SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
Sun Communities, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SUN COMMUNITIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2002
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Sun
Communities, Inc. (the "Company") will be held at the Novi Hilton, 21111
Haggerty Road, Novi, Michigan 48375, on Thursday, May 23, 2002, at 11:00 a.m.,
local time, for the following purposes:
(1) To elect two Directors to serve until the Annual Meeting of
Shareholders to be held in 2005 or until their successors
shall have been duly elected and qualified; and
(2) To transact such other business as may properly come before
the meeting.
A Proxy Statement containing information relevant to the Annual Meeting
appears on the following pages.
Only holders of Common Stock of record at the close of business on
April 2, 2002 are entitled to notice of and to vote at the meeting or any
adjournments.
If you do not plan to attend the meeting and you wish to vote in
accordance with the Board of Director's recommendations, it is not necessary to
specify your choices; merely sign, date, and return the enclosed Proxy Card. If
you attend the meeting, you may withdraw your Proxy and vote your own shares.
By Order of the Board of Directors
JEFFREY P. JORISSEN
Secretary
Dated: April 9, 2002
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE ENCOURAGED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
SUN COMMUNITIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2002
PROXIES AND SOLICITATIONS
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors (the "Board") of Sun
Communities, Inc. ("Sun" or the "Company") to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") and at any adjournments. If received in time
for the Annual Meeting, the shares represented by a valid proxy will be voted in
accordance with the specifications, if any, contained in such executed proxy. If
no instructions are given, proxies will be voted: (a) FOR election of the two
nominees for the Board; and (b) at the discretion of Jeffrey P. Jorissen and
Arthur A. Weiss, the Board's designated representatives for the Annual Meeting,
with respect to such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof. A proxy executed in the
enclosed form may be revoked by the person signing it at any time before it is
exercised. Proxies may be revoked by filing with the Secretary of the Company,
any time prior to the time set for commencement of the Annual Meeting, a written
notice of revocation bearing a later date than the proxy, or by attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute revocation of a proxy).
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegram, by directors, officers and employees of the
Company. Arrangements may also be made with brokerage houses or other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of shares of the Company's common stock (the "Common Stock")
held of record by such persons, and the Company may reimburse such persons for
reasonable out-of-pocket expenses incurred in forwarding material. The Company
anticipates that fees and expenses for the foregoing parties will not exceed
$1,000. The costs of all proxy solicitation will be borne by the Company.
The executive offices of the Company are located at 31700 Middlebelt
Road, Suite 145, Farmington Hills, Michigan 48334. The approximate date of
mailing of this Proxy Statement and the enclosed Proxy materials to the
Company's shareholders is April 10, 2002.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Novi Hilton, 21111 Haggerty
Road, Novi, Michigan 48375, on Thursday, May 23, 2002, at 11:00 a.m., local
time.
VOTING RIGHTS AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
Only shareholders of record at the close of business on April 2, 2002
are entitled to notice of and to vote at the Annual Meeting or at any
adjournments. As of that date, the Company had 17,669,917 shares of Common Stock
issued, outstanding and entitled to vote held by 677 holders of record. Each
outstanding share entitles the record holder to one vote. Shares cannot be voted
at the Annual Meeting unless the holder is present in person or represented by
proxy. The presence, in person or by proxy, of shareholders entitled to vote a
majority of the voting shares that are outstanding and entitled to vote will
constitute a quorum.
Information concerning principal holders of the Common Stock is
discussed under "Security Ownership of Certain Beneficial Owners and
Management."
1
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this Proxy Statement entitled "Report of the Audit Committee,"
"Report of the Compensation Committee on Executive Compensation" and
"Shareholder Return Performance Presentation" shall not be deemed to be so
incorporated unless specifically otherwise provided in any such filing.
ANNUAL REPORT
Shareholders are concurrently being furnished with a copy of the
Company's 2001 Annual Report which contains its audited financial statements as
of December 31, 2001. In addition, copies of the Company's Annual Report on Form
10-K for the year ended December 31, 2001, as filed with the Securities and
Exchange Commission (the "SEC"), will be sent to any shareholder, without
charge, upon written request to Sun Communities Investor Services, 31700
Middlebelt Road, Suite 145, Farmington Hills, Michigan 48334.
2
ELECTION OF DIRECTORS
(SOLE PROPOSAL)
The only matter expected to be considered at the Annual Meeting will be
the election of two directors. It is proposed that these positions be filled by
persons nominated to the Board by management. Each director shall be elected by
a plurality of the votes cast at the Annual Meeting. Therefore, if a quorum is
present, abstentions and broker non-votes will have no effect on the election of
directors. Proxies will be tabulated by the Company's transfer agent. The
Inspector of Elections appointed at the Annual Meeting will then combine the
proxy votes with the votes cast at the Annual Meeting. Each director elected at
the Annual Meeting will serve for a term commencing on the date of the Annual
Meeting and continuing until the Annual Meeting of Shareholders to be held in
2005 or until his successor is duly elected and qualified. In the absence of
directions to the contrary, proxies will be voted in favor of the election of
the two nominees listed below.
If either of the nominees named below are unavailable to serve for any
reason, then a valid proxy may be voted for the election of such other persons
as the person or persons voting the proxy may deem advisable in accordance with
their best judgment. Management has no present knowledge that either of the
persons named will be unavailable to serve. In any event, the enclosed proxy can
be voted for only the two nominees named in this Proxy Statement or their
substitutes.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED BELOW.
PROXIES SOLICITED BY THE BOARD WILL BE VOTED "FOR" THE NOMINEES UNLESS
INSTRUCTIONS TO WITHHOLD OR TO THE CONTRARY ARE GIVEN.
The following list identifies each incumbent director and nominee for
election to the Board at the Annual Meeting and describes each person's
principal occupation for the past five years. Each of the directors has served
continuously from the date of his election to the present time.
NAME AGE OFFICE
---- --- ------
Gary A. Shiffman................................. 47 Chairman, Chief Executive Officer, President
and Director (Nominee)
Paul D. Lapides.................................. 47 Director
Clunet R. Lewis.................................. 55 Director
Ronald L. Piasecki............................... 63 Director (Nominee)
Ted J. Simon..................................... 71 Director
Arthur A. Weiss.................................. 53 Director
GARY A. SHIFFMAN is the Chairman, President and Chief Executive
Officer, and has been an executive officer of Sun since its inception. He has
been actively involved in the management, acquisition, construction and
development of manufactured housing communities and has developed an extensive
network of industry relationships over the past 18 years. He has overseen the
land acquisition, rezoning, development and marketing of numerous manufactured
home expansion projects. Mr. Shiffman is also the President and a director of
Sun Home Services, Inc. ("Sun Home Services") and all other corporate
subsidiaries of the Company. Mr. Shiffman is the Chairman of the Board and
Secretary of Bingham Financial Services Corporation (Nasdaq: BFSC) ("Bingham"),
which is a specialized financial services company providing financing for
manufactured homes. Bingham was initially formed as an affiliate of Sun but
became publicly held in November 1997.
PAUL D. LAPIDES has been a director since December 1993. Mr. Lapides is
Director of the Corporate Governance Center in the Coles College of Business at
Kennesaw State University, where he is an assistant professor of management and
entrepreneurship. A certified public accountant, Mr. Lapides is the author of
more than 100 articles and books on real estate and management. His real estate
experience includes managing a $3 billion national portfolio of income-producing
real estate consisting of 42,000 multi-family units and 16 million square feet
of commercial space.
