SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
KOGER EQUITY, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
KOGER EQUITY, INC.
433 PLAZA REAL, SUITE 335
BOCA RATON, FLORIDA 33432
(561) 395-9666
---------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------
DATE: Thursday, May 23, 2002
TIME: 11:00 a.m.
PLACE: Three Ravinia Building
Three Ravinia Drive
Atlanta, Georgia
Dear Shareholder:
At our Annual Meeting, we will ask you:
1. To elect a board of eight (8) directors to serve for
the ensuing year and until their respective
successors are elected and qualified; and
2. To transact any other business that may properly be
presented at the Annual Meeting.
If you were a shareholder of record at the close of business on March
15, 2002, you may vote at the Annual Meeting.
A copy of the Koger Equity, Inc. Annual Report for the year ended
December 31, 2001, which reports financial and other information, is enclosed.
You are asked to mark, date, sign, and return the enclosed proxy. An
envelope is enclosed for your convenience. No postage is required if mailed in
the United States.
By order of the Board of Directors
Robert E. Onisko
Chief Financial Officer
April 19, 2002
KOGER EQUITY, INC.
433 PLAZA REAL, SUITE 335
BOCA RATON, FLORIDA 33432
(561) 395-9666
---------
PROXY STATEMENT
APRIL 19, 2002
---------
INTRODUCTION
We sent you this proxy statement and the enclosed proxy card because
Koger Equity's Board of Directors is soliciting your proxy to vote at the 2002
Annual Meeting of Shareholders. This proxy statement summarizes the information
you need to know to vote at the Annual Meeting. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply
complete, sign, and return the enclosed proxy card. In this proxy statement,
Koger Equity, Inc. is generally referred to as either "Koger Equity" or the
"Company."
We will begin sending this proxy statement, the attached notice of
annual meeting and the enclosed proxy card on April 19, 2002 to all
shareholders entitled to vote. Only those shareholders who owned Koger Equity
common stock at the close of business on March 15, 2002, are entitled to vote.
On this record date, there were 21,235,908 shares of Koger Equity common stock
outstanding. Koger Equity common stock is our only class of voting stock
outstanding. We are also sending along with this proxy statement, the Koger
Equity 2001 Annual Report, which includes our financial statements.
Each share of Koger Equity common stock that you own entitles you to
one vote. The proxy card indicates the number of shares of Koger Equity common
stock that you own. In this proxy statement, Koger Equity common stock is
sometimes referred to as the "Shares."
VOTE BY PROXY
Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign, and date the enclosed proxy card and to return it promptly in
the envelope provided. Returning the proxy card will not affect your right to
attend the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time to
vote, your "proxy" (one of the individuals named on your proxy card) will vote
your shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares as recommended by the Board
for the election of all eight nominees for directors of the Company.
If any other matter is presented, your proxy will vote in accordance
with his best judgment. At the time this proxy statement went to press, we knew
of no other matter to be acted on at the Annual Meeting other than the election
of directors.
1
TO REVOKE A PROXY
If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of three ways:
1) You may send in another proxy with a later date.
2) You may notify the Company in writing before the Annual
Meeting that you have revoked your proxy.
3) You may vote in person at the Annual Meeting.
TO VOTE IN PERSON
If you plan to attend the Annual Meeting and wish to vote in person,
we will give you a ballot when you arrive. You will complete the ballot at that
time and return it to the Inspectors of Election at the door. However, if your
shares are held in the name of your broker, bank or other nominee, you must
bring an account statement or letter from the nominee indicating that you are
the beneficial owner of the shares on March 15, 2002, the record date for
voting.
MATTER TO BE CONSIDERED
ELECT EIGHT DIRECTORS
The eight nominees for director who receive the most votes will be
elected. So, if you do not vote for a particular nominee, or you indicate,
"Vote WITHHELD" for a particular nominee on your proxy card, your vote will not
count either for or against the nominee.
BROKER VOTES
Under the rules of the New York Stock Exchange, if your broker holds
your shares in its name, the broker will be entitled to vote your shares for
the election of directors even if it does not receive instructions from you. If
your broker received instructions from you, it must vote as instructed by you.
