NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
You are cordially invited to attend the 2023 Annual Meeting of Stockholders (the “Meeting”) of Apartment Income REIT Corp. (“AIR” or the “Company”) to be held on September 15, 2023, at 9:30 a.m., Mountain Time, at AIR’s corporate headquarters, 4582 South Ulster Street, Suite 1700, Denver, CO 80237, for the following purposes:
WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, PLEASE VOTE AS SOON AS
POSSIBLE TO ENSURE THAT YOUR SHARES ARE REPRESENTED.
1To elect nine directors, for a term of one year each, until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified;
2To ratify the selection of Deloitte & Touche LLP, to serve as independent registered public accounting firm for the Company for the fiscal year ending December 31, 2023;
3To conduct an advisory vote on executive compensation;
4To approve amendments to our Charter to eliminate supermajority voting provisions;
5 To approve amendments to our Charter to provide stockholders the ability to remove directors without cause;
6To approve amendments to our Charter to eliminate language that is by its terms no longer applicable due to the passage of time; and
7 To transact such other business as may properly come before the Meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on July 28, 2023, will be entitled to notice of, and to vote at, the Meeting or any adjournment(s) thereof.
We are pleased to again use the Securities and Exchange Commission (“SEC”) rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Meeting.
On or about August 4, 2023, we intend to mail our stockholders a notice containing instructions on how to access our 2023 proxy statement (the “Proxy Statement”), Annual Report on Form 10-K for the year ended December 31, 2022, and vote online. The notice also provides instructions on how you can request a paper copy of these documents if you desire, and how you can enroll in e-delivery. If you received your annual materials via email, the email contains voting instructions and links to these documents on the Internet.
By order of the Board of Directors
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DATE AND TIME
September 15, 2023,
at 9:30 a.m. (MDT)
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LOCATION
4582 South Ulster Street, Suite 1700, Denver, CO 80237
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Lisa R. Cohn
President, General Counsel, and Secretary
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August 1, 2023
Important Notice Regarding the Availability of Proxy Materials for
AIR’s Annual Meeting of Stockholders to be held on September 15, 2023.
This Proxy Statement and AIR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, are available free of charge at the following website: www.envisionreports.com/airc.
A MESSAGE FROM OUR CHAIRMAN OF THE BOARD AND OUR CHIEF EXECUTIVE OFFICER
Dear AIR Shareholders:
We write as shareholders like you…and as colleagues who have worked together for the past 16 years to enhance the value of AIR: Tom, first as an Aimco director and now Chairman of the AIR Board of Directors; and Terry as Founder/CEO of “Old Aimco” and now AIR.
Together with our board colleagues, we made the strategic decision just over two and a half years ago to create AIR as a simple, efficient, and predictable business, different in its focus on operations where AIR has a comparative advantage – the AIR Edge.
A few items of note in our key areas of operations, portfolio, balance sheet, team and culture, and governance:
•The AIR Edge, our combination of process, technology, analytics, and most importantly, people, continues to deliver superior results. Since 2019, AIR leads coastal peers in Same Store Revenue and NOI growth, and in the conversion of revenue to Free Cash Flow. AIR is expected to lead all peers in these metrics in 2023 and 2024.
•We have continued to transform the AIR portfolio. Since the separation from “Old Aimco” we have recycled 45% of our GAV, or $4.7 billion. Our resulting portfolio has average revenue per unit of $2,797, up 25% since the separation and the third highest average revenue per unit, 8.4% above peer average. We continue to allocate capital to more dynamic markets such as Southeast Florida.
•Our Balance Sheet is in exceptional shape. We have liquidity of $2 billion, which is more than 3x the peer average. We have no debt maturities for three years with available liquidity to repay all refunding obligations for the next six years. We have no floating rate debt versus peer average of 6%.
•Two of the world’s most professional, successful, and largest real estate investors have chosen to partner with AIR in ventures with an aggregate value of $1.2 billion. This reflects an endorsement of the AIR Edge and AIR’s capability in sourcing accretive growth opportunities. These new JV partnerships are strategic to AIR. They increase AIR’s exposure to higher growth properties, which benefit from the AIR Edge. AIR expects to achieve 200+ bps spreads to our cost of capital, incremental property and asset management fees through higher AUM, and immediate reduction in leverage.
•As promised, we have a more focused business with no exposure to development or mezzanine investments, nor their attendant risks.
•Our highly engaged team continues to drive results, and is being recognized across the country, as a National Top Workplace for the second year in a row as well as a Top Workplace in Denver, Washington, DC, Southeast Florida, and Philadelphia. With engagement rising, so is teammate retention, which is a further accelerant to our AIR Edge.
•Our highly engaged Board brings a wide range of perspectives, including five directors with an average tenure of less than two and a half years.
How We Are Selected and Elected
BOARD COMPOSITION, BOARD REFRESHMENT, AND DIRECTOR TENURE
The AIR Board is focused on being well-constructed and high performing. To that end, the Governance and Corporate Responsibility Committee selects nominees for director based on, among other things, breadth and depth of experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries, understanding of AIR’s business environment, and willingness to devote adequate time and effort to Board responsibilities. In considering nominees for director, the Governance and Corporate Responsibility Committee seeks to have a diverse range of experience and expertise relevant to AIR’s business. The Governance and Corporate Responsibility Committee places a premium on individual directors who work well in the collegial and collaborative AIR culture, think and act independently, and can communicate their convictions clearly and effectively. The Governance and Corporate Responsibility Committee also assesses the appropriate balance of skills and experiences included in the composition of the Board and makes recommendations to the Board.
The Governance and Corporate Responsibility Committee has specifically considered the feedback of some stockholders as well as the discussions of some commentators that suggest lengthy Board tenure should be balanced with new perspectives. The Board has structured itself such that there are directors of varying tenures, with new directors and perspectives joining the Board every few years including three new directors who were elected in 2021 and two new directors who were elected in 2020. They have done this while retaining the institutional memory of longer-tenured directors. New directors go through an extensive onboarding process, including meeting with members of management across the entire business. This onboarding process provides an understanding of the business and of the team that drives it.
The Governance and Corporate Responsibility Committee believes that longer-tenured directors, balanced with less-tenured directors, enhance the Board’s oversight capabilities. AIR’s directors work effectively together, functioning as a team with a broad range of expertise and perspectives. Directors also coordinate closely with senior management, interact periodically with the broader AIR team in town hall settings and onsite, comprehend AIR’s challenges and
opportunities, and frame AIR’s business strategy. AIR’s Board members have established relationships with each other and in the business community that inform their work to apply effectively their collective business savvy in setting policies for the AIR enterprise and supporting management in their achievement.
When formulating its Board membership recommendations, the Governance and Corporate Responsibility Committee also considers advice and recommendations from others, including stockholders, as it deems appropriate. Such recommendations are evaluated based on the same criteria noted above. The three most recently added directors were recommended to the Governance and Corporate Responsibility Committee by an independent search firm, retained to help identify and review director candidates. Prior director candidates were also identified and reviewed by the same independent search firm.
The Board is responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of stockholders.
INDEPENDENCE OF DIRECTORS
The Board has determined that to be considered independent, a director may not have a direct or indirect material relationship with AIR or its subsidiaries (directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). A material relationship is one that impairs or inhibits, or has the potential to impair or inhibit, a director’s exercise of critical and disinterested judgment on behalf of AIR and its stockholders. In determining whether a material relationship exists, the Board considers all relevant facts and circumstances, including whether the director or a family member is a current or former employee of the Company, family member relationships, compensation, business relationships and payments, and charitable contributions between AIR and an entity with which a director is affiliated (as an executive officer, partner or substantial stockholder). The Board consults with the Company’s counsel to ensure that such determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent director,” including but not limited to those categorical standards set forth in Section 303A.02 of the listing standards of the New York Stock Exchange.
Consistent with these considerations, the Board has affirmatively determined that all of the directors (other than Mr. Considine) are independent.
MAJORITY VOTING FOR THE ELECTION OF DIRECTORS
In an uncontested election at the meeting of stockholders, any nominee to serve as a director of the Company will be elected if the director receives a majority of votes cast, which means that the number of shares voted “for” a director exceeds the number of shares voted “against” that director. With respect to a contested election, a plurality of all the votes cast at the meeting of stockholders will be sufficient to elect a director. If a nominee who currently is serving as a director receives a greater number of “against” votes for his or her election than votes “for” such election (a “Majority Against Vote”) in an uncontested election, Maryland law provides that the director continue to serve on the Board as a “holdover director.” However, under AIR’s Bylaws, any nominee for election as a director in an uncontested election who receives a Majority Against Vote is obligated to tender his or her resignation to the Board for consideration following certification of the vote. The Governance and Corporate Responsibility Committee will consider any resignation and recommend to the Board whether to accept it. The Board is required to take action with respect to the Governance and Corporate Responsibility Committee’s recommendation. Additional details are set out in Article II, Section 2.03 (Election and Tenure of Directors; Resignations) of AIR’s Bylaws.
PROXY ACCESS
Based on stockholder feedback, corporate governance best practices and trends, and the Company’s particular facts and circumstances, the Board determined to provide in the Company’s Bylaws a proxy access right to stockholders. A stockholder or a group of up to 20 stockholders, owning at least 3% of our shares for at least three years, may submit nominees for up to 20% of the Board, or two nominees, whichever is greater, for inclusion in our proxy materials, subject to complying with the requirements contained in our Bylaws.
How We Govern and Are Governed
CODE OF ETHICS
The Board has adopted a code of ethics entitled “Code of Business Conduct and Ethics” that applies to the members of the Board, all of AIR’s executive officers and all teammates of AIR or its subsidiaries, including AIR’s principal executive officer, principal financial officer, and principal accounting officer. The Code of Business
Conduct and Ethics is posted on AIR’s website (www.aircommunities.com) and is also available in print to stockholders, upon written request to AIR’s Corporate Secretary. If, in the future, AIR amends, modifies, or waives a provision in the Code of Business Conduct and Ethics, rather than filing a Current Report on Form 8-K, AIR intends to satisfy any applicable disclosure requirement under Item 5.05 of Form 8-K by posting such information on AIR’s website (www.aircommunities.com), as necessary.
CORPORATE RESPONSIBILITY REPORT
AIR publishes a Corporate Responsibility Report, which highlights our commitment to environmental and social responsibility. A copy of AIR’s current Corporate Responsibility Report is available on AIR’s website (www.aircommunities.com). Nothing on AIR’s website, including the Corporate Responsibility Report, shall be deemed incorporated by reference into this Proxy Statement.
CORPORATE GOVERNANCE GUIDELINES AND DIRECTOR STOCK OWNERSHIP
The Board has adopted and approved Corporate Governance Guidelines. These guidelines are available on AIR’s website (www.aircommunities.com) and are also available in print to stockholders, upon written request to AIR’s Corporate Secretary. In general, the Corporate Governance Guidelines address director qualification standards, director responsibilities, director access to management and independent advisors, director compensation, director orientation and continuing education, the role of the Board in planning management succession, stock ownership guidelines and retention requirements, and an annual performance evaluation of the Board.
With respect to stock ownership guidelines for the independent directors, the Corporate Governance Guidelines provide that by the completion of five years of service, an independent director is expected to own, at a minimum, the lesser of 27,500 shares or shares having a value of at least $550,000. Each of AIR’s continuing directors meets the ownership requirement or has not yet completed five years of service. In addition, many of our independent directors have purchased shares on the open market. As described elsewhere in this Proxy Statement, our founder and CEO, Mr. Considine and his family have substantial holdings of AIR securities, and Mr. Considine takes most of his compensation in AIR securities with the quantity based on AIR’s performance.
MAJORITY VOTING WITH A RESIGNATION POLICY
AIR requires its directors to be elected by a majority of the votes cast in an uncontested election. Directors failing to get a majority of the votes cast are expected to tender their resignation. If a nominee who currently is serving as a director receives a greater number of “against” votes for his or her election than votes “for” such election (a “Majority Against Vote”) in an uncontested election, Maryland law provides that the director would continue to serve on the Board as a “holdover director.” However, under AIR’s Bylaws, any nominee for election as a director in an uncontested election who receives a Majority Against Vote is obligated to tender his or her resignation to the Board for consideration following certification of the vote. The Governance and Corporate Responsibility Committee will consider any resignation and recommend to the Board whether to accept it. The Board is required to take action with respect to the Governance and Corporate Responsibility Committee’s recommendation.
RETIREMENT AGE OR TERM LIMITS
Rather than impose arbitrary limits on service, the Company regularly (and at least annually) reviews each director’s continued role on the Board and considers the need for periodic board refreshment.
CHARTER AND Bylaws Amendments
In 2022, the Board took action to amend AIR’s Charter to reduce to a simple majority the stockholder vote required to amend AIR’s Charter and Bylaws In 2023, the Board took action to amend AIR’s Charter and Bylaws to lower the threshold for stockholders to remove directors to a simple majority of shares outstanding and eliminate the requirement that such removal be for “cause.” The actions taken are subject to the affirmative vote of shareholders, as detailed further in proposals 4 and 5.
TRANSACTIONS IN AIR SECURITIES
The Company has a policy and training program focused on compliance with the securities laws, which are designed to prevent insider trading and ensure compliance with fair disclosure regulations. Any transaction in AIR securities by a director, officer or other employee on certain projects requires pre-clearance with the General Counsel and typically such transactions are permitted only during certain open trading windows. In addition, the Company’s policy against insider trading prohibits short sales and provides certain limitations to help ensure that any sort of margin account, pledges, hedges, or option transactions are consistent with the securities laws and aligned with the best interests of stockholders.
BOARD CULTURE
The Board has a culture of collaboration and a commitment to acting with consensus. The Board asks all independent directors to serve on all standing committees, have a breadth and depth of experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries, and a willingness to devote adequate time and effort to Board responsibilities. The Board focuses on regular refreshment and seeks to have a diverse range of experience and expertise relevant to AIR’s business. AIR places a premium on directors who work well in the collegial and collaborative culture of the Board, who think and act independently, and who can clearly and effectively communicate their convictions.
How We Are Organized
BOARD LEADERSHIP STRUCTURE
In connection with the Separation, Mr. Considine recommended and the Board concluded that separating the Chairman and CEO role would be most effective for the Company’s leadership and governance. Mr. Keltner serves as Chairman of the Board, which includes: presiding over meetings of the Board; presiding over executive sessions of the independent directors, which are held regularly and not less than four times per year; with the CEO, setting meeting agendas and schedules; calling meetings of the independent directors; and being available for direct communication with stockholders.
All committees are composed solely of independent directors. The Audit, Compensation and Human Resources, and Governance and Corporate Responsibility Committees are composed solely of all independent directors so that each independent director hears all information unfiltered and reduces repetitive or summarized reports. This practice ensures that elected and independent directors have broad awareness of the AIR business and make Board decisions with the perspective of the stockholders who elected them and own the AIR business.
SEPARATE SESSIONS OF INDEPENDENT DIRECTORS
AIR’s Corporate Governance Guidelines (described above) provide that the non-management directors shall meet in executive session without management on a regularly scheduled basis, but no less than four times per year. The non-management directors, which group currently is made up of the eight independent directors, met in executive session without management four times during the year ended December 31, 2022.
