence more suitably
directed to management. Mr. Burck will
summarize all correspondence not forwarded to the Board and make the
correspondence available to the Board for its review at the Board’s request.
Mr. Burck will
forward stockholder communications to the Board prior to the next regularly
scheduled meeting of the Board following the receipt of the communication as
appropriate.
Stock
Ownership Guidelines
To
further support our goal of achieving a strong link between stockholders and
directors, directors are encouraged to purchase and hold shares of our common
stock with a cost basis of at least $50,000 within three years of their election
to the Board.
Management
Succession
Pursuant
to our Guidelines on Governance, the Board has undertaken appropriate succession
planning for our chief executive officer and other executive officers, including
policies and principles for selection and performance review for the chief
executive officer, as well as policies regarding succession in case of emergency
or the retirement of the chief executive officer. The Nominating and Corporate
Governance Committee has reviewed our succession plans and reported on them
to
the Board.
Compensation
of Directors
Except
as
described below, each non-employee director receives an annual fee of $25,000
for services as a director, payable quarterly. The Chairman of the Board
receives an additional annual fee of $25,000 but is not entitled to receive
any
other committee meeting fees. Non-employee members of the Audit Committee,
Executive Committee, Nominating and Corporate Governance Committee and/or
Compensation Committee receive a fee of $2,000 for each committee meeting
attended in person or $1,000 for each committee meeting attended by conference,
telephone or similar communications equipment, except that in lieu of such
meeting fee for Audit Committee meetings, the chairman of the Audit Committee
receives a monthly fee of $2,000.
Our
2004
Incentive Award Plan (the “Plan”) provides for formula grants of restricted
stock units, or RSUs, to non-employee directors. On August 17, 2004, the closing
date of our IPO, except as described below, each non-employee member of the
Board on such date received $25,000 of RSUs, or 1,429 RSUs, valued at $17.50
per
RSU, the IPO price of our common stock. Thereafter, except as described below,
on the date of each Annual Meeting at which a non-employee director is
re-elected to the Board of Directors, such non-employee director receives
$25,000 of RSUs valued at 100% of the Fair Market Value (as defined in the
Plan)
of our common stock on the date of grant. Accordingly, on May 12, 2005, the
date
of our 2005 Annual Meeting, each non-employee member of the Board re-elected
on
such date received 1,205 RSUs, valued at $20.76 per RSU, the Fair Market Value
of our common stock on such date. Similarly, except as described below, each
non-employee director who is initially elected to the Board of Directors
receives $25,000 of RSUs on the date of such initial election and $25,000 of
RSUs on the date of each Annual Meeting at which the non-employee director
is
re-elected to the Board of Directors, in each case valued at 100% of the Fair
Market Value of our common stock on the date of grant. Shares underlying RSUs
granted to directors will be settled, in accordance with the terms of the Plan,
on the third anniversary of the date of the grant. Dividends accrue on the
RSUs
(without interest) equal to the cash dividends we pay on our common stock.
A
total of 14,375 RSUs have been issued, all of which are currently
outstanding.
Mr.
Rechler waived receipt of any director compensation until his re-election to
the
Board by our stockholders at the 2005 Annual Meeting. Mr. Henneman does not
receive any director compensation.
Members
of the Board of Directors are also reimbursed for travel expenses incurred
in
connection with our business, including attendance at meetings of the Board
and
its committees.
EXECUTIVE
AND SENIOR OFFICERS
Our
executive and senior officers are elected by the Board to serve at the pleasure
of the Board or until their successors are elected and qualified. The following
executive and senior officers are not directors. For information regarding
William C. Bayless, Jr., President and Chief Executive Officer, and Brian B.
Nickel, Executive Vice President, Chief Financial Officer and Secretary, see
“Board of Directors - Board Composition.”
Executive
Officers
Greg
A. Dowell
has
served as our Executive Vice President and Chief of Operations since May 2005
and served as our Senior Vice President and Chief of Operations from August
2004
until May 2005. Mr. Dowell joined our predecessor entities in October 2001
as
Senior Vice President - Management Services. Prior to this, Mr. Dowell was
employed by Century Development from 1991 to 2001 where he began his tenure
as
accountant and ultimately served as Senior Vice President over the operations
of
their 29 property student housing portfolio. Mr. Dowell received a B.S. in
Accounting from the University of Louisiana, Lafayette and is a Certified Public
Accountant. Age: 42.
James
C. Hopke, Jr.
has
served as our Executive Vice President and Chief Investment Officer since May
2005. From November 2002 to April 2005, Mr. Hopke served as Vice President,
Asset Management and Advisory Services for Wachovia Securities’ Real Estate
Capital Markets group. From February 2000 to November 2002, he served as Senior
Vice President, Acquisitions of our predecessor entities. Mr. Hopke was
previously a Vice President of JPI Development and Insignia Financial Group,
and
is a former MAI Member of The Appraisal Institute. Mr. Hopke received a B.S.
in
Administrative Management from Clemson University. Age: 44.
Senior
Officers
Steve
Crawford has
served as our Senior Vice President of Management Services since August
2005. From 1999 to 2005, he served as our Vice President of Management
Services. Mr. Crawford joined our predecessor entities in October 1997 as
a Regional Manager and has served us in increasing capacities. Mr.
Crawford began his career in student housing with Allen & O’Hara, Inc.,
where he held various student housing management positions from 1991 until
1997. Mr. Crawford graduated with a B.A. from the University of
California, Santa Barbara in 1991 and with a Masters of Public Administration
from California State University, San Diego in 1995. Age: 36.
Jorge
de Cárdenas has
served as our Senior Vice President of Information Technology since August
2005
and joined our predecessor entities in January 2004 as Vice President of
IT. Prior to joining American Campus, Mr. de Cárdenas served as Director
of Product Management for Emerging Technologies at Visa where he was responsible
for defining product strategies and delivering application services to a global
market. Mr. de Cárdenas began his career developing software for NASA at
Lockheed Engineering and Science. From 1991 to 1994, Mr. de Cardenas was a
co-founder and principal consultant of Everest Technologies, Inc., an Oil &
Gas IT consulting firm which was sold to SAIC, Inc. Between 1994 and 2000,
he
served in various capacities at technology startup companies including software
architect, support manager, professional services manager, product management,
and marketing. Mr. de Cárdenas received a B.S. in Computer Science with
specializations in Mathematics and Management from Texas A&M
University. Age: 42.
Jonathan
A. Graf
has
served as our Senior Vice President, Chief Accounting Officer and Treasurer
since May 2005, and served as our Vice President and Controller from October
2004 until May 2005. From September 1994 to September 2004, he served in various
capacities at Southern Union Company, most recently as Vice President and
Controller. From 1988 until 1994, he was an audit manager and information
systems auditor at Ernst & Young LLP. Mr. Graf received a B.A. in Accounting
from Texas A&M University and is a Certified Public Accountant. Age:
40.
James
R. Sholders
has
served as our Senior Vice President of Management Services since August 2005.
From June 2003 to 2005 he served as our Vice President of Management Services.