3
CLUNET R. LEWIS has been a director since December 1993. For the past
nine years, Mr. Lewis has served as President of CRL Enterprises, Inc. a private
business consulting firm. From August 1995 until December 2000, Mr. Lewis served
in various capacities, including as Secretary, General Counsel and as a member
of the board of directors, of Verso Technologies, Inc. (f/k/a Eltrax Systems,
Inc), an international provider of information technology services supporting
internet and private network E-commerce applications.
RONALD L. PIASECKI has been a director since May 1996, upon completion
of the Company's acquisition of twenty-five manufactured housing communities
(the "Aspen Properties") owned by affiliates of Aspen Enterprises, Ltd.
("Aspen"). Mr. Piasecki is the executive vice president and a director of Aspen,
which he co-founded in 1973. Prior to the Company's acquisition of the Aspen
Properties, Aspen was one of the largest privately-held developers and owners of
manufactured housing communities in the U.S. Mr. Piasecki serves as chairman of
the board of directors of Kurdziel Industries, Inc., the world's largest
producer of counter weights for the material handling industry, and Mr. Piasecki
is a director of USOL Holdings, Inc. (Nasdaq: USOL), a provider of integrated
telecommunications services.
TED J. SIMON has been a director since December 1993. Since February
1999, Mr. Simon has been affiliated with Grand Sakwa Properties Inc., a real
estate development company located in Farmington Hills, Michigan. From 1981
until January 1999, Mr. Simon was the Vice President-Real Estate (Midwest Group)
of The Great Atlantic & Pacific Tea Company, Inc. and Mr. Simon was a Vice
President-Real Estate and a director of Borman's Inc., a wholly owned subsidiary
of The Great Atlantic & Pacific Tea Company, Inc. Mr. Simon is also a director
of Clarkston State Bank, a wholly-owned subsidiary of Clarkston Financial
Corporation.
ARTHUR A. WEISS has been a director since October 1996. Since 1976, Mr.
Weiss has practiced law with the law firm of Jaffe, Raitt, Heuer & Weiss,
Professional Corporation ("JRH&W"), which represents the Company in various
matters. Mr. Weiss is currently a shareholder of JRH&W. Mr. Weiss is also a
director of Bingham.
To the best of the Company's knowledge, there are no material
proceedings to which any nominee is a party, or has a material interest, adverse
to the Company. To the best of the Company's knowledge, there have been no
events under any bankruptcy act, no criminal proceedings and no judgments or
injunctions that are material to the evaluation of the ability or integrity of
any nominee during the past five years.
BOARD OF DIRECTORS AND COMMITTEES
Pursuant to the terms of the Company's charter, the directors are
divided into three classes. The class up for election at the Annual Meeting will
hold office for a term expiring at the annual meeting of shareholders to be held
in 2005. A second class will hold office for a term expiring at the annual
meeting of shareholders to be held in 2003 and a third class will hold office
for a term expiring at the annual meeting of shareholders to be held in 2004.
Each director will hold office for the term to which he is elected and until his
successor is duly elected and qualified. Gary A. Shiffman and Ronald L. Piasecki
have terms expiring at the Annual Meeting and are nominees for the class to hold
office for a term expiring at the annual meeting of shareholders to be held in
2005. Ted J. Simon and Paul D. Lapides have terms expiring at the annual meeting
of shareholders to be held in 2003 and Clunet R. Lewis and Arthur A Weiss have
terms expiring at the annual meeting of shareholders to be held in 2004. At each
annual meeting of the shareholders of the Company, the successors to the class
of directors whose terms expire at such meeting will be elected to hold office
for a term expiring at the annual meeting of shareholders held in the third year
following the year of their election.
The Board met five times during 2001 and took various actions pursuant
to resolutions adopted by unanimous written consent. All directors attended at
least 75% of the meetings of the Board and each committee on which they served.
4
Several important functions of the Board may be performed by committees
that are comprised of members of the Board. The Company's Bylaws authorize the
formation of these committees and grant the Board the authority to prescribe the
functions of each committee and the standards for membership of each committee.
In addition, the Board appoints the members of each committee. The Board has
four standing committees: an Audit Committee, a Compensation Committee, an
Indemnification Committee and an Executive Committee.
The Audit Committee was established to: (i) annually recommend a firm
of independent public accountants to the Board to act as auditors of the
Company; (ii) review the scope of the annual audit with the auditors in advance
of the audit; (iii) generally review the results of the audit and the adequacy
of the Company's accounting, financial and operating controls; (iv) review the
Company's accounting and reporting principles, policies and practices; and (v)
perform such other duties as may be delegated to it by the Board or as specified
in the Audit Committee's written charter adopted by the Board (set forth in
Appendix A to this proxy statement). The current members of the Audit Committee
are Messrs. Paul D. Lapides, Clunet R. Lewis and Ronald L. Piasecki. The Audit
Committee held two formal meetings and several informal meetings during the
fiscal year ended December 31, 2001.
The Compensation Committee was established to: (i) review and modify
the compensation (including salaries and bonuses) of the Company's officers as
initially set by the Company's President; (ii) administer the Company's 1993
Stock Option Plan (the "Employee Option Plan"); and (iii) perform such other
duties as may be delegated to it by the Board. The current members of the
Compensation Committee are Messrs. Ted J. Simon and Ronald L. Piasecki. During
the fiscal year ended December 31, 2001, the Compensation Committee held two
formal meetings and took various actions pursuant to resolutions adopted by
unanimous written consent. See "Report of the Compensation Committee on
Executive Compensation."
The Indemnification Committee was established to: (i) perform such
duties as provided in Article XII of the Company's Bylaws; and (ii) perform such
other duties as may be delegated to it by the Board. The current members of the
Indemnification Committee are Messrs. Ted J. Simon and Clunet R. Lewis. The
Indemnification Committee did not hold any formal meetings in 2001.
The Executive Committee was established to generally manage the
day-to-day business and affairs of the Company between regular Board meetings.
In no event may the Executive Committee, without the prior approval of the Board
acting as a whole: (i) recommend to the shareholders an amendment to the
Company's Charter; (ii) amend the Company's Bylaws; (iii) adopt an agreement of
merger or consolidation; (iv) recommend to the shareholders the sale, lease or
exchange of all or substantially all of the Company's property and assets; (v)
recommend to the shareholders a dissolution of the Company or a revocation of a
dissolution; (vi) fill vacancies on the Board; (vii) fix compensation of the
directors for serving on the Board or on a committee of the Board; (viii)
declare dividends or authorize the issuance of the Company's stock; (ix) approve
or take any action with respect to any related party transaction involving the
Company; or (x) take any other action which is forbidden by the Company's
Bylaws. All actions taken by the Executive Committee must be promptly reported
to the Board as a whole and are subject to ratification, revision and alteration
by the Board, except that no rights of third persons created in reliance on
authorized acts of the Executive Committee can be affected by any such revision
or alteration. The current members of the Executive Committee are Messrs. Gary
A. Shiffman and Ted J. Simon. The Executive Committee did not hold any formal
meetings during the fiscal year ended December 31, 2001 but took various actions
pursuant to resolutions adopted by unanimous written consent.
The Board does not have a standing committee responsible for nominating
individuals to become directors. The entire Board performs the function of such
a committee.
5
REPORT OF THE AUDIT COMMITTEE
The Board maintains an Audit Committee comprised of three of the
Company's directors. The directors who serve on the Audit Committee are all
"independent" for purposes of the New York Stock Exchange listing standards. The
Audit Committee held two formal meeting during the 2001 fiscal year.
