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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
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 24, 2005
---------------------25, 2006
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Sun
Communities, Inc. (the "Company") will be held at the Embassy Suites, 28100
Franklin Road, Southfield, MI 48034, on Tuesday,Thursday, May 24, 2005,25, 2006, 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 20082009 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
19, 200512, 2006 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
/s/ Jeffrey P. Jorissen
----------------------------------------
JEFFREY P. JORISSEN
Secretary
Dated: April 20, 200519, 2006
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 24, 2005
---------------------25, 2006
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 Clunet
R. Lewis, 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 200, Southfield, Michigan 48034. The approximate date of mailing of this
Proxy Statement and the enclosed Proxy materials to the Company's shareholders
is April 21, 2005.2006.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Embassy Suites, 28100 Franklin Road,
Southfield, MI 48034, on Tuesday,Thursday, May 24, 2005,25, 2006, 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 19, 200512, 2006 are
entitled to notice of and to vote at the Annual Meeting or at any adjournments.
As of that date, the Company had 18,331,45318,069,335 shares of Common Stock issued,
outstanding and entitled to vote held by 551553 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.
Each share of Common Stock outstanding on the Record Date entitles the holder
thereof to one vote upon each matter to be voted upon at the Annual Meeting.
If your shares are held in "street name," your brokerage firm, under
certain circumstances, may vote your shares for you if you do not return your
proxy. Brokerage firms have authority under the rules of the New York Stock
Exchange to vote customers' unvoted shares on some routine matters. If you do
not give a proxy to your brokerage firm to vote your shares, your brokerage firm
may either vote your shares on routine matters or leave your shares unvoted. The
election of directors (Sole Proposal) is considered a routine matter. We
encourage you to provide voting instructions to your brokerage firm by returning
your completed proxy. This ensures your shares will be voted at the meeting
according to your instructions. You should receive directions from your
brokerage firm about how to submit your proxy to them at the time you receive
this proxy statement.
The presence, in person or by proxy, of outstanding shares of Common Stock
representing a majority of the total votes entitled to be cast is necessary to
constitute a quorum for the transaction of
business at the Annual Meeting. Shares that reflect abstentions or broker
non-votes will be counted for purposes of determining whether a quorum is
present for the transaction of business at the Annual Meeting.
With respect to the Sole Proposal, One, the directors will be elected by a
plurality of all votes cast at the Annual Meeting. Accordingly, abstentions will
have no effect on the results of the vote.
If there is not a quorum at the Annual Meeting, the shareholders entitled
to vote at the Annual Meeting, whether present in person or represented by
proxy, shall only have the power to adjourn the Annual Meeting until such time
as there is a quorum. The Annual Meeting may be reconvened without notice to the
shareholders, other than an announcement at the prior adjournment of the Annual
Meeting, within 120 days after the Record Date, and a quorum must be present at
such reconvened Annual Meeting.
If a proxy in the form enclosed is duly executed, dated and returned, and
it has not been revoked in accordance with the instructions set forth therein,
the shares of Common Stock represented thereby will be voted by Gary A. Shiffman
and Clunet R. Lewis, the Board's proxy agents for the Annual Meeting, in
accordance with the specifications made thereon by the shareholder. If no such
specifications are made, such proxy will be voted (i) for the election of the
two nominees for director to the Board,Board; and (ii) at the discretion of Messrs.
Shiffman and Lewis with respect to such other business as may properly come
before the Annual Meeting or any adjournment or postponement thereof.
Information concerning principal holders of our Common Stock is discussed
under "Security Ownership of Certain Beneficial Owners and Management."
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
"Exchange Act"), 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
20042005 Annual Report which contains its audited financial statements as of
December 31, 2004.2005. In addition, copies of the Company's Annual Report on Form
10-K for the year ended December 31, 2004,2005, 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 200, Southfield, Michigan 48034.
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 200, Southfield, Michigan
48034, not later than December 21, 2005.2006. Such proposals should be addressed to
the Company's Secretary. See "Board of Directors and Corporate Governance ---
Consideration of Director Nominees."
2
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.
-2-
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
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
2008.2009. A second class will hold office for a term expiring at the annual meeting
of shareholders to be held in 20062007 and a third class will hold office for a term
expiring at the annual meeting of shareholders to be held in 2007.2008. Each director
will hold office for the term to which he is elected and until his successor is
duly elected and qualified. Gary A. ShiffmanTed J. Simon and Ronald L. PiaseckiPaul 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 shareholders to be held in 2008. Ted J.
Simon and Paul D. Lapides have terms expiring at the annual meeting of
shareholders to be held in 2006 and2009. Clunet R.
Lewis and Arthur A. Weiss have terms expiring at the annual meeting of
shareholders to be held in 2007.2007 and Ronald L. Piasecki and Gary A. Shiffman have
terms expiring at the annual meeting of shareholders to be held in 2008. 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 seven (7)five (5) times during 20042005 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
fivefour standing committees: an Audit Committee, a Compensation Committee, a
Nominating and Corporate Governance Committee, an Indemnification Committee, and an Executive Committee. You
may find copies of the charters of the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee under the
"Shareholder Info""Investor Relations-Officers and Directors" section of our website at
www.suncommunities.com. You may also find a copy of our corporate governance
guidelines and our code of business ethics under the "Shareholder Info""Investor
Relations-Officers and Directors" section of our website at
www.suncommunities.com. All of the committee charters, our corporate governance
guidelines and our code of business ethics are available in print to any
shareholder who requests them.
The Audit Committee operates pursuant to a charter that was approved by the
Board in January 2004. A copy of the Audit Committee Charter is available on the
Company's website at www.suncommunities.com. The Audit Committee, among other
functions, (1) has the sole authority to appoint, retain, terminate and
determine the compensation of the Company's independent accountants, (2) reviews
with the Company's independent accountants the scope and results of the audit
engagement, (3) approves professional services provided by the Company's
independent accountants, and (4) reviews the independence of the Company's
independent accountants. The current members of the Audit Committee are Messrs.
Paul D. Lapides, Clunet R. Lewis and Ronald L. Piasecki, all of whom are
"independent" as that term is defined in the rules of the SEC and applicable
rules of the New York Stock Exchange ("NYSE"). The Audit Committee held seven (7)four (4)
formal meetings and several informal meetings during the fiscal year ended
December 31, 2004.2005. The
3
Board has determined that Mr. Lapides is an "audit
committee financial expert," as defined by SEC rules. See "Report of the Audit
Committee."
The Compensation Committee operates pursuant to a charter that was approved
by the Board in March 2004. A copy of the Compensation Committee Charter is
available on the Company's website at www.suncommunities.com. The Compensation
Committee, among other functions, (1) reviews and approves corporate goals and
objectives relevant to the compensation of the Chief Executive Officer and such
other executive officers as may be designated by the Chief Executive Officer,
evaluates the performance of such officers in light of such goals and
objectives, and determines and approves the compensation of such officers based
on these evaluations, (2) approves the compensation of the Company's other
executive officers, (3) recommends to the Board for approval the compensation of
the non-employee directors and (4) oversees the Company's incentive-compensation
plans and equity-based plans. The current members of the Compensation Committee
are Messrs. Ted J. Simon, Clunet R. Lewis and Ronald L. Piasecki, all of whom
are independent directors under the NYSE rules. During the fiscal year ended
December 31, 2004,2005, the Compensation Committee held four (4)three (3) formal meetings and
took various actions pursuant to resolutions adopted by unanimous written
consent. See "Report of the Compensation Committee on Executive Compensation."
