SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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AMERICAN CAMPUS COMMUNITIES, INC.
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(Name of Registrant as Specified In Its Charter)
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[LOGO]
AMERICAN CAMPUS
COMMUNITIES
805 LAS CIMAS PARKWAY, SUITE 400
AUSTIN, TEXAS 78746
April 6, 2005
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of American Campus Communities, Inc. (the "Company") to be
held at 10:00 a.m. (Central Time) on Thursday, May 12, 2005, 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.
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WILLIAM C. BAYLESS JR.
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
TABLE OF CONTENTS
Notice of Annual Meeting of Stockholders....................................................i
Defined Terms...............................................................................ii
Questions and Answers.......................................................................1
Proposal to be Voted Upon...................................................................3
Board of Directors..........................................................................4
Board Size and Composition................................................................4
Board Independence and Meetings...........................................................6
Board Committees..........................................................................6
Guidelines on Governance and Codes of Ethics..............................................7
Communication with the Board of Directors.................................................8
Compensation of Directors.................................................................8
Executive Officers..........................................................................9
Security Ownership..........................................................................10
Section 16(a) Beneficial Ownership Reporting Compliance.....................................11
Compensation Committee Report on Executive Compensation.....................................11
Compensation................................................................................13
Executive Officer Compensation............................................................13
Employment Contracts, Termination of Employment and Change-In Control Arrangements........15
Compensation Committee Interlocks and Insider Participation...............................16
Certain Relationships and Related Transactions..............................................16
Common Stock Performance Graph..............................................................17
Audit Committee Information.................................................................18
Report of the Audit Committee.............................................................18
Independent Auditor Fees..................................................................19
Stockholder Proposals.......................................................................20
The Company's 2004 Annual Report............................................................20
APPENDIX A Audit Committee Charter
AMERICAN CAMPUS COMMUNITIES, INC.
805 LAS CIMAS PARKWAY, SUITE 400
AUSTIN, TEXAS 78746
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 2005
To the Holders of Common Stock of AMERICAN CAMPUS COMMUNITIES, INC.:
The 2005 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 12, 2005, at 10:00 a.m. (Central Time) to
consider and take action upon the following:
(i) To elect eight directors to a one-year term of office expiring
at the 2006 Annual Meeting of Stockholders or until their
successors are duly elected and qualified; and
(ii) 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.
Please refer to the attached Proxy Statement, which forms a part of this Notice
of Annual Meeting and is incorporated herein by reference, 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 18, 2005 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 the Company's common stock, par value $.01 per share,
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
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BRIAN B. NICKEL
CHIEF INVESTMENT OFFICER AND SECRETARY
Austin, Texas
April 6, 2005
DEFINED TERMS
Unless the context otherwise requires, the following capitalized terms shall
have the meanings set forth below for purposes of this proxy statement:
"2004 PLAN" means American Campus Communities' 2004 Incentive Award Plan.
"ANNUAL MEETING" means the May 12, 2005 Annual Meeting of Stockholders of
American Campus Communities, Inc.
"BOARD" or "BOARD OF DIRECTORS" means American Campus Communities' Board of
Directors.
"COMMON STOCK" means the common stock, par value $.01 per share, of the Company.
"COMPANY" or "AMERICAN CAMPUS COMMUNITIES" or "WE" or "OUR" means American
Campus Communities, Inc.
"FORMATION TRANSACTIONS" means the transactions designed to consolidate the
ownership interests in the Company's properties, to facilitate the IPO and to
enable the Company to qualify as a REIT for federal income tax purposes
commencing with its taxable year ended December 31, 2004.
"IPO" means American Campus Communities' initial public offering of Common
Stock, which was consummated on August 17, 2004.
"NAREIT" means the National Association of Real Estate Investment Trusts.
"OPERATING PARTNERSHIP" means American Campus Communities Operating Partnership,
LP, a Maryland limited partnership of which we are the general partner.
"PIUS" means profits interest units, which are a special class of partnership
interests in the Operating Partnership.
"RAP" means Reckson Asset Partners, LLC, a Delaware limited liability company
owned (through subsidiaries) by Reckson and RSVP.
"RECKSON" means Reckson Associates Realty Corp., a Maryland corporation.
"RECORD DATE" means March 18, 2005.
"REIT" means a real estate investment trust as defined in the Internal Revenue
Code of 1986, as amended.
"RSUS" means restricted stock units, which are a security that entitles the
holder to receive restricted stock in the Company at a future date specified
therein.
"RSVP" means Reckson Strategic Venture Partners, LLC, a Delaware limited
liability company.
"SEC" means the Securities and Exchange Commission.
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ii
AMERICAN CAMPUS COMMUNITIES, INC.
805 LAS CIMAS PARKWAY, SUITE 400
AUSTIN, TEXAS 78746
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PROXY STATEMENT
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The accompanying proxy, to be mailed to stockholders together with the Notice of
Annual Meeting and this Proxy Statement on or about April 8, 2005, is solicited
by the Board of Directors of American Campus Communities, Inc. in connection
with the Annual Meeting of Stockholders to be held on May 12, 2005.
QUESTIONS AND ANSWERS
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Q: WHAT AM I VOTING ON?
A: Election of eight directors to hold office for a one-year term.
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Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on the Record Date, March 18,
2005, are entitled to vote at the Annual Meeting. Each share of Common
Stock is entitled to one vote.
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Q: HOW DO I VOTE?
A: Sign and date each Proxy Card you receive and return it in the prepaid
envelope. If you are the holder of record and do not mark any selections,
your Proxy Card will be voted in favor of all of the director nominees. If
you are a registered stockholder, 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 vote will be recorded and the earlier vote 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 named in the enclosed proxy 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 proposal 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.
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Q: IS MY VOTE CONFIDENTIAL?
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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.
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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. For purposes of calculating votes cast in the
election of directors, 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 regarding the election of the directors. "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.
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Q: WHAT CONSTITUTES A QUORUM?
A: As of the Record Date, 12,669,782 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.
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Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: All stockholders of record as of the Record Date can attend.
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Q: WHO PAYS FOR THIS PROXY SOLICITATION?
A: The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly and mailing of this Proxy Statement, the proxy and
any additional information furnished to stockholders by the Company. Copies
of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding shares of Common Stock in their names
that are beneficially owned by others to forward to these beneficial
owners. The Company 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
directors, officers or employees of the Company. No additional compensation
will be paid to directors, officers or employees for such services.