In accordance with its written charter adopted by the Board, the Audit
Committee assists the Board with fulfilling its oversight responsibility
regarding the quality and integrity of the accounting, auditing and financial
reporting practices of the Company. In discharging its oversight
responsibilities regarding the audit process, the Audit Committee:
- reviewed and discussed the audited financial statements with
management and PricewaterhouseCoopers LLP, the Company's
independent auditors;
- discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees); and
- reviewed the written disclosures and the letter from the
independent auditors required by the Independence Standards
Board's Standard No. 1 (Independence Discussions with Audit
Committees), and discussed with the independent auditors any
relationships that may impact their objectivity and
independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, as filed with the Securities and Exchange Commission.
The Audit Committee presents the following summary of all fees incurred
with PricewaterhouseCoopers LLP, the Company's independent auditors, for the
fiscal year ended December 31, 2001:
- audit fees (for professional services rendered for the audit
of the Company's 2001 financial statements and the reviews of
the quarterly financial statements) - $117,900;
- financial information systems design and implementation fees -
none; and
- all other fees (consisting primarily of professional services
rendered for the reviews of registration statements on Form
S-3 and research and consultation on accounting matters) -
$57,665.
The Audit Committee has considered and determined that the level of
fees of PricewaterhouseCoopers LLP's for provision of services other than the
audit services is compatible with maintaining the auditor's independence. The
Audit Committee has also approved the selection of PricewaterhouseCoopers LLP as
the Company's independent auditor for the year ending December 31, 2002.
Respectfully Submitted,
Members of the Audit Committee:
Paul D. Lapides
Clunet R. Lewis
Ronald L. Piasecki
6
MANAGEMENT AND COMPENSATION
EXECUTIVE OFFICERS
The persons listed below are the current executive officers of the
Company. Each is annually appointed by, and serves at the pleasure of, the
Board.
NAME AGE OFFICE
---- --- ------
Gary A. Shiffman................................. 47 Chairman, Chief Executive Officer and President
Jeffrey P. Jorissen.............................. 57 Senior Vice President, Treasurer, Chief
Financial Officer and Secretary
Brian W. Fannon.................................. 51 Senior Vice President and Chief Operating Officer
Jonathan M. Colman............................... 46 Senior Vice President - Acquisitions
Background information for Gary A. Shiffman is provided under "Election
of Directors," above. Background information for the other three executive
officers is set forth below.
JEFFREY P. JORISSEN has been Chief Financial Officer and Secretary
since August 1993, and Senior Vice President and Treasurer since December 1993.
As a certified public accountant, he was with the international accounting firm
of Coopers & Lybrand for sixteen years, including eight years as a partner.
During his tenure at Coopers & Lybrand, Mr. Jorissen specialized in real estate
and directed financial statement examinations of numerous public companies. Mr.
Jorissen is also the Chief Financial Officer and Secretary of Sun Home Services
and all other corporate subsidiaries of the Company.
BRIAN W. FANNON joined the Company in May 1994 as Senior Vice
President-Operations and became Chief Operating Officer in 1995. Prior to
joining the Company, he worked for Lautrec, Ltd., then the largest manufactured
housing community owner-operator in the United States, where he was responsible
for operations comprising 25,000 sites and 300 employees, and Quality Homes,
Inc., its sales and marketing division. He joined that organization in 1978 as a
regional manager and became President in 1986. Mr. Fannon was appointed by
Governor Milliken to the Michigan Mobile Home Commission in 1977, the year of
its inception. Subsequent appointments by Governors Blanchard and Engler have
enabled Mr. Fannon to serve on such commission, including serving as its
chairman from 1986 to 1994, and Mr. Fannon has again been serving as the
chairman of the Michigan Mobile Home Commission since 1998. Mr. Fannon is also
the Chief Executive Officer of Sun Home Services and a Vice President of all
other corporate subsidiaries of the Company.
JONATHAN M. COLMAN joined the Company in 1994 as Vice
President-Acquisitions and became a Senior Vice President in 1995. A certified
public accountant, Mr. Colman has over eighteen years of experience in the
manufactured housing community industry. He has been involved in the
acquisition, financing and management of over 75 manufactured housing
communities for two of the 10 largest manufactured housing community owners,
including Uniprop, Inc. during its syndication of over $90 million in public
limited partnerships in the late 1980s. Mr. Colman is also a Vice President of
all corporate subsidiaries of the Company.
To the best of the Company's knowledge, there have been no events under
any bankruptcy act, no criminal proceedings and no judgments or injunctions that
are material to the evaluation of the ability or integrity of any executive
officer during the past five years.
7
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid to the Chief
Executive Officer and each executive officer whose remuneration from the Company
exceeded $100,000 during the fiscal year ended December 31, 2001.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) STOCK AWARDS($) COMPENSATION($)
--------------------------- ---- --------- -------- ---------- --------------- ---------------
Gary A. Shiffman, 2001 $388,336 $97,085 25,000 $933,636(1) 0
Chairman, Chief Executive Officer and 2000 $373,400 0 0 0 $6,837(2)
President................................ 1999 $355,666 $175,000 25,000 0 $5,552(2)
Jeffrey P. Jorissen,
Senior Vice President, Treasurer, Chief 2001 $262,080 $65,520 2,250 $1,263,570(3) 0
Financial Officer and 2000 $252,000 0 0 0 $4,512(2)
Secretary................................ 1999 $240,000 $120,000 10,000 0 $3,664(2)
Brian W. Fannon, 2001 $354,900 $88,725(4) 2,250 $660,000(5) 0
Senior Vice President and Chief Operating 2000 $341,250 0 0 0 0
Officer.................................. 1999 $325,000 $162,500 0 0 0
Jonathan M. Colman, 2001 $141,960 $36,910 4,000 $341,220(6) 0
Senior Vice President-Acquisitions....... 2000 $136,500 0 0 0 0
1999 $130,000 $30,000 5,000 0 0
----------------------
(1) On March 30, 2001, the Company issued Mr. Shiffman 28,292 shares of
Common Stock, which are subject to the terms and conditions of a
Restricted Stock Award Agreement. 35% of these restricted shares vest
on March 30, 2005, 35% of these shares vest on March 30, 2006, 20% of
these shares vest on March 30, 2007, 5% of these shares vest on March
30, 2008 and 5% of these shares vest on March 30, 2011. As of December
31, 2001, the value of such restricted shares (as determined in
accordance with the rules promulgated by the Securities and Exchange
Commission) was $933,636.00. Mr. Shiffman receives any dividends paid
on such restricted shares.
(2) Dividend distribution from Sun Home Services, Inc.
(3) On March 30, 2001, the Company issued Mr. Jorissen 38,290 shares of
Common Stock, which are subject to the terms and conditions of a
Restricted Stock Award Agreement. 35% of these restricted shares vest
on March 30, 2005, 35% of these shares vest on March 30, 2006, 20% of
these shares vest on March 30, 2007, 5% of these shares vest on March
30, 2008 and 5% of these shares vest on March 30, 2011. As of December
31, 2001, the value of such restricted shares (as determined in
accordance with the rules promulgated by the Securities and Exchange
Commission) was $1,263,570.00. Mr. Jorissen receives any dividends paid
on such restricted shares.
(4) Mr. Fannon's bonus was paid partially by the Company and partially by
Sun Home Services, Inc.
