UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
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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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
SUN COMMUNITIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 28, 2003
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 Wednesday, May 28, 2003, 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 2006 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 17, 2003 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 23, 2003
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 28, 2003
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 Gary A. Shiffman 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 27777 Franklin
Road, Suite 2000, Southfield, Michigan 48034. The approximate date of mailing of
this Proxy Statement and the enclosed Proxy materials to the Company's
shareholders is April 23, 2003.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Novi Hilton, 21111 Haggerty
Road, Novi Michigan 48375, on Wednesday, May 28, 2003, 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 17, 2003
are entitled to notice of and to vote at the Annual Meeting or at any
adjournments. As of that date, the Company had 18,113,677 shares of Common Stock
issued, outstanding and entitled to vote held by 634 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 2002 Annual Report which contains its audited financial statements as
of December 31, 2002. In addition, copies of the Company's Annual Report on Form
10-K for the year ended December 31, 2002, 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, 27777
Franklin Road, Suite 2000, Southfield, Michigan 48034.
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
2006 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......................... 48 Chairman, Chief Executive Officer, President
and Director
Paul D. Lapides.......................... 48 Director (Nominee)
Clunet R. Lewis.......................... 56 Director
Ronald L. Piasecki....................... 64 Director
Ted J. Simon............................. 72 Director (Nominee)
Arthur A. Weiss.......................... 54 Director
-2-
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.
PAUL D. LAPIDES has been a director since December 1993. Mr. Lapides is
Director of the Corporate Governance Center in the Michael J. 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 or co-author of more than 100 articles and twelve books on real
estate, management and directors' responsibilities. Mr. Lapides is a member of
the Advisory Board of the National Association of Corporate Directors and served
on the NACD's Blue Ribbon Commission on Audit Committees (1999). 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.
CLUNET R. LEWIS has been a director since December 1993. Mr. Lewis also
serves as President of CRL Enterprises, Inc. a private consulting firm. From
1995 until 2000, Mr. Lewis served in various positions with Eltrax Systems,
Inc., a Nasdaq National Market System company, including Secretary, General
Counsel, member of the Board of Directors and Chief Financial Officer. From 1989
until 1994, Mr. Lewis served as Secretary and General Counsel of Military
Communications Center, Inc., a privately held company that provided retail
telecommunications services to members of the United States Armed Services. From
1990 through 1991, Mr. Lewis was Managing Director of MCC Communications, Inc.,
a privately held company that provided international telecommunications services
to members of the United States Armed Services serving in the Persian Gulf area
during the Gulf War. Prior to 1993, Mr. Lewis was a shareholder at the Detroit
law firm of Jaffe, Raitt, Heuer & Weiss, Professional Corporation.
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 LLC, 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 (OTC BB: CKSB.OB).
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.
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 2006. A second class will hold office for a term expiring at the annual
meeting of shareholders to be held in 2004 and a third class will hold office
for a term expiring at the annual meeting of shareholders to be held in 2005.
Each director will hold office for the term to which he is elected and until his
successor is duly elected and qualified. Ted J. Simon and Paul D. Lapides 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
-3-
shareholders to be held in 2006. Clunet R. Lewis and Arthur A Weiss have terms
expiring at the annual meeting of shareholders to be held in 2004 and Gary A.
Shiffman and Ronald L. Piasecki have terms expiring at the annual meeting of
shareholders to be held in 2005. 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 six (6) times during 2002 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.
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. The current
members of the Audit Committee are Messrs. Paul D. Lapides, Clunet R. Lewis and
Ronald L. Piasecki. The Audit Committee held three (3) formal meetings and
several informal meetings during the fiscal year ended December 31, 2002.
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, 2002, the Compensation Committee held
two (2) 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 2002.
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, 2002 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.
-4-
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 three (3) formal meetings and several informal meetings
during the 2002 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:
o reviewed and discussed the audited financial statements with
management and PricewaterhouseCoopers LLP, the Company's
independent auditors;
o discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees); and
o 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, 2002, 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, 2002:
o Audit Fees: For professional services rendered for the audit of
the Company's 2002 financial statements and the reviews of the
quarterly financial statements - $144,000;
o Financial Information Systems Design and Implementation Fees:
None; and
o All Other Fees: $22,000 (consisting primarily of professional
services rendered for the reviews of registration
statements on Form S-3 and research and consultation on
accounting matters).