On March 11, 2004, the Board formed the-3-
The Nominating and Corporate Governance Committee (the "NCG Committee"). The Nominating and Corporate Governance
Committee
operates pursuant to a charter that was approved by the Board in March 2004. A
copy of the Nominating and Corporate Governance Committee Charter is available
on the Company's website at www.suncommunities.com. The Nominating and Corporate
Governance Committee, among other functions, is responsible for (1) identifying
individuals qualified to become Board members, consistent with criteria approved
by the Board, (2) recommending that the Board select the committee-recommended
nominees for election at each annual meeting of stockholders, (3) developing and
recommending to the Board a set of corporate governance guidelines applicable to
the Company, and (4) periodically reviewing such guidelines and recommending any
changes, and overseeing the evaluation of the Board. The current members of the
Nominating and Corporate Governance Committee are Clunet R. Lewis, Paul D.
Lapides and Ted J. Simon, all of whom are independent under the NYSE rules. The
Nominating and Governance Committee held one (1)two (2) formal meeting and several informal meetings during the
fiscal year ended December 31. 2004.
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 2004.31, 2005.
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, 20042005 but took various actions pursuant to
resolutions adopted by unanimous written consent.
4
COMMUNICATIONS WITH THE BOARD
If you wish to communicate with any of the directors of the Board or the
Board as a group, you may do so by writing to them at [Name(s) of
Director(s)/Board of Directors of Sun Communities, Inc.], c/o Compliance
Officer, Sun Communities, Inc., 27777 Franklin Road, Suite 200, Southfield, MI
48034.
If you wish to contact the Audit Committee to report complaints or concerns
regarding accounting, internal accounting controls or auditing matters, you may
do so by writing to the Chairman of the Audit Committee of Sun Communities,
Inc., c/o Compliance Officer, Sun Communities, Inc., 27777 Franklin Road, Suite
200, Southfield, MI 48034. You are welcome to make any such report anonymously
but the Company prefers that you identify yourself so that the Company may
contact you for additional information if necessary or appropriate.
If you wish to communicate with our non-management directors as a group,
you may do so by writing to Non-Management Directors of Sun Communities, Inc.,
c/o Compliance Officer, Sun Communities, Inc., 27777 Franklin Road, Suite 200,
Southfield, MI 48034.
The Company recommends that all correspondence be sent via certified U.S.
mail, return receipt requested. All correspondence received by the Compliance
Offer will be forwarded by the Compliance Officer promptly to the addressee(s).
INDEPENDENCE OF NON-EMPLOYEE DIRECTORS
The NYSE rules require that a majority of the Board consist of members who
are independent. There are different measures of director
independence -- independenceindependence--independence under New York Stock Exchange rules, under Section 16
of the Securities Exchange Act of 1934 and under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Board has reviewed
information about each of the Company's non-employee directors and determined
that Paul D. Lapides, Clunet R. Lewis, Ronald L. Piasecki and Ted J. Simon are
independent directors. The independent directors meet on a regular basis in
executive sessions without management participation. The executive sessions
occur after each regularly scheduled meeting of the entire Board and at such
other times as the independent directors deem
-4-
appropriate. Mr. Lapides, Chairman of the Audit Committee, presides at the
regularly scheduled executive sessions of the non-employee directors.
CONSIDERATION OF DIRECTOR NOMINEES
BOARD MEMBERSHIP CRITERIABoard Membership Criteria.
The Board of Directors has established criteria for Board membership. These
criteria include the following specific, minimum qualifications that the NCG
Committee believes must be met by an NCG Committee-recommended nominee for a
position on the Board:
- The candidate must have experience at a strategic or policymaking
level in a business, government, non-profit or academic organization
of high standing;
- The candidate must be highly accomplished in his or her field, with
superior credentials and recognition;
- The candidate must be well regarded in the community and must have a
long-term reputation for high ethical and moral standards;
- The candidate must have sufficient time and availability to devote to
the Company's affairs, particularly in light of the number of boards
on which the nominee may serve; and
- The candidate's principal business or occupation must not be such as
to place the candidate in competition with the Company or conflict
with the discharge of a director's responsibilities to the Company or
its stockholders.
5
In addition to the minimum qualifications for each nominee set forth above, the
NCG Committee will recommend director candidates to the full Board for
nomination, or present director candidates to the full Board for consideration,
to help ensure that:
- A majority of the Board of Directors shall be "independent" as defined
by the NYSE rules;
- Each of its Audit, Compensation and NCG Committees shall be comprised
entirely of independent directors; and
- At least one member of the Audit Committee shall have such experience,
education and qualifications necessary to qualify as an "audit
committee financial expert" as defined by the rules of the SEC.
CONSIDERATION OF SHAREHOLDER NOMINATED DIRECTORSConsideration of Shareholder Nominated Directors
The NCG Committee's current policy is to review and consider any director
candidates who have been recommended by shareholders in compliance with the
procedures established from time to time by the NCG Committee. All shareholder
recommendations for director candidates must be submitted in writing to our
Secretary at Sun Communities, Inc., 27777 Franklin Road, Suite 200, Southfield,
MI 48034, who will forward all recommendations to the NCG Committee. We did not
receive any shareholder recommendations for director candidates for election at
the 20052006 annual meeting. All shareholder recommendations for director candidates
for election at the 20062007 annual meeting of shareholders must be submitted to our
Secretary on or before December 21, 20052006 and must include the following
information:
- The shareholder's name, address, number of shares owned, length of
period held and proof of ownership;
- The name, age, business and residential address, educational
background, current principal occupation or employment, and principal
occupation or employment for the preceding five full fiscal years of
the proposed director candidate;
- A description of the qualifications and background of the proposed
director candidate which addresses the minimum qualifications and
other criteria for Board membership as approved by the Board from time
to time;
- A description of all arrangements or understandings between the
shareholder and the proposed director candidate;
- The consent of the proposed director candidate (1) to be named in the
proxy statement relating to the Company's annual meeting of
stockholders and (2) to serve as a director if elected at such annual
meeting; and
- Any other information regarding the proposed director candidate that
is required to be included in a proxy statement filed pursuant to the
rules of the SEC.
IDENTIFYING AND EVALUATING NOMINEES-5-
Identifying and Evaluating Nominees.
The NCG Committee may solicit recommendations for director nominees from
any or all of the following sources: non-management directors, executive
officers, third-party search firms or any other source it deems appropriate. The
NCG Committee will review and evaluate the qualifications of any proposed
director candidate that it is considering or has been recommended to it by a
shareholder in compliance with the NCG Committee's procedures for that purpose,
and conduct inquiries it deems appropriate into the background of these proposed
director candidates. When nominating a sitting director for re-election, the NCG
Committee will consider the director's performance on the Board and the
director's qualifications in respect to the criteria set forth above. Other than
circumstances in which we are legally required by contract or otherwise to
provide third parties with the ability to nominate directors, the NCG Committee
will evaluate all proposed director candidates based on the same criteria and in
substantially the same manner, with no regard to the source of the initial
recommendation of the proposed director candidate.