8
(5) On March 30, 2001, the Company issued Mr. Fannon 20,000 shares of
Common Stock, which are subject to the terms and conditions of a
Restricted Stock Award Agreement. 35% of these restricted shares vest
on March 30, 2005, 35% of these shares vest on March 30, 2006, 20% of
these shares vest on March 30, 2007, 5% of these shares vest on March
30, 2008 and 5% of these shares vest on March 30, 2011. As of December
31, 2001, the value of such restricted shares (as determined in
accordance with the rules promulgated by the Securities and Exchange
Commission) was $660,000.00. Mr. Fannon receives any dividends paid on
such restricted shares.
(6) On March 30, 2001, the Company issued Mr. Colman 10,340 shares of
Common Stock, which are subject to the terms and conditions of a
Restricted Stock Award Agreement. 35% of these restricted shares vest
on March 30, 2005, 35% of these shares vest on March 30, 2006, 20% of
these shares vest on March 30, 2007, 5% of these shares vest on March
30, 2008 and 5% of these shares vest on March 30, 2011. As of December
31, 2001, the value of such restricted shares (as determined in
accordance with the rules promulgated by the Securities and Exchange
Commission) was $341,220.00. Mr. Colman receives any dividends paid on
such restricted shares.
OPTION/SAR GRANTS TABLE
==========================================================================================================================
SHARES % OF TOTAL
UNDERLYING OPTIONS/SARS POTENTIAL REALIZABLE VALUE AT
OPTIONS/SARS GRANTED TO EXERCISE ASSUMED ANNUAL RATES OF STOCK
GRANTED EMPLOYEES PRICE EXPIRATION PRICE APPRECIATION FOR OPTION
NAME IN 2001 IN 2001 ($/SH.) DATE TERM
--------------------------------
5% 10%
($) ($)
--------------------------------
Gary A. Shiffman 25,000 18.13% $27.03 4/12/2011 $ 425,000 $1,077,000
--------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Jorissen 2,250 1.63% $27.03 4/12/2011 $ 38,250 $ 96,930
--------------------------------------------------------------------------------------------------------------------------
Brian W. Fannon 2,250 1.63% $27.03 4/12/2011 $ 38,250 $ 96,930
--------------------------------------------------------------------------------------------------------------------------
Jonathan M. Colman 4,000 2.90% $27.03 4/12/2011 $ 68,000 $ 172,320
==========================================================================================================================
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
=================================================================================================================================
NO. OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
--------------- ---------------- ---------------- ----------------
SHARES
ACQUIRED
ON EXERCISE VALUE NOT NOT
NAME IN 2001 RECEIVED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
---------------------------------------------------------------------------------------------------------------------------------
Gary A. Shiffman (2) - - 408,334 16,667 $3,774,737 $170,337
---------------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Jorissen (3) - - 123,250 1,500 $1,376,446 $40,545
---------------------------------------------------------------------------------------------------------------------------------
Brian W. Fannon (4) - - 35,750 1,500 $ 391,978 $40,545
---------------------------------------------------------------------------------------------------------------------------------
Jonathan M. Colman (5) - - 46,333 2,667 $ 490,911 $72,089
---------------------------------------------------------------------------------------------------------------------------------
9
(1) Assumes a value equal to the difference between the closing sales price
on December 31, 2001, which was $37.25 per share, and the exercise
price of in-the-money options.
(2) Includes: (a) 50,000 stock options granted December 21, 1993 pursuant
to the Employee Option Plan with an exercise price of $20.00 per share,
which options must be exercised by December 21, 2003; (b) 25,000 stock
options granted March 11, 1996 pursuant to the Employee Option Plan
with an exercise price of $26.625 per share, which options must be
exercised by March 11, 2006; (c) 275,000 stock options granted October
28, 1996 pursuant to the Employee Option Plan with an exercise price of
$28.6375 per share, which options must be exercised by October 28,
2006; (d) 25,000 stock options granted January 14, 1998 pursuant to the
Employee Option Plan with an exercise price of $33.75 per share, which
options must be exercised by January 14, 2008; (e) 25,000 stock options
granted December 15, 1999 pursuant to the Employee Option Plan with an
exercise price of $30.03 per share, which options must be exercised by
December 15, 2009; and (f) 25,000 stock options granted April 12, 2001
pursuant to the Employee Option Plan with an exercise price of $27.03
per share, which options must be exercised by April 12, 2011.
(3) Includes: (a) 20,000 stock options granted December 1, 1993 pursuant to
the Employee Option Plan with an exercise price of $20.00 per share,
which options must be exercised by December 1, 2003; (b) 35,000 stock
options granted May 23, 1995 pursuant to the Employee Option Plan with
an exercise price of $22.00 per share, which options must be exercised
by May 23, 2005; (c) 15,000 stock options granted February 26, 1996
pursuant to the Employee Option Plan with an exercise price of $27.00
per share, which options must be exercised by February 26, 2006; (d)
22,500 stock options granted October 28, 1996 pursuant to the Employee
Option Plan with an exercise price of $28.6375 per share, which options
must be exercised by October 28, 2006; (e) 20,000 stock options granted
January 14, 1998 pursuant to the Employee Option Plan with an exercise
price of $33.75 per share, which options must be exercised by January
14, 2008; (f) 10,000 stock options granted December 15, 1999 pursuant
to the Employee Option Plan with an exercise price of $30.03 per share,
which options must be exercised by December 15, 2009; and (g) 2,250
stock options granted April 12, 2001 pursuant to the Employee Option
Plan with an exercise price of $27.03 per share, which options must be
exercised by April 12, 2011.
(4) Includes: (a) 15,000 stock options granted July 18, 1994 pursuant to
the Employee Option Plan with an exercise price of $22.50 per share,
which options must be exercised by July 18, 2004; (b) 10,000 stock
options granted February 26, 1996 pursuant to the Employee Option Plan
with an exercise price of $27.00 per share, which options must be
exercised by February 26, 2006; (c) 5,000 stock options granted October
28, 1996 pursuant to the Employee Option Plan with an exercise price of
$28.6375 per share, which options must be exercised by October 28,
2006; (d) 5,000 stock options granted January 14, 1998 pursuant to the
Employee Option Plan with an exercise price of $33.75 per share, which
options must be exercised by January 14, 2008; and (e) 2,250 stock
options granted April 12, 2001 pursuant to the Employee Option Plan
with an exercise price of $27.03 per share, which options must be
exercised by April 12, 2011.
(5) Includes: (a) 20,000 stock options granted July 18, 1994 pursuant to
the Employee Option Plan with an exercise price of $22.50 per share,
which options must be exercised by July 18, 2004; (b) 7,500 stock
options granted February 26, 1996 pursuant to the Employee Option Plan
with an exercise price of $27.00 per share, which options must be
exercised by February 26, 2006; (c) 5,000 stock options granted October
28, 1996 pursuant to the Employee Option Plan with an exercise price of
$28.6375 per share, which options must be exercised by October 28,
2006; (d) 7,500 stock options granted January 14, 1998 pursuant to the
Employee Option Plan with an exercise price of $33.75 per share, which
options must be exercised by January 14, 2008; (e) 5,000 stock options
granted December 15, 1999 pursuant to the Employee Option Plan with an
exercise price of $30.03 per share, which options must be exercised by
December 15, 2009; and (f) 4,000 stock options granted April 12, 2001
pursuant to the Employee Option Plan with an exercise price of $27.03
per share, which options must be exercised by April 12, 2011.