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2
PROPOSAL TO BE VOTED UPON
1. ELECTION OF DIRECTORS
Under the Company's Charter, each member of the Board is elected by the
stockholders to serve until the next annual meeting and until his or her
successor is duly elected and qualified. Vacancies on the Board may be
filled only by individuals elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the size of the Board) will serve for the
remainder of the term and until such director's successor is elected and
qualified, or until such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes cast at the Annual
Meeting, which means the eight nominees who receive the largest number of
properly cast votes will be elected as directors. Each share of Common
Stock is entitled to one vote for each of the eight director nominees.
Cumulative voting is not permitted. It is the intention of the proxy
holders named on the enclosed proxy to vote the proxies received by them
for the election of the nominees named below unless authorization to do so
is withheld. If any nominee should become unavailable for election prior to
the Annual Meeting, an event which currently is not anticipated by the
Board, the proxies will be voted for the election of a substitute nominee
or nominees proposed by the Board.
Mr. William C. Bayless Jr., Mr. R.D. Burck, Mr. G. Steven Dawson, Ms.
Cydney Donnell, Mr. Edward Lowenthal, Mr. Brian B. Nickel, Mr. Scott H.
Rechler and Mr. Winston W. Walker are all of our nominees for election to
the Board. Each such nominee has consented to be named in this Proxy
Statement and to serve as a director if elected, and management has no
reason to believe that any nominee will be unable to serve.
The employment agreements between the Company and each of Messrs. Bayless
and Nickel provide that such executive will be a director. See
"Compensation - Employment Contracts, Termination of Employment and
Change-In-Control Arrangements." In connection with the Formation
Transactions, the Company agreed to nominate Mr. Rechler to be a director
at the 2005 and 2006 annual meetings, subject to his consent and
eligibility to serve. See "Certain Relationships and Related Transactions."
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3
BOARD OF DIRECTORS
BOARD SIZE AND COMPOSITION
The Board of Directors of the Company is comprised of eight directors elected by
the stockholders to serve until the next Annual Meeting and until his or her
successor is duly elected and qualified. The following pages contain information
concerning the nominees, based upon information furnished to the Company by each
nominee.
WILLIAM C. BAYLESS JR. has been President and Chief Executive Officer of
American Campus Communities and the Company's predecessor entities since October
2003. Mr. Bayless is a co-founder of the Company and participated in the
founding of the student housing business of the Company's predecessor entities.
Mr. Bayless served as Executive Vice President and Chief Operating Officer of
the Company's predecessor entities from July 1995 to September 2003, where he
directed all aspects of the predecessor's business units including business
development, development and construction management, acquisitions, and
management services. He served as the Vice President of Development from the
inception of the Company 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 Bachelor
of Science in Business Administration from West Virginia University in 1986.
Director since 2004. Age: 41.
R.D. BURCK has been Chairman of the Board of American Campus Communities since
August 2004. Mr. Burck retired from the position of chancellor of The University
of Texas ("U.T.") 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 U.T. Board of Regents to manage the
investment of all assets over which the board has fiduciary responsibility. Mr.
Burck joined the U.T. 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 for infiNET, Inc., Celo Data, Inc., and is a Senior Client
Advocate for Willis Group Holdings. He also serves on the advisory boards for
Frost Bank, G51 Capital Management, L.L.C., and Patton Medical Devices. In
addition, Mr. Burck serves on The Headliners Club Board of Trustees. He also has
been a member of the board of the Texas Department of Information Resources; the
board of directors 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 in 1956 with a B.B.A. He also attended the South Texas School of Law
in Houston. Director since 2004. Age: 72.
G. STEVEN DAWSON primarily has 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; and Desert Capital REIT, Inc., an unlisted, public mortgage REIT.
In addition, Mr. Dawson is on the board of Medical Properties Trust, a private
REIT, and 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. Director since 2004. Age: 47.
CYDNEY DONNELL has been an Executive Professor at the Mays Business School of
Texas A&M University since August 2004 where she teaches in the Finance
Department. Ms. Donnell joined the Mays School in January of 2004 as a Visiting
Lecturer. 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 of EII from
1992 to 2002 and served as a Vice-President and Analyst of EII from 1986 to
1992. Prior to joining EII, she was a real estate lending officer at
RepublicBanc Corporation in Dallas from 1983 to 1986. Ms. Donnell has served on
the Board of Directors of European Investors Holding Company since 1992 and also
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
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4
Institutional Advisory Committee of NAREIT. She is an active volunteer currently
serving on the Board of Directors of the Association of Former Students of Texas
A&M University and served in various leadership capacities for the Junior League
of the City of New York. Ms. Donnell received a B.B.A. from Texas A&M University
in 1981 and an M.B.A. from Southern Methodist University in 1982. Director since
2004. Age: 45.
EDWARD LOWENTHAL 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 WRP. Mr. Lowenthal was a
Founder, Trustee and President of Wellsford Residential Property Trust, a NYSE
listed multi-family REIT, 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), as a Director of
Ark Restaurants (NASDAQ: ARKR), 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 earned
a B.A. degree from Case Western Reserve University in 1966 and a J.D. degree
from Georgetown University Law Center in 1969 where he was an editor of the
Georgetown University Law Journal. Director since 2004. Age: 60.
BRIAN B. NICKEL has been Executive Vice President and Chief Investment Officer
and Secretary of American Campus Communities and the Company's predecessor
entities since October 2003 and Secretary since July 2004. In this capacity, Mr.
Nickel has responsibility for all investment activities, oversees the Company's
business development and growth related efforts, and is responsible for capital
market relationships. Mr. Nickel joined the Company's predecessor in June 1996
as Director of Business Development and has served in various capacities during
his tenure. Prior to joining American Campus Communities, Mr. Nickel held
positions in the investment banking firms of Kidder, Peabody Company and with
the corporate finance group of LaSalle Partners. Mr. Nickel received a BS in
Economics from Northwestern University in 1994. Director since 2004. Age: 32.
SCOTT H. RECHLER has been Chief Executive Officer and President of Reckson 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. Director since 2004. Age: 37.
WINSTON W. WALKER 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. Prior to this, Mr. Walker
served as the Chief Executive Officer of Provident Life and Accident Insurance
Company of America from 1987 to October 1993. Mr. Walker is currently a member
of the board of directors and the audit committee chair of CBL & Associates
Properties, Inc. (NYSE: CBL) and a member of the board of directors of MRI
Medical. Mr. Walker received a B.A. in Russian from Tulane University in 1965
and a Ph.D. in mathematics from the University of Georgia in 1969. Director
since 2004. Age: 61.