He joined us in 2001 as a Regional Manager. Mr. Sholders began his career in
student housing in 1989 as a Resident Assistant with Allen and O’Hara,
where
he
served in increasing capacities through 2001. Mr. Sholders received a B.S.
in
Secondary Education from West Virginia University and is a Certified Property
Manager. Age: 36.
William
W. Talbot
has
served as our Senior Vice President-Investments since August 2005. Mr.
Talbot joined us in August 2001 as Director of Acquisitions and has since served
in increasing capacities, including Director of Asset Management and Vice
President of Investments. Prior to joining us, Mr. Talbot was an Acquisitions
Analyst for Lend Lease Real Estate Investments, Inc. from 1997 until 2001,
where
he was involved in acquisitions on behalf of pension fund clients. Mr.
Talbot received a B.A. in Economics and Spanish from Vanderbilt University.
Age:
31.
Brian
N. Winger
has
served as our Senior Vice President-Development since October 2003. Mr. Winger
joined us in March 2000 as Director-On-Campus Development and has since served
in increasing capacities. Prior to joining us, Mr. Winger was the Chief
Operating Officer with Aspen Gold Development Company (a private real estate
developer) from 1999 to 2000. From 1996 to 1999, he was an endowment development
officer and ultimately served as General Counsel for Oklahoma Christian
University. From 1994 to 1996, Mr. Winger was a real estate analyst with Kabili
& Company. Mr. Winger received a J.D. from Oklahoma City University and a
B.S. in history/pre-law from Oklahoma Christian University in 1990. Mr. Winger
is a licensed attorney in Oklahoma and a real estate broker licensed to practice
in Oklahoma and Colorado. Age: 38.
Jason
R. Wills
has
served as our Senior Vice President of On-Campus Development since 2004. From
2003 to 2004, he served as our Senior Vice President of Marketing and
Development. Mr. Wills joined our predecessor entities in February 1997 as
Manager-Marketing and Leasing and has served us in increasing capacities. Mr.
Wills began his career in student housing with Century Development, where he
held the positions of Resident Assistant and Marketing Coordinator in 1993.
Mr.
Wills attended the University of Texas, Arlington, where he studied Journalism
and Marketing. Age: 34.
SECURITY
OWNERSHIP
The
following table sets forth the number of all shares of our common stock
beneficially owned by each director, by each of our named executive officers,
by
each person known to us to beneficially own 5% or more of our outstanding common
stock, and by all directors and executive officers as a group on March 24,
2006,
unless otherwise indicated in the footnotes. Each of the following persons
and
members of the group had sole voting and investment power with respect to the
shares shown unless otherwise indicated in the footnotes. Unless otherwise
indicated, the address of each named person is c/o American Campus Communities,
Inc., 805 Las Cimas Parkway, Suite 400, Austin, Texas 78746.
Name
of Beneficial Owner
|
|
Amount
and Nature of Beneficial Ownership Number of Shares Beneficially
Owned
|
|
Percent
of Class
|
|
Cohen
& Steers, Inc.
|
|
1,851,900
|
(1)
|
|
10.7
|
%
|
FMR
Corp.
|
|
1,428,620
|
(2)
|
|
8.3
|
%
|
Davis
Selected Advisors, L.P.
|
|
1,421,190
|
(3)
|
|
8.2
|
%
|
Deutsche
Bank AG
|
|
1,354,604
|
(4)
|
|
7.8
|
%
|
ING
Clarion Real Estate Securities
|
|
1,290,859
|
(5)
|
|
7.5
|
%
|
Columbia
Wanger Asset Management, L.P.
|
|
1,170,000
|
(6)
|
|
6.8
|
%
|
Morgan
Stanley
|
|
1,116,306
|
(7)
|
|
6.5
|
%
|
AMVESCAP
PLC
|
|
978,300
|
(8)
|
|
5.7
|
%
|
William C. Bayless
Jr.
|
|
73,786
|
(9)
|
|
*
|
|
R.D. Burck
|
|
3,000
|
|
|
*
|
|
G.
Steven Dawson
|
|
8,000
|
|
|
*
|
|
Cydney
C. Donnell
|
|
2,100
|
|
|
*
|
|
Michael
J. Henneman
|
|
543,668
|
(10)
|
|
3.0
|
%
|
Edward Lowenthal
|
|
15,000
|
|
|
*
|
|
Brian B. Nickel
|
|
45,997
|
(11)
|
|
*
|
|
Scott H. Rechler
|
|
57,000
|
|
|
*
|
|
Winston W. Walker
|
|
9,000
|
|
|
*
|
|
Greg
A. Dowell
|
|
18,250
|
(12)
|
|
*
|
|
James
C. Hopke, Jr.
|
|
3,194
|
(13)
|
|
*
|
|
All
directors and executive officers as a group (11 persons)
|
|
778,995
|
(14)
|
|
4.3
|
%
|
* Less
than
one percent.
(1)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of Cohen & Steers, Inc. is 280 Park Avenue,
10th
Floor, New York, New York 10017. Each of Cohen & Steers, Inc. and
Cohen & Steers Capital Management, Inc. beneficially owned an
aggregate of 1,851,900 shares and possessed sole voting power over
1,816,700 shares and sole dispositive power over 1,851,900
shares.
|
(2)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of FMR Corp. is 82 Devonshire Street, Boston, MA
02109.
FMR Corp. beneficially owned an aggregate of 1,428,620 shares and
possessed sole voting power over 122,000 shares and sole dispositive
power
over 1,428,620 shares.
|
(3)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of Davis Selected Advisors, L.P. is 2949 East Elvira
Road, Suite 101, Tucson, Arizona 85706. Davis Selected Advisors,
L.P.
beneficially owned an aggregate of 1,421,190 shares and possessed
sole
voting and sole dispositive power over 1,421,190
shares.
|
(4)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of Deutsche Bank AG is Taunusanlage 12, D-60325,
Frankfurt am Main, Federal Republic of Germany. Each of Deutsche
Bank AG
and RREEF America, L.L.C. beneficially owned an aggregate of 1,354,604
shares and possessed sole voting and sole
|
dispositive
power over 1,354,604 shares, and Deutsche
Asset Management, Inc. beneficially owned an aggregate of 6,700 shares and
possessed sole voting and sole dispositive power over 6,700
shares.
(5)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2004. The address of ING Clarion Real Estate Securities is 259 Radnor
Chester Road, Suite 205, Radnor, PA 19087. ING Clarion Real Estate
Securities beneficially owned an aggregate of 1,290,859 shares and
possessed sole voting and dispositive power over 1,123,959
shares.
|
(6)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of Columbia Wanger Asset Management, L.P. is 227
West
Monroe Street, Suite 3000, Chicago, Illinois 60606. Each of Columbia
Wanger Asset Management, L.P. and WAM Acquisition GP, Inc. beneficially
owned an aggregate of 1,170,000 shares and possessed sole voting
and sole
dispositive power over 1,170,000
shares.
|
(7)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of Morgan Stanley is 1585 Broadway, New York, NY
10036.