10
EQUITY COMPENSATION PLAN INFORMATION
The following table reflects information about the securities
authorized for issuance under the Company's equity compensation plans as of
December 31, 2001.
----------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
----------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF SECURITIES WEIGHTED-AVERAGE UNDER EQUITY
PLAN CATEGORY TO BE ISSUED UPON EXERCISE PRICE OF COMPENSATION PLANS
EXERCISE OF OUTSTANDING OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
OPTIONS, WARRANTS AND WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))
RIGHTS
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by shareholders 1,090,794 $28.69 369,764
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not 0 Not applicable Not applicable
approved by shareholders (1)
----------------------------------------------------------------------------------------------------------------------
TOTAL 1,090,794 $28.69 369,764
----------------------------------------------------------------------------------------------------------------------
(1) On May 29, 1997, the Company established a Long Term Incentive Plan
(the "LTIP") pursuant to which all full-time salaried and full-time
commission only employees of the Company, excluding the Company's
officers, are entitled to receive options to purchase shares of the
Company's common stock at $32.75 per share (i.e., the average of the
highest and lowest selling prices for the common stock on May 29,
1997), on January 31, 2002. In accordance with the terms of the LTIP,
(a) the Company granted the eligible participants options to purchase
168,000 shares of common stock; and (b) each eligible participant
received an option to purchase a number of shares of common stock equal
to the product of 168,000 and the quotient derived by dividing such
participant's total compensation during the period beginning on January
1, 1997 and ending on December 31, 2001 (the "Award Period") by the
aggregate compensation of all of the eligible participants during the
Award Period.
11
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Policy of Executive Officer Compensation
The executive compensation program is administered by the Compensation
Committee of the Board (the "Committee") which is comprised of Non-Employee
Directors, Messrs. Ted J. Simon and Ronald L. Piasecki. The program supports the
Company's commitment to providing superior shareholder value. It is designed to
attract and retain high-quality executives, to encourage them to make career
commitments to the Company, and to accomplish the Company's short and long term
objectives. The Committee attempts to structure a compensation program for the
Company that will reward its top executives with bonuses and stock and option
awards upon attainment of specified goals and objectives while striving to
maintain salaries at reasonably competitive levels. The Committee reviews the
compensation (including salaries, bonuses and stock options) of the Company's
officers and performs such other duties as may be delegated to it by the Board.
The Committee held two formal meetings during the fiscal year ended December 31,
2001 and took action pursuant to resolutions adopted by unanimous written
consent.
In reviewing the compensation to be paid to the Company's executive
officers during the fiscal year ended December 31, 2001, the Committee sought to
ensure that executive officers were rewarded for long term strategic management,
for increasing the Company's value for its shareholders, and for achieving
internal goals established by the Board.
The key components of executive officer compensation are salary,
bonuses, restricted stock awards and stock option awards. Salary is generally
based on factors such as an individual officer's level of responsibility, prior
years' compensation, comparison to compensation of other officers in the
Company, and compensation provided at competitive companies and companies of
similar size. Bonuses, restricted stock awards and stock option awards are
intended to reward exceptional performances. Benchmarks for determining base
salary and bonus levels include targeted funds from operations levels, strength
of the balance sheet and creation of shareholder value. Restricted stock awards
and stock option awards are also intended to increase an officer's interest in
the Company's long-term success as measured by the market and book value of its
Common Stock. Stock awards may be granted to officers and directors of the
Company and its subsidiaries and to certain employees who have managerial or
supervisory responsibilities under the Employee Option Plan. Stock awards may be
stock options, stock appreciation rights, restricted share rights or any
variation thereof.
CEO Compensation
During the fiscal year ended December 31, 2001, Gary A. Shiffman served
in the capacity of Chief Executive Officer of the Company. Under Mr. Shiffman's
leadership, the Company's funds from operations increased by more than 6% in
2001 as compared to 2000, and the Company continued its growth by acquiring an
additional five manufactured housing communities in 2001. See "Shareholder
Return Performance Presentation."
As of December 31, 1996, the Company entered into an employment
agreement with Mr. Shiffman which governed the salary and bonus paid to Mr.
Shiffman during the fiscal year ended December 31, 2001. Pursuant to this
employment agreement, Mr. Shiffman was paid a salary of $388,336, and a bonus of
$97,085. Based upon market studies of pay levels for chief executive officers of
publicly traded REITs (conducted by the National Association of Real Estate
Investment Trusts), the Committee believes that Mr. Shiffman's total
compensation in 2001 was competitive with the appropriate level for his
position, particularly in view of his performance. See "Certain Transactions."
Respectfully submitted,
Members of the Compensation Committee:
Ted J. Simon
Ronald L. Piasecki
12
EMPLOYMENT AGREEMENTS
Gary A. Shiffman
The Company has entered into an employment agreement with Gary A.
Shiffman pursuant to which Mr. Shiffman serves as Chief Executive Officer and
President of the Company. Mr. Shiffman's employment agreement is for an initial
term of five years ending December 31, 2001. Pursuant to his employment
agreement, Mr. Shiffman is paid an annual base salary of $350,000, which will be
increased by an annual cost of living adjustment beginning with calendar year
1999. In addition to his base salary and in accordance with the terms of his
employment agreement, Mr. Shiffman is entitled to incentive compensation of up
to 50% of his then base salary in accordance with the incentive compensation
formula set forth in the employment agreement. A copy of Mr. Shiffman's
employment agreement is attached as an exhibit to the Company's periodic filings
under the Exchange Act.
The non-competition clauses of Mr. Shiffman's employment agreement
preclude him from engaging, directly or indirectly: (a) in the real estate
business or any ancillary business of the Company during the period he is
employed by the Company; and (b) in the manufactured housing community business
or any ancillary business of the Company for a period of eighteen months
following the period he is employed by the Company. However, Mr. Shiffman's
employment agreement does allow him to make passive investments relating to real
estate in general or the housing industry in particular (other than in
manufactured housing communities) during the period he is employed by the
Company.
Jeffrey P. Jorissen
The Company has entered into an employment agreement with Jeffrey P.
Jorissen pursuant to which Mr. Jorissen serves as Senior Vice President, Chief
Financial Officer, Treasurer and Secretary of the Company. Mr. Jorissen's
employment agreement is for an initial term of five years ending December 31,
2003. Pursuant to his employment agreement, Mr. Jorissen must devote his entire
productive time, ability and attention to the Company and, in consideration for
his services, Mr. Jorissen will be paid an annual base salary of $240,000, which
will be increased by an annual cost of living adjustment beginning with calendar
year 2000. In addition to this base salary, Mr. Jorissen is entitled to
incentive compensation of up to 50% of his then base salary in accordance with
the incentive compensation formula set forth in the employment agreement. A copy
of Mr. Jorissen's employment agreement is attached as an exhibit to the
Company's periodic filings under the Exchange Act.
The non-competition clauses of Mr. Jorissen's employment agreement
preclude him from engaging, directly or indirectly, in the real estate business
or any ancillary business of the Company during the period he is employed by the
Company and for a period of eighteen months thereafter.
Brian W. Fannon
The Company has entered into employment agreements with Brian W. Fannon
pursuant to which Mr. Fannon serves as Chief Operating Officer of the Company
and Chief Executive Officer of Sun Home Services. Each of Mr. Fannon's
employment agreements is for an initial term of three years ending December 31,
2001. Pursuant to his employment agreements, Mr. Fannon must devote his entire
productive time, ability and attention to the Company and Sun Home Services. In
consideration for his services, Mr. Fannon will be paid an annual base salary of
$100,000 from the Company and Mr. Fannon will be paid an annual base salary of
$225,000 from Sun Home Services, each of which will be increased by 3.5% per
year beginning with calendar year 2000. In addition to this base salary, Mr.