THE BOARD RECOMMENDS A VOTE FOR ALL NOMINEES TO SERVE AS DIRECTORS.
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5
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 that generally formalize practices
already in place at the Company. To view the Company's 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.
INDEPENDENT DIRECTORS. Currently, the Board has eight 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 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 the Company, either directly or as a partner, stockholder or
officer of an organization that has a relationship with the Company. 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.
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. R.D. Burck,
the Lead Independent Director.
MEETINGS. The Board of Directors met either in person or by conference call five
times in 2004. All directors attended at least 75% of the total number of
meetings of the Board and committees, collectively, on which they served during
2004 while they were directors and a member of any such committee. All directors
are encouraged to attend the Company's annual meeting of stockholders. This is
the Company's first annual meeting since our IPO.
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. The Audit Committee reviews and assesses the adequacy of its
charter on an annual basis. A copy of the charter is included in this Proxy
Statement as Appendix A and can also be viewed on the Company's website at
www.americancampuscommunities.com. The Report of the Audit Committee is set
forth beginning on page 18 of this Proxy Statement.
The Audit Committee's responsibilities include assisting the Board in overseeing
the integrity of the Company's financial statements, compliance with legal and
regulatory requirements, the independent auditors' qualifications and
independence and the performance of the Company's independent auditors. In
addition, the Audit Committee reviews, as it deems appropriate, the adequacy of
the Company's 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 the Company. The
Audit Committee met four times in 2004.
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 by the Company
and to authorize the execution, subject to certain limitations, of certain
contracts and agreements, including those relating to the borrowing of money by
the Company, and to exercise generally all other powers of the Board, except for
those which require action by all directors or the non-employee directors under
the Articles of Incorporation or Bylaws of the Company or under applicable law.
The Executive Committee met one time in 2004.
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6
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 the Company's website at
www.americancampuscommunities.com. The Compensation Committee's responsibilities
include overseeing the Company's compensation programs and practices and
determining compensation for the executive officers. The Compensation Committee
met one time in 2004.
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 the Company's
website at www.americancampuscommunities.com. The responsibilities of the
Nominating and Corporate Governance Committee include assisting the Board in
promoting the best interests of the Company and its stockholders 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 of stockholders, (ii) developing and
recommending to the Board a set of corporate governance principles applicable to
the Company, and (iii) overseeing the evaluation of the Board and the Company's
management. The Nominating and Corporate Governance Committee met one time in
2004.
The Nominating and Corporate Governance Committee will consider appropriate
nominees for director whose names are submitted in writing by a stockholder of
the Company. 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 the Bylaws of the Company.
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 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, the Company has not paid a fee to any
third party to identify or assist in identifying or evaluating potential
nominees.
All nominees for director at the 2005 Annual Meeting currently serve as
directors of the Company.
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 executive share ownership. 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
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7
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
the Company's 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.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company or its subsidiaries 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 directors who
serve on 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.
The 2004 Plan provides for formula grants of RSUs to non-employee directors. On
the closing date of the IPO, each non-employee director received $25,000 of
RSUs, or 1,429 RSUs, valued at $17.50 per RSU, the initial public offering price
of the Common Stock. Thereafter, on the date of each annual meeting of
stockholders 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 of the Common Stock on the date of grant. Similarly, 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 of stockholders 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 the Common Stock on the date of
grant. Shares underlying RSUs granted to directors shall be settled, in
accordance with the terms of the 2004 Plan, on the third anniversary of the date
of the grant. Dividends accrue on the RSUs (without interest) equal to the cash
dividends paid by the Company on the Common Stock. Mr. Rechler waived receipt of
any director compensation until such time as he has been re-elected to the Board
by the Company's stockholders. A total of 7,145 RSUs have been issued, all of
which are currently outstanding.
Members of the Board of Directors also are reimbursed for travel expenses
incurred in connection with Company business, including attendance at meetings
of the Board and its committees.
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8
EXECUTIVE OFFICERS
Executive and senior officers of the Company 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 of the Company are not
directors. For information regarding William C. Bayless, Jr., President and
Chief Executive Officer, and Brian B. Nickel, Executive Vice President, Chief
Investment Officer and Secretary, see "Board of Directors - Board Size and
Composition."
MARK J. HAGER has been Executive Vice President, Chief Financial and Accounting
Officer, and Treasurer since August 2004. Mr. Hager joined the Company's
predecessor in August 1999 as Senior Vice President and Chief Financial Officer.
Prior to this, Mr. Hager was a Certified Public Accountant in the assurance
practice of Ernst & Young from November 1997 to August 1999, serving both public
and private clients. In other positions, including Vice President Finance and
Chief Financial Officer for Oklahoma Christian University from 1996 to 1997 and
Vice President, Corporate Controller for Crested Butte Mountain Resort from 1994
to 1996, Mr. Hager has been involved in development and financing in the hotel,
single-family residential, and assisted living sectors utilizing conventional,
tax-exempt, and public/private financing structures. Mr. Hager holds a bachelors
degree in Business Administration - Accounting from Abilene Christian
University. Mr. Hager is a Certified Public Accountant licensed in Texas and
Oklahoma. Age: 43.
GREG A. DOWELL has been Senior Vice President and Chief of Operations since
August 2004. Mr. Dowell joined the Company's predecessor in October 2001 as
Senior Vice President - Management Services and in that role has directed all
aspects of the Company's property management operations. 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
BS in Accounting from the University of Louisiana, Lafayette in 1989 and is a
Certified Public Accountant licensed in Texas. Age: 41.
BRIAN N. WINGER has been Senior Vice President - Development since October 2003
and is primarily responsible for coordinating, financing, and closing the
Company's acquisitions and development projects. Mr. Winger joined the Company's
predecessor in March 2000 as Director - On-Campus Development and has since
served in increasing capacities. Prior to this, 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. Mr. Winger received a Juris Doctor from Oklahoma City University in
1994 and a BS 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: 37.
JASON R. WILLS has been Senior Vice President - Marketing and Development since
October 2003 and oversees all aspects of the on-campus development segment as
well as corporate communications, and property leasing and marketing. Mr. Wills
joined the Company's predecessor in February 1997 as Manager - Marketing and
Leasing and has served in increasing capacities. Mr. Wills attended the
University of Texas, Arlington where he studied Journalism and Marketing. Age:
33.