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.
Respectfully Submitted,
Members of the Audit Committee:
Paul D. Lapides
Clunet R. Lewis
Ronald L. Piasecki
-5-
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...................... 48 Chairman, Chief Executive Officer and
President
Jeffrey P. Jorissen................... 58 Executive Vice President, Treasurer, Chief
Financial Officer and Secretary
Brian W. Fannon....................... 54 Executive Vice President and Chief
Operating Officer
Jonathan M. Colman.................... 47 Executive Vice President
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 1999 and Treasurer since December 1993 and became an Executive Vice
President in March 2003. 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 and an Executive
Vice President in March 2003. 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. In 2002, Mr. Fannon was elected to the Board of Directors
of the Manufactured Housing Institute and Mr. Fannon was elected to the RV/MH
Hall of Fame in 2003. 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 and an
Executive Vice President in March 2003. 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.
-6-
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 $100,000 during the fiscal year ended December 31, 2002.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) STOCK AWARDS($) COMPENSATION($)
--------------------------- ---- --------- -------- ---------- --------------- ---------------
Gary A. Shiffman, 2002 $401,950 0 0 $ 2,767,100(1) $4,000(3)
Chairman, Chief Executive Officer and 2001 $388,336 $97,085 25,000 $ 933,636(2) $3,400(3)
President................................ 2000 $373,400 0 0 0 $10,237(3)(4)
Jeffrey P. Jorissen,
Executive Vice President, Treasurer, Chief 2002 $271,300 0 0 0 $4,000(3)
Financial Officer and 2001 $262,080 $65,520 2,250 $ 1,263,570(5) $3,400(3)
Secretary................................ 2000 $252,000 0 0 0 $7,912(3)(4)
Brian W. Fannon, 2002 $367,350 0 0 0 $4,000(3)
Executive Vice President and Chief 2001 $354,900 $88,725(6) 2,250 $660,00(7) $3,400(3)
Operating Officer........................ 2000 $341,250 0 0 0 $3,400(3)
Jonathan M. Colman, 2002 $146,950 0 0 0 $3,677(3)
Executive Vice President................. 2001 $141,960 $36,910 4,000 $341,220(8) $2,839(3)
2000 $136,600 0 0 0 $2,730(3)
-----------------------------
(1) On July 15, 2002, the Company issued Mr. Shiffman 70,000 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 July 15, 2006, 35% of these shares vest on July
15, 2007, 20% of these shares vest on July 15, 2008, 5% of these
shares vest on July 15, 2009 and 5% of these shares vest on July
15, 2012. As of December 31, 2002, the value of such restricted
shares (as determined in accordance with the rules promulgated by
the Securities and Exchange Commission) was $2,559,900. Mr.
Shiffman receives any dividends paid on such restricted shares.
(2) 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, 2002, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was
$1,034,638. Mr. Shiffman receives any dividends paid on such
restricted shares.
(3) Matching contributions made by the Company under its 401(k) plan.
(4) Dividend distribution from Sun Home Services, Inc. in the amount
of $6,837 to Mr. Shiffman and $4,512 to Mr. Jorissen.
-7-
(5) 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, 2002, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was
$1,400,265. Mr. Jorissen receives any dividends paid on such
restricted shares.
(6) Mr. Fannon's bonus was paid partially by the Company and
partially by Sun Home Services, Inc.
(7) 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, 2002, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was
$731,400. Mr. Fannon receives any dividends paid on such
restricted shares.
(8) 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, 2002, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was
$378,134. Mr. Colman receives any dividends paid on such
restricted shares.