Morgan Stanley beneficially owned an aggregate of 1,116,306 shares,
possessed sole voting and sole dispositive power over 818,398 shares
and
shared voting and shared dispositive power over 348 shares, and Morgan
Stanley Investment Management Inc. beneficially owned an aggregate
of
1,025,720 shares and possessed sole voting and sole dispositive power
over
752,865 shares.
|
(8)
|
This
information is based upon information contained in filings made by
the
stockholder with the SEC reporting beneficial ownership as of December
31,
2005. The address of AMVESCAP PLC is 30 Finsbury Square, London EC2A
1AG,
England. AMVESCAP PLC beneficially owned an aggregate of 978,300
shares
and possessed sole voting and sole dispositive power over 978,300
shares.
|
(9)
|
Includes
23,238 restricted stock awards (“RSAs”) and 48,400 common units of limited
partnership interest in our operating partnership (“Common Units”). Such
Common Units are immediately redeemable for cash or, at our election,
an
equal number of shares of our common
stock.
|
(10)
|
Comprised
of 543,668 Common Units. Such Common Units are redeemable for cash
or, at
our election, an equal number or shares of our common stock after
March 1,
2007.
|
(11)
|
Includes
15,492 RSAs and 29,040 Common Units. Such Common Units are immediately
redeemable for cash or, at our election, an equal number of shares
of our
common stock.
|
(12)
|
Includes
6,587 RSAs and 10,890 Common Units. Such Common Units are immediately
redeemable for cash or, at our election, an equal number of shares
of our
common stock.
|
(13)
|
Includes
3,024 RSAs.
|
(14)
|
Includes
48,341 RSAs and 631,998 Common Units, 88,330 of which are immediately
redeemable and 543,668 of which are redeemable after March 1, 2007,
in
each case for cash or, at our election, an equal number of shares
of our
common stock.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based
solely on a review of Forms 3, 4 and 5 and amendments thereto furnished to
us
during or with respect to 2005, we believe that all SEC filing requirements
applicable to our directors, officers and beneficial owners of more than 10%
of
our common shares were complied with in 2005.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The
Compensation Committee administers our executive compensation program. The
Compensation Committee consists entirely of independent members of our
Board.
Objectives
An
important part of our results-oriented culture is to recognize and reward
executives based on their contributions to our success. Our executive
compensation program links incentive compensation to individual and corporate
results by rating achievement against financial and non-financial objectives.
Our compensation objectives are designed to make our performance expectations
clear to executives and other employees and to consistently measure and reward
performance. The key objectives of our executive compensation program are
to:
·
|
support
our business objectives to produce consistent earnings growth and
increase
stockholder value;
|
·
|
attract,
reward, motivate and retain talented
executives;
|
·
|
tie
executive compensation to our financial performance;
and
|
· |
link
executives’ goals with stockholders’
interests.
|
Types
of Compensation
The
principal components of our executive compensation program are base salary,
annual bonus, a portion of which may be received in restricted stock, and
long-term compensation, which may include grants of RSAs, profits interest
units
(“PIUs”) or outperformance awards based on past performance. When awarding
bonuses, the Compensation Committee uses specific qualitative and quantitative
measures and factors in assessing individual performance.
The
Compensation Committee believes that we are best served if executive
compensation is targeted so that, in a year that we achieve target performance
as determined by the Compensation Committee, compensation approximates the
median level within our industry. Base salaries, bonus compensation and
long-term compensation for our chief executive officer and other executive
officers are set by the Compensation Committee after considering recommendations
by management and factors such as the nature and responsibilities of each
executive’s position, the executive’s experience, the achievement of overall
performance, the achievement of individual goals and competitive industry
compensation.
In
conducting its review of management’s proposals, the Compensation Committee
considers comparable companies included in the equity REIT peer group used
for
the comparison of total stockholder return in the performance graph. The
Compensation Committee reviews salary information about comparable companies
contained in public disclosures made by companies in the real estate industry
and in published surveys. Our most direct competitors for executive talent
are
not necessarily identical to the REITs included in the peer group used in the
performance graph. Thus, the peer group of REITs in the compensation analysis
that was utilized by the Compensation Committee in analyzing management’s bonus
proposals is not identical to the peer group used in the performance
graph.
Base
Salary.
Members
of executive management receive base salaries determined by the
responsibilities, skills and experience related to their respective positions.
Other factors considered in base salary determinations are individual
performance, the success of each business unit in the individual’s area of
responsibility in achieving business plans, the competitiveness of the
executive’s total compensation and our ability to pay an appropriate and
competitive salary. Members of executive management are eligible for periodic
increases in their base salary as a result of individual and company
performance, their salary relative to the competitive market median level and
the time interval and any added responsibility since the last salary increase.
The Compensation Committee reviews and approves any such salary increases for
executive officers, including the Chief Executive Officer. In 2005, all of
the
named executive officers received a salary increase from 2004 due to these
factors.
Annual
Bonus.
The
Compensation Committee may award annual bonuses to executives, including the
Chief Executive Officer, for the achievement of specified goals, with varying
weightings applied to each area of goals based on the individual’s position.
Each year, the compensation committee sets the target and maximum bonus that
may
be
awarded to each executive officer if threshold goals are achieved. For 2005,
the
goals used in determining cash bonuses included:
·
|
the
development and implementation of a strategic
plan;
|
·
|
re-leasing
of our owned off-campus assets to achieve revenue growth
targets;
|
·
|
acquisitions
and commencement of development and construction of owned off-campus
assets to achieve asset growth
targets;
|
·
|
growth
of third party service revenues;
|
·
|
the
completion of recapitalization transactions to fund growth objectives;
and
|
·
|
the
effectiveness of management’s overall performance, with an emphasis on
growth in same store net operating
income.
|
The
weightings applicable to each goal are set in advance, and similar categories
of
goals will be used to determine bonuses with respect to 2006.
Long-Term
Compensation.
Because
today’s business decisions affect us over a number of years, long-term incentive
awards are tied to our performance and the long-term value of our stock. The
Compensation Committee’s policy is to make all awards of restricted shares, PIUs
or outperformance awards based on an officer’s actual current and past
performance rather than projected future performance. Grants of RSAs, PIUs
and
outperformance awards are an important part of our long-term compensation plan.
The Compensation Committee granted RSAs in January 2006 based on an assessment
of our performance and the performance of the executive’s department during
2005.
CEO
Performance Evaluation
In
determining the compensation of Mr. Bayless, the compensation committee applied
the same philosophy and procedures as it applies to other executive officers.
Under
Mr.
Bayless’s leadership, based on the goals described above, the assigned relative
weighting and the achievement level for each, our achievement level for 2005
exceeded expectations. For 2005, under Mr. Bayless’s leadership, we developed
and implemented a strategic plan, increased revenues by 44%, completed $120
million of acquisitions, entered into agreements to acquire $244 million in
additional acquisitions, commenced the development and construction of two
owned
off-campus properties, increased third party service revenues by 9%, completed
a
successful secondary offering of our common stock and increased operating income
by 43%. Based on these factors, the Compensation Committee granted Mr. Bayless
a
bonus of $175,000 and RSAs with a value on the date of grant of
$300,000.