Change in Independent Registered Public Accounting Firm
NEW INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As disclosed above, on September 23, 2021, the Audit Committee approved the appointment of Deloitte & Touche LLP for the fiscal year ending December 31, 2021. During the fiscal years ended December 31, 2020 and December 31, 2019, and for the subsequent interim period through September 23, 2021, none of AIR, the Operating Partnership or anyone on their behalf consulted Deloitte & Touche LLP regarding: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and no written report or oral advice was provided that Deloitte & Touche LLP concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a “reportable event” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
PREVIOUS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Also as disclosed above, during the competitive process, on September 22, 2021, Ernst & Young LLP resigned as the Company’s independent registered public accounting firm, effective immediately. Ernst & Young LLP’s reports on (i) the consolidated financial statements as of and for fiscal year ended December 31, 2020 of AIR and the Operating Partnership and (ii) the consolidated financial statements as of and for the fiscal year ended December 31, 2019 of AIR’s predecessor, Apartment Investment and Management Company, and the Operating Partnership, then known as AIMCO Properties, L.P., did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During fiscal years ended December 31, 2020 and December 31, 2019, and in the subsequent interim period through September 22, 2021, (i) there were no disagreements with Ernst & Young LLP (within the meaning of Item 304(a)(1)(iv) of Regulation S-K) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that if not resolved to Ernst & Young LLP’s satisfaction, would have caused Ernst & Young LLP to make reference thereto in its reports; and (ii) there were no reportable events (as defined by Item 304(a)(1)(v) of Regulation S-K).
AUDIT COMMITTEE REPORT TO STOCKHOLDERS
The Audit Committee oversees AIR’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures. A written charter approved by the Audit Committee and ratified by the Board governs the Audit Committee. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report on Form 10-K with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, its judgment as to the quality, not just the acceptability, of the Company’s accounting principles. The Audit Committee also has discussed with the independent registered public accounting firm the
•Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
•Actuarial services;
•Internal audit outsourcing services;
•Management functions or human resources;
•Broker or dealer, investment adviser, or investment banking services; and
•Legal services and expert services unrelated to the audit.
•The following rules of the PCAOB:
•3521 - Contingent Fees;
•3522 - Tax Transactions; and
•3524 - Audit Committee Pre-approval of Certain Tax Services.
In addition, the Audit Committee considered the SEC’s Release, Strengthening the Commission’s Requirements Regarding Auditor Independence, in which the SEC reiterated “its long-standing position that an accounting firm can provide tax services to its audit clients without impairing the firm’s independence.”
AUDIT COMMITTEE PRE-APPROVAL POLICIES
The Audit Committee has adopted the Audit and Non-Audit Services Pre-Approval Policy (the “Pre-approval Policy”). A summary of the Pre-approval Policy is as follows:
•The Pre-approval Policy describes the Audit, Audit-related, Tax and Other Permitted services that have the general pre-approval of the Audit Committee.
•Pre-approvals are typically subject to a dollar limit of $100,000.
•The term of any general pre-approval is generally 12 months from the date of pre-approval.
•At least annually, the Audit Committee reviews and pre-approves the services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval from the Audit Committee.
•Unless a type of service has received general pre-approval and is anticipated to be within the dollar limit associated with the general pre-approval, it requires specific pre-approval by the Audit Committee if it is to be provided by the independent registered public accounting firm.
•The Audit Committee will consider whether all services are consistent with the rules on independent registered public accounting firm independence.
•The Audit Committee also considers whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with AIR’s business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance AIR’s ability to manage or control risk or improve audit quality. Such factors are considered as a whole, and no one factor is necessarily determinative.
All of the services described in the Principal Accountant Fee section above were approved pursuant to the annual engagement letter or in accordance with the Pre-approval Policy.
Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers (“NEOs”) as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC.
At
the Annual Meeting of Stockholders in 2022, approximately 98% of the votes cast in the advisory vote on executive compensation that
were present and entitled to vote on the matter were in favor of the compensation of AIR’s NEOs (also commonly referred to as
“Say on Pay”). Prior to the separation, AIR’s predecessor presented annual say-on-pay
proposals with peer leading approvals for at least the most current five years, a support level which AIR has continued to receive
since the Separation.
In 2022, we engaged with stockholders representing approximately 70% of our outstanding shares of Common Stock as of December 31, 2022, as part of our ongoing process of soliciting feedback on AIR’s executive compensation program, disclosure, and governance. In 2022, the Company received supportive feedback from stockholders on the structure of its executive compensation program, the program’s alignment of pay and performance, and the quantum of compensation delivered under the program as described in detail under the heading “Compensation Discussion & Analysis—2022 Say-on-Pay Vote Result and Stockholder Engagement Regarding Executive Compensation.”
As described in detail under the heading “Compensation Discussion & Analysis,” it is consistent with AIR’s philosophy to have stockholder friendly compensation that aligns closely the interests of our NEOs with the interests of our stockholders. Our compensation program is designed to reward our NEOs for the achievement of short-term and long-term strategic and operational goals and the achievement of total stockholder return (“TSR”) relative to peers, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. Much of the compensation is in AIR equity and vests subject to performance and over a period of time.
It is also consistent with corporate policy that net G&A be less than 15bps of gross asset value, or GAV.
It is noteworthy that Mr. Considine, AIR’s founder and CEO, in order to establish that policy in AIR’s corporate culture and with consideration of his teammates, voluntarily waived $2.5 million of 2021 compensation. He also volunteered to do the same in 2022; however AIR met its net G&A commitment, so no such forfeiture was required.
AIR’s executive compensation is low by industry standards, tied to performance, paid substantially in equity, and without special benefits or perks.
The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the overall compensation of our NEOs, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.
The vote is advisory, which means that the vote is not binding on the Company, our Board or the Compensation and Human Resources Committee (the “Committee”). However, as described above, we take seriously the views of our stockholders, and to the extent there is any significant vote against our executive compensation as disclosed in this proxy statement, the Committee will evaluate whether any actions are necessary to address the concerns of stockholders.
To be approved at the Meeting, Proposal 3 must receive the affirmative vote of a majority of the total votes cast at the Annual Meeting. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of the vote. We expect the next advisory vote on our executive compensation after the meeting will be held at the Company’s 2024 Annual Meeting of stockholders.
We are asking the Company’s stockholders to approve, on an advisory basis, the following resolution: RESOLVED, that the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion & Analysis, the 2022 Summary Compensation Table and the other related tables and disclosure, is hereby APPROVED.
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
Executive Summary
•Mr. Considine’s compensation is largely tied to outperformance as measured by relative Total Stockholder Returns over three-year periods.
•Mr. Considine volunteered twice to cap his compensation. First, Mr. Considine volunteered, and the AIR Board accepted his commitment, that his combined target compensation from AIR and Aimco during 2021 and 2022 would not exceed his target compensation prior to the Separation. Mr. Considine did so to make clear that the object of the Separation was to create stockholder value, not increased executive compensation. As described in more detail below, to the extent he received compensation directly from Aimco, compensation paid to him by AIR in relation to his role as CEO of AIR was reduced in a manner to ensure that his combined aggregate annual compensation paid from both companies did not exceed his annual compensation prior to the Separation.
•Second, Mr. Considine volunteered, and the AIR Board accepted his commitment, to reduce his compensation if net G&A expenses exceed 15 basis points of gross asset value, as determined by AIR’s Board of Directors and Mr. Considine. Mr. Considine did so to establish firmly in AIR policy and culture that it is in the long-term best interests of AIR and its stockholders that AIR be an efficient and low-cost provider of real estate investment and management services and to do so while guarding the compensation of his teammates and the appropriate level of investment in other corporate costs. This discipline regarding G&A is an important element of AIR being the most efficient way to invest in stabilized multifamily properties with public market liquidity, as measured by the amount of rent converted to cash flow available for investment in AIR’s business or payment of cash dividends to AIR’s stockholders. Mr. Considine made his commitments without any adjustment or any sort of makeup arrangement. In 2021, this meant that Mr. Considine waived $2,527,000 of compensation: returning his $400,000 base salary, foregoing his earned STI of $1,772,640, and making a cash payment to AIR of $354,360. In 2022, AIR’s net G&A expenses were below 15 basis points of gross asset value so it was not necessary for Mr. Considine to waive any of his 2022 compensation
•AIR delivered strong operational performance in 2022. Average rents in our portfolio reached a new high and our 10-year revenue CAGR is 3.7%. Same Store Net Operating Income (“NOI”) growth of 14% surpassed our expectations, and NOI in our newly acquire properties grew even faster. We had the highest operating margins in the sector - 74.4% NOI Margin vs 68.1% peer average. We were the most efficient in converting rent to Free Cash Flow.
•The annual incentive plan was based on financial, operational, and strategic objectives. Financial and operational results were weighted at 70% of the total incentive, with balance sheet, capital allocation, and employee engagement metrics comprising the remainder.
•Based on overall outperformance on KPIs (Operations Performance, Portfolio Quality, Financial Performance, Balance Sheet and Team Engagement & ESG), the calculated payout was 134.31% of Target.
•Performance equity granted in 2020 earned at 82.28% of Target. Across the 2020-2022 period, Total Stockholder Return (TSR) was favorable compared to the Nareit Equity Apartments Index, but underperformed the MSCI US REIT Index due to the general decline of apartment REITs. This was the last award with a combined AIR/Aimco return metric.
•Over the five year period ending December 31, 2022, our 5-Year Cumulative TSR was 18.1%, which exceeds the 16.34% 5-Year Cumulative TSR of the Nareit Apartments Index.
•The structure of 2023 compensation is largely in line with 2022. The AIR compensation philosophy and general compensation program structure have not changed. AIR remains committed to long-term, stockholder-aligned, performance-based compensation for senior executives. AIR’s say-on-pay support averages a peer leading 98.1% over the past five years.
18.1%
5-Year Cumulative TSR, vs 16.34% for the Nareit Apartments Index for the period ending December 31, 2022
74.4%
NOI Margin, vs 68.1%
peer average
3.7%
10-year revenue CAGR
98.1%
5-year average
Say-on-Pay support rate
Total Compensation for 2022
For 2022, total compensation is the sum of base compensation earned in 2022, STI earned in 2022, and LTI awards granted in 2022.
Base Compensation for 2022
For 2022, Mr. Considine’s base compensation was $400,000, reduced by him from $700,000 which amount is well below the median for CEOs of his experience, expertise, and tenure in AIR’s peer group. For 2022, base compensation for Messrs. Beldin and Kimmel and Ms. Cohn was set at $450,000, near the median base compensation paid by our peer companies to executives in similar positions. Mr. McGrath had a draw in an amount equal to $600,000, which was earned based on transactions and forfeitable if he had not closed transactions sufficient to earn his draw payment as described in more detail below.
Short-Term Incentive Compensation for 2022
The Committee determined Mr. Considine’s STI by the extent to which AIR met five designated corporate goals, which are described below and are referred to as AIR’s Key Performance Indicators, or KPIs.
For the other NEOs, with the exception of Mr. McGrath, calculation of STI was determined by the Committee upon Mr. Considine’s recommendation with respect to two components: AIR’s performance against the KPI; and each officer’s achievement of his or her individual Managing AIR Performance (“MAP”) goals. For example, if an executive’s target STI was $400,000 and weighted 75% on KPIs, then 75% of that amount, or $300,000, varied based on KPI results and 25% of that amount, or $100,000, varied based on MAP results. As actual KPI results were 134.31% of target in 2022, then the executive would receive 134.31% of $300,000 ($402,930) for the KPI portion of his STI, and if MAP results were 100%, such hypothetical executive would receive 100% of the $100,000, for a total STI payment of $502,930.
AIR’s 2022 KPIs reflected our five areas of strategic focus, as set forth below. Specifically, AIR’s KPIs consisted of the following five corporate goals that were reviewed with, and approved by, the Committee, each weighted as described.
These goals aligned executive officers with AIR’s publicly communicated, long-term goals without encouraging them to take unnecessary and excessive risks. Threshold performance paid out at 50%; target performance paid out at 100%; and maximum performance paid out at 200%.
For some goals, where performance was between threshold and target or between target and maximum, the amount of the payout was interpolated.
Acquisitions: In 2022, we acquired four properties with 1,351 apartment homes for approximately $640 million, including one property in the Washington, D.C. area, one in Estero, Florida, one in Miami, Florida, and one in Fort Lauderdale, Florida.
Additionally, we cancelled existing master leases at four properties owned by AIR and previously leased to Aimco for purpose of their development. As part of the cancellation, AIR paid $200 million to Aimco for the added improvements. The four properties include 865 apartment homes with average revenue per apartment home of $3,669 and are located in the South Beach neighborhood of Miami Beach, FL, Kendall Square in Cambridge, MA, the Anschutz Medical Campus in Aurora, CO, and Redwood City, CA.
Subsequent to December 31, 2022, AIR acquired Southgate Towers, a 495-unit luxury apartment community located in the South Beach neighborhood of Miami Beach, for $298 million. AIR’s presence in South Beach, a submarket with limited supply, now comprises 1,630 apartment homes between Flamingo Towers and Southgate Towers. This transaction is consistent with AIR’s paired trade strategy where we look to achieve, on new acquisitions, unlevered IRRs of 200 basis points or higher relative to our cost of capital, driven by the implementation of the AIR Edge. AIR funded the transaction with proceeds from the New England portfolio sale discussed below, the assumption of $101.2 million of 4.15% in place financing maturing in 2036, and the issuance of $22.4 million of OP Units. To neutralize the issuance of OP Units, in November and December of 2022, AIR repurchased an equal number of shares of common stock.
Dispositions: During 2022, we sold 18 properties totaling 3,364 units located in California, Boston, Chicago, and Virginia for a gross sales price of $1.3 billion, representing a trailing 12-month NOI cap rate of 4.5%. Since the end of 2020, AIR has completed $2.2 billion of property sales and joint venture transactions at prices averaging 17% above internal estimates of GAV as measured in the first quarter of 2020.
Since 2019, we have improved AIR’s portfolio through reducing our exposure to regulatory risk. We have achieved this through property sales in the New York, Chicago, and California markets, as well as through a strategic joint venture in California. This has allowed AIR to reallocate capital into higher growth submarkets, such as Miami-Dade and Broward counties, now 22% of AIR GAV.
These outcomes resulted in a payout of this goal of 17.0% for each of the NEOs with STI as a component of compensation.
Financial Performance – Performance against overall FFO budget (35% of KPI). We created AIR to be the most efficient and effective way to invest in U.S. multi-family real estate, due to its simplified business model and diversified portfolio of stabilized apartment communities and to maintain an efficient cost structure. For 2022, the range for the FFO performance goal was as follows: “Threshold” equated to achievement of $2.30 per share; “Target” equated to achievement of $2.40 per share; budgeted Same Store NOI; and “Maximum” equated to $2.50 per share. FFO performance was $0.026 per share favorable to budget. This resulted in a payout on the FFO performance goal of 44.26% for each of the NEOs with STI as a component of compensation.