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
NAME IN 2002 RECEIVED EXERCISABLE NOT EXERCISABLE EXERCISABLE NOT EXERCISABLE
---- --------------- -------- ----------- --------------- ----------- ---------------
Gary A. Shiffman (2) - - 416,667 8,333 $3,651,566 $79,497
Jeffrey P. Jorissen (3) - - 124,000 750 $1,299,491 $7,163
Brian W. Fannon (4) - - 36,500 750 $374,823 $7,163
Jonathan M. Colman (5) - - 47,666 1,334 $472,122 $12,726
-8-
(1) Assumes a value equal to the difference between the closing sales
price on December 31, 2002, which was $36.57 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.
-9-
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, 2002.
(a) (b) (c)
---------------------------- ---------------------------- ----------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A)
PLAN CATEGORY
------------------------------- ---------------------------- ---------------------------- ----------------------------
approved by shareholders 858,388 $27.92 150,519
Equity compensation plans not
approved by shareholders (1) 117,379 $32.75 0
TOTAL 975,767 $28.50 150,519
(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 167,918 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 167,918 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.
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 (2) formal meetings during the fiscal year ended December
31, 2002 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, 2002, 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
-10-
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, 2002, Gary A. Shiffman served in
the capacity of Chief Executive Officer of the Company. Under Mr. Shiffman's
leadership, the Company's revenues increased by over 6% and the Company's funds
from operations increased by nearly 2% in 2002 as compared to 2001, and the
Company continued its growth by acquiring an additional four manufactured
housing communities in 2002. 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, 2002. Pursuant to this employment
agreement (which was amended in July 2002), Mr. Shiffman was paid a salary of
$401,950 and Mr. Shiffman received 70,000 restricted shares of common stock in
2002. 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 2002 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
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
ending December 31, 2006 and is automatically renewable for successive one year
terms thereafter unless either party timely terminates the agreement. Pursuant
to his employment agreement, commencing January 1, 2003, Mr. Shiffman is paid an
annual base salary of $425,000, which will be increased by an annual cost of
living adjustment beginning with calendar year 2004. 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 Chief Financial Officer of the
Company. Mr. Jorissen's employment agreement is for an initial term of five
years ending December 31, 2003 and is automatically renewable for successive one
-11-
year terms thereafter unless either party timely terminates the agreement.
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,
2005 and is automatically renewable for successive one year terms thereafter
unless either party timely terminates the agreement. 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 $267,000 from Sun
Home Services. 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 between twelve and twenty-four months thereafter.
OUTSIDE DIRECTOR COMPENSATION
Directors who are not employees of the Company are entitled to an annual
retainer fee of $20,000, payable $5,000 per calendar quarter. For services
during the fiscal year ended December 31, 2002, 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, 2002, 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, 2002. This line graph assumes a $100 investment on December 31,
1997, 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.
-12-
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SUN COMMUNITIES, INC.,
NYSE MARKET INDEX AND MG GROUP INDEX
[LINE GRAPH]
FISCAL YEAR ENDING: 1997 1998 1999 2000 2001 2002
SUN COMMUNITIES, INC. 100.00 103.91 100.67 111.84 132.43 138.10
MG GROUP INDEX 100.00 86.79 95.56 126.46 139.17 131.97
NYSE MARKET INDEX 100.00 118.99 130.30 133.40 121.52 99.27
-13-
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, 2002, 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 2003, 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 1,447,549(2) 7.67%
27777 Franklin Road
Suite 2000
Southfield, Michigan 48034
Jeffrey P. Jorissen 339,832(3) 1.85%
27777 Franklin Road
Suite 2000
Southfield, Michigan 48034
Brian W. Fannon 116,598(4) *
27777 Franklin Road
Suite 2000
Southfield, Michigan 48034
Jonathan M. Colman 82,153(5) *
27777 Franklin Road
Suite 2000
Southfield, Michigan 48034
Ted J. Simon 18,500(6) *
28470 Thirteen Mile Road
Suite 220
Farmington Hills, Michigan 48334
Paul D. Lapides 15,000(7) *
1000 Chastain Road
Kennesaw, Georgia 30144
Clunet R. Lewis 45,600(8) *
10557 E. Tamarisk Way
Scottsdale, Arizona 85262
-14-
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
--------------------------------------- -------------------- ------------------
Ronald L. Piasecki 311,728(9) 1.69%
101 Washington Street
Grand Haven, Michigan 49417
Arthur A. Weiss 835,135(10) 4.61%
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Cohen & Steers Capital Management, Inc.(11) 955,930 5.28%
757 Third Avenue
New York, NY 10017
T. Rowe Price Associates, Inc.(12) 1,471,600 8.13%
100 E. Pratt Street
Baltimore, MD 21202
Wellington Management Company, LLP (13) 1,425,500 7.87%
75 State Street
Boston, MA 02109
All current executive officers and directors as a 3,212,095(14) 16.11%
group (9 persons)
* Less than one percent (1%) of the outstanding shares.