Tax
Deductibility of Executive Compensation
Section 162(m)
of the Internal Revenue Code of 1986, as amended, disallows a tax deduction
for
any publicly held corporation for individual compensation of more than
$1.0 million in any taxable year to any named executive officers, other
than compensation that is performance-based under a plan that is approved by
the
stockholders and that meets certain other technical requirements. Our
Compensation Committee’s policy with respect to Section 162(m) is to make
every reasonable effort to ensure that compensation is deductible to the extent
permitted while simultaneously providing executives with appropriate rewards
for
their performance.
This
section of the proxy statement is not deemed “filed” with the SEC and is not
incorporated by reference into our Annual Report on Form 10-K.
This
executive officer compensation report is given by the following members of
the
Compensation Committee:
Winston W. Walker,
Chairman
G.
Steven Dawson
Edward Lowenthal
COMPENSATION
Executive
Officer Compensation
The
following table sets forth information regarding the compensation awarded for
the past three fiscal years (i) to our Chief Executive Officer and (ii) to
each of our three other executive officers at December 31, 2005. We did not
grant any options, stock appreciation rights or long-term incentive plan awards
during 2005 and there were no options or stock appreciation rights exercised
during 2005 or outstanding at December 31, 2005.
Summary
Compensation Table
|
|
Annual
Compensation
|
|
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Other
Annual
Compensation
(1)
|
Long-Term
Compensation:
RSAs
(2)
|
All
Other
Compensation
(3)
|
|
|
|
|
|
|
|
William
C. Bayless, Jr.
|
2005
|
$
300,000
|
$
175,000
|
$
18,802
|
$
300,000
|
$
2,100
|
Chief
Executive Officer and
|
2004
|
253,333
|
130,000
|
--
|
300,000
|
--
|
President
|
2003
|
210,000
|
80,000
|
--
|
--
|
--
|
Brian
B. Nickel
|
2005
|
250,000
|
125,000
|
12,535
|
200,000
|
--
|
Executive
Vice President, Chief
|
2004
|
210,333
|
115,000
|
--
|
200,000
|
--
|
Financial
Officer and Secretary
|
2003
|
175,000
|
100,000
|
--
|
--
|
--
|
Greg
A. Dowell
|
2005
|
170,000
|
87,500
|
3,134
|
125,000
|
2,069
|
Executive
Vice President and
|
2004
|
130,000
|
40,000
|
--
|
50,000
|
--
|
Chief
of Operations
|
2003
|
124,000
|
25,000
|
--
|
--
|
--
|
James
C. Hopke, Jr. (4)
|
2005
|
116,667
|
60,000
|
8,671
|
75,000
|
28,910
|
Executive
Vice President and
|
2004
|
--
|
--
|
--
|
--
|
--
|
Chief
Investment Officer
|
2003
|
--
|
--
|
--
|
--
|
--
|
(1)
|
Represents
the amount of cash dividends paid on RSAs for Messrs. Bayless, Nickel
and
Dowell. The amount for Mr. Hopke represents tax reimbursement payments
for
relocation expenses.
|
(2)
|
Amounts
for 2005 represent the value of RSAs as of January 31, 2006, the
date of
grant. Amounts for 2004 represent the value of RSAs as of February
16,
2005, the date of grant. All awards vest in five equal annual installments
beginning on February 28 of the year following the date of grant,
except
for the 2004 grant to Mr. Dowell, which vests in three equal annual
installments beginning on February 28, 2006. Dividends on RSAs are
paid at
the same rate and time as paid to holders of our common
stock.
|
(3)
|
Amounts
consist of an employer matching contribution under our 401(k) plan
for
Messrs. Bayless and Dowell and $1,365 of a matching contribution
under our
401(k) plan and $27,545 of reimbursed relocation expenses for Mr.
Hopke.
|
(4)
|
Mr.
Hopke joined us in May 2005 and as such his salary represents a
partial
year of service.
|
Common
Units / PIUs
PIUs
were
issued to certain executive and senior officers upon consummation of the IPO.
In
connection with our equity offering in July 2005, all 121,000 PIUs were
converted to Common Units. Each Common Unit is deemed equivalent to one share
of
our common stock, and Common Units are entitled to the same quarterly per unit
distributions as holders of our common stock. This treatment with respect to
quarterly distributions is similar to the treatment of RSAs and RSUs.
Common
Units are redeemable for cash based upon the fair market value of an equivalent
number of shares of our common stock, or, at our election, an equal number
of
shares of common stock. Unlike RSUs, the grant or vesting of PIUs was not a
taxable transaction to the recipients. Therefore, a recipient who wishes to
hold
incentive equity awards for the long term may be able to do so more efficiently
with PIUs and ultimately enjoy a greater after-tax return when disposing of
them.
Outperformance
Bonus Plan
Upon
the
consummation of the IPO, we granted a special award of a bonus pool equal to
the
value on the date of vesting of 367,682 shares of common stock to executive
officers and certain key employees, subject to continued service and attainment
of certain performance measures. No dividends or dividend equivalent payments
accrue with respect to the shares underlying this bonus pool.
Vesting
of the awards will occur on August 17, 2007, the third anniversary of the IPO,
provided that the employees have maintained continued service and that at least
one performance measure, as outlined in the plan, has been achieved. These
performance measures are: (i) a total return on our common stock of at least
25%
per annum from the IPO date through the vesting date (the “Primary Performance
Measure”), or (ii) a total return on our common stock of at least 12% per annum
from the IPO date through the vesting date, and such return is at or above
the
60th
percentile of the total return achieved by “peer” companies during the same
period (the “Alternate Performance Measure”).
Payments
of vested awards will be made within 120 days of vesting. The Compensation
Committee may, in its sole discretion, elect to pay such an award through cash,
the issuance of shares of common stock, PIUs or similar securities (provided
that such issuance will not result in any recognition of taxable income by
the
recipient), valued at the date of issuance.
Any
individual award that becomes unvested as a result of an early termination
of
employment will be reallocated among the remaining recipients. In the event
of a
change of control, or termination of employment other than for “cause” or by a
designated recipient for “good reason,” the award will be fully vested at that
time (with the value of the bonus pool to be determined at that time for any
affected award recipient) if the Primary Performance Measure has been achieved.
Otherwise, a portion (but not less than 50%) of the special award (equal to
the
portion of the initial three-year vesting period that has elapsed) will be
vested at that time if the Alternate Performance Measure has been
achieved.
Employment
Contracts, Termination of Employment and Change-In-Control
Arrangements
As
of
December 31, 2005, we had employment agreements in effect with each of our
executive officers (Messrs. Bayless, Nickel, Dowell and Hopke) that provide
that
during the term of the respective agreement, the executive’s base salary will
not be reduced and that the executive will remain eligible for participation
in
our executive compensation and benefit programs. The employment agreements
with
our executive officers provide for Mr. Bayless to serve as a member of the
Board
and as our President and Chief Executive Officer, Mr. Nickel to serve as a
member of the Board and our Executive Vice President, Chief Financial Officer
and Secretary, Mr. Dowell to serve as our Executive Vice President and Chief
of
Operations and Mr. Hopke to serve as our Executive Vice President and Chief
Investment Officer.