Fannon may be entitled to incentive compensation of up to 50% of his then base
salary in accordance with an executive bonus plan to be established by the
Company. Copies of Mr. Fannon's employment agreements are attached as exhibits
to the Company's periodic filings under the Exchange Act.
The non-competition clauses of Mr. Fannon's employment agreements
preclude him from engaging, directly or indirectly, in the real estate business
or any ancillary business of the Company during the period he is employed by the
Company and for a period of twelve months thereafter.
13
OUTSIDE DIRECTOR COMPENSATION
Directors who are not employees of the Company are entitled to an
annual retainer fee of $16,000, payable $4,000 per calendar quarter, plus a
$1,000 fee for each quarterly meeting of the Board. For services during the
fiscal year ended December 31, 2001, Ted J. Simon, Paul D. Lapides, Clunet R.
Lewis and Ronald L. Piasecki each earned directors' fees of $20,000. Although
Arthur A. Weiss earned director's fees of $20,000 for services during the fiscal
year ended December 31, 2001, he declined such fees.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Common Stock against the
cumulative total return of a broad market index composed of all issuers listed
on the New York Stock Exchange and an industry index comprised of thirty-three
publicly traded real estate investment trusts, for the five year period ending
on December 31, 2001. This line graph assumes a $100 investment on December 31,
1996, a reinvestment of dividends and actual increase of the market value of the
Company's Common Stock relative to an initial investment of $100. The
comparisons in this table are required by the SEC and are not intended to
forecast or be indicative of possible future performance of the Company's Common
Stock.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SUN COMMUNITIES, INC.,
NYSE MARKET INDEX AND MG GROUP INDEX
[LINE GRAPH]
FISCAL YEAR ENDING: 1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
SUN COMMUNITIES 100.00 110.10 114.40 110.84 123.14 145.80
MG GROUP INDEX 100.00 112.25 97.42 107.27 141.95 156.22
NYSE MARKET INDEX 100.00 131.56 156.55 171.42 175.51 159.87
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and beneficial owners of
more than 10% of the Company's capital stock to file reports of ownership and
changes of ownership with the SEC and the New York Stock Exchange. Based solely
on its review of the copies of such reports received by it, and written
representations from certain reporting persons, the Company believes, that
during the year ended December 31, 2001, its directors, executive officers and
beneficial owners of more than 10% of the Company's Common Stock have complied
with all filing requirements applicable to them, except that Ted J. Simon filed
one report late with the SEC.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 2002, the shareholdings
of: (a) each person known to the Company to be the beneficial owner of more than
five percent (5%) of the Common Stock; (b) each director of the Company; (c)
each executive officer listed in the Summary Compensation Table; and (d) all
executive officers and directors of the Company as a group, based upon
information available to the Company.
=================================================================================================================
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
------------------------------------ -------------------- ---------------------
Gary A. Shiffman 1,438,818(2) 7.75%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jeffrey P. Jorissen 331,583(3) 1.84%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Brian W. Fannon 118,088(4) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jonathan M. Colman 88,606(5) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Ted J. Simon 15,883(6) *
32000 Northwestern Highway
Farmington Hills, Michigan 48334
Paul D. Lapides 15,883(7) *
1000 Chastain Road
Kennesaw, Georgia 30144
Clunet R. Lewis 37,933 (8) *
2000 Town Center
Suite 690
Southfield, Michigan 48075
15
=================================================================================================================
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
------------------------------------ -------------------- ---------------------
Ronald L. Piasecki 318,061(9) 1.75%
4927 Stariha Drive
Muskegon, Michigan 49441
Arthur A. Weiss 832,968(10) 4.58%
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
LaSalle Investment Management, Inc. (11) 1,605,329 9.00%
200 East Randolph Drive
Chicago, Illinois 60601
European Investors Inc. (12) 1,532,472 8.6%
667 Madison Avenue
New York, New York 10021
FMR Corp. (13) 1,947,831 10.93%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company, LLP (14) 1,487,300 8.34%
75 State Street
Boston, MA 02109
All current executive officers and directors as a 3,197,823 (15) 16.28%
group (9 persons)
=================================================================================================================
* Less than one percent (1%) of the outstanding shares.
(1) In accordance with SEC regulations, the percentage calculations are
based on 17,823,020 shares of Common Stock issued and outstanding as of
March 15, 2002 plus shares of Common Stock which may be acquired
pursuant to options exercisable, or limited partnership interests in
the Operating Partnership ("Common OP Units") that are convertible into
Common Stock, within sixty days of March 15, 2002 by each individual or
group listed.
(2) Includes 326,617 Common OP Units convertible into shares of Common
Stock and 416,667 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 15, 2002. Mr.
Shiffman disclaims beneficial ownership of 3,000 Common OP Units
convertible into shares of Common Stock held by other family members.
(3) Includes 100,000 Common OP Units convertible into shares of Common
Stock and 124,000 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 15, 2002. Mr.
Jorissen disclaims beneficial ownership of 5,316 shares of Common Stock
held by other family members.
(4) Includes 30,000 Common OP Units convertible into shares of Common Stock
and 36,500 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 15, 2002.
(5) Includes 7,500 Common OP Units convertible into shares of Common Stock
and 52,606 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 15, 2002.
(6) Includes 12,333 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 15, 2002.
16
(7) Includes 12,333 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 15, 2002. Includes
2,700 shares of Common Stock held by a corporation in which Mr. Lapides
owns a 33% equity interest. Mr. Lapides disclaims beneficial ownership
of these 2,700 shares except to the extent of his proportionate
pecuniary interest therein.
(8) Includes 20,000 Common OP Units convertible into shares of Common Stock
and 12,333 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 15, 2002.
(9) Includes : (a) 34,874 Common OP Units convertible into shares of Common
Stock and 245,134 Preferred OP Units convertible into Common OP Units
(which are convertible into shares of Common Stock ), all of which are
attributable to Mr. Piasecki because of his ownership interests in
various entities ; (b) 17,000 Common OP Units convertible into shares
of Common Stock and 220 Preferred OP Units convertible into Common OP
Units (which are convertible into shares of Common Stock ); and (c)
11,833 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 15, 2002.
(10) Includes 30,000 Common OP Units convertible into shares of Common Stock
and 12,333 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 15, 2002. Includes (a)
311,794 Common OP Units convertible into shares of Common Stock and
453,841 shares of Common Stock held by the Estate of Milton M. Shiffman
for which Mr. Weiss is a Co-Personal Representative, and (b) 25,000
shares of Common Stock held by the 1997 Shiffman Charitable Remainder
Unitrust for which Mr. Weiss is a Co-Trustee. Mr. Weiss does not have a
pecuniary interest in either the Estate of Milton M. Shiffman or the
1997 Shiffman Charitable Remainder Unitrust and, accordingly, Mr. Weiss
disclaims beneficial ownership of the 311,794 Common OP Units and
453,841 shares of Common Stock held by the Estate of Milton M. Shiffman
and the 25,000 shares of Common Stock held by the 1997 Shiffman
Charitable Remainder Unitrust.