6
ELECTION OF DIRECTORS
(SOLE PROPOSAL)
The first matter to be considered at the Annual Meeting will be the
election of two directors. Following the recommendation of the NCG Committee,
the Board of Directors has nominated Gary A. ShiffmanTed J. Simon and Ronald L. PiaseckiPaul D. Lapides to serve
as directors. Each director shall be elected by a plurality of the votes cast at
the Annual Meeting. Therefore, if a quorum is present, abstentions 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 20082009 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.......................... 50Shiffman........... 51 Chairman, Chief Executive Officer, President
and Director
(Nominee)
Paul D. Lapides........................... 50Lapides............ 51 Director (Nominee)
Clunet R. Lewis........................... 58Lewis............ 59 Director
Ronald L. Piasecki........................ 66Piasecki......... 67 Director
Ted J. Simon............... 75 Director (Nominee)
Ted J. Simon.............................. 74 Director
Arthur A. Weiss........................... 56Weiss............ 57 Director
GaryGARY A. ShiffmanSHIFFMAN 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 twenty years. He has overseen the land
acquisition, rezoning, development and marketing of numerous manufactured home
expansion projects. Mr. Shiffman is also the
-6-
President and a director of Sun Home Services, Inc. ("Sun Home Services") and
all other corporate subsidiaries of the Company. PaulMr. Shiffman is also a director
of Origen Financial, Inc (NASDAQ: ORGN).
PAUL D. LapidesLAPIDES 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 director of
Internet Commerce Corporation (NASDAQ: ICCA) and 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.
7
ClunetCLUNET R. LewisLEWIS 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.
RonaldRONALD L. PiaseckiPIASECKI 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. In addition, Mr. Piasecki is the
Chief Executive Officer of AVAcore Technologies, Inc., an early-stage technology
company.
TedTED J. SimonSIMON has been a director since December 1993. Since February 1999,
Mr. Simon has been affiliated with Grand Sakwa PropertiesManagement 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).
ArthurARTHUR A. WeissWEISS 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 Chairman of the Board of Directors and 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.
-7-
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.......................... 50Shiffman....... 51 Chairman, Chief Executive Officer and President
Jeffrey P. Jorissen....................... 60Jorissen.... 61 Executive Vice President, Treasurer, Chief
Financial Officer and Secretary
Brian W. Fannon........................... 56Fannon........ 57 Executive Vice President and Chief Operating
Officer
Jonathan M. Colman........................ 49Colman..... 50 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.
JeffreyJEFFREY P. JorissenJORISSEN has been Chief Financial Officer, Secretary 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.
8
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.
BrianBRIAN W. FannonFANNON 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.
JonathanJONATHAN M. ColmanCOLMAN 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 twenty 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.
-8-
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
$100,000 during the fiscal year ended December 31, 2004.2005.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------------
-------------------------------------------------------------------------------
---------------------------------- RESTRICTED STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($SALARY($) BONUS ($BONUS($) OPTIONS (#) AWARDS ($OPTIONS(#) STOCK AWARDS($) COMPENSATION ($(1) COMPENSATION($)
- --------------------------- ---- --------- -------- ---------- --------- ----------- ---------------- ---------------------------------- ---------------
Gary A. Shiffman,......... 2005 $517,750 0 0 0 $4,324(3)
Chairman, Chief Executive 2004 $431,800 0 0 $1,327,188(1)$1,327,188(2) $4,100(3)
Chairman, Chief ExecutiveOfficer and President......... 2003 $425,000 0 0 0 $4,000(3)
Officer andJeffrey P. Jorissen,
Executive Vice President,
2002 $401,950Treasurer, Chief 2005 $298,608 0 0 $2,767,100(2) $4,000(3)
Jeffrey P. Jorissen,......0 $4,352(3)
Financial Officer and 2004 $285,750 0 0 $ 770,625(4)$770,625(4) $4,100(3)
Executive Vice President,Secretary..................... 2003 $281,250 0 0 0 $4,000(3)
Treasurer, Chief
Financial 2002 $271,300Brian W. Fannon, 2005 $383,515 0 0 0 $4,000(3)
Officer and Secretary
Brian W. Fannon,..........$4,347(3)
Executive Vice President 2004 $373,250 0 0 $ 513,750(5)$513,750(5) $4,100(3)
Executive Vice Presidentand Chief Operating Officer... 2003 $367,350 0 0 0 $4,000(3)
and Chief Operating 2002 $367,350Jonathan M. Colman, 2005 $155,372 $60,000(6) 0 0 0 $4,000(3)
Officer
Jonathan M. Colman,.......$4,205(3)
Executive Vice President...... 2004 $158,000 0 0 $ 342,500(6)$342,500(7) $3,160(3)
Executive Vice President 2003 $151,900 0 0 0 $3,038(3)
2002 $146,950 0 0 0 $3,677(3)$3,038(3)
9
- -------------------------
(1) As of December 31, 2005, Mr. Shiffman held 229,390 shares of restricted
stock, including 56,250 shares of performance based restricted stock (with
an aggregate value of $7,202,846), Mr. Jorissen held 114,889 shares of
restricted stock, including 37,500 shares of performance based restricted
stock (with an aggregate value of $3,607,515), Mr. Fannon held 43,000
shares of restricted stock (with an aggregate value of $1,350,200) and Mr.
Colman held 25,721 shares of restricted stock (with an aggregate value of
$807,639). For purposes of the preceding sentence, aggregate values are
based on the closing market price of the Company's common stock on December
31, 2005.
(2) On May 10, 2004, the Company issued Mr. Shiffman 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 May 10, 2008, 35%
of these shares vest on May 10, 2009, 20% of these shares vest on May 10,
2010, 5% of these shares vest on May 10, 2011 and 5% of these shares vest
on May 10, 2014. As of December 31, 2004, the value of such restricted shares (as
determined in accordance with the rules promulgated by the SEC) was
$805,000. Mr. Shiffman receives any dividends paid on such
restricted shares. In addition, on May 10, 2004, the Company issued Mr.
Shiffman 75,000 shares of Common Stock, which are subject to the terms and
conditions of a Restricted Stock Award Agreement. 25%6,250 of these shares
vest on each of May 10, 2007, May 10, 2008 and May 10, 2009 and the
remaining 75%56,250 of these shares are performance based and will vest on
March 1, 2010 if certain performance milestones during the period of
January 1, 2005 through December 31, 2009 are met. Mr. Shiffman receives
any dividends paid on the time-vesting portion of theses shares. As of December
31, 2004, the value of such time-vesting restricted shares (as determined in
accordance with the rules promulgated by the SEC) was $754,688.
(2) 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, 2004, the value of such restricted
shares (as determined in accordance with the rules promulgated by the SEC)
was $2,817,500. Mr. Shiffman receives any dividends paid on such restricted shares.
(3) Matching contributions made by the Company under its 401(k) plan.
(4) On May 10, 2004, the Company issued Mr. Jorissen 10,000 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 May 10, 2008, 35%
of these shares vest on May 10, 2009, 20% of these shares vest
-9-
on May 10, 2010, 5% of these shares vest on May 10, 2011 and 5% of these
shares vest on May 10, 2014. As of December 31, 2004, the value of such restricted shares (as
determined in accordance with the rules promulgated by the SEC) was
$402,500. Mr. Jorissen receives any dividends paid on
such restricted shares. In addition, on May 10, 2004, the Company issued
Mr. Jorissen 50,000 shares of Common Stock, which are subject to the terms
and conditions of a Restricted Stock Award Agreement. 25%4,167 of these shares
vest on each of May 10, 2007, May 10, 2008 and May 10, 2009 and the
remaining 75%37,500 of these shares are performance based and will vest on
March 1, 2010 if certain performance milestones during the period of
January 1, 2005 through December 31, 2009 are met. Mr. Jorissen receives
any dividends paid on the time-vesting portion of theses shares. As of December
31, 2004, the value of such time-vesting restricted shares (as determined in
accordance with the rules promulgated by the SEC) was $503,125.
(5) On May 10, 2004, the Company issued Mr. Fannon 15,000 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 May 10, 2008, 35%
of these shares vest on May 10, 2009, 20% of these shares vest on May 10,
2010, 5% of these shares vest on May 10, 2011 and 5% of these shares vest
on May 10, 2014.