The
employment agreements provide for the following:
·
|
an
annual base salary of $300,000 for Mr. Bayless, $250,000 for Mr.
Nickel
and $175,000 for each of Messrs. Dowell and Hopke, subject in each
case to
increases in accordance with our normal executive compensation
practices;
|
·
|
eligibility
for annual cash bonus awards determined by the Compensation Committee
or
in the event that we have a formal annual bonus plan for other senior
executives, the bonus will be determined in accordance with the terms
of
the bonus plan on the same basis as other senior
|
executives
(with appropriate adjustments due to title
and salary), and in the case of Mr. Hopke, we agreed to pay him an annual bonus
of at least $60,000 in cash in respect to the 2005 fiscal year;
·
|
in
the case of Messrs. Bayless and Nickel, a grant of 48,400 and 29,040
PIUs,
respectively, representing a 0.40% and 0.24% limited partnership
interest
in our operating partnership, respectively, valued at $847,000 and
$508,200, respectively, based on the value of our common stock at
the
consummation of the IPO, each of which was immediately
vested;
|
·
|
an
outperformance award to Messrs. Bayless, Nickel, Dowell and Hopke
of
110,305 shares, 66,183 shares, 29,415 shares and 20,000 shares,
respectively, subject to the terms and conditions of our Outperformance
Bonus Program; and
|
· |
participation
in other employee benefit plans applicable generally to our
executives.
|
Each
employment agreement provides that the respective executive may terminate the
agreement at any time by delivering written notice of termination to us at
least
30 days prior to the effective date of such termination, in which case he will
be entitled to payment of his base salary through the effective date of
termination, plus all other benefits to which he has a vested right at that
time. Additionally, each employment agreement provides that he may terminate
the
agreement for “good reason,” which is defined in the employment agreement, in
general, as any substantial change by us in the nature of his employment without
his express written consent; the requirement that he be based at a location
at
least 50 miles further than from his current principal location of employment;
our failure to obtain a satisfactory agreement from any successor to assume
the
terms of the employment agreement; and our breach of any material provision
of
the employment agreement.
The
employment agreements provide that, if we terminate an executive’s employment
without “cause” or the executive terminates his employment for “good reason”
(each as defined in the applicable employment agreement), the executive will
be
entitled to the following payments and benefits, subject to his execution and
non-revocation of a general release of claims:
· |
a
cash payment equal to 299% for Mr. Bayless, 200% for Mr. Nickel and
100%
for Messrs. Dowell and Hopke, in each case times the sum of his
then-current annual base salary plus the average annual bonus paid
or
payable in respect of the last prior three years payable over the
remaining term of his non-competition
agreement;
|
·
|
his
prorated annual bonus for the year in which the termination
occurs;
|
·
|
health
benefits for two years following the executive’s termination of employment
at the same cost to the executive as in effect immediately preceding
such
termination, subject to reduction to the extent that the executive
receives comparable benefits from a subsequent employer;
and
|
· |
excise
tax equalization payments.
|
Additionally,
we have entered into non-competition agreements with Messrs. Bayless, Nickel,
Dowell and Hopke in which the executive agreed to comply with all obligations
under the non-competition agreement and further agreed that the non-competition
agreement will survive any termination of the respective employment agreement
or
the executive’s employment, or subsequent service relationship with us, if
any.
Compensation
Committee Interlocks and Insider Participation
No
director who served on our Compensation Committee during 2005 was either an
officer or employee during 2005, a former officer or was party to any material
transaction described below in the “Certain Relationships and Related
Transactions” section.
No
executive officer served as a member of the compensation or similar committee
or
board of directors of any entity whose members served on our Compensation
Committee.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Prior
to
the formation transactions consummated immediately before our IPO, most of
the
interests in our off-campus properties were owned by RAP Student Housing
Properties, LLC (“RAPSH”), which was wholly-owned by Reckson Asset Partners, LLC
(“RAP”). Reckson Strategic Venture Partners, LLC (“RSVP”) owned a 67% interest
in RAP and, prior to the IPO, was our sole stockholder. Pursuant to agreement
entered into in connection with the formation transactions, in 2005, we paid
RAP
and RSVP an aggregate of approximately $1.7 million relating to a guarantee
fee
and the distribution of insurance proceeds from a fire that occurred at an
off-campus student housing property. Scott H. Rechler is one of our
directors and is the Chief Executive Officer and President of Reckson Associates
Realty Corp. (“Reckson”) and the Chief Executive Officer and sole director of
FrontLine Capital Group. FrontLine is the indirect parent of RSVP. Reckson
is
the indirect non-controlling minority owner of RAP and the largest creditor
of
FrontLine. In 2002, FrontLine filed for protection from creditors under the
federal bankruptcy laws. In connection with the formation transaction, we also
agreed to nominate Mr. Rechler for reelection as director at the 2005 and 2006
Annual Meetings.
On
December 2, 2005, we entered into a contribution and sale agreement with
affiliates of Royal Properties to acquire a 13-property portfolio. The closing
of the transactions contemplated by the contribution and sale agreement occurred
on March 1, 2006, at which time Mr. Henneman received 543,668 Common Units
valued at $23.50 per unit. These units are redeemable after March 1, 2007 into
an equal number of shares of our common stock or cash, at our election. The
contribution and sale agreement provides, among other things, that Michael
J.
Henneman, a principal of the Royal Properties entities, will be appointed to
our
Board of Directors at closing and that we will cause Mr. Henneman to be
nominated for reelection so long as recipients of units of limited partnership
interest in our operating partnership issued at closing continue to beneficially
own, on an as if converted basis, units comprising at least 10% of the then
outstanding fully diluted shares of our common stock. The contribution and
sale
agreement also provides that, in his capacity as a limited partner of our
operating partnership, Mr. Henneman will enter into the First Amendment to
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership that, among other things, sets forth the rights and preferences
of
such units; a Registration Rights Agreement pursuant to which we will register
shares into which such units are exchangeable; and a Tax Matters Agreement
that,
among other things, will prevent the operating partnership from selling the
properties comprising the Royal Portfolio under certain circumstances if the
limited partners would recognize a taxable gain in such a
disposition.
COMMON
STOCK PERFORMANCE GRAPH
The
following performance graph compares the cumulative total return on our common
stock with the cumulative total return of the Standard & Poor’s 500 Stock
Index and The MSCI US REIT Index for the period August 17, 2004, the date
of our IPO, through December 31, 2005. The performance graph assumes an
investment of $100 on August 17, 2004 in each of us and the two previously
mentioned indices, and the reinvestment of any dividends. The performance
reflected in the graph is not necessarily indicative of future
performance.
AUDIT
COMMITTEE INFORMATION
Report
of the Audit Committee
The
Audit
Committee, on behalf of the Board of Directors, serves as an independent and
objective party to monitor our financial reporting process and internal control
system, and to review and appraise the audit efforts of our independent
auditors. The Audit Committee performs these oversight responsibilities in
accordance with its Audit Committee Charter (as amended and restated in August
2005), a copy of which is included herein as Appendix A.