CONFIDENTIAL VOTING
We keep all the proxies, ballots and voting tabulations private as a
matter of practice. We only let our Inspectors of Election, representatives of
Wells Fargo Bank Minnesota, N.A. and certain employees of our independent
tabulating agent, Morrow & Co., Inc., examine these documents. The Inspectors
of Election will not disclose your vote to management unless it is necessary to
meet legal requirements. The Inspectors of Election will, however, forward to
management any written comments you make, on the proxy card or elsewhere.
2
ELECTION OF DIRECTORS
The Board has nominated eight directors for election at the Annual
Meeting. Each nominee is currently serving as one of our directors. If you
re-elect them, they will hold office until the next annual meeting and until
their successors have been elected and qualified.
We know of no reason why any nominee may be unable to serve as
director. If any nominee is unable to serve, your proxy may vote for another
nominee proposed by the Board, or the Board may reduce the number of directors
to be elected. If any director resigns, dies or is otherwise unable to serve
out his term, or the Board increases the number of directors, the Board may
fill the vacancy until the next Annual Meeting of Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE FOLLOWING NOMINEES.
PRINCIPAL OCCUPATIONS YEAR FIRST
FOR A PERIOD OF FIVE YEARS OR MORE BECAME A
NAME ENDED ON DECEMBER 31, 2001 DIRECTOR AGE
---- -------------------------------------------- ---------- ---
D. Pike Aloian(2) ................ Currently serves as a Director of Koger 1993 47
Equity, Inc. Mr. Aloian is also a Managing
Director of Rothschild Realty Inc. (a
real estate investment management and
advisory service firm); and a Director
of Charter Oak Group, Ltd. (a privately
held owner and developer of factory
outlet and retail properties). Mr.
Aloian is also a Director of EastGroup
Properties, Inc. (an industrial real
estate investment trust ("REIT"));
Brandywine Realty Trust (an office
REIT); Angeles Corporation (a holder of
loans to and equity investments in
residential real estate); Merritt
Properties, LLC (a privately held owner
and developer of light industrial
buildings); and Advana Realty Group (an
office and industrial company).
Benjamin C. Bishop, Jr.(1)(2) .... Currently serves as a Director of Koger 1991 70
Equity, Inc. Mr. Bishop is the President
and the Chairman of the Board of Allen C.
Ewing & Co. (an investment banking
company). He is a former Director of Grubb
& Ellis Company (a national commercial real
estate brokerage company); a former Trustee
of GMR Properties (a diversified REIT); and
a former Director of Cousins Properties,
Inc. (an office and retail REIT).
3
PRINCIPAL OCCUPATIONS YEAR FIRST
FOR A PERIOD OF FIVE YEARS OR MORE BECAME A
NAME ENDED ON DECEMBER 31, 2001 DIRECTOR AGE
---- -------------------------------------------- ---------- ---
Thomas J. Crocker ................ Currently serves as Chief Executive 2000 48
Officer (since March 1, 2000) and a
Director of Koger Equity, Inc. Mr.
Crocker is Chief Executive Officer of
Crocker Realty Trust, Inc. (a private
REIT), and Chief Executive Officer of
Crocker & Associates, L. P. (a private
real estate limited partnership). Mr.
Crocker also serves as a Director of
Innkeepers USA Trust (a hotel REIT). Mr.
Crocker is the former Chairman and Chief
Executive Officer of Crocker Realty
Trust, Inc., (a public REIT) and
previously served as the Chairman and
Chief Executive Officer of Crocker Realty
Investors, Inc. (a public REIT). Mr.
Crocker is the former Chief Executive
Officer of Crocker & Sons, Inc. (a
private real estate company).
David B. Hiley ................... Currently serves as a Director of Koger 1993 63
Equity, Inc. Mr. Hiley previously served as
Executive Vice President and Chief Financial
Officer of Koger Equity, Inc. from April 1,
1998 to March 1, 2000. Mr. Hiley is
currently a financial consultant. He was
former Managing Director of Berkshire
Capital Corporation (an investment banking
services firm); a Director and former Senior
Executive Vice President of Thomson McKinnon
Securities, Inc. (a securities
broker-dealer); consultant, Director and
former Executive Vice President of Thomson
McKinnon, Inc. (a financial services holding
company); and former Director of Newcity
Communications, Inc. (a communications firm).