Balance Sheet – Debt to EBITDA, Balance Sheet Safety and Cost, Financial Flexibility, Investment Grade Rating (10% of KPI). The primary objective of this goal was to (i) reduce financial risk by reducing total leverage, (ii) use safe property debt that is low-cost, long-dated, amortizing, and non-recourse, limiting entity and refunding risk while maintaining asset flexibility, and (iii) gain access to all sources of debt capital including corporate borrowings by maintaining an S&P investment grade rating and securing a Moody’s investment grade rating. We set out at the beginning of 2022 to achieve a Net Leverage to Adjusted EBITDAre between 5.0:1 and 6.0:1. At year-end, Net Leverage to Adjusted EBITDAre was 6.05:1 as we chose temporarily to increase leverage by $25 million above our policy limit to neutralize the issuance of OP Units as part of the consideration for the purchase of Southgate Apartments in January 2023. AIR extended debt maturities, reduced floating rate exposure, increased liquidity, placed privately debentures with pricing inside the public market, and gained a Baa2 investment grade rating from Moody’s enhancing future access to public debt markets. However, we judged ourselves to be slow to fix variable interest rates and so paid higher than optimal interest costs.
The above outcomes significantly improved AIR’s strong and flexible balance sheet but at a cost. This resulted in a payout on the balance sheet goal of 5.00% for each of the NEOs with STI as a component of compensation.
Team Member Engagement and ESG (10% of KPI).
Team Engagement and on-site team morale, engagement, turnover, and productivity (5%) - The primary objective of this metric was to fulfill our strategic objective of producing a strong, stable team that is the enduring foundation of our success. Every team member is surveyed via a third-party, confidential survey on an annual basis. The teammate engagement score consists of the average of the responses to the questions that comprise the engagement index, on a scale of 1 to 5, for the 72% plus teammates who complete the survey during the year. For 2022, the range for team member engagement scores was as follows: “Threshold” equated to 4.00; “Target” equated to 4.30; and “Maximum” equated to 4.75. For 2022, our overall team member engagement was 4.42. In addition to this quantitative component, we focused on the qualitative outcomes related to our onsite team. There our onsite remain engaged, stable, and productive, particularly in our service team roles, with increased job satisfaction, productivity, retention, and tenure. In addition, AIR received numerous recognitions as a top place to work. For 2022, this resulted in a payout of 7.33% out of 5.0% for each of the NEOs with STI as a component of compensation
Continued focus on Corporate Responsibility, including enhancing public communications disclosure responsive to shareholders and the public (5%). For 2022, AIR added ESG components to investor presentations, earnings scripts, and new corporate responsibility website and corporate responsibility report. AIR’s GRESB score improved by 13% year-over-year, including a 29% improvement in the environmental category and ranked number five out of eleven peers. AIR also received an “A” in public disclosure and “A” in alignment with The Taskforce on Climate-related Financial Disclosures (TCFD). Finally, AIR’s Green Street governance score improved by 36 points (the largest increase among the roughly 90 companies) and is third among the seven multi-family REITS. AIR received third party recognitions for having agender balanced board and Kingsley Elite 5 as a top public company for customer service. These achievements resulted in a payout of 6.0% out of 5.0% for each of the NEOs with STI as a component of compensation.
The total KPI result was 134.31%.
GOAL SETTING
For all numerical metrics, our target 2022 performance goals were aligned with our 2022 budget goals. We have a rigorous budgeting process that includes an evaluation of prior performance, market data, and peer performance. Our budget strategy is to set ambitious, achievable goals. Our 2022 budget and KPI goals were finalized in January 2022.
Various of the key financial indicators we use in managing our business and in evaluating our financial condition and operating performance are non-GAAP measures. Key non-GAAP measures we use are defined, described and, where appropriate, reconciled to the most comparable financial measures computed in accordance with GAAP under the Non-GAAP Measures heading within Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Investment-based Compensation for 2022
Mr. McGrath is responsible for AIR portfolio management and leads the AIR investment team. Mr. McGrath and other senior members of the investment team are compensated based on (i) the amount of new investments made and their performance over three years, (ii) the amount of property sales, and (iii) the profitability of the investment team as a profit center. Mr. McGrath earns 15 basis points on purchases originated by him. Two thirds (or ten basis points) is payable in cash and one third (or five basis points) is deferred and is payable in three equal annual installments, which are subject to reduction should the performance of the investments be less than the underwriting expectations on which the investment decision was based. Management has flexibility to consider whether any underperformance was due to factors outside the control of the underwriter, e.g., the shutdown of the economy in 2020. The deferred amount bears interest at the same rate as AIR’s revolving credit facility. Mr. McGrath also earns 10 basis points on property sales. Finally, Mr. McGrath earns a participation in the profitability of the investment team which he leads. The investment team is considered as a profit center with revenues based on investments originated (30 basis points) and properties sold (15 basis points), and expenses based on related costs such as travel and staffing, support costs including an allocation of corporate overhead, and the costs of abandoned pursuits. Two-thirds of investment team profits is payable in cash and one-third is deferred and is subject to reduction based on the performance
commitment without any adjustment or any sort of makeup arrangement. In 2021, this meant that Mr. Considine waived $2,527,000 of compensation: returning his $400,000 base salary, foregoing his earned STI of $1,772,640, and making a cash payment to AIR of $354,360. In 2022, AIR’s net G&A expenses were below 15 basis points of gross asset value. Accordingly, Mr. Considine did not reduce his compensation.
For Messrs. Beldin and Kimmel and Ms. Cohn, an allocation of the target STI was made as follows: 75% of the target STI was calculated based on AIR’s performance against KPI and 25% of the target STI was calculated based on each executive’s achievement of his or her individual MAP goals. As noted above, AIR’s KPI performance was 134.31%.
Accordingly, each was awarded 134.31% of the portion of his or her STI attributable to KPI (i.e., 75% of the target STI amount shown below for Messrs. Beldin and Kimmel and Ms. Cohn).
In determining the MAP achievement component of 2022 STI, the Committee, based on Mr. Considine’s evaluation and recommendation, determined that Mr. Beldin’s MAP achievement would be paid at 100% of target for his leadership of Financial Planning & Analysis, corporate accounting, income and property taxation, and management of AIR’s balance sheet; Ms. Cohn’s MAP achievement would be paid at 120% for her leadership over various AIR initiatives; Mr. Kimmel’s MAP achievement would be paid at 130% for his leadership of AIR’s operating team.
As described above, LTI for the NEOs including the CEO was granted on February 1, 2022, in the form of LTIP II Units or restricted stock.
As described above, Mr. McGrath earned $2,539,770 of which $391,000 is deferred and subject to reduction depending on the performance of investments as compared to underwriting.
Target compensation and incentive compensation for 2022 for the other NEOs is summarized as follows:
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Target Total Compensation ($)
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Paid Base ($)
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Target Total Incentive Compensation
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2022 Incentive Compensation ($)
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STI
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LTI
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STI/Investment Based Compensation ($)
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LTI ($)
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($)(1)
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Time-Based LTI ($)(2)
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Performance- Based Equity- Stock ($)(3)
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Performance- Based Equity- Stock Options ($)(3)
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Mr. Considine(4)
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6,800,000(4)
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400,000(5)
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1,200,000
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3,400,000
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1,611,720(5)
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—
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3,400,000
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—
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Mr. Beldin
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1,070,000
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450,000
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250,000
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370,000
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339,475
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123,333
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246,667
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—
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Ms. Cohn
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2,100,000
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450,000
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550,000
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1,100,000
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781,220
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366,667
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733,333
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—
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Mr. Kimmel
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1,700,000
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450,000
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500,000
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750,000
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747,700
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250,000
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500,000
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—
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Mr. McGrath
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2,539,770(6)
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—
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2,539,770(6)
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—
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—
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—
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—
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—
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(1)Amounts shown reflect the 2022 STI paid to each of Messrs. Considine, Beldin, and Kimmel and Ms. Cohn.
(2)For Messrs. Beldin, and Kimmel and Ms. Cohn, comprises one-third of the LTI target, vesting ratably over four years, and is for the purpose of attracting and retaining key talent integral AIR’s success. For Messrs. Beldin, and Kimmel and Ms. Cohn, time-based LTI was in the form of restricted stock.
(3)Amounts shown reflect a 100% payout of the performance-based shares resulting from achieving “target” performance. Actual payouts will be in a range of 0% to 200% of these amounts, depending on performance results for the three-year performance period from January 1, 2022, through December 31, 2024.
(4)After setting target total compensation, Aimco determined to pay Mr. Considine $1.8 million in combination of base, STI, and LTI. Accordingly, Mr. Considine voluntarily reduced his target total compensation at AIR by comparable amounts, making his target total compensation: $400,000 - base salary (reduced by $300,000), $1,200,000 - STI (reduced by $600,000), and $3,400,000 - LTI (reduced by $900,000).
(5)In 2021, Mr. Considine volunteered and AIR accepted his commitment to reduce his compensation if net G&A expenses exceed 15 basis points of gross asset value, as determined by AIR’s Board of Directors and Mr. Considine. Mr. Considine did this in the best long-term interest of AIR to keep AIR’s focus on stockholder benefit, be the lowest cost operator, guard his team’s compensation, and maintain investment in other corporate costs. This facilitated AIR’s goal of efficiency in converting rents to cash available for investment in AIR’s business or payment of cash dividends to our stockholders. Mr. Considine made this commitment without any adjustment or any sort of makeup arrangement. In 2021, this meant that Mr. Considine waived $2,527,000 of compensation: returning his $400,000 base salary, foregoing his earned STI of $1,772,640, and making a cash payment to AIR of $354,360. In 2022, AIR’s net G&A expenses were below 15 basis points of gross asset value. Accordingly, for 2022 Mr. Considine did not reduce his compensation.
How the Committee determines the amount of target total compensation for executive officers
In addition to reviewing the performance of, and determining the compensation for, the CEO, the Committee also reviews the decisions made by the CEO as to the compensation of the other executive officers. Base salary, target STI, and target LTI are generally set near the median base salary, target STI, and target LTI for peer comparators.
How peer comparators are identified
The Committee considered enterprise Gross Asset Value (“GAV”), as reported by Green Street Advisors, to be an imprecise, but reasonable representation and useful reference point of the size or complexity of a real estate business and of the responsibilities of its leaders. In addition to GAV, the Committee also reviewed other factors, including gross revenues, number of properties, and number of employees, to determine if these factors provided any additional insight into the work and requirements of its leaders. Based on this analysis, we included as “peers” for 2022 compensation the following 20 real estate companies:
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Peer Group
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Agree Realty Corporation
Americold Realty Trust
Brixmor Property Group, Inc.
CubeSmart
Douglas Emmett, Inc.
EastGroup Properties, Inc.
Federal Realty Investment Trust
First Industrial Realty Trust, Inc.
Healthcare Realty Trust Incorporated
Kilroy Realty Corp.
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Lamar Advertising Company
Life Storage, Inc.
National Retail Properties, Inc.
National Storage Affiliates Trust
Omega Healthcare Investors, Inc.
Park Hotels & Resorts, Inc.
Rexford Industrial Realty, Inc.
SL Green Realty Corp.
Spirit Realty Capital, Inc.
STAG Industrial, Inc.
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At the time 2022 compensation targets were established, approximately half of these real estate companies had a larger GAV, and approximately half of these real estate companies had a smaller GAV, than AIR. Due to changes in GAV for AIR and its peers during 2021, Agree Realty Corporation , CubeSmart, EastGroup Properties, Inc., First Industrial Realty Trust, Inc., Healthcare Realty Trust Incorporated, Lamar Advertising Company, Life Storage, Inc., National Retail Properties, Inc., National Storage Affiliates Trust, Rexford Industrial Realty, Inc., SL Green Realty Capital, Inc., Spirit Realty Capital, Inc., and STAG Industrial, Inc. were added to the peer group for 2022 in replacement of American Campus Communities, Inc., American Homes 4 Rent, CyrusOne, Equity LifeStyle Properties Inc., Gaming and Leisure Properties Inc., Healthcare Trust of America, Hudson Pacific Properties, Inc., JBG Smith Properties, Kimco Realty, Macerich Company, MGM Growth Properties, Regency Centers Corporation, and Taubman Centers, Inc.
For Mr. Kimmel, whose position as President of Property Operations, does not have a good benchmark outside of the multi-family industry, we used a multi-family peer group for benchmarking his 2022 compensation, consisting of the following six multi-family real estate companies: AvalonBay Communities, Inc., Camden Property Trust, Essex Property Trust, Equity Residential, Mid-America Apartment Communities, Inc., and UDR, Inc.
Risk analysis of compensation programs
The Committee considers risk-related matters when making decisions with respect to executive compensation and has determined that neither our executive compensation program nor any of our non-executive compensation programs create risk-taking incentives that are reasonably likely to have a material adverse effect on the organization. Our compensation programs align management incentives with AIR’s long-term interests.
points of gross asset value, as determined by AIR’s Board of Directors and Mr. Considine. Mr. Considine did this in the best long-term interest of AIR to maintain investment in other corporate costs while also meeting a goal of efficiency in converting rents to cash available for investment in AIR’s business or payment of cash dividends to our stockholders. Mr. Considine made this commitment without any adjustment or makeup of any sort.
On
December 31, 2022, AIR and Mr. Considine entered into an amendment to Mr. Considine’s 2017 Employment
Agreement pursuant to which the term of his employment under the agreement was extended by an additional year, through December 31,
2023.
The 2017 Employment Agreement provides for a base salary of $700,000, subject to future increase. Mr. Considine also continues to be eligible to participate in AIR’s performance-based incentive compensation plan with a target annual short-term incentive award opportunity of not less than $1.4 million (the “Target STI”), and a target long-term incentive award opportunity of not less than $4.025 million, both subject to future increase.
Pursuant to the 2017 Employment Agreement, upon termination of Mr. Considine’s employment by AIR without cause, or by Mr. Considine for good reason, Mr. Considine is generally entitled to: (a) a lump sum cash payment equal to the sum of (i) three times the sum of his base salary at the time of termination, and (ii) the Target STI; (b) any short-term incentive bonus earned but unpaid for a prior fiscal year (the “Prior Year STI”); (c) a pro-rata portion of the short-term incentive bonus he would have earned for the year in which the termination occurs, based on the actual achievement of the applicable performance targets (the “Pro Rata STI”); and (d) immediate and full acceleration of any outstanding unvested equity awards, with all outstanding stock options (including options previously vested) remaining exercisable until the expiration of the applicable option term. In the event of Mr. Considine’s retirement, Mr. Considine will be entitled to: (a) the Prior Year STI; (b) the Pro Rata STI; and (c) accelerated vesting of outstanding and unvested equity awards, if any, that vest solely on a time basis and continued vesting of all outstanding unvested equity awards that vest based on the achievement of performance targets according to actual achievement of the applicable performance targets. If Mr. Considine’s employment is terminated for reason of disability, Mr. Considine will be entitled to: (a) three times the sum of his base salary at the time
of termination; provided that this amount will be offset by any income replacement Mr. Considine receives under the Company’s long-term disability insurance plan); (b) the Pro Rata STI; and (c) all outstanding equity awards will become immediately and fully vested and be treated in accordance with the terms of the applicable award agreement. If Mr. Considine’s employment is terminated due to his death, Mr. Considine’s estate will receive payment of any earned but unpaid base salary and vested accrued benefits, the Prior Year STI, and the Pro Rata STI, and all outstanding equity awards will become immediately and fully vested and be treated in accordance with the terms of the applicable award agreement.
Under the 2017 Employment Agreement, Mr. Considine is not entitled to any additional or special payments upon the occurrence of a change in control.