As of(6) Represents additional compensation earned by Mr. Colman during the calendar
year ended December 31, 2004,2005 on the valuesuccessful disposition of such restricted shares (as
determined in accordance with the rules promulgatedcertain real
property by the SEC) was
$603,750.
(6)Company.
(7) On May 10, 2004, the Company issued Mr. Colman 10,000 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 May 10, 2008, 35%
of these shares vest on May 10, 2009, 20% of these shares vest on May 10,
2010, 5% of these shares vest on May 10, 2011 and 5% of these shares vest
on May 10, 2014.
As of December 31, 2004, the value of such restricted shares (as
determined in accordance with the rules promulgated by the SEC) was
$402,500.
10
LONG TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
PERFORMANCE OR
NUMBER OF OTHER PERIOD UNTIL
SHARES, UNITS OR MATURATION OR
NAME AND OFFICE(1) OTHER RIGHTS PAYOUT
- ------------------ ---------------- ---------------------
Gary A. Shiffman...................................... 56,250 2005-2009
Chairman, Chief Executive Officer and President
Jeffrey P. Jorissen................................... 37,500 2005-2009
Executive Vice President, Treasurer,
Chief Financial Officer and Secretary
- ---------------
(1) All incentives issued to the Named Executives under long-term incentive
plans during the fiscal year ended December 31, 2004 were awards of
performance shares issued under the Company's Amended and Restated 1993
Stock Option Plan. Recipients of these awards were granted the right to
receive a specified number of shares of the Company's common stock on March
1, 2010 subject to the Company achieving certain performance goals for the
period from January 1, 2005 through December 31, 2009. The performance share
grants for each recipient are also contingent upon the recipient remaining
an employee of the Company until March 1, 2010. The maximum number of
performance shares that each recipient is entitled to receive is listed in
the table above.
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
NO. OF UNEXERCISED VALUE OF UNEXERCISED
NO. OF UNEXERCISEDOPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
OPTIONS/SARS AT
SHARES ACQUIRED FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON ------------------------- -------------------------
EXERCISE VALUE ----------------------------- -----------------------------
NAME IN VALUE NOT NOT
NAME 20042005 RECEIVED EXERCISABLE NOT EXERCISABLE EXERCISABLE NOT EXERCISABLE
- ---- -------------------------- -------- ----------- --------------- ----------- ----------- --------------------------
Gary A. Shiffman(2)....... 0Shiffman (2) -0- $ 0 375,000 0 $4,282,563$1,022,563 0
Jeffrey P. Jorissen(3)....Jorissen (3) 35,000 $638,750 69,750 0 $ 721,976151,689 0
Brian W. Fannon...........Fannon 22,250 $252,808 0-0- 0 $ 0 0
Jonathan M. Colman(4).....Colman (4) 10,000 $177,500 29,000 0 $ 310,16871,143 0
- ---------------
(1) Assumes a value equal to the difference between the closing sales price on
December 31, 2004,2005, which was $40.25$31.40 per share, and the exercise price of
in-the-money options.
(2) Includes: (a) 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; (b) 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; (c) 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; (d) 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 (e) 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. On
March 10, 2006, Mr. Shiffman exercised all 25,000 options described in item
(a) above.
-10-
(3) Includes: (a) 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; (b) 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; (c) 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; (d) 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 (e) 2,250 stock options granted April
12, 11
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. On
February 26, 2006, Mr. Jorissen exercised all 15,000 options described in
item (a) above.
(4) Includes: (a) 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; (b) 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; (c) 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; (d) 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 (e) 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. On February 21,
2006, Mr. Colman exercised all 7,500 options described in item (a) above.
On March 16, 2006, Mr. Colman exercised all of his remaining vested
options.
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,
2004.2005.
(A) (B) (C)
-------------------- -------------------- -------------------------(c)
----------------------------
(a) (b) NUMBER OF SECURITIES
-------------------------- ------------------------- REMAINING AVAILABLE FOR
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF EXERCISE PRICE OF EQUITYOUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
- ------------- -------------------- ---------------------------------------------- ------------------------- ----------------------------
Equity compensation plans
approved by shareholders... 641,251 $29.97shareholders 635,101 $29.93 98,000
Equity compensation plans
not approved by shareholders(1)............ 55,12951,238 $32.75 0
shareholders (1)
------- ------
------
TOTAL................... 696,380TOTAL 686,339 98,000
======= ======
- ---------------
(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, 2003.
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.
12-11-
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
PHILOSOPHY OF EXECUTIVE COMPENSATIONPhilosophy of Executive Compensation
The executive compensation program is administered by the Compensation
Committee of the Board, which is currently comprised of Ted J. Simon, Clunet R.
Lewis and Ronald L. Piasecki. None of the members of the Compensation Committee
are employees of the Company and each of them is an independent director for
purposes of the requirements of the NYSE rules.
The executive compensation program supports the Company's commitment to
providing superior shareholder value. This program is designed to:
- attract, retain and reward executives who have the motivation,
experience and skills necessary to lead the Company effectively and
encourage them to make career commitments to the Company;
- create a link between the performance of our stock and executive
compensation;
- base executive compensation levels on the overall financial and
operational performance of the Company and the individual contribution
of the executive officer to the success of the Company; and
- position executive compensation levels to be competitive with other
similarly situated public companies including the real estate industry
in general and manufactured housing REITs in particular.
COMPENSATION COMMITTEE PROCEDURES AND FINDINGSCompensation Committee Procedures and Findings
The Compensation 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 Compensation
Committee reviews the compensation (including salaries, bonuses and stock
options) of the Company's Chairman and CEO as well as the Company's other
executive officers, administers the Company's incentive and equity based
compensation plans and performs such other duties as may be delegated to it by
the Board. The Compensation Committee held four (4)three (3) formal meetings during the
fiscal year ended December 31, 20042005 and took action pursuant to resolutions
adopted by unanimous written consent.
In order to implement the Company's executive compensation philosophy, the
Compensation Committee exercises its independent discretion in reviewing and
approving the executive compensation program as a whole, as well as specific
compensation levels for each executive officer. Final aggregate compensation
determinations for each fiscal year are generally made after the end of the
fiscal year, after financial statements for such year become available. At that
time, the Compensation Committee determines bonuses, if any, for the past year's
performance, sets base salaries for the following fiscal year and makes awards
of equity-based compensation, if any. The Chief Executive Officer makes
recommendations to the Compensation Committee with respect to the compensation
of all executive officers. In addition, the Compensation Committee bases its
decisions on the most recent publicly available compensation data for senior
executive officers of comparable REITs, as well as various compensation studies
and surveys, to ensure that compensation packages are in line with our peer
group and the real estate industry in general. While benchmarks and comparative
market data are valuable tools to assist the Compensation Committee in setting
reasonable and fair compensation for the Company's executive officers, the
stated philosophy of the Company's executive compensation program is to
recognize individual contributions to the performance of the Company and to
create a link between the performance of the Company's stock and executive
compensation.
The Compensation Committee reviewed all components of the compensation of
the Company's executive officers, including salary, bonus, equity and long-term
incentive compensation, accumulated realized and unrealized stock option and
restricted stock gains, the dollar value to the executive and cost to the
Company of all perquisites and other personal benefits and the projected payout
obligations under potential severance and change-in-control scenarios. Based on
this review, the Compensation Committee finds that the Company's executive
officers' total compensation (and, in the case of the severance and
change-in-control scenarios, the potential payouts) in the aggregate to be
reasonable and not excessive.
13-12-
COMPONENTS OF EXECUTIVE COMPENSATIONComponents of Executive Compensation
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.