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9
SECURITY OWNERSHIP
The following table sets forth the number of all shares of the Common Stock
beneficially owned by each director, by each Named Executive Officer, by each
person known by the Company to beneficially own 5% or more of the Company's
outstanding Common Stock, and by all directors and executive officers as a group
on March 18, 2005, 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.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------------------ ------------------------ --------------
William C. Bayless Jr. 14,027 (1) *
R.D. Burck 2,000 (2) *
G. Steven Dawson 2,000 (2) *
Cydney Donnell 1,000 (2) *
Edward Lowenthal 14,000 (2) *
Brian B. Nickel 9,385 (3) *
Scott H. Rechler 28,500 (2) *
Winston W. Walker -- *
Mark J. Hager 7,063 (4) *
Greg A. Dowell 2,321 (5) *
FMR Corp. 1,553,990 (6) 12.27%
Deutsche Bank AG 1,521,652 (7) 12.01%
Clarion CRA Securities, LP 1,283,300 (8) 10.13%
LaSalle Investment Management Securities Ltd. 1,022,603 (9) 8.07%
Cohen & Steers Capital Management, Inc. 1,007,600 (10) 7.95%
K.G. Redding & Associates, LLC 934,500 (11) 7.38%
Morgan Stanley 804,500 (12) 6.35%
AMVESCAP PLC 696,800 (13) 5.50%
All directors and executive officers 82,524 (14) *
as a group (12 persons)
------------------------------
* Less than one percent.
(1) Represents 100 shares of Common Stock owned directly and 13,927 shares of
restricted stock.
(2) Represents shares of Common Stock owned directly.
(3) Represents 100 shares of Common Stock owned directly and 9,285 shares of
restricted stock.
(4) Represents 100 shares of Common Stock owned directly and 6,963 shares of
restricted stock.
(5) Represents 2,321 shares of restricted stock.
(6) 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 FMR Corp. is 82 Devonshire Street, Boston, MA 02109.
FMR Corp. possessed sole voting power over 149,900 shares and sole
dispositive power over 1,553,990 shares and each of Edward C. Johnson and
Abigail P. Johnson possessed sole dispositive power over 1,553,990 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,
2004. The address of Deutsche Bank AG is Taunusanlage 12, D-60325,
Frankfurt am Main, Federal Republic of Germany. Deutsche Bank AG and RREEF
America, L.L.C. each possessed sole voting and sole dispositive power over
these shares.
(8) This information is based upon information contained in filings made by the
stockholder with the SEC. The address of Clarion CRA Securities, L.P. is
259 North Radnor Chester Road, Suite 205, Radnor, PA 19087.
(9) This information is based upon information contained in filings made by the
stockholder with the SEC. The address LaSalle Investment Management
Securities, Ltd. is 100 E. Pratt Street, 20th Floor, Baltimore, MD 21202.
(10) 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 Cohen & Steers Capital Management Inc. is 757 Third
Avenue, New York, NY 10017.
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10
(11) 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 K.G. Redding & Associates, LLC is One North Wacker
Drive, Suite 4343, Chicago, IL 60606. K.G. Redding & Associates, LLC
possessed sole voting power over 157,400 shares and sole dispositive power
over 934,500 shares.
(12) 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 Morgan Stanley is 1585 Broadway, New York, NY 10036.
Morgan Stanley beneficially owned an aggregate of 804,500 shares and
possessed sole voting and sole dispositive power over 585,000 shares, and
Morgan Stanley Investment Management Inc. beneficially owned an aggregate
of 760,800 shares and possessed sole voting and sole dispositive power over
558,400 shares.
(13) 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 AMVESCAP PLC is 11 Devonshire Square, London EC2M 4YR,
England.
(14) Represents 47,800 shares of Common Stock owned directly and 34,724 shares
of restricted stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors, and persons who own more than 10% of
a registered class of the Company's equity securities ("10% Holders"), to file
reports of ownership and changes in ownership with the SEC. Officers, directors
and 10% Holders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms that they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to the Company,
all Section 16(a) filing requirements applicable to its executive officers,
directors and 10% Holders were satisfied during 2004.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE ROLE OF THE COMMITTEE. Generally, the Compensation Committee of the Board of
Directors (the "Compensation Committee") establishes, oversees and directs the
Company's executive compensation policies and programs, administers the
Company's 2004 Plan and seeks to ensure that the Company's executive
compensation philosophy is consistent with the Company's best interests. The
executive compensation program aims to: (i) support the Company's business
objectives to produce consistent earnings growth and increase stockholder value;
(ii) attract, reward, motivate and retain talented executives; (iii) tie
executive compensation to the Company's financial performance; and (iv) link
executives' goals with stockholders' interests.
TYPES OF COMPENSATION. The executive compensation system consists of three
elements: (i) base salary; (ii) annual bonus, a portion of which may be received
in restricted shares; and (iii) long-term compensation, which may include grants
of restricted shares, PIUs or out performance awards based on past performance.
The Compensation Committee does not allocate a fixed percentage of compensation
to these elements.
BASE SALARY AND BONUS COMPENSATION. The Compensation Committee believes that the
Company is best served if executive base salaries and bonus compensation are
kept at amounts approximating the median level within the industry. Base
salaries and bonus compensation for our senior executives 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 corporate goals, the achievement
of individual goals and competitive industry compensation. Corporate goals are
based on operating performance, total stockholder return and other targets.
In conducting the review of management's proposals, the Compensation Committee
considers comparable companies included in the Company's REIT peer group used 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 on published surveys with particular focus on
companies of similar size within the industry. The most direct competitors for
executive talent may not necessarily be 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 salary and bonus proposals may include other companies
not included in the peer group used in the performance graph.
Final compensation determinations for each fiscal year are generally made after
the end of the fiscal year. At that time, base salaries for the following fiscal
year are set, cash bonuses, if any, are determined for the past year's
performance, and other long-term compensation awards, if any, are generally
made. For fiscal 2004, the Compensation Committee reviewed the annual salaries
of the Company's executive officers. At meetings held in January 2005 and
February 2005,
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the Compensation Committee set the base salaries for the Named Executive
Officers for the fiscal year ending December 31, 2005 and approved cash bonuses
and restricted stock awards for such officers in respect of the fiscal year
ended December 31, 2004. See "Compensation - Executive Officer Compensation."