In the event payments to Mr. Considine are subject to the excise tax imposed by Section 4999 of the Code, the payments will be either (a) delivered in full, or (b) delivered as to such lesser extent that would result in no portion of such payments being subject to the excise tax, whichever results in the receipt by Mr. Considine of the greater amount on an after-tax basis.
The 2017 Employment Agreement also contains customary confidentiality provisions, a limited mutual non-disparagement provision, and non-competition, non-solicitation, and no-hire provisions.
In addition, as part of the Separation AIR and Aimco entered into the Employee Matters Agreement, which provides that Mr. Considine will continue to serve Aimco with specific responsibilities during 2021 and 2022 to support the establishment and growth of the Aimco business, reporting directly to the Aimco board of directors and in connection with such role at Aimco, Mr. Considine proposed, and the Compensation and Human Resources Committee agreed, that to the extent he receives compensation directly from Aimco, compensation paid to him by AIR in relation to his role as CEO of AIR will be reduced in a manner to ensure that his combined aggregate annual compensation paid from both companies will not exceed his annual compensation prior to the Separation. On February 13, 2023, Mr. Considine resigned as a member of the Aimco Board, having completed his undertaking to support the establishment and growth of Aimco as an independent business.
None of Messrs. Beldin, Kimmel, McGrath, or Ms. Cohn has an employment agreement.
Executive Severance Arrangements
Executive Severance Policy. In connection with the Separation, AIR adopted the Apartment Income REIT Corp. Executive Severance Policy (the “Executive Severance Policy”). The Executive Severance Policy supersedes and replaces any employment agreement or other plan, policy or practice involving the payment of severance benefits to participants under the Executive Severance Policy. The Company’s Presidents, Executive Vice Presidents, as determined on the records of the Company and any other entities through which the operations of the Company are conducted, are eligible to participate in the Executive Severance Policy. Each of Messrs. Beldin, Kimmel, and McGrath and Ms. Cohn are participants under the Executive Severance Policy; however, the Chief Executive Officer, Mr. Considine, is not a participant under the Executive Severance Policy.
The Executive Severance Policy provides that if the Company terminates a participant’s employment without “Cause,” or if the participant terminates his or her employment for “Good Reason” (each as defined in the Executive Severance Policy), then the participant will be eligible to receive the following benefits:
•a lump sum payment equal to the sum of (i) the annual base salary for the calendar year of the date of termination, and (ii) the average annual bonus paid to the participant in the most recent three years; and
•18 months of continued health benefits coverage at the Company’s expense.
The vesting and exercise of any equity awards held by a participant on the date of termination will be determined in accordance with the applicable incentive plan and award agreement.
Pursuant to the terms of the Executive Severance Policy, if the Company terminates a participant’s employment without Cause, or if the participant terminates his or her employment for Good Reason, in either case, within the period commencing six months prior to and ending 12 months following a “Change in Control” (as defined in the Executive Severance Policy), then in lieu of the severance benefits described above the participant will be eligible to receive the following benefits:
•a lump sum payment equal to two times the sum of (i) the annual base salary for the calendar year of the date of termination, and (ii) the average annual bonus paid to the Eligible Executive in the most recent three years
•18 months of continued health benefits coverage at the Company’s expense and
•100% accelerated vesting of any unvested equity awards then-held by the participant.
The Executive Severance Policy provides that if the employment of the participant is terminated by reason of the participant’s death or disability, then the participant will be eligible to receive a pro-rated bonus for the year of termination. In addition, the vesting and exercise of any equity awards held by the participant at the time of his or her death or disability will be determined in accordance with the applicable incentive plan and award agreement.
In the event that any payment or benefit payable to a participant under the Executive Severance Policy would result in the imposition of excise taxes under the “golden parachute” provisions of Section 280G of the Code, then such payments and benefits will either be made and/or provided in full or will be reduced such that the excise tax under Section 280G is not applicable, whichever is least economically disadvantageous to the participant. The Executive Severance Policy does not provide for any excise tax or other tax “gross-up” payment.
All severance payments and benefits under the Executive Severance Policy are subject to applicable withholding obligations, the participant’s execution and non-revocation of a release of claims, and compliance with certain non-competition, non-disclosure and non-solicitation covenants set forth in a restrictive covenant agreement that is appropriate for the participant’s position.
The Executive Severance Policy will remain in effect, subject to amendment, until terminated by the Board. The Board may terminate or amend the Executive Severance Policy at any time, so long as at least 90 days’ prior notice is provided to any participant if the termination or amendment of the Executive Severance Policy would materially or adversely affect the rights of the participant.
Non-Competition and Non-Solicitation Agreements
Effective in January 2002 for Mr. Considine, and in connection with their employment or promotions by the Company for Messrs. Beldin and Kimmel and Ms. Cohn, the Company entered into certain non-competition and non-solicitation agreements with each executive. Mr. Considine’s 2002 non-competition and non-solicitation agreement was replaced by his 2008
and 2017 Employment Agreements. Pursuant to these agreements, each of these NEOs agreed that during the term of his or her employment with the Company and for a period of two years following the termination of his or her employment, except in circumstances where there is a change in control of the Company, he or she will not (i) be employed by a competitor of the Company named on a schedule to the agreement, (ii) solicit other employees to leave the Company’s employment, or (iii) solicit customers of AIR to terminate their relationship with the Company. The agreements further require that the NEOs protect trade secrets and confidential information. For Messrs. Beldin and Kimmel and Ms. Cohn, the agreements provide that in order to enforce the above-noted non-competition condition following the executive’s termination of employment by the Company without cause, each such executive will receive, for a period not to extend beyond the earlier of 24 months following such termination or the date of acceptance of employment with a non-competitor, (i) non-compete payments in an amount, if any, to be determined by the Company in its sole discretion and (ii) a monthly payment equal to two-thirds of such executive’s monthly base salary at the time of termination. For purposes of these agreements, “cause” is defined to mean, among other things, the executive’s (i) breach of the agreement, (ii) failure to perform required employment services, (iii) misappropriation of Company funds or property, (iv) conviction, plea of guilty, or plea of no contest to a crime involving fraud or moral turpitude, or (v) negligence, fraud, breach of fiduciary duty, misconduct or violation of law.
Equity Award Agreements
Double Trigger Vesting Upon Change in Control. The award agreements pursuant to which restricted stock, LTIP Unit, or stock option awards have been granted to Messrs. Considine, Beldin and Kimmel, and Ms. Cohn, as applicable, provide that if (i) a change in control occurs and (ii) the executive’s employment with the Company is terminated either by the Company without cause or by the executive for good reason, in either case, within 12 months following the change in control, then (a) for time-based options or restricted stock, all outstanding shares of restricted stock or unvested stock options shall become immediately and fully vested and exercisable, and all vested options will remain exercisable for the remainder of the term of the option, and (b) for performance-based options, restricted stock and/or LTIP Unit awards, shares,
unvested options and/or units will vest based on the higher of actual or target performance through the truncated performance period ending on the date of the change in control, and all vested options will remain exercisable for the remainder of the term of the option.
Accelerated Vesting Upon Termination of Employment Due to Death or Disability. Pursuant to the 2017 Employment Agreement, as set forth above, if Mr. Considine’s employment is terminated due to his death or disability, and all outstanding equity awards will become immediately and fully vested and be treated in accordance with the terms of the applicable award agreement. The award agreements pursuant to which restricted stock, LTIP Unit or stock option awards have been granted to Messrs. Considine, Beldin and Kimmel and Ms. Cohn, as applicable, provide that upon a termination of employment due to death or disability, then (a) for time-based options or restricted stock, all outstanding shares of restricted stock or unvested stock options shall become immediately and fully vested and exercisable, and all vested options will remain exercisable for the remainder of the term of the option, and (b) for performance-based options, restricted stock or LTIP Unit awards, shares, unvested options and/or units will vest based on the higher of actual or target performance through the date of termination, and all vested options will remain exercisable for the remainder of the term of the option.
Other Benefits; Perquisite Philosophy
Our executive officer benefit programs are substantially the same as for all other eligible officers and employees. AIR does not provide executives with more than minimal perquisites, such as reserved parking places.
Stock Ownership Guidelines and Required Holding Periods After Vesting
We believe that it is in the best interest of our stockholders for our executive officers to own AIR stock. Every year, the Committee and Mr. Considine review AIR’s stock ownership guidelines, each executive officer’s holdings in light of the stock ownership guidelines, and each executive officer’s accumulated realized and unrealized stock option and restricted stock gains.
Equity ownership guidelines for all executive officers are determined as a minimum of the lesser of a multiple of the executive’s base salary or a fixed number of shares. The Committee and management have established the following stock ownership guidelines for AIR’s executive officers:
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Officer Position
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Ownership Target
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Chief Executive Officer
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Lesser of 5x base salary or 150,000 shares
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President & General Counsel
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Lesser of 5x base salary or 75,000 shares
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Chief Financial Officer
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Lesser of 5x base salary or 75,000 shares
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Other Executive Officers
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Lesser of 4x base salary or 25,000 shares
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Any executive officer who has not satisfied the stock ownership guidelines must, until the stock ownership guidelines are satisfied, hold 50% of any restricted stock that vests, after deduction of restricted stock sold for payment of income taxes related to the vesting for at least three years from the date of vesting, and hold shares equal to 50% of (i) the value realized upon option exercises less (ii) related income taxes for at least three years from the date of exercise.
Each of Messrs. Considine, Beldin, Kimmel and Ms. Cohn exceeded the ownership targets established in our stock ownership guidelines as of February 25, 2023. Mr. McGrath does not yet have ownership consistent with the guidelines.
Role of Outside Consultants
The Committee has the authority under its charter to engage the services of outside advisors, experts, and others to assist the Committee. In 2022, the Committee engaged FPL Associates, L.P. (“FPL”) to review our executive compensation plan. FPL did not provide other services to AIR. The Committee instructed FPL to compile and provide data on both total pay and individual elements of compensation among companies in the peer groups, as well as trends in compensation practices that they observed within the peer groups and generally among public companies. The Committee has assessed the independence of FPL pursuant to SEC rules and has concluded that FPL is independent.
Base Salary, Incentive Compensation, and Equity Grant Practices
Base salary adjustments typically take effect on January 1. The Committee (for Mr. Considine) and Mr. Considine, in consultation with the Committee (for the other executive officers), determine incentive compensation in late January or early February. STI is typically paid in February or March.
With respect to LTI, the Committee sets the grant date for restricted stock, LTIP Unit, and stock option grants. The Committee sets grant dates at the time of its final compensation determination, generally in late January or early February. The date of determination and date of award are not selected based on share price. In the case of new-hire packages that include equity awards, grants are made on the employee’s start date or on a date designated in advance based on the passage of a specific number of days after the employee’s start date. For non-executive officers, the Committee has delegated the authority to make equity awards, up to certain limits, to the Chief Financial Officer (Mr. Beldin) and/or Corporate Secretary (Ms. Cohn). The Committee and Mr. Beldin and Ms. Cohn time grants without regard to the share price or the timing of the release of material non-public information and do not time grants for the purpose of affecting the value of executive compensation.
2023 Compensation Targets
Based on comparison to compensation paid to CEOs at our peers, the Committee set Mr. Considine’s target total compensation (base compensation, STI and LTI) for 2023 at $8 million, with all but $100,000 of the increase in Mr. Considine’s compensation comprised of STI and LTI awards that may be earned based solely on Mr. Considine’s and the Company’s performance. Mr. Considine, in consultation with the Committee, set target total compensation (base compensation, STI, and LTI) for 2023 for the other NEOs as follows: Mr. Beldin — $1.07 million; Ms. Cohn — $2.4 million; and Mr. Kimmel — $2 million. Mr. McGrath’s 2023 target compensation is based on the same transaction-based formula as for 2022, with a refundable draw of $600,000 and earnings tied to acquisitions and dispositions as described above.
AIR’s and individual performance will determine the amounts paid for 2023 STI. For Mr. Considine’s STI, 50% will be measured based on Company performance and 50% will be measured based on his individual goals,
Summary Compensation Table
The table below summarizes the compensation attributable to the principal executive officer, principal financial officer, and the three other most highly compensated executives in 2022, for the years 2022, 2021, and 2020.
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Name and Principal Position
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Year
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Salary ($)
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Bonus ($)
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Stock Awards ($)(1)
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Option Awards ($)(2)
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Non-Equity Incentive Plan Compensation ($)(3)
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All Other Compensation ($)(4)
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Total ($)
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Terry Considine — Chief Executive Officer
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2022(5)
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400,000(5)
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—
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3,400,008(5)(6)
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—
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1,611,720(5)
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4,300
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5,416,020(5)(7)
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2021(5)
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—(7)
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—
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3,400,000
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—
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(354,360)(7)
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2,900
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3,048,540(7)
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2020
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700,000
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—
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4,300,006
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—
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1,800,000
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2,850
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6,802,856
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Paul L. Beldin — Executive Vice President and Chief Financial Officer
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2022
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450,000
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—
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401,913(9)
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—
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314,331
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4,300
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1,170,544
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2021
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450,000
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—
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393,547
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—
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339,475
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2,900
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1,185,922
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2020
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450,000
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250,000(8)
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309,027
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61,671
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250,000
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2,850
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1,323,548
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Lisa R. Cohn — President, General Counsel and Secretary
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2022
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450,000
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—
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1,194,658(10)
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—
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719,029
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4,300
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2,367,987
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2021
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450,000
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—
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1,169,864
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—
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781,220
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2,900
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2,403,984
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2020
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450,000
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550,000(8)
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955,356
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146,667
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687,500
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2,850
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2,792,373
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Keith M. Kimmel — President of Property Operations
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2022
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450,000
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—
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814,576(11)
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—
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666,163
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4,300
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1,935,039
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2021
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450,000
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—
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797,626
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—
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747,700
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2,900
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1,998,226
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2020
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450,000
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125,000(8)
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752,070
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—
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500,000
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2,850
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1,829,920
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John McGrath — Executive Vice President, Co-Chief Investment Officer, Chairman of the Investment Committee
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2022
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600,000(12)
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—
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—
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—
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1,548,770(12)
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392,250(13)
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2,539,770
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(1)This column represents the aggregate grant date fair value of stock awards in the year granted computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions with respect to the grants reflected in this column for 2022, refer to the Share-Based Compensation footnote to AIR’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022.
The amounts shown in this column for 2022 include the grant date fair value of the performance-based restricted stock awards or performance-based LTIP II Unit awards, as applicable, granted in 2022 based on the probable outcome of the performance condition to which such awards are subject, which was calculated by a third-party consultant using a Monte Carlo valuation model in accordance with FASB ASC Topic 718. Based on the foregoing, the grant date fair value is $11.59 per LTIP II Unit as to Mr. Considine’s performance-based LTI award, $58.57 per share for the performance-based restricted stock awards granted to each of Messrs. Beldin and Kimmel, and Ms. Cohn that are based on relative TSR Performance. The grant date fair value of the performance-based LTIP II Unit award assuming achievement at the maximum level of performance, is $6,800,016 for Mr. Considine. The grant date fair value of the performance-based restricted stock awards, assuming achievement at the maximum level of performance, is $554,892 for Mr. Beldin, $1,649,448 for Ms. Cohn, and $1,124,662 for Mr. Kimmel.