Cash bonuses, restricted stock awards and stock option awards are intended to
reward exceptional performances. Benchmarks for determining base salary and
bonus levels include growth in funds from operations, or FFO, as measured
against targets established at the beginning of each year and against the
relative performance of the Company in comparison to its peer group of
companies, strength of the balance sheet and creation of shareholder value.
Restricted stock awards and stock option awards are intended to provide
long-term incentive compensation to executive officers that is aligned directly
with the achievement of enhanced value for shareholders.
In 2004, the Company completed a comprehensive restructuring of its capital
and operating debt and publicly announced a five-year financial plan. To
coincide with the objectives targeted in the 5-year plan, theCEO Compensation
Committee approved restricted stock awards for each of the Company's executive
officers and new employment agreements for each of the Company's Chief Executive
Officer, Chief Financial Officer and Chief Operating Officer. Specifically, Mr.
Shiffman was awarded 20,000 shares of restricted stock, Mr. Fannon was awarded
15,000 shares of restricted stock, Mr. Jorissen was awarded 10,000 shares of
restricted stock and Mr. Colman was awarded 10,000 shares of restricted stock.
All of these restricted shares vest over a ten year period as follows: 35% vest
in 2008, 35% vest in 2009, 20% vest in 2010, 5% vest in 2011 and 5% vest in
2014. In addition, Mr. Shiffman was awarded 75,000 restricted shares, Mr.
Jorissen was awarded 50,000 restricted shares and Mr. Fannon is entitled to cash
compensation on the basis of dividends resulting from, and the market prices on
certain dates of, 25,000 shares of the Company's common stock (all of these
awards are collectively referred to as the "Performance-Based Shares"). 25% of
the Performance-Based Shares vest in 2007 and the balance of the
Performance-Based Shares vest in 2010 on the basis of the compound annual growth
rate of the Company's FFO during the period commencing January 1, 2005 and
ending December 31, 2009 (the "CAGR"). None of the balance of the
Performance-Based Shares vest if the CAGR is less than 5%, the entire balance of
the Performance-Based Shares vest if the CAGR is at least 9% and a portion of
the balance of Performance-Based Shares vest if the CAGR is between 5% and 9%.
CEO COMPENSATION
During the fiscal year ended December 31, 2004,2005, Gary A. Shiffman served in
the capacity of Chief Executive Officer of the Company. 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, 2004. Pursuant to this employment agreement, Mr. Shiffman was paid
a salary of $431,800 but, on the basis of the performance criteria established
in the employment agreement, he did not receive a bonus in 2004. As previously
discussed, the Company issued Mr. Shiffman an aggregate of 95,000 restricted
shares in 2004, 41% of which vest on certain dates and the balance of which vest
on the basis of certain FFO milestones, to reward him for his contribution in
completing the comprehensive balance sheet restructuring and as an incentive to
continue his efforts in the future to enhance shareholder value. 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 Compensation Committee believes that Mr. Shiffman's total compensation in
2004 was competitive with the appropriate level for his position, particularly
in view of his performance.
14
INTERNAL PAY EQUITY
The Compensation Committee believes that the relative differences between
CEO compensation and the compensation of the Company's other executive officers
is consistent with such differences found in its peer group and the real estate
industry in general.
Respectfully submitted,
Members of the Compensation Committee:
Ted J. Simon
Clunet R. Lewis
Ronald L. Piasecki
15
EMPLOYMENT AGREEMENTS
GARY A. SHIFFMAN In 2005, the Company
entered into an employment agreement with Gary A. Shiffman pursuant to which Mr.
Shiffman serves as President and Chief Executive Office of the Company. Mr.
Shiffman's employment agreement is for an initial term ending December 31, 2011
and is automatically renewable for successive one year terms thereafter unless
either party timely terminates the agreement. Pursuant to this employment
agreement, Mr. Shiffman is paid an annual base salary of $545,000, which will be
increased by an annual cost of living adjustment beginning with calendar year
2006. In addition to his base salary and in accordance with the terms of his
employment agreement, Mr. Shiffman is entitled to annual incentive compensation
of up to 75% of his then current base salary if he satisfies certain individual
and company performance criteria established from time to time by the Board and
Mr. Shiffman is entitled to annual incentive compensation of up to 25% of his
then current base salary in the sole discretion of the Compensation Committee.
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 Compensation Committee believes that Mr. Shiffman's total
compensation in 2005 was competitive with the appropriate level for his
position.
Internal Pay Equity
The Compensation Committee believes that the relative differences between
CEO compensation and the compensation of the Company's other executive officers
is consistent with such differences found in its peer group and the real estate
industry in general.
Salary Reduction
Effective January 1, 2005, the executive officers agreed to a 5% reduction
in their stated base salaries for calendar year 2005 and calendar year 2006. In
addition, the executive officers waived their right to receive an incentive
bonus during calendar year 2005.
Respectfully submitted,
Members of the Compensation Committee:
Ted J. Simon
Clunet R. Lewis
Ronald L. Piasecki
EMPLOYMENT AGREEMENTS
Gary A. Shiffman
In 2005, the Company entered into an employment agreement with Gary A.
Shiffman pursuant to which Mr. Shiffman serves as President and Chief Executive
Office of the Company. Mr. Shiffman's employment agreement is for an initial
term ending December 31, 2011 and is automatically renewable for successive one
year terms thereafter unless either party timely terminates the agreement.
Pursuant to this employment agreement, Mr. Shiffman is paid an annual base
salary of $545,000, which will be increased by an annual cost of living
adjustment beginning with calendar year 2006. In addition to his base salary and
in
-13-
accordance with the terms of his employment agreement, Mr. Shiffman is entitled
to annual incentive compensation of up to 75% of his then current base salary if
he satisfies certain individual and company performance criteria established
from time to time by the Board and Mr. Shiffman is entitled to annual incentive
compensation of up to 25% of his then current base salary in the sole discretion
of the Compensation Committee.
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.
A copy of Mr. Shiffman's employment agreement is attached as an exhibit to
the Company's periodic filings under the Exchange Act.
JEFFREYJeffrey P. JORISSENJorissen
In 2005, the Company 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 ending
December 31, 2010 and is automatically renewable for successive one year terms
thereafter unless either party timely terminates the agreement. Pursuant to this
employment agreement, Mr. Jorissen is paid an annual base salary of $314,325,
which will be increased by an annual cost of living adjustment beginning with
calendar year 2006. In addition to his base salary and in accordance with the
terms of his employment agreement, Mr. Jorissen is entitled to annual incentive
compensation of up to 75% of his then current base salary if he satisfies
certain individual and company performance criteria established from time to
time by the Board and Mr. Jorissen is entitled to annual incentive compensation
of up to 25% of his then current base salary in the sole discretion of the
Compensation Committee.
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.
A copy of Mr. Jorissen's employment agreement is attached as an exhibit to
the Company's periodic filings under the Exchange Act.
BRIANBrian W. FANNONFannon
In 2005, the Company entered into an employment agreement with Brian W.
Fannon pursuant to which Mr. Fannon serves as Chief Operating Officer of the
Company. Mr. Fannon's employment agreement is for an initial term ending
December 31, 2009 and is automatically renewable for successive one year terms
thereafter unless either party timely terminates the agreement. Pursuant to this
employment agreement, Mr. Fannon is paid an annual base salary of $403,700,
which will be increased by an annual cost of living adjustment beginning with
calendar year 2006. In addition to his base salary and in accordance with the
terms of his employment agreement, Mr. Fannon is entitled to annual incentive
compensation of up to 75% of his then current base salary if he satisfies
certain individual and company performance criteria established from time to
time by the Board and Mr. Fannon is entitled to annual incentive compensation of
up to 25% of his then 16
current base salary in the sole discretion of the
Compensation Committee. This employment agreement also provides Mr. Fannon with
cash compensation based on the dividends resulting from, and the market prices
on certain dates of, up to 25,000 shares of stock, 25%stock. Pursuant to a Waiver and
Extension Agreement dated November 11, 2005, which modified the original terms
of the employment agreement, 8 1/3 % of such cash compensation which will be
paid in each of 2007, 2008 and 2009 and the balance of which depends on the
compound annual growth rate of the Company's funds from operations during a
certain period of time through 2009.