LONG-TERM COMPENSATION. Because today's business decisions affect the Company
over a number of years, long-term incentive awards are tied to the Company's
performance and the long-term value of its shares. 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 restricted shares, PIUs and outperformance awards
are an important part of the Company's long-term compensation plan. Restricted
stock awards granted in February 2005 were made based on an assessment of
Company performance and the performance of the executive's department.
CEO PERFORMANCE EVALUATION. In determining the compensation of Mr. Bayless, the
Compensation Committee applies the same philosophy and procedures as it applies
to other executive officers discussed above.
Changing market and economic conditions created a challenging business
environment in 2004. During 2004 the Company completed its IPO, completed and
successfully opened nine properties, commenced construction on five properties
and placed five properties under contract to purchase. The Compensation
Committee concluded that Mr. Bayless performed well in 2004 and provided
leadership and vision, developed and articulated a strategic direction and
fostered an environment in which his senior management team was able to support
and execute these strategies. Based on these factors, the Compensation Committee
granted Mr. Bayless a bonus and a long-term compensation award for 2004.
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
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12
COMPENSATION
EXECUTIVE OFFICER COMPENSATION
The following table sets forth information regarding the compensation awarded
for the past three fiscal years by the Company and its subsidiaries (i) to the
Chief Executive Officer and (ii) to each of the four most highly compensated key
executive officers at December 31, 2004 of the Company (this group is referred
to as the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION RESTRICTED
---------------------------------------- STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS (1)
--------------------------- ---- ------------------ ------------- --------------
William C. Bayless, Jr.
Chief Executive Officer and 2004 $ 253,333 $ 130,000 $ 300,000
President 2003 210,000 80,000 --
2002 200,000 80,000 --
Brian B. Nickel
Executive Vice President, 2004 210,333 115,000 200,000
Chief Investment Officer and 2003 175,000 100,000 --
Secretary 2002 153,500 155,440 --
Mark J. Hager
Executive Vice President, 2004 162,944 100,000 150,000
Chief Financial and Accounting 2003 132,500 50,000 --
Officer and Treasurer 2002 128,116 40,000 --
Greg A. Dowell
Senior Vice President and 2004 130,000 40,000 50,000
Chief of Operations 2003 124,000 25,000 --
2002 120,000 20,000 --
Ronnie L. Macejewski (2)
Senior Vice President - 2004 126,690 25,000 24,000
Development and Construction 2003 123,000 90,000 --
2002 118,976 48,813 --
--------------------------------------------
(1) Represents the value, as of February 16, 2005, the date of grant, of
restricted stock awards to the Named Executive Officers. Awards to
Messrs. Bayless, Nickel and Hager vest in five equal annual
installments beginning on February 28, 2006. Awards to Messrs. Dowell
and Macejewski vest in three equal annual installments beginning on
February 28, 2006. Dividends on restricted stock awards are paid at
the same rate and time as paid to holders of Common Stock. No stock
appreciation rights were granted and no long-term incentive plan
payouts were made in 2004, 2003 or 2002.
(2) Mr. Macejewski resigned from the Company effective April 1, 2005. At
such date, all of his restricted stock awards were forfeited.
OPTION GRANTS IN 2004
There were no grants of options during fiscal year 2004.
AGGREGATED OPTION EXERCISES IN 2004 AND 2004 YEAR-END VALUES
There were no options or stock appreciation rights exercised during fiscal year
2004 or outstanding at December 31, 2004.
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LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
PERFORMANCES ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS PERIOD UNTIL -------------------------------------------------
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS OR PAYOUT (# OF SHARES) (# OF SHARES) (# OF SHARES)
---------------------- ------------------ --------------- --------------- --------------- ---------------
William C. Bayless Jr.
PIU Award 48,400 (1) -- 48,400 48,400
Outperformance Award (2) 110,305 8/17/07 -- 110,305 110,305
Brian B. Nickel
PIU Award 29,040 (1) -- 29,040 29,040
Outperformance Award (2) 66,183 8/17/07 -- 66,183 66,183
Mark J. Hager
PIU Award 12,100 (1) -- 12,100 12,100
Outperformance Award (2) 29,415 8/17/07 -- 29,415 29,415
Greg A. Dowell
PIU Award 10,890 (1) -- 10,890 10,890
Outperformance Award (2) 29,415 8/17/07 -- 29,415 29,415
Ronnie L. Macejewski
PIU Award 9,074 (1) -- 9,074 9,074
Outperformance Award (2) 18,384 8/17/07 -- 18,384 18,384
----------------------
(1) See discussion of "Profits Interest Units" below.
(2) See discussion of "Outperformance Bonus Plan" below.
PROFITS INTEREST UNITS
PIUs are a special class of partnership interests in the Operating Partnership.
Each PIU awarded is deemed equivalent to an award of one share of Common Stock
under the 2004 Plan, reducing availability for other equity awards on a
one-for-one basis. PIUs, whether vested or not, receive the same quarterly per
unit distributions as holders of the Common Stock receive. This treatment with
respect to quarterly distributions is similar to the treatment of restricted
stock awards and RSUs. The Company issued 121,000 PIUs concurrently with the IPO
to certain key employees of the Company. PIUs are automatically convertible into
an equal number of common units of the Operating Partnership once the PIUs
achieve full parity with common units on account of certain book-up events. The
common units are redeemable for cash based upon the fair market value of an
equivalent number of shares of the Common Stock, or, at the election of the
Company, an equal number of shares of Common Stock.
Book-up events will occur upon a contribution of cash or property to the
Operating Partnership, including contributions by the Company of the proceeds
from future issuances of securities, or upon certain distributions of cash or
property by the Operating Partnership to one or more partners of the Operating
Partnership. Although we believe it likely that equalization will occur and the
PIUs will be converted into common units of the Operating Partnership, there are
circumstances under which such equalization would not be achieved and the PIUs
would therefore not achieve parity with respect to liquidating distributions.
Until and unless such parity is reached, the value that may be realized for a
given number of vested PIUs will likely be less than the value of an equal
number of shares of Common Stock. As of the date of this Proxy Statement, a
book-up event has not yet occurred.
Holders of the PIUs are entitled to customary registration rights, including
demand and piggyback registration rights, with respect to the shares of Common
Stock that may be received by the PIU holders upon a conversion/exchange of the
PIUs in accordance with the terms of the partnership agreement. The Company will
bear all fees, costs and expenses of such registrations, other than underwriting
discounts and commissions.
Unlike RSUs, the grant or vesting of PIUs is not expected to be a taxable
transaction to 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.