(1) In accordance with SEC regulations, the percentage calculations are based
on 18,107,102 shares of Common Stock issued and outstanding as of March 1,
2003 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 1, 2003 by each individual or group listed.
(2) Includes 329,617 Common OP Units convertible into shares of Common Stock
and 425,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 1, 2003. Mr. Shiffman
disclaims beneficial ownership of 3,000 Common OP Units convertible into
shares of Common Stock held by other family members because he does not
have a pecuniary interest therein.
(3) Includes 100,000 Common OP Units convertible into shares of Common Stock
and 124,750 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 1, 2003. Mr. Jorissen
disclaims beneficial ownership of 10,000 shares of Common Stock held by
other family members because he does not have a pecuniary interest therein.
(4) Includes 30,000 Common OP Units convertible into shares of Common Stock and
37,250 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 1, 2003.
(5) Includes 7,500 Common OP Units convertible into shares of Common Stock and
49,000 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 1, 2003.
(6) Includes 15,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 1, 2003.
(7) Includes 12,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 1, 2003. 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.
-15-
(8) Includes 20,000 Common OP Units convertible into shares of Common Stock and
15,000 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 1, 2003. Mr. Lewis disclaims
beneficial ownership of 5,600 shares of Common Stock held by other family
members because he does not have a pecuniary interest therein.
(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) 14,500 shares of
Common Stock which may be acquired pursuant to options exercisable within
sixty days of March 1, 2003.
(10) Includes 30,000 Common OP Units convertible into shares of Common Stock and
14,500 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 1, 2003. Includes (a) 311,794 Common
OP Units convertible into shares of Common Stock and 453,841 shares of
Common Stock held by the Milton M. Shiffman Spouse's Marital Trust for
which Mr. Weiss is a Co-Trustee, 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
Milton M. Shiffman Spouse's Marital Trust 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 Milton M. Shiffman Spouse's Marital Trust and the 25,000 shares
of Common Stock held by the 1997 Shiffman Charitable Remainder Unitrust. In
August 2002, Mr. Weiss sold a beneficial interest in 23,062 of his Common
OP Units to a third-party and the purchase price was paid by delivery of a
promissory note. Until this promissory note is repaid in full, Mr. Weiss
will maintain record ownership of, and voting rights with respect to, these
Common OP Units and, accordingly, Mr. Weiss disclaims beneficial ownership
of these 23,062 Common OP Units.
(11) According to the Schedule 13G filed with the SEC for calendar year 2002,
Cohen & Steers Capital Management, Inc., in its capacity as investment
advisor, beneficially owns 955,930 shares of Common Stock which are held of
record by clients of Cohen & Steers Capital Management, Inc.
(12) According to the Schedule 13G filed with the SEC for calendar year 2002, T.
Rowe Price Associates, Inc., in its capacity as investment advisor,
beneficially owns 1,471,600 shares of Common Stock which are held of record
by clients of T. Rowe Price Associates, Inc., including T. Rowe Price
Small-Cap Value Fund, Inc.
(13) According to the Schedule 13G filed with the SEC for calendar year 2002,
Wellington Management Company, LLP, in its capacity as investment advisor,
beneficially owns 1,425,500 shares of Common Stock which are held of record
by clients of Wellington Management Company, LLP.
(14) Includes (1) 880,785 Common OP Units convertible into shares of Common
Stock and 245,354 Preferred OP Units convertible into Common OP Units
(which are convertible into Common Stock); and (2) 707,000 shares of Common
Stock which may be acquired pursuant to options exercisable within sixty
days of March 1, 2003.