Management
has the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed with management the audited
financial statements in our Annual Report, and discussed with management the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the
financial statements. The Audit Committee also reviewed and discussed our
earnings releases with management.
During
2005, management worked to establish, evaluate and maintain the Company’s system
of internal controls over financial reporting in response to the requirements
set forth in Section 404 of the Sarbanes-Oxley Act and related regulations.
The
Audit Committee was kept informed of the progress of management on this
evaluation and provided oversight and advice to management during the
process.
Ernst &
Young LLP, our independent auditors, are responsible for auditing our financial
statements and for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles. The Audit
Committee reviewed and discussed with the independent auditors their judgments
as to the quality, not just the acceptability, of our accounting principles
and
such other matters as are required to be discussed with the Audit Committee
under Statement on Auditing Standards No. 61, as currently in effect. The
Audit Committee also received the written disclosures and the letter from the
independent auditors required by the Independence Standards Board Standard
No. 1, as currently in effect, discussed with the independent auditors the
auditors’ independence from management and us and considered the compatibility
of non-audit services with the auditors’ independence.
The
Audit
Committee discussed with the independent auditors the overall scope and plans
for their audit. The Audit Committee meets at least quarterly with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of our internal controls and
the overall quality of our financial reporting. The Audit Committee also meets
with management and the independent auditors prior to the filing of the
quarterly reports on Form 10-Q with the SEC and release to the public of
its quarterly and year-end financial results to, among other things, review
and
discuss such filings, review any related financial statements and related
variances, review significant accounting policies and discuss any significant
accounting treatments applied during the period.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in our Annual Report on Form 10-K
for the year ended December 31, 2005 for filing with the SEC.
This
section of the proxy statement is not deemed “filed” with the SEC and is not
incorporated by reference into our Annual Report on Form 10-K.
This
Audit Committee report is given by the following members of the Audit
Committee:
G.
Steven Dawson, Chairman
R.D. Burck
Winston W. Walker
Independent
Auditor Fees
The
following summarizes the approximate aggregate fees billed to American Campus
Communities for the fiscal years ended December 31, 2005 and 2004 by our
principal accounting firm, Ernst & Young LLP:
|
|
Total
Approximate Fees
|
|
Types
of Services (1)
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
Audit
Fees (2)
|
|
$
|
764,000
|
|
$
|
1,694,000
|
|
Audit-Related
Fees (3)
|
|
|
62,000
|
|
|
170,000
|
|
Tax
Fees (4)
|
|
|
165,000
|
|
|
60,000
|
|
All
Other Fees (5)
|
|
|
--
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
Total
(6)
|
|
$
|
991,000
|
|
$
|
1,926,000
|
|
(1)
|
All
such services subsequent to our IPO were preapproved by the Audit
Committee.
|
(2)
|
Fees
for audit services billed in 2005 and 2004 included the following:
(i)
audit of our annual financial statements; (ii) reviews of quarterly
financial statements; (iii) audit of internal control over financial
reporting; and (iv) services related to SEC matters, including review
of
registration statements filed and related issuances of comfort letters,
consents and other services. Fees for audit services billed in 2005
included $250,000 related to the audit of our internal controls over
financial reporting. During 2004, audit fees included approximately
$1,621,000 for services provided in conjunction with the IPO.
|
(3)
|
Fees
for audit-related services billed in 2005 and 2004 included financial
accounting and reporting consultations and audits of certain subsidiaries.
|
(4)
|
Fees
for tax services billed in 2005 and 2004 included tax compliance
services
and tax planning and advice
services.
|
(5)
|
Fees
for all other services billed in 2004 consisted of permitted non-audit
services, such as access to Ernst & Young LLP’s accounting and
auditing research database.
|
(6)
|
Excludes
amounts that we reimbursed Ernst & Young LLP for out-of-pocket
expenses, which totaled approximately $6,000 in 2005 and $28,000
in
2004.
|
In
considering the nature of the services provided by Ernst & Young LLP,
the Audit Committee determined that such services are compatible with the
provision of independent audit services. The Audit Committee discussed these
services with representatives of Ernst & Young LLP and management to
determine that they are permitted under the rules and regulations concerning
auditor independence promulgated by the SEC to implement the Sarbanes-Oxley
Act
of 2002, as well as by the American Institute of Certified Public
Accountants.
The
Audit
Committee has developed policies and procedures concerning its pre-approval
of
audit and non-audit services provided to us by the independent auditors. These
provide that the Audit Committee must pre-approve all audit and permitted
non-audit services (including the fees and terms thereof) to be rendered to
us
by the independent auditors.
The
independent auditors provide the Audit Committee with a list describing the
services expected to be performed by the independent auditor. Any request for
services not contemplated by this list must be submitted to the Audit Committee
for specific pre-approval and the provision of such services cannot commence
until such approval has been granted. Normally, pre-approval is provided at
regularly scheduled meetings. However, the Audit Committee has authorized the
committee’s Chairman to approve the provision by our independent auditors of up
to $50,000 per occurrence of non-audit services not prohibited by law. Each
decision made by the Audit Committee Chairman will be reported to the full
Audit
Committee at its next meeting.
In
addition, although not required by the rules and regulations of the SEC, the
Audit Committee generally requests a range of fees associated with each proposed
service. The Audit Committee believes that providing a range of fees
for
a
service incorporates appropriate oversight and control of the independent
auditor relationship, while permitting us to receive immediate assistance from
the independent auditor when time is of the essence.
Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting,
and to be given an opportunity to make a statement if they desire to do so
and
to be available to respond to appropriate questions.
Ratification
of the Selection of the Independent Auditors
The
audit
committee has reappointed Ernst & Young LLP as our independent auditors for
2006.
The
proposal will be approved if it receives the affirmative vote of a majority
of
shares represented in person or by proxy at the Annual Meeting.
The
Audit Committee, which has the sole authority to retain our independent
auditors, recommends that you vote FOR the ratification of the appointment
of
Ernst & Young LLP as our independent auditors for
2006.
STOCKHOLDER
PROPOSALS
We
must
receive any stockholder proposal intended for inclusion in the proxy materials
for the Annual Meeting to be held in 2007 no later than December 31, 2006.
A
stockholder may also nominate directors before the next Annual Meeting by
submitting the nomination as described under “Board of Directors - Consideration
of Director Nominees.” We did not receive any formal proposals during 2005 from
stockholders.
2005
ANNUAL REPORT
Our
Annual Report to Stockholders is being mailed to stockholders along with this
Proxy Statement. The Annual Report and the Annual Report on Form 10-K for the
fiscal year ended December 31, 2005, as filed with the Securities and Exchange
Commission, are on our website at www.americancampuscommunities.com and
available without charge to stockholders upon writing to our corporate
secretary. Neither the Annual Report to Stockholders nor the Annual Report
on
Form 10-K for the fiscal year ended December 31, 2005 is to be treated as part
of the proxy solicitation materials or as having been incorporated herein by
reference.
|
By Order of the Board of
Directors, |
|
/s/ Brian B. Nickel
|
|
BRIAN B. NICKEL |
|
Chief Financial Officer
and
Secretary |
Austin,
Texas
April
6,
2006
Appendix
A
AUDIT
COMMITTEE CHARTER
OF
AMERICAN
CAMPUS COMMUNITIES, INC.