(11) According to the Schedule 13G filed with the SEC for calendar year
2001, LaSalle Investment Management, Inc. ("LaSalle") beneficially owns
516,632 shares of Common Stock and LaSalle Investment Management
(Securities), L.P. ("LIMS") beneficially owns 1,088,697 shares of
Common Stock. LIMS is a Maryland limited partnership, the limited
partner of which is LaSalle and the general partner of which is LaSalle
Investment Management (Securities), Inc., a Maryland corporation, the
sole stockholder of which is LaSalle. LaSalle and LIMS, each registered
investment advisors, have different advisory clients.
(12) According to the Schedule 13G filed with the SEC for calendar year
2001, European Investors Inc. beneficially owns 373,772 shares of
Common Stock and EII Realty Securities Inc., a wholly-owned subsidiary
of European Investors Inc., beneficially owns 1,158,700 shares of
Common Stock.
(13) According to the Schedule 13G filed with the SEC for calendar year
2001, (a) Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp. and an investment advisor, is the beneficial
owner of 468,731 shares of Common Stock as a result of acting as
investment advisor to various investment companies, and (b) Fidelity
Management Trust Company, a wholly-owned subsidiary of FMR Corp. and a
bank, is the beneficial owner of 1,479,100 shares of Common Stock as a
result of its serving as investment manager of the institutional
account(s).
(14) According to the Schedule 13G filed with the SEC for calendar year
2001, Wellington Management Company, LLP, in its capacity as investment
advisor, beneficially owns 1,487,300 shares of Common Stock which are
held of record by clients of Wellington Management Company, LLP.
(15) Includes (1) 877,785 Common OP Units convertible into shares of Common
Stock and 245,351 Preferred OP Units convertible into Common OP Units
(which are convertible into Common Stock); and (2) 690,938 shares of
Common Stock which may be acquired pursuant to options exercisable
within sixty days of March 15, 2002.
17
CERTAIN TRANSACTIONS
RELATIONSHIP WITH ORIGEN
In the past, Sun has provided financing to Bingham. In December 2001,
the Company made a $15.0 million equity investment in a newly formed company,
Origen Financial, L.L.C., that will merge with Origen Financial, Inc., a
subsidiary of Bingham, as part of a recapitalization of Bingham. As a result of
this equity investment, the Company will own approximately a 30% interest in the
surviving company ("Origen"), which company will hold all of the operating
assets of Bingham and its subsidiaries. As part of the recapitalization, the
funds contributed to capitalize Origen were used to repay approximately $38.9
million of Bingham's outstanding indebtedness to the Company.
Certain of Sun's officers and directors have an interest in Bingham
and/or Origen. Gary A. Shiffman is a director and officer of Bingham and a
manager of Origen, and Arthur A. Weiss is a director of Bingham. Bingham owns
approximately a 20% interest in Origen and the Company (together with the other
investors in Origen) has the right to purchase its pro-rata share of Bingham's
interest in Origen at fair value at any time between the third and fifth
anniversaries of the closing date of the Company's investment in Origen. In
addition, concurrently with Sun's investment in Origen, the Shiffman Family LLC,
an entity owned and controlled by Mr. Shiffman and members of his family,
purchased approximately an 8.4% equity interest in Origen for approximately $4.2
million. Finally, for certain tax reasons, Sun made its equity investment in
Origen through a taxable REIT subsidiary ("TRS") which is wholly-owned by Sun
Home Services. The Operating Partnership contributed $15.0 million to Sun Home
Services in connection with the Origen investment and owns all of the non-voting
preferred stock of Sun Home Services, which entitles Sun to 95% of the cash flow
from the operating activities of Sun Home Services (including the operating
activities of the TRS) and effectively an approximate 30% interest in Origen.
Gary A. Shiffman and the Estate of Milton M. Shiffman (a former officer and
director of the Company) contributed approximately $790,000 to Sun Home Services
in connection with the Origen investment and own all of the voting common stock
of Sun Home Services, which entitles them to 5% of the cash flow from the
operating activities of Sun Home Services (including the operating activities of
the TRS) and effectively an approximate 1.6% interest in Origen. Mr. Weiss is a
personal representative of the Estate of Milton M. Shiffman. As a result of the
ownership and management of Origen, Mr. Shiffman and Mr. Weiss may have a
conflict of interest with respect to any transaction between the Company and
Origen.
Currently, Sun (together with another unaffiliated lender) provides
financing to Origen. This financing consists of a $21.25 million standby line of
credit, bearing interest at a per annum rate equal to 700 basis points over
LIBOR, with a minimum interest rate of 11% and a maximum interest rate of 15%.
This line of credit is secured by a security interest in Origen's assets, which
is subordinate in all respects to all institutional indebtedness of Origen, and
a guaranty and pledge of assets by Bingham. As of March 28, 2002, approximately
$9.72 million was outstanding under the line of credit.
Under the terms of a participation agreement Sun entered into with the
other lender, the Company is obligated to loan up to $12.5 million to Origen
under the line of credit, the other lender is required to loan up to $8.75
million to Origen under line of credit and the Company and the other lender
jointly administer the line of credit. Under the participation agreement, each
lender participates pari passu in all proceeds from the line of credit, provided
that, if additional funds in excess of $17.5 million are loaned to Origen and
both lenders do not participate therein, such additional amounts funded will be
subordinate in all respects to all indebtedness of Origen in which both lenders
have participated.
LOANS TO EXECUTIVE OFFICERS
In 1995, the Company issued Mr. Gary A. Shiffman, the Company's Chief
Executive Officer and President, 400,000 shares of Common Stock for $8,650,000
(the "Purchase Price"). The Purchase Price is evidenced by three (3) separate
10-year promissory notes that bear interest at a rate equal to six months' LIBOR
plus 175 basis points, with a maximum interest rate of 9% per annum and a
minimum interest rate of 6% per annum (the "Promissory Notes"). Two of the
Promissory Notes are secured by shares of Common Stock (the "Secured Shares")
and/or OP Units (the "Secured Units") and the last Promissory Note is unsecured
but fully recourse to Mr. Shiffman. Mr. Shiffman's personal liability on the
secured Promissory Notes is limited to all accrued interest on such notes plus
fifty percent (50%) of the deficiency, if any, after application of the proceeds
from the sale of the Secured Shares and/or the Secured Units to the then
outstanding principal balance of the Promissory Notes. The Promissory Notes
18
provide for quarterly interest only payments and provide that all cash
distributions and dividends paid to Mr. Gary Shiffman on the Secured Shares and
the Secured Units (the "Distributions") will first be applied toward the accrued
and unpaid interest under the Promissory Notes and sixty percent (60%) of the
remainder of the Distributions, if any, will be applied toward the outstanding
principal balance of the Promissory Notes.
In April 1997, the Operating Partnership loaned Mr. Shiffman an
additional $2,600,391 on terms substantially identical to the terms of the other
loan to Mr. Shiffman, as described above, and such loan is secured by 80,000
shares of Common Stock (the promissory notes evidencing this loan, together with
the Promissory Notes, are hereinafter referred to as the "Shiffman Notes"). The
largest aggregate indebtedness outstanding under the Shiffman Notes since
January 1, 2001 was $11,118,145. As of March 31, 2002, the amount outstanding
under the Shiffman Notes was approximately $10,827,531. Copies of the Shiffman
Notes have been filed as exhibits to the Company's periodic filings under the
Exchange Act.
On April 8, 1996, the Company completed a $122.8 million public
offering of 4.7 million shares of its Common Stock (the "Equity Offering").