Conversely, the Company will not receive any tax deduction for compensation
expense from the grant of PIUs.
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OUTPERFORMANCE BONUS PLAN
Upon the consummation of the IPO, the Company 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 of Common Stock underlying
this bonus pool.
Vesting of the awards will occur on 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 include: (i) a total return on the 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 the 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. Such payments
will be paid in cash; however, the Compensation Committee may, in its sole
discretion, elect to pay such an award through 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. Because the achievement of the required performance measures is
considered to be remote as of December 31, 2004, nothing has been reflected in
the consolidated financial statements at such date related to these awards.
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 of the Company, or termination of employment other than
for "cause" or by a designated recipient for "good reason," the special 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 3-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, 2004, the Company had employment agreements in effect with
Messrs. Bayless, Nickel and Hager 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 the Company's executive
compensation and benefit programs. The employment agreements provide for Mr.
Bayless to serve as a member of the Company's Board and President and Chief
Executive Officer, Mr. Nickel to serve as a member of the Company's Board and
Executive Vice President, Chief Investment Officer and Secretary, and Mr. Hager
to serve as Executive Vice President, Chief Financial and Accounting Officer and
Treasurer. The term of each agreement ends upon an executive's termination of
employment as discussed below.
The employment agreements provide for: (i) an annual base salary of $300,000,
$250,000 and $200,000 for Messrs. Bayless, Nickel and Hager, respectively,
subject in each case to increases in accordance with the Company's normal
executive compensation practices; (ii) eligibility for annual cash bonus awards
determined by the Compensation Committee or in the event that the Company has 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 of the Company (with appropriate adjustments due to
title and salary); (iii) a PIU grant as of the consummation of the Company's
IPO, which was immediately vested; (iv) eligibility to receive an outperformance
award subject to the terms and conditions of the Company's 2004 Outperformance
Bonus Program; and (v) participation in other employee benefit plans applicable
generally to the Company's senior executives.
Under the terms of the respective employment agreements, as of the consummation
of the Company's IPO, Messrs. Bayless, Nickel and Hager were issued 48,400,
29,040 and 12,100 PIUs, respectively, valued at $847,000, $508,200 and $211,750,
respectively, based on the value of the Common Stock at the time of the IPO.
These PIUs represent a 0.40%, 0.24% and 0.10% limited partnership interest in
the Operating Partnership for Messrs. Bayless, Nickel and Hager, respectively.
The PIUs are not subject to any vesting period or requirement.
Each employment agreement provides that the respective executive may terminate
the agreement at any time by delivering written notice of termination to the
Company 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
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15
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 in the nature of his employment by the Company 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; any
failure by the Company to obtain a satisfactory agreement from any successor to
assume the terms of the employment agreement; and a breach by the Company of any
material provision of the employment agreement.
The employment agreements provide that, if an executive's employment is
terminated by the Company without "cause" or by the executive 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: (i) a cash payment equal to 299%,
200% and 100% 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
for Messrs. Bayless, Nickel and Hager, respectively, payable over the remaining
term of his non-competition agreement; (ii) his prorated annual bonus for the
year in which the termination occurs; and (iii) 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. Additionally, the employment agreements provide for excise
tax equalization payments.
Additionally, the Company has entered into non-competition agreements with
Messrs. Bayless, Nickel and Hager 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 the Company, if any.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no Compensation Committee interlocks and none of the Company's
employees participates on the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Formation Transactions, most of the interests in the Company's
off-campus properties were owned by RAP Student Housing Properties, LLC
("RAPSH"), which was wholly-owned by RAP. RSVP owned a 67% interest in RAP and,
prior to the IPO, was the sole stockholder of the Company. Mr. Scott Rechler is
the Chief Executive Officer and President of 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 Transactions, the former owners of our properties received material
benefits, including:
o RAP received a cash payment of approximately $78.5 million for the
redemption of its interests in RAPSH. Additionally, RAP received a
final working capital distribution from cash on hand of $1.5 million
and $0.2 million in budgeted development fees relating to the
construction properties to be paid from the remaining construction
budgets.
o RAPSH and an affiliate of RSVP distributed their interests in the
entities owning The Village at Riverside to an affiliate of RAP and
RSVP, and RAPSH maintained its guaranty of certain contingent
obligations of RAP and RSVP under the non-recourse indebtedness
encumbering this property. Subsequent to the IPO, the property was
foreclosed upon by the lender.
o RAPSH distributed to entities affiliated with RSVP, RAP and other
persons certain assets that the Company considered to be unrelated to
its core business, including a fee title to a parcel of
commercially-zoned land that is adjacent to the University Village at
San Bernardino and interests in entities that previously developed a
residential condominium project adjacent to University Village at
Boulder Creek and that currently own one remaining condominium unit in
that project.
o RAP and RSVP were entitled to $0.4 million (paid in February 2005) of
savings in the budgeted completion cost of the Company's three owned
off-campus construction properties that were completed in Fall 2004,
as well as $0.9 million (paid in November 2004) of insurance proceeds
that the Company received with respect to the fire at
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16
University Village at Fresno. Additionally, upon completion of the
construction at University Village at TU, RAP was entitled to receive
$0.5 million relating to a construction guarantee fee, which was paid
from the remaining construction budget in September 2004.
o Reckson and RSVP, through their respective ownership interests in RAP,
were entitled to participate in the benefits realized by RAP described
above.
o The Company agreed to nominate Mr. Scott Rechler to be a director of
our Board of Directors at our next two annual meetings, subject to his
consent and eligibility to serve. Mr. Rechler has agreed to waive
receipt of any director compensation until such time as he has been
reelected by our stockholders.
One of the Company's indirect wholly owned subsidiaries provides customary
property management services to Dobie Center and serves as exclusive leasing
agent for the commercial space at the property. An indirect subsidiary of RSVP
owns a 23% interest in this property. The agreement expires on May 31, 2008,
after which time the agreement renews on a month to month basis. The fee payable
for managing the property is 3% of gross receipts from the operation of
property, calculated on cumulative annualized basis (6% for supervision and
coordination of restoration activities following a casualty and major
rehabilitation/renovation of the property). In addition, the property manager
earns a commission equal to 4% of base rents payable under each commercial lease
(6% if a co-broker is involved) for acting as exclusive leasing agent for
commercial space. From the closing of the IPO until December 31, 2004, the
Company received $146,000 under this agreement.