(2)This column represents the aggregate grant date fair value of the option awards in the year granted computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions with respect to the grants reflected in this column for 2022, refer to the Share-Based Compensation Note 10 to AIR’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022.
The amounts shown in this column for 2020 include the grant date fair value of the performance-based stock options granted in 2020 based on the probable outcome of the performance condition to which such option is subject, which was calculated by a third-party consultant using a Monte Carlo valuation model. Based on the foregoing, the grant date fair value is $8.15 per underlying share of the options. The grant date fair value of the options, assuming achievement at the maximum level of performance, is $123,342 for Mr. Beldin, and $293,335 for Ms. Cohn.
(3)For 2022, the amounts shown for Messrs. Considine, Beldin, and Kimmel, and Ms. Cohn represent the 2022 STI amounts that were paid on February 22, 2023. For 2022, the amounts shown for Mr. McGrath represents cash compensation earned on transactions, including his portion of the transaction team profit as described in footnote 12.
(4)Includes discretionary matching contributions under AIR’s 401(k) plan for everyone besides Mr. McGrath. For Mr. McGrath the amount represents the portion of his compensation that is deferred as described in footnote 11.
(5)The amounts shown for Mr. Considine reflect his voluntary reduction of his compensation to offset the compensation he received directly from Aimco. For 2022, Mr. Considine’s: base compensation was $400,000, reduced by him from $700,000; STI target was $1,200,000, reduced by him from $1,800,000; LTI target was $3,400,000, reduced by him from $4,300,000. For 2021, Mr. Considine similarly voluntarily reduced his compensation to offset the compensation received directly from Aimco, and he further voluntarily reduced his compensation as described in note 7.
(6)Mr. Considine’s 2022 LTI award consists of 293,357 performance-based LTIP II Units (at target) for the forward looking, three-year performance period from January 1, 2022, through December 31, 2024, with the number of units earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later.
(7)As described above, in 2021, Mr. Considine volunteered and AIR accepted his commitment to reduce his compensation if net G&A expenses exceed 15 basis points of gross asset value, as determined by AIR’s Board of Directors and Mr. Considine. Mr. Considine did this in the best long-term interest of AIR to maintain investment in other corporate costs while also meeting a goal of efficiency in converting rents to cash available for investment in AIR’s business or payment of cash dividends to our stockholders. Mr. Considine made this commitment without any adjustment or makeup of any sort. Consistent with this commitment, for 2021, Mr. Considine waived $2,527,000 of compensation: returning his $400,000 base salary, foregoing his earned STI of $1,772,640, and making a cash payment to AIR of $354,360. In 2022, AIR’s net G&A expenses were below 15 basis points of gross asset value. Accordingly, Mr. Considine did not forfeit any compensation for 2022.
(8)Mr. Considine awarded a discretionary cash award to each of Messrs. Beldin, Kimmel, and Ms. Cohn for their significant contributions in connection with the Separation.
(9)Equity awards for Mr. Beldin in 2022 include a 2022 LTI award consisting of the following: (i) 2,369 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 4,737 shares of performance-based restricted stock (at target) for the forward looking, three-year performance period from January 1, 2022, through December 31, 2024, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later.
(10)Equity awards for Ms. Cohn in 2022 include a 2022 LTI award consisting of the following: (i) 7,041 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 14,081 shares of performance-based restricted stock (at target) for the forward looking, three-year performance period from January 1, 2022, through December 31, 2024, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later.
(11)Equity awards for Mr. Kimmel in 2022 include a 2022 LTI award consisting of the following: (i) 4,801 shares of time-based restricted stock, vesting 25% on each anniversary of the grant date; (ii) 9,601 shares of performance-based restricted stock (at target) for the forward looking, three-year performance period from January 1, 2022, through December 31, 2024, with the number of shares earned, if any, vesting 50% following the end of the three-year performance period and 50% one year later.
(12)Mr. McGrath is responsible for AIR portfolio management and leads the AIR investment team. Mr. McGrath and other senior members of the investment team are compensated based on (i) the amount of new investments made and their performance over three years, (ii) the amount of property sales, and (iii) the profitability of the investment team as a profit center. Mr. McGrath earns 15 basis points on purchases originated by him. Two thirds (or ten basis points) is payable in cash and one third (or five basis points) is deferred and is payable in three equal annual installments, which are subject to reduction should the performance of the investments be less than the underwriting expectations on which the investment decision was based. Management has flexibility to consider whether any underperformance was due to factors outside the control of the underwriter, e.g., the shutdown of the economy in 2020. The deferred amount bears interest at the same rate as AIR’s revolving credit facility. Mr. McGrath also earns 10 basis points on property sales. Finally, Mr. McGrath earns a participation in the profitability of the investment team which he leads. The investment team is considered as a profit center with revenues based on investments originated (30 basis points) and properties sold (15 basis points), and expenses based on related costs such as travel and staffing, support costs including an allocation of corporate overhead, and the costs of abandoned pursuits. Two-thirds of investment team profits is payable in cash and one-third is deferred and is subject to reduction based on the performance of the investments made. Mr. McGrath determines the allocation of team profits to his teammates. His determination and the amount allocated to Mr. McGrath are decided by Mr. Considine and Ms. Cohn, subject to the oversight of the Compensation Committee of the Board. Mr. McGrath also receives a refundable draw of $600,000 repayable from the first cash earned by him.
(13)For Mr. McGrath the amount represents the portion of his compensation that is deferred as described in footnote 12.
Grants of Plan-Based Awards in 2022
The following table provides details regarding plan-based awards granted to the NEOs during the year ended December 31, 2022.
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Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
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Estimated Future Payouts Under Equity Incentive Plan Awards(2)
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All Other Stock Awards: Number of Shares of Stock or Units (#)(3)
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All other Option Awards Number of Securities Underlying Options
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Exercise or Base Price of Option Awards ($/Sh)
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Grant Date Fair Value of Stock and Option Awards ($)(4)
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Name
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Grant Date
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Threshold ($)
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Target ($)
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Maximum ($)
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Threshold (#)
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Target (#)
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Maximum (#)
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Threshold (#)
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Target (#)
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Maximum (#)
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Terry Considine
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2/1/22
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600,000
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1,200,000
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2,400,000
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2/1/22
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146,679
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293,357
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586,714
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3,400,000
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Paul L. Beldin
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2/1/22
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125,000
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250,000
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500,000
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2/1/22
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2,369
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124,467
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2/1/22
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2,369
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4,737
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9,474
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277,446
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Lisa R. Cohn
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2/1/22
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275,000
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550,000
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1,100,000
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2/1/22
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7,041
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369,934
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2/1/22
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7,041
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14,081
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28,162
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824,724
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Keith M. Kimmel
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2/1/22
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250,000
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500,000
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1,000,000
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2/1/22
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4,801
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252,245
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2/1/22
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4,801
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9,601
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19,202
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562,331
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John McGrath
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2/1/22
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—
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1,600,000(5)
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—
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2/1/22
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—
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—
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2/1/22
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—
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—
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—
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—
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(1)On February 1, 2022, the Committee made determinations of target total incentive compensation for 2022 based on achievement of our five corporate goals for 2023, and achievement of specific individual objectives. Target total incentive compensation amounts were as follows: Mr. Considine — $4.6 million (which amount reflects Mr. Considine’s voluntary reduction for the portion of his compensation being paid by Aimco); Mr. Beldin — $620,000; Ms. Cohn — $1.65 million; Mr. Kimmel — $1.25 million. The awards in this column indicate the 2022 STI portion of these target total incentive amounts — at threshold, target, and maximum performance levels. The actual 2022 STI awards earned by each of Messrs. Considine, Beldin, Kimmel, McGrath, and Ms. Cohn are as disclosed in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” See the discussion above under “CD&A — Total Compensation for 2022 — Short-Term Incentive Compensation for 2022.”
(2)For each of Messrs. Considine, Beldin, and Kimmel, and Ms. Cohn, the amounts in this column include the number of shares underlying performance- based LTIP II Units (in the case of Mr. Considine) or performance-based restricted stock (in the case of Messrs. Beldin, and Kimmel and Ms. Cohn) granted on February 1, 2022, pursuant to their 2022 LTI award that may be earned — at threshold, target and maximum performance levels — based on relative TSR (60% of each award is based on AIR’s TSR relative to the Nareit Equity Apartments Index and 40% of each award is based on AIR’s TSR relative to the MSCI US REIT Index) over a three-year period from January 1, 2022, to December 31, 2024, with the number of units or shares earned, if any, vesting 50% on the later of the third anniversary of the grant date or the date on which performance is determined (but no later than March 15, 2025), and 50% on the fourth anniversary of the grant date.
(3)The amounts in this column reflect the number of shares of time-based restricted stock granted pursuant to the 2022 LTI award, vesting 25% on each anniversary of the grant date. The number of shares of restricted stock was determined based on the five trading days up to and including the grant date, or $52.08.
(4)This column represents the aggregate grant date fair value of equity awards in the year granted computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions with respect to the grants reflected in this column, refer to the Share-Based Compensation footnote to AIR’s consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2022. The amounts shown in this column include the grant date fair value of the performance-based restricted stock awards or LTIP II Unit awards, as applicable, based on the probable outcome of the performance condition to which such awards are subject, which was calculated by a third-party consultant using a Monte Carlo valuation model in accordance with FASB ASC Topic 718. Based on the foregoing, the grant date fair value is $11.59 per LTIP II Unit as to Mr. Considine’s performance-based LTI award, $58.57 per share for the performance-based restricted stock awards granted to each of Messrs. Beldin and Kimmel, and Ms. Cohn that are based on relative TSR performance. The grant date fair value of the performance-based LTIP II Unit award, assuming achievement at the maximum level of performance, is $6,800,000 for Mr. Considine. The grant date fair value of the performance-based restricted stock awards, assuming achievement at the maximum level of performance, is $554,892 for Mr. Beldin, $1,649,448 for Ms. Cohn, and $1,124,661 for Mr. Kimmel.
(5)Mr. McGrath has no target compensation. His compensation is based on transactions. Using AIR’s 2021 transactions as an example, and assuming all such transactions were attributable to Mr. McGrath, the target amount is the $1,600,000 shown above. This is a hypothetical number shown for purposes of the disclosure requirements of this table. It is perhaps more appropriate to say Mr. McGrath’s target compensation is zero, as AIR does not budget for or provide guidance on transactions.
(2)This option was granted on January 31, 2017. The amount shown in the table represents the portion of the award that was earned based on Aimco relative TSR performance for the three-year performance period from January 1, 2017, through December 31, 2019, of which 50% vested on January 31, 2020, and the remaining 50% vested on January 31, 2021.
(3)This performance-based LTIP II Unit award was granted on February 1, 2022, and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. The amount shown in the table is the award at threshold. Once vested and until the 10-year anniversary of the grant date, LTIP II Units may be converted at the holder’s election into a number of units determined based on the market value of AIR’s Common Stock on the conversion date less the closing price of AIR’s Common Stock on the date of the grant which was $52.54. Because this value assumes a December 31, 2022, conversion date, that amount does not reflect the value of having the ability to control the timing of conversion and the ultimate value that may be realized. At December 31, 2022, AIR’s closing price was $34.31 and the conversion price per LTIP II is $52.54, therefore no value is shown in the table above.
(4)This option was granted on January 26, 2016. The amount shown in the table represents the portion of the award that was earned based on Aimco relative TSR performance for the three-year performance period from January 1, 2016, through December 31, 2018, of which 50% vested on January 26, 2019, and the remaining 50% vested on January 26, 2020.
(5)This performance-based LTIP II Unit award was granted on January 25, 2021, and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. The amount shown in the table is the award at threshold. Once vested and until the 10-year anniversary of the grant date, LTIP II Units may be converted at the holder’s election into a number of units determined based on the market value of AIR’s Common Stock on the conversion date less the closing price of AIR’s Common Stock on the date of the grant which was $39.21. Because this value assumes a December 31, 2022, conversion date, that amount does not reflect the value of having the ability to control the timing of conversion and the ultimate value that may be realized. At December 31, 2022, AIR’s closing price was $34.31 and the conversion price per LTIP II is $39.21, therefore no value is shown in the table above.
(6)This option was granted on February 12, 2015, and vested 25% on each anniversary of the grant date.
(7)This performance-based LTIP II Unit award was granted on January 28, 2020, and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. Once vested and until the 10-year anniversary of the grant date, LTIP II Units may be converted at the holder’s election into a number of units determined based on the market value of AIR’s Common Stock on the conversion date less the conversion price of $47.14. Because this value assumes a December 31, 2022, conversion date, that amount does not reflect the value of having the ability to control the timing of conversion and the ultimate value that may be realized. At December 31, 2022, AIR’s closing price was $34.31 and the conversion price per LTIP II is $47.14, therefore no value is shown in the table above.
(8)This performance-based LTIP II Unit award was granted on January 29, 2019, and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. Once vested and until the 10-year anniversary of the grant date, LTIP II Units may be converted at the holder’s election into a number of units determined based on the market value of AIR’s Common Stock on the conversion date less the conversion price of $43.58. Because this value assumes a December 31, 2022, conversion date, that amount does not reflect the value of having the ability to control the timing of conversion and the ultimate value that may be realized. At December 31, 2022, AIR’s closing price was $34.31 and the conversion price per LTIP II is $43.58, therefore no value is shown in the table above.
(9)This option was granted on January 28, 2020 and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward-looking performance period and 50% on the fourth anniversary of the grant date. The amount shown in the table represents the portion of the award that was earned based on relative TSR performance.
(10)This performance-based restricted stock award was granted on February 1, 2022 and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. The amount shown in the table is the award at threshold.
(11)This performance-based restricted stock award was granted on January 25, 2021 and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. The amount shown in the table is the award at threshold.
(12)This option was granted on January 31, 2017. The amount shown in the table represents the portion of the award that was earned based on Aimco’s relative TSR performance for the three-year performance period from January 1, 2017, through December 31, 2019, of which 50% vested on January 31, 2020, and the remaining 50% vested on January 31, 2022.
(13)This performance-based restricted stock award was granted on January 28, 2020 and, subject to achievement of relative TSR metrics set forth in the CD&A, vests 50% following the end of the three-year forward looking performance period and 50% on the fourth anniversary of the grant date. The amount shown in the table represents the portion of the award that was earned based on relative TSR performance.
(14)This option was granted on January 26, 2016. The amount shown in the table represents the portion of the award that was earned based on Aimco’s relative TSR performance for the three-year performance period from January 1, 2016, through December 31, 2018, of which 50% vested on January 26, 2019, 37.5% vested on January 26, 2020, and 12.5% vested on January 26, 2022.
(15)This restricted stock award was granted on February 1, 2022, and vests 25% on each anniversary of the grant date.
(16)This restricted stock award was granted on January 25, 2021, and vests 25% on each anniversary of the grant date.
(17)This restricted stock award was granted on January 28, 2020, and vests 25% on each anniversary of the grant date.
(18)This restricted stock award was granted on January 29, 2019, and vests 25% on each anniversary of the grant date.
(19)This performance-based restricted stock award was granted on January 29, 2019, and, subject to achievement of relative TSR metrics, vests 50% following the end of the three-year forward-looking performance period and 50% on the fourth anniversary of the grant date.