Jeffrey P. Jorissen, the Company's Senior Vice President, Treasurer, Chief
Financial Officer and Secretary, Brian W. Fannon, the Company's Senior Vice
President and Chief Operating Officer, and Jonathan M. Colman, the Company's
Senior Vice President - Acquisitions, collectively, purchased 20,000 shares of
Common Stock in the Equity Offering at the public offering price of $26.125 per
share. Such purchases in the Equity Offering were financed with loans from the
Operating Partnership on terms substantially identical to the terms of the
Operating Partnership's loan to Mr. Gary Shiffman described above. Mr. Fannon
has repaid, in full, his loan from the Operating Partnership. The largest
aggregate indebtedness outstanding under Mr. Jorissen's promissory notes to the
Operating Partnership and Mr. Colman's promissory notes to the Operating
Partnership since January 1, 2001 were $257,741 and $105,612, respectively. As
of March 31, 2002, the total amounts outstanding under Mr. Jorissen's promissory
notes to the Operating Partnership and Mr. Colman's promissory notes to the
Operating Partnership were approximately $252,683 and $52,320, respectively.
STOCK PURCHASE LOAN PROGRAM
On December 15, 1998, certain directors, employees and consultants of
the Company purchased approximately $25.5 million of newly issued shares of
common stock of the Company and common OP Units in Sun Communities Operating
Limited Partnership at a price of $31.75 per share/OP Unit in accordance with
the Company's 1998 Stock Purchase Plan (the "Purchase Plan"). These purchases
were financed by 5-year personal loans from Bank One Corporation, as agent, and
participants in the Purchase Plan are personally responsible for repayment of
their respective loans. In order to facilitate purchases under the Purchase
Plan, the Company guaranteed repayment of all of the loans and the participants
have agreed to fully indemnify the Company against all liabilities arising under
such guaranty. The following executive officers and/or directors of the Company
purchased the following number of OP Units under the Purchase Plan: Jonathan M.
Colman (7,500 OP Units), Brian W. Fannon (30,000 OP Units), Jeffrey P. Jorissen
(100,000 OP Units), Clunet R. Lewis (20,000 OP Units), Ronald L. Piasecki
(17,000 OP Units), Gary A. Shiffman (170,000 OP Units) and Arthur A. Weiss
(50,000 OP Units).
LEGAL COUNSEL
During 2001, the law firm of Jaffe, Raitt, Heuer & Weiss, P.C. acted as
general counsel to the Company and represented the Company in various matters.
Arthur A. Weiss, a director of the Company, is a shareholder of such firm.
19
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected PricewaterhouseCoopers LLP as the Company's
independent public accountants for the fiscal year ended December 31, 2001.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting, and will have the opportunity to make a statement if they desire
to do so and to respond to appropriate questions. It is expected that
PricewaterhouseCoopers LLP will also serve the Company in the same capacity
during the fiscal year ending December 31, 2002.
SHAREHOLDERS' PROPOSALS
Any and all shareholder proposals for inclusion in the proxy materials
for the Company's next Annual Meeting of Shareholders must comply with the rules
and regulations promulgated under the Exchange Act and must be received by the
Company, at its offices at 31700 Middlebelt Road, Suite 145, Farmington Hills,
Michigan 48334, not later than December 11, 2002. Such proposals should be
addressed to the Company's Secretary.
The Company's Bylaws also contain certain provisions which affect
shareholder proposals. The Company's Bylaws provide that: (a) with respect to an
annual meeting of shareholders, nominations of persons for election to the Board
of Directors and the proposal of business to be considered by shareholders may
be made only (i) pursuant to the Company's notice of the meeting, (ii) by the
Board of Directors, or (iii) by a shareholder who is entitled to vote at the
meeting and has complied with the advance notice procedures set forth in the
Bylaws; and (b) with respect to special meetings of shareholders, only the
business specified in the Company's notice of meeting may be brought before the
meeting of shareholders, and nominations of persons for election to the Board of
Directors may be made only (i) by the Board of Directors, or (ii) provided that
the Board of Directors has determined that directors shall be elected at such
meeting, by a shareholder who is entitled to vote at the meeting and has
complied with the advance notice provisions set forth in the Bylaws.
OTHER MATTERS
Management knows of no matters which will be presented for
consideration at the Annual Meeting other than those stated in the Notice of
Meeting. However, if any other matters do properly come before the Annual
Meeting, the person or persons named in the accompanying proxy form will vote
the proxy in accordance with their best judgment regarding such matters,
including the election of a director or directors other than those named in this
Proxy Statement should an emergency or unexpected occurrence make the use of
such discretionary authority necessary, and also regarding matters incident to
the conduct of the meeting.
Shareholders are requested to date, sign and return the enclosed proxy
in the enclosed postage-paid envelope. So that the presence, in person or by
proxy, of the holders of a majority of the shares entitled to vote at the
meeting may be assured, prompt execution and return of the proxy is requested.
By Order of the Board of Directors
JEFFREY P. JORISSEN
Secretary
Dated: April 9, 2002
20
SUN COMMUNITIES, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
SUN COMMUNITIES, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are issues related to the management and operation of the Corporation
that require your immediate attention and approval. These are discussed in
detail in the enclosed proxy statements.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then, sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 23,
2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sun Communities, Inc.
[SNCOM SUN COMMUNITIES, INC.] [FILE NAME: ZSNCO1.ELX] [VERSION - (2)] [04/04/02] [ORIG. 04/02/02]
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
======================================================
1. Election of Directors. SUN COMMUNITIES, INC.
(01) GARY A. SHIFFMAN ======================================================
(02) RONALD L. PIASECKI
2. The above-appointed proxies are authorized to vote
FOR WITHHOLD upon all matters incidental to the conduct of the
ALL [ ] [ ] FROM ALL Annual Meeting and such other business as may
NOMINEES NOMINEES properly come before the Annual Meeting in
accordance with their best judgment.
FOR
ALL
EXCEPT [ ]_________________________________________________
(INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
in the space provided above.)
Mark box at right if an address change or [ ]
comment has been noted on the reverse side of this
card.
Please be sure to sign and date this Proxy.
Shareholder Co-owner
sign here ____________________________________ Date _____________ sign here: ____________________________________ Date:________
[SNCOM SUN COMMUNITIES, INC.] [FILE NAME: ZSNCO.ELX] [VERSION - (2)] [04/08/02] [ORIG. 04/02/02]
DETACH HERE
SUN COMMUNITIES, INC.
31700 MIDDLEBELT ROAD, SUITE 146
FARMINGTON HILLS, MICHIGAN 48334
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 23, 2002
The undersigned hereby appoints Jeffrey P. Jorissen and Arthur A. Weiss, or either of them, as attorneys and proxies of the
undersigned shareholder, with full power of substitution, to vote on behalf of the undersigned and in his or her name and stead, all
shares of the common stock of Sun Communities, Inc. (the "Company") which the undersigned would be entitled to vote if personally
present at the Company's Annual Meeting of Shareholders to be held at the Novi Hilton, 21111 Haggerty Road, Novi, Michigan 48375 on
Thursday, May 23, 2002, and at any adjournments thereof.
The undersigned shareholder acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated April 9, 2002.
The giving of this Proxy does not affect the right of the undersigned shareholder to vote in person should the undersigned
shareholder attend the Annual Meeting. The Proxy may be revoked at any time before it is voted.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS
PROXY WILL BE VOTED FOR SUCH PROPOSAL.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
________________________________________________________ ____________________________________________________________
________________________________________________________ ____________________________________________________________
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