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.
A copy of Mr. Fannon's employment agreement is attached as an exhibit to
the Company's periodic filings under the Exchange Act.
-14-
OUTSIDE DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as directors. During 2004,Effective January 1, 2005, the Company paid its
directors who are not employees of the Company:Company agreed to a 5% reduction in their
fees for calendar year 2005 and calendar year 2006. As a result, during 2005,
the Company paid such directors: an annual retainer fee of $40,000; $2,500$38,000; $2,375 per
quarter for attendance at all Board and committee meetings during such quarter;
$2,500$2,375 per year for service on, but not chair of, the Audit Committee, the
Compensation Committee and the NCG Committee; and $5,000$4,750 per year for the chair
of the Audit Committee, the Compensation Committee and the NCG Committee. For
services during the fiscal year ended December 31, 2004,2005, Ted J. Simon and Paul
D. Lapides each earned directors' fees of $57,500,$54,625, Ronald L. Piasecki earned
director's fees of $52,250 and Clunet R. Lewis earned directors'director's fees of
$60,000 and Ronald L. Piasecki earned directors'
fees of $55,000.$57,000. Although Arthur A. Weiss earned director's fees of $50,000$47,500 for services
during the fiscal year ended December 31, 2004,2005, he declined such fees.
17
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, 2004.2005. This line graph assumes a $100 investment on December 31,
1999,2000, 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 CORE DATAHEMSCOTT GROUP INDEX
(PERFORMANCE GRAPH)
- --------------------------------------------------------------------------------
FISCAL YEAR ENDING: 1999 2000 2001 2002 2003 2004 - --------------------------------------------------------------------------------2005
------- ------- ------- ------- ------- -------
SUN COMMUNITIES, INCINC. 100.00 111.10 131.54 137.18 154.60 171.48
COREDATA118.40 123.47 139.15 154.36 129.18
HEMSCOTT GROUP INDEX 100.00 132.33 145.63 138.10 174.61 231.69110.05 104.36 131.95 175.08 192.82
NYSE MARKET INDEX 100.00 102.38 93.26 76.18 98.69 111.4591.09 74.41 96.39 108.85 117.84
-15-
SECTION 16(a)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, 2004,2005, 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: (a) Messrs. Lewis and Piasecki,
each filed one report late due to an administrative error, and (b)that Messrs. Jorissen, Fannon and Colman
each failed to timely file one reporttwo reports disclosing that the Company retained
shares of its Common Stock upon vesting of previously granted restricted stock
awards to pay withholding tax as required under the terms of the Company's
Amended and Restated 1993 Stock Option Plan.
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2005,2006, 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............................... 2,292,895(2) 11.88%Shiffman 2,293,595(2) 12.09%
27777 Franklin Road
Suite 200
Southfield, Michigan 48034
Jeffrey P. Jorissen............................ 337,828(3) 1.82%Jorissen 303,006(3) 1.66%
27777 Franklin Road
Suite 200
Southfield, Michigan 48034
Brian W. Fannon................................ 70,747(4)Fannon 59,139(4) *
27777 Franklin Road
Suite 200
Southfield, Michigan 48034
Jonathan M. Colman............................. 68,880(5)Colman 38,124(5) *
27777 Franklin Road
Suite 200
Southfield, Michigan 48034
Ted J. Simon................................... 20,500(6)Simon 21,500(6) *
28470 Thirteen Mile Road
Suite 220
Farmington Hills, Michigan 48334
Paul D. Lapides................................ 15,200(7)Lapides 17,400(7) *
1000 Chastain Road
Kennesaw, Georgia 30144
Clunet R. Lewis................................ 47,100(8) *
10557 E. Tamarisk Way
Scottsdale, Arizona 85262
Ronald L. Piasecki............................. 131,393(9)Lewis 48,100(8) *
PMB 260 101 Washington Street
Grand Haven, Michigan 49417
Arthur A. Weiss................................ 672,279(10) 3.62%
27777 Franklin Road
Suite 2500
Southfield, Michigan 48034
Cohen & Steers Capital Management, Inc.(11).... 2,916,900 15.88%
757 Third Avenue
New York, New York 10017
T. Rowe Price Associates, Inc.(12)............. 1,720,500 9.36%
10010557 E. Pratt Street
Baltimore, Maryland 21202
Arthur Zankel(13).............................. 1,080,000 5.88%
J. David O'Connor
535 Madison Avenue, 26th Floor
New York, New York 10022Tamarisk Way
Scottsdale, Arizona 85262
19-16-
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
- ------------------------------------ -------------------- ---------------------
Ronald L. Piasecki 132,143(9) *
PMB 260 101 Washington Street
Grand Haven, Michigan 49417
Arthur A. Weiss 219,348(10) 1.20%
27777 Franklin Road
Suite 2500
Southfield, Michigan 48034
Cohen & Steers Capital Management, Inc.(11) 2,923,998 16.18%
757 Third Avenue
New York, New York 10017
David O'Connor (12) 1,775,648 9.82%
535 Madison Avenue
26th Floor
New York, New York 10022
All current executive officers and 3,131,745(13) 16.12%
directors as a group (9 persons).......................... 3,656,822(14) 18.38%
- ---------------
* Less than one percent (1%) of the outstanding shares.
(1) In accordance with SEC regulations, the percentage calculations are based
on 18,367,31918,069,335 shares of Common Stock issued and outstanding as of March 31,
20052006 plus shares of Common Stock which may be acquired pursuant to options
exercisable, or limited partnership interests in Sun Communities Operating
Limited Partnership ("Common OP Units") that are convertible into Common
Stock, within sixty days of March 31, 20052006 by each individual or group
listed.
(2) Includes: (a) 551,222 Common OP Units convertible into shares of Common
Stock; (b) 375,000350,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2005;2006; (c) 453,841 shares
of Common Stock owned by certain limited liability companies of which Mr.
Shiffman is a member and a manager; and (d) 56,250 restricted shares over
which Mr. Shiffman does not have the right to vote until such time as
certain performance criteria are met. Mr. Shiffman disclaims beneficial
ownership of 3,000 Common OP Units convertible into shares of Common Stock
and 2,300 shares of Common Stock held by other family members because he
does not have a pecuniary interest therein.
(3) Includes: (a) 100,000 Common OP Units convertible into shares of Common
Stock, (b) 69,75054,750 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2005,2006, and (c) 37,500037,500
restricted shares over which Mr. Jorissen does not have the right to vote
until such time as certain performance criteria are met. 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 20,000 Common OP Units convertible into shares of Common Stock.
(5) Includes 7,500 Common OP Units convertible into shares of Common Stock and
29,000Stock.
(6) Includes 17,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2005.
(6)2006.
(7) Includes 16,00015,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2005.
(7)2006.
(8) Includes 14,00020,000 Common OP Units convertible into shares of Common Stock and
4,500 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 31, 2005.
(8) Includes 20,000 Common OP Units convertible into shares of Common Stock and
3,500 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 31, 2005.2006. 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.