-16-
CERTAIN TRANSACTIONS
RELATIONSHIP WITH ORIGEN
In December 2001, the Company made a $15.0 million equity investment
in Origen Financial, L.L.C. ("Origen"), a financial services company that
provides and services loans used by buyers to finance the acquisition of
manufactured homes. As a result of this equity investment, the Company owns
approximately a 30% interest in Origen.
Gary A. Shiffman, the Chairman of the Board, Chief Executive Officer
and President of the Company, is a manager of Origen. In addition,
concurrently with the Company's investment in Origen, Mr. Shiffman and
members of his family purchased approximately a 10% equity interest in
Origen for approximately $5.0 million. For certain tax reasons, the Company
made its equity investment in Origen through a taxable REIT subsidiary
("TRS") which is wholly-owned by Sun Home Services, Inc. The Company
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 the Company 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. Arthur A. 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 Origen and the Company.
Currently, the Company (together with one unaffiliated lender and one
lender affiliated with Mr. Shiffman) provides financing to Origen. This
financing consists of a $48.0 million standby line of credit and a $10.0
million term loan, each 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 credit facility matures December 31, 2003 but is
extendable automatically to December 31, 2004 upon the occurrence of
certain events. This credit facility is collateralized 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.
Under the terms of a participation agreement the Company entered into
with the other lenders, the Company is obligated to loan up to $35.5
million to Origen under the credit facility, Milton M. Shiffman Spouse's
Marital Trust (an entity affiliated with Mr. Shiffman) is obligated to loan
up to $2.5 million to Origen and the unaffiliated lender is required to
loan up to $20.0 million to Origen under the credit facility and all of the
participants jointly administer the credit facility. Under the
participation agreement, the Company is entitled to 43.75% of the first
$40.0 million of proceeds from Origen upon repayment under the credit
facility and $18.0 million of the Company's advances to Origen are
subordinate in all respects to the first $40.0 million of proceeds from
Origen upon repayment under the credit facility.
In March 2003, Origen financed a portfolio of approximately $200.0
million principal amount of manufactured home loans. As part of this
financing, Origen contributed the manufactured home loans to a subsidiary
and the subsidiary borrowed $160.0 million from a third-party institutional
lender. The subsidiary plans to issue up to $40.0 million of equity
securities and Mr. Shiffman and members of his family have committed to
purchase $10.0 million of these securities through one or more affiliated
entities. The proceeds of the loan and the investment will be used
primarily to pay down Origen's existing warehouse facility and to permit
Origen to continue to originate manufactured home loans and for general
corporate purposes.
LOANS TO EXECUTIVE OFFICERS
In 1995, the Company issued Gary A. Shiffman, its 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 (with an initial aggregate principal amount of
approximately $7.6 million) are secured by approximately 270,000 shares of
common stock of the Company
-17-
held by Mr. Shiffman (the "Secured Shares")and/or 128,000 common
partnership units in Sun Communities Operating Limited Partnership (the
"Secured Units") and the last Promissory Note (with an initial principal
amount of approximately $1.0 million) 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 provide for
quarterly interest only payments and provide that all cash distributions
and dividends paid to Mr. 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 Company 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 of the Company held by Mr. Shiffman (the promissory
notes evidencing this loan, together with the Promissory Notes, are
hereinafter referred to as the "Shiffman Notes"). On July 15, 2002, the due
date of the Shiffman Notes was extended such that one-third of the
principal balance becomes due on December 31, 2008, an additional one-third
of the principal balance becomes due on December 31, 2009 and the balance
of the Shiffman Notes becomes due on December 31, 2010. The largest
aggregate indebtedness outstanding under the Shiffman Notes since January
1, 2002 was approximately $10,703,000. As of March 1, 2003, the amount
outstanding under the Shiffman Notes was approximately $10,383,000.