(Amended
and Restated as of August 4, 2005)
Purpose
The
purpose of the Audit Committee (the "Committee")
of the
Board of Directors (the "Board")
of
American Campus Communities, Inc. (the "Company")
is to
oversee the broad range of issues surrounding the accounting and financial
reporting processes of the Company and audits of the financial statements of
the
Company. The Committee's primary focus is: (1) to assist the Board in monitoring
(a) the integrity of the financial statements of the Company, (b) the compliance
by the Company with legal and regulatory requirements, (c) the independent
auditors' qualifications and independence, and (d) the performance of the
Company's internal audit function and independent auditors; and (2) to prepare
the audit committee report that the United States Securities and Exchange
Commission (the "SEC")
rules
require be included in the Company's annual proxy statement.
Organization
This
charter (the "Charter")
governs the operation of the Committee. The Committee shall provide a medium
within the Company for consideration of matters relating to any audit issues.
The Committee shall be directly responsible for the appointment, compensation,
retention and oversight of the work of any independent public accounting firm
engaged for the purpose of performing any audit, review or attest services
and
shall deal directly with such accounting firm. At its sole discretion, the
Committee may retain outside legal, accounting and financial consultants or
other advisors and may delegate to subcommittees to assist it in its activities.
The fees and expenses of such consultants and advisors shall be borne by the
Company.
Membership
The
members of the Committee shall be appointed by the Board and shall consist
of
three or more members, as the Board may determine from time to time, of the
Company's Board and shall serve until their successors are duly elected and
qualified. Director fees are the only compensation that a member of the
Committee may receive from the Company. The Chair of the Committee will be
designated by the independent members of the Board. Each Committee member shall
meet the independence requirements of Rule 10A-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”),
and
be free from any relationship that, in the opinion of the Board, will interfere
with his or her independent judgment as a member of the Committee.
Composition
All
members of the Committee shall have working familiarity with basic finance
and
accounting practices. Committee members may enhance their understanding of
their
familiarity with finance and accounting by participating in educational programs
conducted by the Company or an outside consultant or firm. At least one member
of the Committee shall be an audit committee financial expert (as defined in
Item 401(h) of Regulation S-K).
Meetings
The
Committee shall hold such regular meetings as may be necessary or advisable,
but
no less frequently than quarterly, and special meetings as may be called by
the
Committee's chairperson or at the request of the internal auditors (or personnel
or independent third party responsible for the internal audit function). The
Chair of the Committee, in consultation with the other Committee members, will
determine the frequency and length of the meetings and will set agendas
consistent with this Charter. The Chair may consult with management in the
process of establishing agendas for Committee meetings. The Committee will
keep
written minutes of its meetings, which
shall
be
recorded and filed with the books and records of the Company, and will report
its actions and recommendations to the Board. A majority of the members of
the
Committee shall constitute a quorum for the transaction of business at any
meeting of the Committee. Unless otherwise provided herein, all actions of
the
Committee will require the vote of a majority of its members present at a
meeting of the Committee at which a quorum is present.
Duties
and Responsibilities
The
Committee's policies and procedures shall remain flexible in order to best
react
to changing conditions and to help ensure that the Company's accounting and
reporting practices are consistent with applicable legal requirements and are
of
the highest quality. The Committee shall:
1) |
Select,
appoint, retain, dismiss and oversee the work of the Company's
independent
auditors.
|
2) |
Pre-approve
the retention of the Company's independent auditors for audit and
non-audit services (other than as provided in Section 10a(i)(B)
of
the Exchange Act relating to de
minimus
exceptions from the pre-approval requirements). The Committee may
delegate
the duty to pre-approve any such payment to any member of the Committee,
provided that the decisions of such member to grant pre-approvals
shall be
presented to the full Committee for
ratification.
|
3) |
Review
all related party transactions entered into by the Company with
any of the
Company's directors or executive
officers.
|
4) |
Ensure
audit partner rotation as required by law or the rules of the
New York
Stock Exchange (the “NYSE”)
and consider whether, in order to assure continuing independence
of the
independent auditors, there should be regular rotation of the
audit firm
itself.
|
5) |
Review
and reassess the adequacy of this Charter annually and recommend
any
proposed changes to the Board for
approval.
|
6) |
Review,
evaluate and reassess the performance of the Committee annually
and
discuss such annual performance evaluation with the
Board.
|
7) |
Review
the Company's annual audited financial statements and quarterly
unaudited
financial statements with the Company's management and independent
auditors and recommend whether the annual audited financial statements
should be included in the Company’s annual report on Form
10-K.
|
8) |
Review
the Company's disclosures under "Management's Discussion and
Analysis of
Financial Condition and Results of Operations" in the Company's
periodic
reports and registration statements filed with the
SEC.
|
9) |
Review
and discuss with the Company's management and independent auditors
the
Company's quarterly earnings press releases (paying particular
attention
to any use of "Pro Forma" or "Adjusted" non-GAAP, information)
and
earnings guidance. Provided that such discussions may be on general
terms
(i.e.,
discussion of the types of information to be disclosed and the
type of
presentation to be made and the Committee need not discuss in
advance each
earnings release or each instance in which the Company may provide
earnings guidance.
|
10)
|
Review
and discuss generally with the Company's management and independent
auditors the type of other financial information provided to
analysts and
rating agencies, provided that the Committee need not discuss
such other
financial information before it is provided to analysts and rating
agencies.
|
11)
|
Review
any major changes to the Company's auditing and accounting principles
and
practices as suggested by the Company's management or independent
auditors.
|
12)
|
At
least annually, obtain and review a report by the Company's independent
auditors describing:
|
a) |
the
auditors' internal quality-control
procedures;
|
b) |
any
material issues raised by the most recent internal quality-control
review,
or peer review, of the firm, or by any inquiry or investigation
by
governmental or professional authorities, within the preceding
five years,
respecting one or more independent audits carried out by the independent
auditors and any steps taken to deal with any such issues;
and
|
c) |
all
relationships between the independent auditors and the Company
(to assess
the auditor's independence).
|
13)
|
Review
and receive periodic reports (as well as the written disclosures
and the
letter from the independent auditors required by Independence Standards
Board Standard No. I as may be modified or supplemented) from the
Company's independent auditors regarding the auditor's qualifications,
performance, independence and their registration with the SEC;
discuss
such materials with the auditors; after receipt of the annual report
provided by the independent auditors discussed above in Section
12,
present its conclusions with respect to the independent auditors
to the
full Board; and, if so determined by the Committee, recommend that
the
Board take appropriate action to insure the independence of the
auditors
and continued registration with the
SEC.
|
14)
|
Review
with the Company's legal counsel and management any legal matters
that may
have a material impact on the financial statements or the Company's
compliance policies.