Potential Payments Upon Termination or Change in Control
The NEOs are entitled to certain severance payments and benefits upon a qualifying termination of employment or, in the case of a change in control, double trigger accelerated vesting of equity awards in the event of a qualifying termination of employment that occurs within one year following a change in control. The terms of these arrangements are described under “CD&A — Post-Employment Compensation and Employment and Severance Arrangements — Executive Employment Arrangements, Executive Severance Arrangements and Equity Award Agreements” above.
In the table that follows, potential payments and other benefits payable upon termination of employment and change in control situations are set out as if the conditions for payments had occurred and/or the terminations took place on December 31, 2022. In setting out such payments and benefits, amounts that had already been earned as of the termination date are not shown. Also, benefits that are available to all full-time regular employees when their employment terminates are not shown. The amounts set forth below are estimates of the amounts that could be paid out to the NEOs upon their termination. The actual amounts to be paid out can only be determined at the time of such NEOs’ separation from AIR. The following table summarizes the potential payments under various scenarios if they had occurred on December 31, 2022.
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Value of Accelerated Stock and Stock Options ($)(1)
|
Severance ($)
|
Name
|
Change in Control Only
|
Double Trigger Change in Control
|
Death or Disability
|
Termination Without Cause
|
Termination For Good Reason
|
Death
|
Disability
|
Termination Without Cause
|
Termination For Good Reason
|
Termination Without Cause or For Good Reason in Connection with a Change in Control
|
Non- Compete Payments ($)(2)
|
Terry Considine
|
—
|
—
|
—
|
—
|
—
|
—
|
3,929,700
|
(3)(4)
|
3,929,700
|
(3)(4)
|
3,929,700
|
(3)(4)
|
3,929,700
|
(3)(4)
|
—
|
Paul L. Beldin
|
—
|
202,488
|
202,488
|
—
|
—
|
—
|
314,331
|
(5)
|
793,234
|
(6)
|
793,234
|
(6)
|
1,543,646
|
(7)
|
600,000
|
Lisa R. Cohn
|
—
|
668,696
|
668,696
|
—
|
—
|
—
|
719,029
|
(5)
|
1,209,069
|
(6)
|
1,209,069
|
(6)
|
2,377,268
|
(7)
|
600,000
|
Keith M. Kimmel
|
—
|
633,900
|
633,900
|
—
|
—
|
—
|
666,163
|
(5)
|
1,106.917
|
(6)
|
1,106.917
|
(6)
|
2,170,732
|
(7)
|
600,000
|
John McGrath
|
—
|
—
|
—
|
—
|
—
|
—
|
1,548,770
|
|
643,101
|
|
643,101
|
|
1,243,101
|
(8)
|
—
|
(1)Amounts reflect value of accelerated restricted stock, LTIP I Units, LTIP II Units and options using the closing market price of AIR’s Common Stock on December 31, 2022, of $34.31 per share. For purposes of this table, the value of restricted stock and LTIP I Units is based on the closing market price and the value of LTIP II Units and options is based on the difference between the closing market price and the conversion or exercise price, as applicable. At December 31, 2022, AIR’s closing price was $34.31 and the conversion price per LTIP II is $52.54 for grants made on February 1, 2022, $39.21 for grants made on January 25, 2021, $47.14 for grants made on January 28, 2022, and $43.58 for grants made on January 29, 2019, therefore no value is shown in the table above. Specifically, Mr. Considine’s LTIP II awards had no value as of December 31, 2022, accordingly no value is shown above. This does not reflect the value of having the ability to control the timing of conversion and the ultimate value that may be realized. Once vested and until the 10-year anniversary of the grant date, the LTIP II Units may be converted at the holder’s election into a number of units determined based on the market value of AIR’s Common Stock on the conversion date less the conversion price.
(2)Amounts assume the agreements were enforced by AIR and that non-compete payments in an aggregate amount equal to two-thirds of the executive’s monthly base salary would be payable for 24 months following the executive’s termination of employment by AIR without cause.
(3)Amount does not reflect the offset for long-term disability benefit payments in the case of a qualifying disability under AIR’s long-term disability insurance plan.
(4)Amount consists of (i) a lump sum cash payment equal to the sum of (a) three times the sum of Mr. Considine’s base salary, or $2.1 million, and (b) Mr. Considine’s 2022 target STI of $1.8 million, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $29,700, as payable pursuant to the terms of Mr. Considine’s employment agreement with AIR.
(5)Amount consists of a lump sum cash payment equal to the amount of 2022 STI paid, as payable pursuant to the Executive Severance Policy
(6)Amount consists of (i) a lump sum cash payment equal to the sum of base salary and the average of the amount of STI paid for the previous three years, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $42,473, as payable pursuant to the Executive Severance Policy.
(7)Amount consists of (i) a lump sum cash payment equal to two times the sum of base salary and the average of the amount of STI paid for the previous three years, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $42,473, as payable pursuant to the Executive Severance Policy.
(8)Amount consists of (i) a lump sum cash payment equal to two times the sum of his draw and his transaction based incentive compensation for 2022, and (ii) 18 months of medical coverage reimbursement at an estimated amount of $42,473, as payable pursuant to the Executive Severance Policy.
(2)Represents the number of shares of AIR Common Stock beneficially owned by each person divided by the total number of shares of AIR Common Stock outstanding. Any shares of AIR Common Stock that may be acquired by a person within 60 days upon the exercise of options, warrants, rights or conversion privileges or pursuant to the power to revoke, or the automatic termination of, a trust, discretionary account or similar arrangement are deemed to be beneficially owned by that person and are deemed outstanding for the purpose of computing the percentage of outstanding shares of AIR Common Stock owned by that person, but not any other person.
(3)Through wholly-owned subsidiaries, AIR acts as general partner of the AIR Operating Partnership. As of July 28, 2023, AIR owned approximately 91.3% of the legal interest in the common partnership interests in the AIR Operating Partnership and approximately 93.1% of the economic interest in the AIR Operating Partnership. Interests in the AIR Operating Partnership that are held by limited partners other than AIR are referred to as “OP Units.” Generally, after a holding period of 12 months, common OP Units may be tendered for redemption and, upon tender, may be acquired by AIR for shares of AIR Common Stock at an exchange ratio of one share of AIR Common Stock for each common OP Unit (subject to adjustment). If AIR acquired all common OP Units for AIR Common Stock (without regard to the ownership limit set forth in AIR’s Charter), these shares of AIR Common Stock would constitute approximately 8.7% of the then outstanding shares of AIR Common Stock. OP Units are subject to certain restrictions on transfer.
(4)Represents
the number of shares of AIR Common Stock beneficially owned, divided by the total number of shares of AIR Common Stock outstanding,
assuming, in both cases, that all 10,905,867 OP Units outstanding as of July 28, 2023, are redeemed in exchange for shares of AIR
Common Stock (notwithstanding any holding period requirements, and AIR’s ownership limit). See note (3) above. Excludes
partnership preferred units issued by the AIR Operating Partnership and AIR preferred securities.
(5)Includes
16,000 shares held in a trust for which Mr. Considine disclaims beneficial ownership. Also includes 750,557 shares subject to
options that are exercisable within 60 days.
(6)Includes 3,274,821 OP Units and equivalents held by Mr. Considine (of which 114,768 are LTIP I Units and 1,000,046 are LTIP II Units), 179,735 OP Units held by an entity in which Mr. Considine has sole voting and investment power, 1,591,672 OP Units and equivalents held by Titahotwo Limited Partnership RLLLP, a registered limited liability limited partnership for which Mr. Considine serves as the general partner and holds a 0.5% ownership interest, and 192,422 OP Units held by Mr. Considine’s spouse, for which Mr. Considine disclaims beneficial ownership. Also includes 3,317,384 unvested LTIP II Units, the vesting of which is subject to certain performance criteria. Upon conclusion of the performance period and depending on the results thereof, Mr. Considine may vest in all, some, or none of the performance-based partnership units. Titahotwo has pledged 695,000 OPU equivalents.
(7)Includes 24,383 shares subject to options that are exercisable within 60 days.
(8)Includes 7,404 shares subject to options that are exercisable within 60 days.
(9)Includes 14,588 shares subject to options that are exercisable within 60 days.
(10)Includes 796,932 shares subject to options that are exercisable within 60 days.
(11)Also includes 3,317,384 unvested LTIP II Units, the vesting of which is subject to certain performance criteria. Upon conclusion of the performance period and depending on the results thereof, the holder may vest in all, some, or none of the performance-based partnership units.
(12)Beneficial ownership information is based on information contained in Amendment No. 1 to Schedule 13G filed with the SEC on February 9, 2023, by The Vanguard Group. According to the schedule, The Vanguard Group has sole dispositive power with respect to 22,146,056 of the shares, shared voting power with respect to 186,592 of the shares, and shared dispositive power with respect to 337,553 of the shares
(13)Beneficial ownership information is based on information contained in Amendment No. 4 to Schedule 13G filed with the SEC on February 14, 2023, by Cohen & Steers, Inc. on behalf of itself and affiliated entities. According to the schedule, included in the securities listed above as beneficially owned by Cohen & Steers, Inc. are (i) 13,750,810 shares over which Cohen & Steers, Inc. has sole voting power, 13,731,132 shares over which Cohen & Steers Capital Management, Inc. has sole voting power, 5,595 shares over which Cohen & Steers UK Limited has sole voting power, and 14,083 shares over which Cohen & Steers Ireland Limited has sole voting power and (ii) 17,730,616 shares over which Cohen & Steers, Inc. has sole dispositive power, 17,640,326 shares over which Cohen & Steers Capital Management, Inc. has sole dispositive power, 76,207 shares over which Cohen & Steers UK Limited has sole dispositive power, and 14,083 shares over which Cohen & Steers Ireland Limited has sole dispositive power.
(14)Beneficial ownership information is based on information contained in Amendment No. 1 to Schedule 13G filed with the SEC on January 26, 2023, by BlackRock Inc. According to the schedule, BlackRock Inc. has sole voting power with respect to 16,995,969 of the shares and sole dispositive power with respect to 17,540,354 of the shares.
(15)Beneficial ownership information is based on information contained in Schedule 13G filed with the SEC on February 10, 2023, by State Street Corporation. According to the schedule, State Street Corporation has shared voting power with respect to 6,252,871 of the shares and shared dispositive power with respect to 8,412,456 of the shares.
(16)Beneficial ownership information is based on information contained in Schedule 13G filed with the SEC on February 15, 2023, by Principal Real Estate Investors, LLC. According to the schedule, Principal Real Estate Investors, LLC has shared voting and dispositive power with respect to 7,524,990 of the shares.
ARTICLE IV
STOCK
Section 1. Authorized Shares
1.1 Class and Number of Shares. The total number of shares of stock that the Corporation from time to time shall have authority to issue is 1,022,175,000 shares of Capital Stock having a par value of $0.01 per share, amounting to an aggregate par value of $10,221,750, consisting of 1,021,175,000 shares currently classified as Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”) (the Class A Common Stock and all other classes or series of common stock hereafter classified being referred to collectively herein as the “Common Stock”), and 1,000,000 shares currently classified as Preferred Stock, par value $0.01 per share (all other classes or series of preferred stock hereafter classified being referred to collectively herein as the “Preferred Stock”). A majority of the entire Board of Directors, without action by the stockholders, may amend the Charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class that the Corporation has authority to issue.
1.2 Changes in Classification and Preferences. The Board of Directors by resolution or resolutions from time to time may classify and reclassify any unissued shares of Capital Stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of Capital Stock, including, but not limited to, ownership restrictions consistent with the Ownership Restrictions with respect to each such class or subclass of Capital Stock, and the number of shares constituting each such class or subclass, and to increase or decrease the number of shares of any such class or subclass.
Section 2. No Preemptive Rights. No holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of the stock of the Corporation or any other security of the Corporation that it may issue or sell.
Section 3. Common Stock.
3.1 Dividend Rights. The holders of shares of Common Stock shall be entitled to receive such dividends as may be declared by the Board of Directors of the Corporation out of funds legally available therefor.
3.2 Rights Upon Liquidation. Subject to the preferential rights of Preferred Stock, if any, as may be determined by the Board of Directors pursuant to Section 1 of this Article IV, in the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of the Corporation, each holder of shares of Common Stock shall be entitled to receive, ratably with each other holder of Common Stock, that portion of the assets of the Corporation available for distribution to its shareholders as the number of shares of the Common Stock held by such holder bears to the total number of shares of Common Stock then outstanding.
3.3 Voting Rights. The holders of shares of Common Stock shall be entitled to vote on all matters (on which a holder of shares of Common Stock shall be entitled to vote) at the meetings of the shareholders of the Corporation, and shall be entitled to one vote for each share of Common Stock entitled to vote at such meeting.
3.4 Restriction on Ownership and Transfers. The Beneficial Ownership and Transfer of Capital Stock shall be subject to the restrictions set forth in this Section 3.4 of this Article IV.
3.4.1 Restrictions.
(A)Limitation on Beneficial Ownership. Except as provided in Section 3.4.8 of this Article IV, from and after the Spin-Off Date, (i) no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, (ii) no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own Common Stock in excess of the Common Stock Ownership Limit, (iii) the Initial Holder shall not Beneficially Own shares of Capital Stock in excess of the Initial Holder Limits, (iv) no
3.4.4 Notice of Restricted Transfer. Any Person that acquires or attempts to acquire shares of Capital Stock in violation of Section 3.4.1 of this Article IV, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 3.4.3 of this Article IV, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation’s status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way.
3.4.5 Owners Required to Provide Information. From and after the Spin-Off Date, certain record and Beneficial Owners and transferees of shares of Capital Stock will be required to provide certain information as set out below.
(A)Annual Disclosure. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code and excluding, solely for this purpose, constructive ownership described in clause (ii)(y) of the definition of Beneficial Ownership) in number or value of Outstanding shares of Capital Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such owner, the number of shares of Capital Stock Beneficially Owned (excluding, solely for this purpose, constructive ownership described in clause (ii)(y) of the definition of Beneficial Ownership) and a full description of how such shares are held. Each such owner of Capital Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Capital Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT or Domestically Controlled Entity and (ii) ensure compliance with the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, the Initial Holder Limits or the Look-Through Ownership Limits, as applicable. Each shareholder of record, including without limitation any Person that holds shares of Capital Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 3.4.5 from the Beneficial Owner.
(B)Disclosure at the Request of the Corporation. Any Person that is a Beneficial Owner of shares of Capital Stock and any Person (including the shareholder of record) that is holding shares of Capital Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation’s status as a REIT and Domestically Controlled Entity, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, the Initial Holder Limits and the Look-Through Ownership Limits, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Capital Stock already Beneficially Owned by such shareholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose.
3.4.6 Remedies Not Limited. Nothing contained in this Article IV shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 3.4.12 of this Article IV) (i) to protect the Corporation and the interests of its shareholders in the preservation of the Corporation’s status as a REIT and Domestically Controlled Entity and (ii) to insure compliance with the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, the Initial Holder Limits and the Look-Through Ownership Limits.