COMMON STOCK PERFORMANCE GRAPH
The following performance graph compares the cumulative total return on the
Common Stock with the cumulative total return of the Standard & Poor's 500 Stock
Index ("S&P 500 Index") and The Morgan Stanley REIT Index for the period August
17, 2004, the date of our initial public offering, through December 31, 2004.
The performance graph assumes an investment of $100 in each of the Company 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
COMPARISON OF CUMULATIVE TOTAL RETURN FOR THE PERIOD
AUGUST 17, 2004 TO DECEMBER 31, 2004
(AMERICAN CAMPUS COMMUNITIES, S&P 500 INDEX AND THE MORGAN STANLEY REIT INDEX)
[GRAPH]
August December
2004 2004
---- ----
American Campus Communities 100 131
S&P 500 Index 100 113
The Morgan Staneley REIT Index 100 121
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17
AUDIT COMMITTEE INFORMATION
REPORT OF THE AUDIT COMMITTEE
The Audit Committee, on behalf of the Board of Directors of the Company, serves
as an independent and objective party to monitor the Company's financial
reporting process and internal control system, and to review and appraise the
audit efforts of the Company's independent auditors. The Audit Committee
performs these oversight responsibilities in accordance with its Audit Committee
Charter.
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 the Company's 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 the Company's earnings releases with management.
Ernst & Young LLP, the Company's independent auditors, are responsible for
auditing the Company's 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 the Company's 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 the Company and considered the compatibility of non-audit
services with the auditors' independence.
The Audit Committee discussed with the Company's 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 the Company's
internal controls and the overall quality of the Company's financial reporting.
The Audit Committee also meets with management and the Company's independent
auditors prior to the filing of the Company's 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 the Company's Annual Report
on Form 10-K for the year ended December 31, 2004 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 the Company's 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
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18
INDEPENDENT AUDITOR FEES
The following summarizes the approximate aggregate fees billed to American
Campus Communities for the fiscal years ended December 31, 2004 and 2003 by our
principal accounting firm, Ernst & Young LLP:
TOTAL APPROXIMATE FEES
-------------------------------------------------
TYPE OF SERVICES (1) 2004 2003
---------------------------- ------------------ ------------------
Audit Fees (2) $ 1,694,000 $ 141,000
Audit-Related Fees (3) 170,000 141,000
Tax Fees (4) 60,000 57,000
All Other Fees (5) 2,000 --
------------------ ------------------
Total (6) $ 1,926,000 $ 339,000
================== ==================
--------------------------------------------
(1) All such services subsequent to the IPO were preapproved by the Audit
Committee.
(2) Fees for audit services billed in 2004 and 2003 included the following: (i)
audit of the Company's annual financial statements; (ii) reviews of
quarterly financial statements; and (iii) services provided in conjunction
with the Company's IPO including review of registration statements filed
and related issuances of comfort letters, consents and other services
related to SEC matters. During 2004, audit fees included approximately
$1,621,000 for the aforementioned services provided in conjunction with the
IPO.
(3) Fees for audit-related services billed in 2004 and 2003 included financial
accounting and reporting consultations and audits of the Company's
unconsolidated and consolidated subsidiaries.
(4) Fees for tax services billed in 2004 and 2003 included tax compliance
services and tax planning and advice services.
(5) Fees for all other services billed in 2004 consisted of access to Ernst
& Young LLP's accounting and auditing research database.
(6) Excludes amounts that the Company reimbursed Ernst & Young LLP for
out-of-pocket expenses, which totaled approximately $28,000 in 2004 and $0
in 2003.
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 the Company 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 the Company 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
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 the Company 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.
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19
STOCKHOLDER PROPOSALS
The Company must receive any stockholder proposal intended for inclusion in the
proxy materials for the Annual Meeting to be held in 2006 no later than December
31, 2005. A stockholder may also nominate directors before the next annual
meeting by submitting the nomination as described under "Board Committees -
Nominating and Corporate Governance Committee." The Company did not receive any
formal proposals during 2004 from stockholders.
THE COMPANY'S 2004 ANNUAL REPORT
The Company's 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, 2004, as filed with the Securities
and Exchange Commission are on the Company's website at
www.americancampuscommunities.com and without charge to stockholders upon
writing to the Secretary of the Company. Neither the Annual Report to
Stockholders nor the Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 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 INVESTMENT OFFICER AND SECRETARY
Austin, Texas
April 6, 2005
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20
APPENDIX A
AUDIT COMMITTEE CHARTER
OF
AMERICAN CAMPUS COMMUNITIES, INC.
(EFFECTIVE: AUGUST 17, 2004)
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 its subsidiaries and audits of the financial
statements of the Company and its subsidiaries. The Committee's primary focus
will be: (1) to assist the Board in monitoring (a) the integrity of the
financial statements of the Company and its subsidiaries, (b) the compliance by
the Company and its subsidiaries with legal and regulatory requirements, (c) the
independent auditor's 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
The Company's Bylaws (the "BYLAWS") and this charter (the "CHARTER") govern the
operation of the Committee; in the event of a conflict, the terms of the Bylaws
shall govern. 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 registered 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 has the power to
retain outside legal, accounting and financial consultants or other advisors or
to delegate to subcommittees to assist it in its activities to the extent
permitted by the SEC and the New York Stock Exchange (the "NYSE"). 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 (3) or more independent directors, 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. Each Committee member may receive his or her director fee
in cash and/or Company stock or options or other in-kind consideration.
Committee members shall not be affiliated with the Company or any of its
subsidiaries or receive any fees paid directly or indirectly for services as a
consultant or financial advisor regardless of amount from the Company or any of
its subsidiaries. This includes payments to any firm of which a Committee member
is an executive officer, partner, member, principal or designee, but does not
include the receipt of fixed amounts of compensation under a retirement plan
(including deferred compensation) for prior service with the Company (provided
that such compensation is not contingent in any way on continued service). Each
Committee member shall meet the independence requirements of the SEC and NYSE.
COMPOSITION
All members of the Committee shall be financially literate, or must become
financially literate within a reasonable period of time after his or her
appointment to the Committee, as required by the NYSE. "Financial Literacy"
shall be determined by the Board in the exercise of its business judgment, and
shall include a working knowledge of skills and competencies that the Board will
need for the Company to be successful in the future. Committee members, if they
or the Board deem it appropriate, may enhance their understanding of their
duties by participating in educational programs conducted by the Company or an
outside consultant or firm.