|
15)
|
Review
with the Company's independent auditors the matters required to
be
discussed by Statement on Auditing Standards No. 61, including
any
problems or difficulties the auditors may have encountered and
any
management letter provided (or intended to be provided) by the
auditors
and management's response,
including:
|
a) |
any
difficulties encountered in the course of the audit work, including
any
restrictions on the scope of the activities or access to required
information;
|
b) |
any
changes required in the planned scope of the external
audit;
|
c) |
any
significant disagreements with
management;
|
d) |
any
material written communications between the independent auditors
and the
Company's management, such as any management letter or schedule
of
unadjusted differences; and
|
e) |
any
accounting adjustments that were proposed by the Company's independent
auditors but were "passed" (as immaterial or otherwise), and any
material
communications between the audit team and the independent auditors'
national office respecting auditing or accounting issues presented
by the
engagement.
|
16) |
Ensure
that the Company has an internal audit function to provide management
and
the Company with ongoing assessments of the Company’s risk management
processes and systems of internal control. The Company may choose
to
outsource this function to a firm other than its independent auditors.
Review the adequacy of the Company's internal audit
function.
|
17)
|
Review
and discuss with the Board any issues that arise with respect to
the
quality or integrity of the performance of the Company's internal
audit
function.
|
18)
|
Review
annually with the Company's management and independent
auditors:
|
a) |
analyses
prepared by the Company's management and/or independent auditors
setting
forth significant financial reporting issues and judgments made
in
connection with the preparation of the financial statements, including
analyses of the effects of alternative generally accepted accounting
principles ("GAAP")
on financial statements; and
|
b) |
the
effect of regulatory and accounting initiatives, as well as review
and
approve any off-balance sheet structures on the Company's financial
statements.
|
19)
|
Review
at least annually major issues regarding accounting principles
and
financial statement presentations, including any significant changes
in
the Company's selection or application of accounting principles,
and major
issues as to the adequacy of the Company's internal controls, and
any
special audit steps adopted in light of material control
deficiencies.
|
20)
|
Review
the audit report provided by the Company's independent auditors,
which
should include:
|
a) |
all
critical accounting policies and practices used;
and
|
b) |
all
alternative treatments of financial information within generally
accepted
accounting principles that have been discussed with the Company's
management, ramifications of the use of such alternative disclosures
and
treatments, and the treatment preferred by the independent
auditors.
|
21) |
Meet
periodically with the Company's management and independent auditors
in
separate sessions to review the Company's policies with respect
to major
risk exposures and the steps management has taken to monitor and
control
such exposures.
|
22)
|
Meet
periodically with the Company's management, the independent auditors
and
the internal auditors (or personnel or independent third party
responsible
for the internal audit function), in separate sessions, to encourage
entirely frank discussions with the Committee, including, without
limitation, discussions regarding the Company's financial reporting
control procedures, the quality of the Company's financial reporting,
the
adequacy and competency of the Company's financial management and
the
Company’s policies with respect to major risk exposures and the steps
management has taken to monitor and control such
exposures.
|
23)
|
Meet
and discuss with the internal auditors (or personnel or independent
third
party responsible for the internal audit function) the Company's
risk
management processes and systems of internal
control.
|
24)
|
Establish
and maintain procedures for:
|
a) |
the
receipt, retention, and treatment of complaints received from the
Company’s employees or any other person regarding accounting, internal
accounting controls, or auditing matters;
and
|
b) |
the
confidential, anonymous submission by employees of the Company
of concerns
regarding questionable accounting or auditing
matters.
|
25)
|
Fulfill
the responsibilities of the Committee set forth in applicable laws
and
regulations, the Company's bylaws and any code of business conduct
and
corporate governance guidelines of the
Company.
|
26)
|
Set
clear hiring policies for employees or former employees of the
independent
auditors in compliance with the rules and regulations set forth
by the SEC
and the NYSE.
|
27)
|
Review
the effect of regulatory and accounting initiative, as well as
off-balance
sheet structures, if any, on the financial statements of the
Company.
|
28)
|
Meet
regularly with the Board to effect the Committee's purposes noted
above.
|
29)
|
Do
every other act incidental to, arising out of or in connection
with, or
otherwise related to, the authority granted to the Committee hereby
or the
carrying out of the Committee's duties and responsibilities
hereunder.
|
Limitation
of Committee's Role
While
the
Committee has the authority, powers, and responsibilities set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in accordance with GAAP and applicable legal, accounting,
and other requirements. These are the responsibilities of the Company's
management and the independent auditors.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AMERICAN
CAMPUS COMMUNITIES, INC.
FOR
THE MAY 11, 2006
ANNUAL
MEETING OF STOCKHOLDERS
The
undersigned hereby appoints William C. Bayless Jr., Brian B. Nickel and Jonathan
A. Graf, or any of them, proxies of the undersigned, with full powers of
substitution, to represent the undersigned and to vote all shares of common
stock of American Campus Communities, Inc. held of record by the undersigned
as
of the close of business on March 24, 2006, on behalf of the undersigned at
the
Annual Meeting of Stockholders to be held on May 11, 2006 at 10:00 a.m., central
time, at The Driskill Hotel, 604 Brazos Street, Austin, Texas or at any
adjournment or postponement thereof.
THE
VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS DIRECTED. IF THIS
PROXY IS PROPERLY EXECUTED BUT IF NO DIRECTION IS GIVEN, THE VOTES ENTITLED
TO
BE CAST BY THE UNDERSIGNED WILL BE CAST “FOR” EACH OF THE NOMINEES FOR DIRECTOR,
“FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT AUDITORS FOR
2006 AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
DETACH
PROXY CARD HERE
Please
sign, date, and return this proxy card in the enclosed
envelope.
[X]
Votes MUST be indicated (x) in Black or Blue ink.
1. Election
of Directors for a one-year term expiring at the 2007 Annual Meeting of
Stockholders
FOR
[ ] WITHHOLD
ALL [ ] FOR
ALL
EXCEPT [ ]
Nominees:
(01)
William C. Bayless Jr. (06)
Edward Lowenthal
(02)
R.D.
Burck (07)
Brian B. Nickel
(03)
G.
Steven Dawson (08)
Scott H. Rechler
(04)
Cydney C. Donnell (09)
Winston W. Walker
(05)
Michael J. Henneman
____________________________________________________________
To
withhold authority to vote for any individual, mark “For All Except” and write
the nominee’s number on the space above.
2.
|
Ratification
of Ernst & Young as our independent auditors for
2006
|
FOR
[ ] AGAINST
[ ] ABSTAIN
[ ]
MARK
HERE
IF YOU PLAN TO ATTEND THE MEETING [ ]
Please
return your signed proxy at once in the enclosed postage-prepaid envelope
provided, even if you plan to attend the meeting in person.
Please
sign exactly as name appears on the records of American Campus Communities,
Inc.
If the shares are held jointly, each holder should sign. When signing in a
representative capacity, please give title.
_______________________________________ _______________________________________ _______________________________________
Date |
Share Owner sign here |
Co-Owner sign
here |