3.4.7 Ambiguity. In the case of an ambiguity in the application of any of the provisions of Section 3.4 of this Article IV, or in the case of an ambiguity in any definition contained in Section 4 of this Article IV, the Board of Directors shall have the power to determine the application of the provisions of this Article IV with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. Absent a decision to the contrary by the Board of Directors (which the Board of Directors may make in its sole and absolute discretion), if a Person would have (but for the remedies set forth in Section 3.4) acquired Beneficial Ownership of Capital Stock in violation of Section 3.4.1, such remedies (as applicable) shall apply first to the shares of Capital Stock which, but for such remedies, would have been actually owned by such Person, and second to shares of Capital Stock which, but
4.2 Beneficial Ownership. The term “Beneficial Ownership” shall mean (i) ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned (x) through the application of Section 544 of the Code, as modified by Sections 856(h)(1)(B) and 856(h)(3)(A) of the Code and (y) through the application of Section 318(a) of the Code (as modified by Section 856(d)(5) of the Code) and/or (ii) ownership of the number and value of shares of Capital Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act; provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (ii) of this definition and clause (b) of the definition of “Person” shall be disregarded. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.
4.3 Capital Stock. The term “Capital Stock” shall mean all classes or series of capital stock of the Corporation, including, without limitation, Common Stock and Preferred Stock.
4.4 Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Trust as determined pursuant to Section 3.4.3 of this Article IV, each of which shall be an organization (i) described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code and (ii) to which contributions are eligible for deduction under each of Sections 170(b)(1) (A), 2055 and 2522 of the Code.
4.5 Code. The term “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time.
4.6 Common Stock. The term “Common Stock” shall mean all shares now or hereafter authorized of any class of Common Stock of the Corporation and any other Capital Stock of the Corporation, however designated, authorized after the Issue Date, that has the right (subject always to prior rights of any class of Preferred Stock) to participate in the distribution of the assets and earnings of the Corporation without limit as to per share amount.
4.7 Common Stock Ownership Limit. The term “Common Stock Ownership Limit” shall mean, for any Person other than the Initial Holder or a Look-Through Entity, 8.7% (in value or in number, whichever is more restrictive) of the Outstanding shares of Common Stock of the Corporation, or such other percentage determined by the Board of Directors in accordance with Section 3.4.8. The number and value of the outstanding shares of Common Stock of the Corporation shall be determined by the Board of Directors, which determination shall be final and conclusive for all purposes hereof. For purposes of determining the percentage ownership of Common Stock by any Person, shares of Common Stock that may be acquired upon conversion, exchange or exercise of any securities of the Corporation directly or constructively held by such Person, but not shares of Common Stock issuable with respect to the conversion, exchange or exercise of securities of the Corporation held by other Persons, shall be deemed to be outstanding prior to conversion, exchange or exercise.
4.8 Excepted Holder. The term “Excepted Holder” shall mean a Person for whom an Excepted Holder Limit is created by these Articles of Incorporation or by the Board of Directors pursuant to Section 3.4.8(A).
4.9 Excepted Holder Limit. The term “Excepted Holder Limit” shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by these Articles of Incorporation or by the Board of Directors pursuant to Section 3.4.8(A) and subject to adjustment pursuant to Section 3.4.8(B), the percentage limit established for an Excepted Holder by these Articles of Incorporation or by the Board of Directors pursuant to Section 3.4.8(A).
4.10 Excess Transfer. The term “Excess Transfer” has the meaning set forth in Section 3.4.3(A) of this Article IV.
4.11 Exchange Act. The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
4.12 Initial Holder. The term “Initial Holder” shall mean Terry Considine.
2023 Proxy Statement B-11
4.13 Initial Holder Limits. The term “Initial Holder Limits” shall mean 15% (in value or in number, whichever is more restrictive) of Outstanding shares of Common Stock applied, in the aggregate, to the Initial Holder and 15% (in value or in number, whichever is more restrictive) of Outstanding shares of Capital Stock. From the Spin-Off Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limits applicable to the Initial Holder.
4.14 Look-Through Entity. The term “Look-Through Entity” shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940.
4.15 Look-Through Ownership Limit. The term “Look-Through Ownership Limits” shall mean 15% (in value or in number, whichever is more restrictive) of Outstanding shares of Capital Stock and 15% (in value or in number, whichever is more restrictive) of Outstanding shares of Common Stock.
4.16 Market Price. The term “Market Price” on any date shall mean the Closing Price on the Trading Day immediately preceding such date. The term “Closing Price” on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Common Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors of the Company. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
4.17 NYSE. The term “NYSE” shall mean the New York Stock Exchange, Inc.
4.18 Outstanding. The term “Outstanding” shall mean issued and outstanding shares of Capital Stock of the Corporation, provided that for purposes of the application of the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, the Look-Through Ownership Limits, the Initial Holder Limits or an Excepted Holder Limit to any Person, the term “Outstanding” shall be deemed to include the number of shares of Capital Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities.
4.19 Ownership Restrictions. The term “Ownership Restrictions” shall mean collectively the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limits as applied to the Initial Holder, the Look-Through Ownership Limits as applied to Look-Through Entities, and the Excepted Holder Limit as applied to Excepted Holders.
4.20 Person. The term “Person” shall mean (A) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (B) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and a group to which an Excepted Holder Limit applies.
4.21 Prohibited Transferee. The term “Prohibited Transferee” has the meaning set forth in Section 3.4.3(A) of this Article IV.
4.22 REIT. The term “REIT” shall mean a “real estate investment trust” as defined in Section 856 through 860 of the Code.
4.23 Spin-Off Date. The term “Spin-Off Date” shall mean December 15, 2020.
4.24 Transfer. The term “Transfer” shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Capital Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Capital Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Capital Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Capital Stock). The term “Transfers” and “Transferred” shall have correlative meanings.
4.25 TRS. The term “TRS” shall mean any taxable REIT subsidiary (as defined in Section 856(l) of the Code) of the Corporation.
4.26 Trust. The term “Trust” shall mean the trust created pursuant to Section 3.4.3 of this Article IV.
4.27 Trustee. The term “Trustee” shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust.
ARTICLE V
GENERAL REIT PROVISIONS
Section 1. Termination of REIT Status. The Board of Directors shall take no action to terminate the Corporation’s status as a REIT until such time as (i) the Board of Directors adopts a resolution recommending that the Corporation terminate its status as a REIT, (ii) the Board of Directors presents the resolution at an annual or special meeting of the shareholders and (iii) such resolution is approved by the vote of a majority of the shares entitled to be cast on the resolution.
Section 2. Exchange or Market Transactions. Nothing in Article IV or this Article V shall preclude the settlement of any transaction entered into through the facilities of the NYSE or other national securities exchange or an automated inter-dealer quotation system. The fact that the settlement of any transaction is permitted shall not negate the effect of any other provision of this Article V or any provision of Article IV, and the transferee, including but not limited to any Prohibited Transferee, in such a transaction shall remain subject to all the provisions and limitations of Article IV and this Article V.
Section 3. Severability. If any provision of Article IV or this Article V or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
Section 4. Waiver. The Corporation shall have authority at any time to waive the requirement that the Corporation redeem shares of Preferred Stock if, in the sole discretion of the Board of Directors, any such redemption would jeopardize the status of the Corporation as a REIT for federal income tax purposes.
ARTICLE VI
BOARD OF DIRECTORS
Section 1. Management. The business and the affairs of the Corporation shall managed under the direction of its Board of Directors.
Section 2. Number. The number of directors that will constitute the entire Board of Directors shall be fixed by, or in the manner provided in, the Bylaws but shall in no event be less than three.
2023 Proxy Statement B-13
Section 3. Vacancies. Subject to the rights of the holders of any class or series of stock separately entitled to elect one or more directors, newly created directorships resulting from any increase in the number of directors shall be filled by the majority vote of the Board of Directors, and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board of Directors, or, if applicable, by a sole remaining director. A director elected by the Board of Directors to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy has occurred and until his or her successor is elected and qualifies.
Section 4. Removal. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock separately entitled to elect one or more directors, removal of directors shall be in a manner as provided under the Bylaws.
Section 5. Bylaws. The Board of Directors shall have power to adopt, amend, alter, change and repeal any Bylaws of the Corporation by vote of the majority of the Board of Directors then in office. Any adoption, amendment, alteration, change or repeal of any Bylaws by the shareholders of the Corporation shall require the affirmative vote of at least a majority of all the shares of capital stock of the Corporation then entitled to vote generally in an election of directors, voting together as a single class at an annual or special meeting of the shareholders of the Corporation called for such purpose.
Section 6. Powers. The enumeration and definition of particular powers of the Board of Directors included elsewhere in the Charter shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of the Charter, or construed as excluding or limiting, or deemed by inference or otherwise in any manner to exclude or limit, the powers conferred upon the Board of Directors under the Maryland General Corporation Law (“MGCL”) as now or hereafter in force.
ARTICLE VII
LIMITATION OF LIABILITY
No director or officer of the Corporation shall be liable to the Corporation or its shareholders for money damages to the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers. Neither the amendment nor repeal of this Article VII, nor the adoption or amendment of any other provision of the charter or Bylaws of the Corporation inconsistent with this Article VII, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act that occurred prior to such amendment, repeal or adoption.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by Maryland law, as applicable from time to time, all persons who at any time were or are directors or officers of the Corporation for any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) relating to any action alleged to have been taken or omitted in such capacity as a director or an officer. The Corporation shall pay or reimburse all reasonable expenses incurred by a present or former director or officer of the Corporation in connection with any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) in which the present or former director or officer is a party, in advance of the final disposition of the proceeding, to the fullest extent permitted by, and in accordance with the applicable requirements of, Maryland law, as applicable from time to time. The Corporation may indemnify any other persons permitted but not required to be indemnified by Maryland law, as applicable from time to time, if and to extent indemnification is authorized and determined to be appropriate, in each case in accordance with applicable law, by the Board of Directors, the majority of the shareholders of the Corporation entitled to vote thereon or special legal counsel appointed by the Board of Directors. No amendment of the Charter of the Corporation or repeal of any of its provisions shall limit or eliminate any of the benefits provided to directors and officers under this Article VIII in respect of any act or omission that occurred prior to such amendment or repeal.
ARTICLE IX
WRITTEN CONSENT OF SHAREHOLDERS
Any corporate action upon which a vote of shareholders is required or permitted may be taken without a meeting or vote of shareholders with the unanimous written consent of shareholders entitled to vote thereon.
ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter or repeal any provision contained in this charter upon (i) adoption by the Board of Directors of a resolution recommending such amendment, alteration, or repeal, (ii) presentation by the Board of Directors to the shareholders of a resolution at an annual or special meeting of the shareholders and (iii) approval of such resolution by the affirmative vote of the holders of at least a majority of all the shares of capital stock of the Corporation then entitled to vote generally in an election of directors, voting together as a single class. All rights conferred upon shareholders herein are subject to this reservation.
ARTICLE XI
EXISTENCE
The Corporation is to have a perpetual existence.
* * * * * *
THIRD: The Board of Directors of the Corporation at a meeting or by a unanimous consent in writing in lieu of a meeting under § 2-408 of the Maryland General Corporation Law, and the holders of at least a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in an election of directors, voting together as a single class, each adopted a resolution that set forth and approved the foregoing amendment and restatement of the Charter.
FOURTH: The foregoing amendment and restatement of the Charter of the Corporation does not increase the authorized Capital Stock of the Corporation. The foregoing amendment and restatement of the Charter of the Corporation (a) increases the number of shares of Capital Stock classified as Preferred Stock from no shares before this amendment and restatement to 1,000,000 shares after this amendment and restatement and (b) decreases the number of shares of Capital Stock classified as Common Stock from 1,022,175,000 shares before this amendment and restatement to 1,021,175,000 shares after this amendment and restatement.
FIFTH: The current address of the principal office of the Corporation is 4582 South Ulster Street, Suite 1700, Denver, Colorado 80237. The current address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202.
SIXTH: The name and address of the Corporation’s resident agent in the State of Maryland is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202.
SEVENTH: These Articles of Amendment and Restatement shall become effective at [__] p.m., Eastern Time, on [•], 2023.1
1 Note to Draft: Time and date to be populated to correspond with effective time specified in the applicable filing with the Maryland Secretary of State after the Corporation’s 2023 annual meeting.
Terry Considine, Paul L. Beldin, and Lisa R. Cohn, or any of them, each with the power of substitution, are hereby authorized
to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally
present, at the Annual Meeting of Stockholders of Apartment Income REIT Corp. to be held on September 15, 2023, or at any
postponement or adjournment thereof.