-17-
(9) Includes: (a) 17,437 Common OP Units convertible into shares of Common
Stock and 106,206 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; and (b) 8,2509,000 shares of Common Stock which may be acquired
pursuant to options exercisable within sixty days of March 31, 2005.2006.
(10) Includes 6,938 Common OP Units convertible into shares of Common Stock and
16,50017,500 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of March 31, 2005.2006. Includes (a) 170,000
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 20
170,000 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.
(11) According to the Schedule 13G filed with the SEC for calendar year 2004,2005,
Cohen & Steers Capital Management, Inc., in its capacity as investment
advisor, beneficially owns 2,916,9002,923,998 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 2004, T.
Rowe Price Associates, Inc., in its capacity as investment advisor,
beneficially owns 1,720,500 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 2004,2005,
(a) Arthur Zankel, J. David O'Connor, High Rise Partners II, LP ("HRP"), High Rise
Institutional Partners, L.P. ("HRIP" and, together with HRP, the "High Rise
Partnerships"), Cedar Bridge Realty Fund, L.P. ("CBR"), Cedar Bridge
Institutional Fund, L.P. ("CBI" and, together with CBR, the "Cedar Bridge
Partnerships"), High Rise Capital Advisors, L.L.C. ("General Partner"),
Bridge Realty Advisors, L.L.C. ("CB General Partner"), High Rise Capital
Management, L.P. and ZankelDPO Management GP L.L.C. beneficially own 1,080,0001,775,648
shares of Common Stock as a "group" for Schedule 13G reporting purposes;
(b) as the sole general partner of each of the High Rise Partnerships, the
General Partner has the power to vote and dispose of the securities owned
by each of the High Rise Partnerships and, accordingly, may be deemed the
"beneficial owner" of such securities; (c) as the sole general partner of
each of the Cedar Bridge Partnerships, the CB General Partner has the power
to vote and dispose of the securities owned by each of the Cedar Bridge
Partnerships and, accordingly, may be deemed the "beneficial owner" of such
securities; (d) the managing members of the General Partner are Arthur Zankel andis David
O'Connor; (e) the managing member of the CB General Partner is the General
Partner; (f) pursuant to an investment advisory contract, High Rise Capital
Management, L.P. currently has the power to vote and dispose of the
securities held for the account of certain managed accounts and,
accordingly, may be deemed the "beneficial owner" of such securities; (g)
the general partner of High Rise Capital Management, L.P. is ZankelDPO Management
GP L.L.C.; and (h) Arthur ZankelDavid O'Connor is managing member of ZankelDPO Management GP
L.L.C.
and David O'Connor is the
President of High Rise Capital Management, L.P. and shares investment
management duties with Mr. Zankel.
(14)(13) Includes (1) 893,097 Common OP Units convertible into shares of Common
Stock and 106,206 Preferred OP Units convertible into Common OP Units
(which are convertible into Common Stock); and (2) 532,000467,750 shares of Common
Stock which may be acquired pursuant to options exercisable within sixty
days of March 31, 2005.2006.
CERTAIN TRANSACTIONS
RELATIONSHIP WITH ORIGEN
In October 2003, Origen Financial, Inc. ("Origen") completed a $150 million
equity financing. In this transaction, the Company purchased 5,000,000 shares of
common stock of Origen for $50 million. Subsequently, Origen raised an
additional $64 million in its initial public offering of common stock and, as of
December 31, 2004, the Company's 5,000,000 shares of Origen common stock
constituted approximately 20% of the issued and outstanding shares of Origen
common stock. Gary A. Shiffman, the Chairman of the Board, Chief Executive
Officer and President of the Company currently serves as a director of Origen
and Shiffman Origen LLC (an entity owned by Mr. Shiffman, the Estate of Milton
M. Shiffman and members of their family) purchased 1,025,000 shares of common
stock of Origen for $10.25 million in the financing transaction. Arthur A.
Weiss, a director of the Company, serves as the sole manager of Shiffman Origen
LLC.
The Company and its affiliates have entered into the following transactions
with Origen:Origen Financial, Inc. ("Origen"):
- Capital Investment in Origen. In 2003 the Company acquired 5,000,000
shares of common stock in Origen in a private placement transaction at
$10 per share. In addition, Shiffman Origen LLC (100 percent of which
is owned by the Milton M. Shiffman Spouse's Marital Trust, Gary A.
Shiffman and members of his family) acquired 1,025,000 shares of
common stock of Origen at $10 per share.
- Board Membership. Gary A. Shiffman, the Chairman and Chief Executive
Officer of the Company, is a member of the Board of Directors of
Origen.
- Loan Servicing Agreement. Origen Servicing, Inc., a wholly-ownedwholly owned
subsidiary of Origen, servicesserviced approximately $16$19.6 million in
manufactured home loans for the Company as of December 31,
2004.-18-
2005. The Company pays Origen
21
Servicing, Inc. an annual servicing fee
of approximately 1.25%100 to 150 basis points of the outstanding principal balance of the
loans pursuant to a Loan Servicing Agreement, which totaled
approximately $200,000 in 2004.$300,000 during 2005.
- The CompanyLoan Origination, Sale and Purchase Agreement. Origen has agreed to
providefund loans that meet the Company's underwriting guidelines and then
transfer those loans to the Company pursuant to a Loan Origination,
Sale and Purchase Agreement. During 2005 the Company purchased $7.2
million of these loans.
- Purchase of Repossessed Manufactured Homes. The Company purchases
certain repossessed manufactured houses owned by Origen certain concessions onand located in
the Company's manufactured housing communities. The Company purchased
approximately $2.2 million of repossessed homes thatfrom Origen repossessesduring
2005. This program allows the Company to retain houses for resale and
rent in its communities including
rent abatement for the first 12 months that aand allows Origen to enhance recoveries on its
repossessed home owned by
Origen is held for sale and abatement of the commission that the Company
would earn if it brokers such sale. The Company also abates rent for
other major lenders who own repossessed homes in its communities. The
fair value of these abatements amounted to approximately $250,000 in
2004.
- Certain loans under the Company's Home Buying Made Easy Program are
originated and serviced by Origen. Loans under this program may, from
time to time, be sold to Origen. Because these loans are made below
published rates, the Company will pay Origen the interest rate
differential between market rates and the rate paid by the borrower for
any such loans sold to Origen. In 2004, loans totaling $1.6 million were
sold to Origen and interest differential of approximately $70,000 was
paid to Origen under this program.homes.
LEASE OF PRINCIPAL EXECUTIVE OFFICES
Gary A.The Company leases its executive offices in Southfield, Michigan from an
entity in which Mr. Shiffman together withand certain family members, indirectlyof his affiliates beneficially own
approximately a 21% equity interest in American Center LLC. This21 percent interest. The lease is for an
initiala term of five years,
which commenced on May 1, 2003. Rent paid was approximately $51,600 per month
from May 2004 to April 2005 and the Company has the right to extend$52,900 per month from May 2005 through December
of 2005. Rent increases of 2.5% are effective every May 1 during the lease for
an additional five year term. The annual base rent under this lease beginsterm
bringing the monthly rental payments at $19.25 per square foot (gross) for the first lease yearMay 1, 2006 and increases $0.50 per
square foot for each successive year of the initial term. Rent paid during 2004
wasMay 2007 to
approximately $52,000 per month.$54,200 and $55,500, respectively.
LOANS TO CHIEF EXECUTIVE OFFICER
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 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, 20042005 was approximately $10,299,442.80.$9,797,721.80. As of March 31, 2005,2006, the
amount outstanding under the Shiffman Notes was approximately $9,711,173.80.
22
$9,335,298.80.