At least one member of the Committee must have accounting or financial
management expertise. The Board has determined that a person who qualifies as a
"financial expert" as set forth by the SEC has such accounting or related
financial management expertise. A "financial expert" is a person who has the
following attributes: (1) an understanding of generally accepted accounting
principles ("GAAP") and financial statements; (2) the ability to assess the
general application of such principles in connection with the accounting for
estimates, accruals and reserves; (3) experience
preparing, auditing, analyzing or evaluating financial statements that present a
breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can reasonably be
expected to be raised by the registrant's financial statements, or experience
actively supervising one or more persons engaged in such activities; (4) an
understanding of internal control over financial reporting; and (5) an
understanding of audit committee functions. A person must have acquired such
attributes through one of more of the following: (a) education and experience as
a principal financial officer, principal accounting officer, controller, public
accountant or auditor or experience in one or more positions that involve the
performance of similar functions; (b) experience actively supervising a
principal financial officer, principal accounting officer, controller, public
accountant, auditor or person performing similar functions; (c) experience
overseeing or assessing the performance of companies or public accountants with
respect to the preparation, auditing or evaluation of financial statements; or
(d) other relevant experience.
MINUTES
The Committee shall maintain and submit to the Board copies of minutes of each
meeting of the Committee, and each written consent to action taken without a
meeting, reflecting the actions so authorized or taken by the Committee since
the preceding meeting of the Board. A copy of the minutes of each meeting shall
be placed in the Corporation's minute book.
CHARTER AMENDMENT
Any member of the Committee may submit proposed Charter amendments to the Board.
The Board shall circulate any proposed charter amendment(s) to members of the
Committee immediately upon receipt. By a majority vote, the Board may approve
the amendments to the Charter.
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. The presence in person or by telephone of a
majority of the Committee's members shall constitute a quorum for any meeting of
the Committee. 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.
The Committee chairperson may consult with management in the process of
establishing agendas for Committee meetings.
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 any
non-audit services;
(3) Pre-approve appropriate funding for payment of (a) compensation to the
Company's independent auditors for the purpose of rendering audit and
non-audit services, (b) compensation to any advisors employed by the
Committee and (c) ordinary administrative expenses necessary to carry
out its duties. 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;
(4) Approve all related party transactions entered into by the Company with
any of the Company's directors or executive officers;
(5) Ensure audit partner rotation if the lead (or coordinating) audit
partner (having primary responsibility for the audit), or the audit
partner responsible for reviewing the audit, has performed audit
services for the Company in each of the Company's five previous fiscal
years;
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2
(6) Review and reassess the adequacy of the Charter annually and recommend
any proposed changes to the Board for approval;
(7) Review, evaluate and reassess the performance of the Committee annually
and discuss such annual performance evaluation with the Board;
(8) Review the Company's annual audited financial statements and quarterly
unaudited financial statements with the Company's management and
independent auditors;
(9) 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;
(10) 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 the Committee need not
discuss in advance each earnings release or each instance in which the
Company may provide earnings guidance;
(11) 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;
(12) Review any major changes to the Company's auditing and accounting
principles and practices as suggested by the Company's management or
independent auditors;
(13) 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
auditor, and any steps taken to deal with any such issues;
and
c) all relationships between the independent auditor and the
Company (to assess the auditor's independence);
(14) Review and receive periodic reports (as well as the written disclosures
and the letter from the independent accountants required by Independence
Standards Board Standard No. 1 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 auditor; after receipt of the
annual report provided by the independent auditors discussed above in
Section 13, present its conclusions with respect to the independent
auditor 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;
(15) Meet regularly with the Board and review with the Company's management
any legal matters that may have a material impact on the financial
statements, the Company's compliance policies and any material reports
or inquiries received from regulators or governmental agencies;
(16) Review with the Company's independent auditors any problems or
difficulties the auditor may have encountered and any management letter
provided (or intended to be provided) by the auditor and the Company'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 disagreements with management;
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3
(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), any material communications
between the audit team and the independent auditors'
national office respecting auditing or accounting issues
presented by the engagement;
(17) Review and discuss with the Company's independent auditors, the
responsibilities, budget and staffing of the Company's internal audit
function;
(18) 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;
(19) 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 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;
(20) Review 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 control deficiencies;
(21) 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 management officials of the issuer,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent
auditors;
(22) Review any failures of the Company's financial reporting controls;
(23) 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;
(24) Meet periodically with the Company's management, the independent
auditors and the personnel or 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 and the
adequacy and competency of the Company's financial management;
(25) Meet and discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit of the Company's annual financial statements and
the matters required to be discussed relating to the conduct of the
review of the Company's quarterly financial statements;
(26) Meet and discuss with the internal auditors (or other personnel or
independent third party responsible for the internal audit function) the
Company's risk management processes and systems of internal control;
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4
(27) Establish procedures for:
(a) the receipt, retention, and treatment of complaints received
by the Company 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;
(28) Obtain assurance from the Company's independent auditor that it has
notified the Committee of any failure of which the independent auditor
is aware of the Company to comply with applicable legal requirements;
(29) Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with any
code of business conduct adopted by the Committee from time to time;
(30) Set clear hiring policies for employees or former employees of the
independent auditors so as to avoid any conflict of interest under the
rules and regulations set forth by the SEC and the NYSE;
(31) Meet regularly with the Board to effect the Committee's purpose noted
above; and
(32) 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 auditor.
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5
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AMERICAN CAMPUS COMMUNITIES, INC.
FOR THE MAY 12, 2005
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints William C. Bayless Jr. and Mark J. Hager, or
either of them, proxies of the undersigned, with full powers of substitution, to
represent the undersigned and to vote all shares of Common Stock of the Company
held of record by the undersigned as of the close of business on March 18, 2005,
on behalf of the undersigned at the Annual Meeting of Stockholders to be held on
May 12, 2005 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 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
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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 2006 ANNUAL MEETING
OF STOCKHOLDERS
FOR [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT [ ]
Nominees:
(01) William C. Bayless Jr. (05) Edward Lowenthal
(02) R.D. Burck (06) Brian B. Nickel
(03) G. Steven Dawson (07) Scott H. Rechler
(04) Cydney Donnell (08) Winston W. Walker
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To withhold authority to vote for any individual, mark "For All Except"
and write the nominee's number on the space above.
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 the Company. If the shares
are held jointly, each holder should sign. When signing in a representative
capacity, please give title.
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Date Share Owner sign here Co-Owner sign here