Pay vs Performance Disclosure
|
12 Months Ended |
Dec. 31, 2022
USD ($)
$ / shares
|
Dec. 31, 2021
USD ($)
$ / shares
|
Dec. 31, 2020
USD ($)
$ / shares
|
Pay vs Performance Disclosure [Table] |
|
|
|
Pay vs Performance [Table Text Block] |
Pay Versus Performance
|
|
|
|
|
|
|
|
|
|
|
Year |
Summary
Compensation
Table Total
for PEO(a)
($) |
Compensation
Actually
Paid to
PEO(a)(b)(c)
($) |
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs(a)
($) |
Average
Compensation
Actually Paid
to Non-PEO
NEOs(a)(b)(c)
($) |
Value
of Initial Fixed $100 Investment Based on:(d) |
Net
Income
($) |
Performance
Against Overall Funds
from Operations
Budget(e) ($) |
Total
Shareholder
Return
($) |
Peer
Group
Total
Shareholder
Return
(MSCI US
REIT Index)
($) |
Peer
Group
Total
Shareholder
Return
(Nareit Equity
Apartments
Index)
($) |
Supplemental
Peer Group
Total
Shareholder Return
(Multi-Family
Peer Group)(d)
($) |
2022 |
5,416,020 |
(10,236,422) |
2,003,335 |
786,089 |
90.32 |
99.82 |
94.25 |
92.18 |
970,050,000 |
$2.41 |
2021 |
3,048,540 |
16,199,170 |
1,862,711 |
2,502,510 |
138.07 |
132.23 |
138.51 |
138.76 |
479,224,000 |
$2.14 |
2020 |
6,802,856 |
1,998,061 |
1,583,280 |
1,842,993 |
93.47 |
92.43 |
84.66 |
84.05 |
(103,344,000) |
$1.73 |
(a) | | Terry Considine served as our PEO for fiscal years 2020,
2021 and 2022. Paul L. Beldin, Lisa R. Cohn, and Keith M. Kimmel were our Non-PEO NEOs for each of fiscal year 20120, 2021 and 2022, along
with Conor Wagner for fiscal year 2020 and John McGrath for fiscal year 2022. |
| | |
(b) | | The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the named executive officers. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote (c) below. |
| | |
(c) | | Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the total (or, in the case of the Non-PEO NEOs, the average of the total) from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table. Our named executive officers have not been provided with opportunities to participate in defined benefit and actuarial pension plans sponsored by us in any applicable years. |
| | |
(d) | | The Peer Group TSR columns set forth in this table use the MSCI US REIT Index and the Nareit Equity Apartments Index, which are the published industry or line-of-business indices we also use in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the fiscal year ended December 31, 2022, along with a supplemental peer group consisting of AvalonBay Communities, Inc., Camden Property Trust, Equity Residential, Essex Property Trust, Inc. Mid-America Apartment Communities, Inc. and UDR, Inc. (such six companies collectively, the “Multi-Family Peer Group”). The Multi-Family Peer Group was selected in consultation with our independent compensation consultant to inform fiscal year 2022 compensation for Mr. Kimmel, whose position does not have a good benchmark outside of the multi-family industry and was weighted according to the respective issuers’ stock market capitalization as of December 31, 2019. The comparison assumes $100 was invested for the period starting December 31, 2019 through the end of the listed fiscal year in our Common Stock and in the MSCI US REIT Index, Nareit Equity Apartments Index and Multi-Family Peer Group, respectively. TSR for our Common Stock for 2020 includes the TSR of Aimco prior to December 15, 2020, which was the date of the Separation. Historical Common Stock performance is not necessarily indicative of future Common Stock performance. |
| | |
(e) | | We determined Performance Against Overall Funds from Operations Budget to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs for our fiscal year ended December 31, 2022. Funds from Operations is a commonly used measure of REIT performance because it allows us to assess our short term performance by capturing features particular to real estate performance by recognizing that real estate assets generally appreciate over time or maintain their residual value to a much greater extent than other capital assets. This measure — Performance Against Overall Funds from Operations Budget — assesses our performance against our plan. This measure may not have been the most important financial performance measure for fiscal years 2021 and 2020 and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
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Fiscal Year
|
Summary Compensation Table Total for Mr. Considine ($)
|
Exclusion of Stock Awards and Option Awards for Mr. Considine ($)
|
Inclusion of Equity Values for Mr. Considine ($)
|
Compensation Actually Paid to Mr. Considine ($)
|
2022
|
5,416,020
|
3,400,008
|
(12,252,434)
|
(10,236,422)
|
2021
|
3,048,540
|
3,400,000
|
16,550,630
|
16,199,170
|
2020
|
6,802,856
|
4,300,006
|
(504,789)
|
1,998,061
|
|
|
|
|
|
Fiscal Year
|
Average Summary Compensation Table Total for Non-PEO NEOs ($)
|
Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($)
|
Average Inclusion of Equity Values for Non-PEO NEOs ($)
|
Average Compensation Actually Paid to Non-PEO NEOs ($)
|
2022
|
2,003,335
|
602,787
|
(614,459)
|
786,089
|
2021
|
1,862,711
|
787,012
|
1,426,811
|
2,502,510
|
2020
|
1,583,280
|
556,198
|
815,911
|
1,842,993
|
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
|
|
|
|
|
|
|
Fiscal Year
|
Year-End Fair Value of Equity Awards Granted During Year That Remained Outstanding and Unvested as of Last Day of Year for Mr. Considine ($)
|
Change in Fair Value from Last Day of Prior Year to Last Day of Year of Outstanding and Unvested Equity Awards Granted in a Prior Year for Mr. Considine ($)
|
Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Mr. Considine ($)
|
Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted in a Prior Year that Vested During Year for Mr. Considine ($)
|
Fair Value at Last Day of Prior Year of Equity Awards Granted in a Prior Year Forfeited During Year for Mr. Considine ($)
|
Total - Inclusion of Equity Values for Mr. Considine ($)
|
2022
|
969,251
|
(12,456,161)
|
0
|
(765,525)
|
0
|
(12,252,434)
|
2021
|
8,246,158
|
7,878,244
|
0
|
426,227
|
0
|
16,550,630
|
2020
|
1,390,614
|
(2,488,213)
|
0
|
592,810
|
0
|
(504,789)
|
|
|
|
|
|
|
|
Fiscal Year
|
Average Year- End Fair Value of Equity Awards Granted During Year That Remained Outstanding and Unvested as of Last Day of Year for Non-PEO NEOs ($)
|
Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Outstanding and Unvested Equity Awards Granted in a Prior Year for Non-PEO NEOs ($)
|
Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($)
|
Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted in a Prior Year that Vested During Year for Non-PEO NEOs ($)
|
Average Fair Value at Last Day of Prior Year of Equity Awards Granted in a Prior Year Forfeited During Year for Non-PEO NEOs ($)
|
Total - Average Inclusion of Equity Values for Non-PEO NEOs ($)
|
2022
|
278,457
|
(828,695)
|
0
|
(64,221)
|
0
|
(614,459)
|
2021
|
1,017,398
|
416,018
|
0
|
(6,604)
|
0
|
1,426,811
|
2020
|
485,490
|
295,544
|
0
|
34,876
|
0
|
815,911
|
|
|
|
Named Executive Officers, Footnote [Text Block] |
(a) | | Terry Considine served as our PEO for fiscal years 2020,
2021 and 2022. Paul L. Beldin, Lisa R. Cohn, and Keith M. Kimmel were our Non-PEO NEOs for each of fiscal year 20120, 2021 and 2022, along
with Conor Wagner for fiscal year 2020 and John McGrath for fiscal year 2022. |
|
|
|
Changed Peer Group, Footnote [Text Block] |
The Peer Group TSR columns set forth in this table use the MSCI US REIT Index and the Nareit Equity Apartments Index, which are the published industry or line-of-business indices we also use in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the fiscal year ended December 31, 2022, along with a supplemental peer group consisting of AvalonBay Communities, Inc., Camden Property Trust, Equity Residential, Essex Property Trust, Inc. Mid-America Apartment Communities, Inc. and UDR, Inc. (such six companies collectively, the “Multi-Family Peer Group”). The Multi-Family Peer Group was selected in consultation with our independent compensation consultant to inform fiscal year 2022 compensation for Mr. Kimmel, whose position does not have a good benchmark outside of the multi-family industry and was weighted according to the respective issuers’ stock market capitalization as of December 31, 2019. The comparison assumes $100 was invested for the period starting December 31, 2019 through the end of the listed fiscal year in our Common Stock and in the MSCI US REIT Index, Nareit Equity Apartments Index and Multi-Family Peer Group, respectively. TSR for our Common Stock for 2020 includes the TSR of Aimco prior to December 15, 2020, which was the date of the Separation. Historical Common Stock performance is not necessarily indicative of future Common Stock performance.
|
|
|
PEO Total Compensation Amount |
$ 5,416,020
|
$ 3,048,540
|
$ 6,802,856
|
PEO Actually Paid Compensation Amount |
$ (10,236,422)
|
16,199,170
|
1,998,061
|
Adjustment To PEO Compensation, Footnote [Text Block] |
|
|
|
|
|
Fiscal Year
|
Summary Compensation Table Total for Mr. Considine ($)
|
Exclusion of Stock Awards and Option Awards for Mr. Considine ($)
|
Inclusion of Equity Values for Mr. Considine ($)
|
Compensation Actually Paid to Mr. Considine ($)
|
2022
|
5,416,020
|
3,400,008
|
(12,252,434)
|
(10,236,422)
|
2021
|
3,048,540
|
3,400,000
|
16,550,630
|
16,199,170
|
2020
|
6,802,856
|
4,300,006
|
(504,789)
|
1,998,061
|
|
|
|
|
|
|
|
Fiscal Year
|
Year-End Fair Value of Equity Awards Granted During Year That Remained Outstanding and Unvested as of Last Day of Year for Mr. Considine ($)
|
Change in Fair Value from Last Day of Prior Year to Last Day of Year of Outstanding and Unvested Equity Awards Granted in a Prior Year for Mr. Considine ($)
|
Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Mr. Considine ($)
|
Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted in a Prior Year that Vested During Year for Mr. Considine ($)
|
Fair Value at Last Day of Prior Year of Equity Awards Granted in a Prior Year Forfeited During Year for Mr. Considine ($)
|
Total - Inclusion of Equity Values for Mr. Considine ($)
|
2022
|
969,251
|
(12,456,161)
|
0
|
(765,525)
|
0
|
(12,252,434)
|
2021
|
8,246,158
|
7,878,244
|
0
|
426,227
|
0
|
16,550,630
|
2020
|
1,390,614
|
(2,488,213)
|
0
|
592,810
|
0
|
(504,789)
|
|
|
|
Non-PEO NEO Average Total Compensation Amount |
$ 2,003,335
|
1,862,711
|
1,583,280
|
Non-PEO NEO Average Compensation Actually Paid Amount |
$ 786,089
|
2,502,510
|
1,842,993
|
Adjustment to Non-PEO NEO Compensation Footnote [Text Block] |
|
|
|
|
|
Fiscal Year
|
Average Summary Compensation Table Total for Non-PEO NEOs ($)
|
Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($)
|
Average Inclusion of Equity Values for Non-PEO NEOs ($)
|
Average Compensation Actually Paid to Non-PEO NEOs ($)
|
2022
|
2,003,335
|
602,787
|
(614,459)
|
786,089
|
2021
|
1,862,711
|
787,012
|
1,426,811
|
2,502,510
|
2020
|
1,583,280
|
556,198
|
815,911
|
1,842,993
|
|
|
|
|
|
|
|
Fiscal Year
|
Average Year- End Fair Value of Equity Awards Granted During Year That Remained Outstanding and Unvested as of Last Day of Year for Non-PEO NEOs ($)
|
Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Outstanding and Unvested Equity Awards Granted in a Prior Year for Non-PEO NEOs ($)
|
Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($)
|
Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted in a Prior Year that Vested During Year for Non-PEO NEOs ($)
|
Average Fair Value at Last Day of Prior Year of Equity Awards Granted in a Prior Year Forfeited During Year for Non-PEO NEOs ($)
|
Total - Average Inclusion of Equity Values for Non-PEO NEOs ($)
|
2022
|
278,457
|
(828,695)
|
0
|
(64,221)
|
0
|
(614,459)
|
2021
|
1,017,398
|
416,018
|
0
|
(6,604)
|
0
|
1,426,811
|
2020
|
485,490
|
295,544
|
0
|
34,876
|
0
|
815,911
|
|
|
|
Compensation Actually Paid vs. Total Shareholder Return [Text Block] |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Peer Total Shareholder Return (“TSR”).
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s and the MSCI US REIT Index’s, the Nareit Equity Apartments Index’s and the Multi-Family Peer Group’s cumulative TSR over the three most recently completed fiscal years.
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Compensation Actually Paid vs. Net Income [Text Block] |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the three most recently completed fiscal years.
|
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|
Compensation Actually Paid vs. Company Selected Measure [Text Block] |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company-Selected Measure
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and Performance Against Overall Funds from Operations Budget during the three most recently completed fiscal years.
|
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Tabular List [Table Text Block] |
TABULAR LIST OF MOST IMPORTANT FINANCIAL PERFORMANCE MEASURES
The Company used the financial performance measures set forth below to link Compensation Actually Paid to our named executive officers for fiscal year 2022 to Company performance.
|
Most Important Financial Performance Measures for Determining PEO and Non-PEO NEO Pay in fiscal year 2022
|
Company TSR relative to the TSR of the MSCI US REIT Index
|
Company TSR relative to the TSR of the Nareit Equity Apartments Index
|
Performance Against Overall Funds from Operations Budget Same Store Net Operating Income Performance Compared to 2022 Budget
|
Balance Sheet Measures (Debt to EBITDA, Balance Sheet Safety & Cost, Financial Flexibility & Investment Grade Rating)
|
Portfolio Quality (Accretive Transactions that Enhance the Company’s Objectives Regarding Portfolio Quality)
|
Amount of new investments and their performance over three years and the amount of property sales (Mr. McGrath)
|
|
|
|
Total Shareholder Return Amount |
$ 90.32
|
138.07
|
93.47
|
Peer Group Total Shareholder Return Amount |
99.82
|
132.23
|
92.43
|
Peer Group Total Shareholder Return Amount1 |
94.25
|
138.51
|
84.66
|
Peer Group Total Shareholder Return Amount2 |
92.18
|
138.76
|
84.05
|
Net Income (Loss) Attributable to Parent |
$ 970,050,000
|
$ 479,224,000
|
$ (103,344,000)
|
Company Selected Measure Amount | $ / shares |
2.41
|
2.14
|
1.73
|
Measure [Axis]: 1 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Company TSR relative to the TSR of the MSCI US REIT Index
|
|
|
Measure [Axis]: 2 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Company TSR relative to the TSR of the Nareit Equity Apartments Index
|
|
|
Measure [Axis]: 3 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Performance Against Overall Funds from Operations Budget
|
|
|
Measure [Axis]: 4 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Same Store Net Operating Income Performance Compared to 2022 Budget
|
|
|
Measure [Axis]: 5 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Balance Sheet Measures (Debt to EBITDA, Balance Sheet Safety & Cost, Financial Flexibility & Investment Grade Rating)
|
|
|
Measure [Axis]: 6 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Portfolio Quality (Accretive Transactions that Enhance the Company’s Objectives Regarding Portfolio Quality)
|
|
|
Measure [Axis]: 7 |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Measure Name |
Amount of new investments and their performance over three years and the amount of property sales (Mr. McGrath)
|
|
|
PEO [Member] | Terry Considine |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
PEO Name |
Terry Considine
|
Terry Considine
|
Terry Considine
|
PEO [Member] | Terry Considine | Exclusion Of Stock Awards And Option Awards For Mr Considine [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
$ 3,400,008
|
$ 3,400,000
|
$ 4,300,006
|
PEO [Member] | Terry Considine | Inclusion of Equity Values |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
(12,252,434)
|
16,550,630
|
(504,789)
|
PEO [Member] | Terry Considine | Year-End Fair Value of Equity Awards Granted During Year that Remained Outstanding andUnvested as of Last Day of Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
969,251
|
8,246,158
|
1,390,614
|
PEO [Member] | Terry Considine | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Outstanding and Unvested Equity Awards Granted in a Prior Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
(12,456,161)
|
7,878,244
|
(2,488,213)
|
PEO [Member] | Terry Considine | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
0
|
0
|
0
|
PEO [Member] | Terry Considine | Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted in a Prior Year that Vested During Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
(765,525)
|
426,227
|
592,810
|
PEO [Member] | Terry Considine | Fair Value at Last Day of Prior Year of Equity Awards Granted in a Prior Year Forfeited During Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
0
|
0
|
0
|
Non-PEO NEO [Member] | Average Exclusion of Stock Awards and Option Award |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
602,787
|
787,012
|
556,198
|
Non-PEO NEO [Member] | Average Inclusion of Equity Values |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
(614,459)
|
1,426,811
|
815,911
|
Non-PEO NEO [Member] | Average Year- End Fair Value of Equity Awards Granted During Year that Remained Outstanding and Unvested as of Last Day of Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
278,457
|
1,017,398
|
485,490
|
Non-PEO NEO [Member] | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Outstanding and Unvested Equity Awards Granted in a Prior Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
(828,695)
|
416,018
|
295,544
|
Non-PEO NEO [Member] | Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
0
|
0
|
0
|
Non-PEO NEO [Member] | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted in a Prior Year that Vested During Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
(64,221)
|
(6,604)
|
34,876
|
Non-PEO NEO [Member] | Average Fair Value at Last Day of Prior Year of Equity Awards Granted in a Prior Year for feited During Year |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
$ 0
|
$ 0
|
$ 0
|
Non-PEO NEO [Member] | Paul L. Beldin |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
PEO Name |
Paul L. Beldin
|
Paul L. Beldin
|
Paul L. Beldin
|
Non-PEO NEO [Member] | Lisa R. Cohn |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
PEO Name |
Lisa R. Cohn
|
Lisa R. Cohn
|
Lisa R. Cohn
|
Non-PEO NEO [Member] | Keith M. Kimmel |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
PEO Name |
Keith M. Kimmel
|
Keith M. Kimmel
|
Keith M. Kimmel
|
Non-PEO NEO [Member] | Conor Wagner |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
PEO Name |
|
|
Conor Wagner
|
Non-PEO NEO [Member] | John McGrath |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
PEO Name |
John McGrath
|
|
|