LEGAL COUNSEL
During 2004,2005, the law firm of Jaffe, Raitt, Heuer & Weiss, Professional
CorporationP.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 the Chairman of the Board of Directors
and a shareholder of such firm.
For its fiscal year ended January 31, 2005, Jaffe, Raitt, Heuer &
Weiss, Professional Corporation-19-
TAX CONSEQUENCES UPON SALE OF PROPERTIES
Mr. Shiffman holds limited partnership interests in Sun Communities
Operating Limited Partnership, our operating partnership, which he received approximately $2.3 million in
feesconnection with the contribution of 24 properties from entities previously
affiliated with him (the "Sun Partnerships"). Prior to any redemption of these
limited partnership interests for the Company.Company's common stock, Mr. Shiffman will
have tax consequences different from those of the Company and the Company's
public stockholders on the sale of any of the Sun Partnerships. Four of the
properties have been sold to date.
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 seven (7)four (4) formal meetings and several informal meetings during the
20042005 fiscal year.
In accordance with its written charter, 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 Grant Thornton, LLP, the Company's independent
auditors, for the fiscal year ended December 31, 2004;2005;
- discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards); 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, 2004,2005, as filed with the Securities and Exchange Commission.
In 2003, theThe Audit Committee approvedhas a policy concerning the pre-approval of audit and
non-audit services to be provided by the Company's independent auditors. The
policy requires that all services provided by the independent auditor to the
Company, including audit services, audit-related services, tax services and
other services, must be pre-approved by the Audit Committee. In some cases,
pre-approval is provided by the full Audit Committee for up to a year, and
relates to a particular category or group of services and is subject to a
particular budget. In other cases, specific pre-approval is required. The Audit
Committee approved all audit and non-audit related services provided to the
Company by Grant Thornton LLP during the 20042005 fiscal year.
The Audit Committee has considered and determined that the level of fees of
Grant Thornton LLP 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
INFORMATION ABOUT OUR INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of the Company's independent auditor, Grant Thornton, 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 selected Grant Thornton, LLP to serve as the
Company's independent auditors for 2005.
232006.
-20-
Aggregate fees for professional services rendered by Grant Thornton, LLP,
the Company's independent auditors, for the fiscal years ended December 31, 20042005
and December 31, 20032004 were as follows:
CATEGORY FYE 12/31/20042005 FYE 12/31/20032004
- -------- -------------- --------------
Audit Fees: For professional services rendered for the $422,205 $160,500
audit of the $395,496 $473,445
Company's financial statements, the audit of internal controls relating to
Section 404 of the Sarbanes-Oxley Act, the reviews of the quarterly
financial statements, comfort letters and consents...consents
Audit-Related Fees: For professional services rendered $ 15,250 $ 22,000
for accounting $ 76,136 $ 28,500
assistance with new accounting standards and potential transactions and
attendance
at Audit Committee meetings..........................other SEC related matters
Tax Fees...............................................Fees 0 0
All Other Fees.........................................Fees 0 0
In July 2003, the Company engaged Grant Thornton LLP effective immediately
as the Company's independent auditor for the fiscal year ending December 31,
2003, and decided to no longer engage PricewaterhouseCoopers LLP as the
Company's independent auditor. During the Company's fiscal year ended December
31, 2002, and the subsequent interim period through July 8, 2003, there were no
disagreements with PricewaterhouseCoopers LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of PricewaterhouseCoopers
LLP, would have caused it to make reference to the subject matter of such
disagreement in their reports on the financial statements for such years. The
reports of PricewaterhouseCoopers LLP on the Company's financial statements for
the fiscal year ended December 31, 2002 did not include any adverse opinion or
disclaimer of opinion, or any qualification or modification as to uncertainty,
audit scope or accounting principles.
During the Company's fiscal year ended December 31, 2002, and the
subsequent interim period through July 8, 2003, there were no "reportable
events" (as defined in Item 304(a)(1)(v) of Regulation S-K) involving
PricewaterhouseCoopers LLP.
During the Company's fiscal year ended December 31, 2002, and the
subsequent interim period through July 8, 2003, Grant Thornton LLP was not
engaged as an independent accountant to audit the financial statements of the
Company, nor was it consulted regarding the application of accounting principles
to any specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, or any
matter that was the subject of a disagreement or reportable event.
24
GENERAL INFORMATION
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
/s/ Jeffrey P. Jorissen
JEFFREY----------------------------------------
Jeffrey P. JORISSEN
Secretary
Dated: April 20, 2005
2519, 2006
21
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 24, 2005
Thank you in advance for your prompt consideration of these
matters
Sincerely,
Sun Communities, Inc
DETACH HERE ZSUN42
SUN COMMUNITIES, INC.
27777 FRANKLIN ROAD, SUITE 200
SOUTHFRELD, MICHIGAN 48034
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 24,2005
The undersigned hereby appoints Gary A Shiffman and Clunet R. Lewis, 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, ail 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 Embassy Suites
28100 Franklin Road, Southfield, Michigan 48034 on Tuesday, May 24, 2005, and at
any adjournments thereof
The undersigned shareholder acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement dated April 20 2005
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 ZSUN41
|
| 3373
[X] PLEASE MARK |
VOTES AS IN |________
THIS EXAMPLE.
------------------------------------------------------
1 Election of Directors
(BAR GRAPHIC)
+
SUN COMMUNITIES, INC.
(01) GARY000000000.000 ext
000000000.000 ext
000004 000000000.000 ext
MR A SHIFFMAN ------------------------------------------------------
(02) RONALD L. PIASECKISAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 LEAST ADDRESS LINE 000000000.000 ext
ADD 2 000000000.000 ext
ADD 3
ADD 4
ADD 5
ADD 6 C 1234567890 JNT
(BAR GRAPHIC)
(BAR GRAPHIC)
[ ] Mark this box with an X if you have made
changes to your name or address details above.
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
- -----------------------------------------------------------------------------------------------------------------------------------
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD
01 - Ted J. Simon [ ] [ ]
02 - Paul D. Lapides [ ] [ ]
2. The appointed proxies are authorized
to vote upon all matters incidental
FOR WITHHOLD
to the conduct of the Annual Meeting
and such other business as may
ALL [ ] [ ] FROM ALL propertyproperly come before the Annual
Meeting in accordance with their
best NOMINEES NOMINEES judgment
FOR
ALLjudgment.
[ ] EXCEPT -----------------------------------
{INSTRUCTION:Mark this box with an X if you have made
comments below.
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
B AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS 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.BE EXECUTED.
Please be sure to sign and date this Proxy.
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)
- --------------------------------------------------- --------------------------------------------------- ----------------------
/ /
- --------------------------------------------------- --------------------------------------------------- ----------------------
0 0 9 1 6 7 1 1 U P X C O Y +
- -----------------------------------------------------------------------------------------------------------------------------------
PROXY - SUN COMMUNITIES, INC.
- -----------------------------------------------------------------------------------------------------------------------------------
27777 FRANKLIN ROAD, SUITE 200
SOUTHFIELD, MICHIGAN 48034
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 25, 2006
The undersigned hereby appoints Gary A. Shiffman and Clunet R. Lewis, 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 Embassy Suites, 28100 Franklin Road,
Southfield, Michigan 48034 on Thursday, May 25, 2006, and at any adjournments thereof.
The undersigned shareholder acknowledges receipt of the Notice of Annual Meeting and Proxy Shareholder Co-ownerStatement dated April 19, 2006.
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.
-------------------------------------------------
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 here: Date: sign here: Date:
------------------------ ----------------- ------------------------ -----------------the card and return your proxy vote
in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 25, 2006.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sun Communities, Inc.