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 Executive Vice President, Treasurer,
Chief Financial Officer and Secretary, Brian W. Fannon, an Executive Vice
President and the Chief Operating Officer, and Jonathan M. Colman, an
Executive Vice President, 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 Company on terms substantially identical to the terms of our loans to
Mr. Shiffman described above. To date, each of Mr. Fannon and Mr. Colman
have repaid, in full, their loans from us. The largest aggregate
indebtedness outstanding under Mr. Jorissen's notes since January 1, 2002
was approximately $249,000 and, as of March 1, 2003, the amount outstanding
under Mr. Jorissen's notes was approximately $249,000.
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 partnership units of Sun Communities
Operating Limited Partnership at a price of $31.75 per share/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 common partnership 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).
LEASE OF PRINCIPAL EXECUTIVE OFFICES
On November 1, 2002, the Company leased approximately 31,300 rentable
square feet of office space from American Center LLC and the Company
expects to relocate its principal executive offices to this office space in
the second quarter of 2003. Gary A. Shiffman, together with certain family
members, indirectly own approximately a 21% equity interest in American
Center LLC. This lease is for an initial term of five years and the Company
has the right to extend the lease for an additional five year term. The
annual base rent under this lease begins at $19.25 per square foot (gross)
for the first lease year and increases $0.50 per square foot for each
successive year of the initial term.
-18-
CONSULTING ARRANGEMENT WITH VOD
During 2002, the Company paid VOD, LLC approximately $100,000
(representing approximately 75% of VOD's revenues for 2002) for consulting
services with respect to the Company's computer systems and cable and
telecommunications services. Ronald L. Piasecki, a director of the Company,
is a manager of VOD and owns a 25% equity interest in VOD.
LEGAL COUNSEL
During 2002, the law firm of Jaffe, Raitt, Heuer & Weiss, P.C. acted
as the Company's general counsel and represented the Company in various
matters. Arthur A. Weiss, a director of the Company, is a shareholder of
such firm.
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected PricewaterhouseCoopers LLP as the Company's
independent public accountants for the fiscal year ended December 31, 2002.
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. The Audit
Committee has not recommended, and the Board has not selected, the
Company's independent auditor for 2003. The Audit Committee plans to
evaluate all alternatives, including holding discussions with other
accounting firms, prior to selecting its independent auditor for 2003. The
Audit Committee intends to carefully consider any potential accounting
firm's qualifications as independent accountants before recommending an
independent auditor to the Board for appointment.
The Company owns approximately a 30% equity interest in Origen
Financial, L.L.C., which is a significant subsidiary of the Company with
respect to the year ended December 31, 2002. On December 9, 2002, Origen
engaged the certified public accounting firm of Grant Thornton LLP to serve
as its principal independent accounting firm to audit its financial
statements for the year ended December 31, 2002. Prior to Origen's
engagement of Grant Thornton LLP, the Company did not consult with such
firm on any accounting, auditing or financial reporting issue.
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 27777 Franklin Road, Suite 2000,
Southfield, Michigan 48034, not later than December 10, 2003. 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.
-19-
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 23, 2003
-20-
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 materials.
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 28,
2003.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sun Communities, Inc.
ZSNCO2
DETACH HERE
SUN COMMUNITIES, INC.
27777 FRANKLIN ROAD, SUITE 2000
SOUTHFIELD, MICHIGAN 48034
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 28, 2003
The undersigned hereby appoints Gary A. Shiffman and Arthur A. Weiss, or either
of them, as attorneys and proxies of the undersigned shareholder, with full
power of substitution, to vote of 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 Wednesday, May 28, 2003,
and at any adjournments thereof.
The undersigned shareholder acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated April 23, 2003.
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. This 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?
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
--------------------------------- ---------------------------------
SUN COMMUNITIES, INC.
c/o EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZSNCO1
[X] PLEASE MARK |
VOTES AS IN |
THIS EXAMPLE. |______
----------------------------------------------------
1. Election of Directors. SUN COMMUNITIES, INC.
(01) PAUL D. LAPIDES ----------------------------------------------------
(02) TED J. SIMON
2. The appointed proxies are authorized to vote
FOR [ ] [ ] WITHHOLD upon all matters incidental to the conduct of
ALL FROM ALL the Annual Meeting and such other business as
NOMINEES NOMINEES may 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 had 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: ________________