Victor A. Hughes, Jr. ............ Currently serves as Chairman of the Board of 1992 66
Directors of Koger Equity, Inc. and
previously served as the Chief Executive
Officer (until March 1, 2000). Mr. Hughes is
a former President, Chief Financial Officer,
Senior Vice President and Assistant
Secretary of Koger Equity, Inc. Mr. Hughes
is also a former Chairman and Chief
Executive Officer of Koger Realty Services,
Inc. (a Koger Equity, Inc. related entity
and manager of office properties).
4
PRINCIPAL OCCUPATIONS YEAR FIRST
FOR A PERIOD OF FIVE YEARS OR MORE BECAME A
NAME ENDED ON DECEMBER 31, 2001 DIRECTOR AGE
---- -------------------------------------------- ---------- ---
John R. S. Jacobsson(2) .......... Currently serves as a Director of Koger 1997 33
Equity, Inc. and is the Partner
responsible for investments at Apollo Real
Estate Funds (manager of four real estate
investment funds). Mr. Jacobsson is also
a Director of Metropolis Realty Trust,
Inc. (owner of high rise office buildings)
and a Director of Roland International,
Inc. (a land development company); and a
Director of Oasis Car Wash, Inc. (a car
care company).
George F. Staudter(1)(2) ......... Currently serves as a Director of Koger 1993 70
Equity, Inc. Mr. Staudter is a managerial
and financial consultant; Director of T. D.
Waterhouse Family of Funds, Inc. (a family
of mutual funds); former Director of
Waterhouse Investor Services, Inc. (a
securities broker-dealer); former
President, Chief Executive Officer and
Director of Family Steak Houses of Florida,
Inc. (a restaurant chain).
James C. Teagle(1) ............... Currently serves as a Director of Koger 1996 60
Equity, Inc. Mr. Teagle is a former
President and Chief Operating Officer of
Koger Equity, Inc. and has also served the
Company as Senior Vice President and Vice
President. Mr. Teagle is also a former
Director, President and Chief Operating
Officer of Koger Realty Services, Inc. (a
Koger Equity, Inc. related entity and
manager of office properties).
---------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Unless instructions are given to the contrary, it is the intention of
the persons named as proxies to vote the Shares to which the proxy is related
FOR the election of the management slate of eight directors.
5
INFORMATION ABOUT KOGER EQUITY COMMON STOCK OWNERSHIP
SHAREHOLDERS OWNING AT LEAST FIVE PERCENT OF KOGER EQUITY
The following table shows, as of December 31, 2001, all persons we
know to be "beneficial owners" of more than five percent of the Koger Equity
common stock. This information is based on Schedule 13D or Schedule 13G reports
filed with the Securities and Exchange Commission (the "SEC") by each of the
firms listed in the table below. If you wish, you may obtain these reports from
the SEC.
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER PERCENT OF CLASS OWNED BENEFICIALLY(1)
------------------------------------ ---------------- ----------------------
EQSF Advisers Inc. et al ..................... 12.7% 2,676,311(2)
767 Third Avenue
New York, New York 10017
Farallon Capital Management Partners, L.P. ... 5.9% 1,255,027
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
---------
(1) "Beneficial ownership" is a technical term broadly defined by the SEC
to mean more than ownership in the usual sense. So, for example, you
"beneficially" own Koger Equity common stock not only if you hold it
directly, but also if you indirectly (through a relationship, a
position as a director or trustee, or a contract or understanding),
have (or share) the power to vote the stock, or to sell it, or you
have the right to acquire it within 60 days.
(2) Sole voting power as to 2,632,711 Shares and sole dispositive power as
to 2,676,311 Shares.
STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table shows, as of February 28, 2002, the Koger Equity
common stock owned beneficially by Koger Equity directors and executive
officers. All directors and executive officers as a group own beneficially
10.19% of the shares of Koger Equity common stock.
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
------------------------ ------------------ ----------------
Directors:
D. Pike Aloian .................................. 15,965 0.08%(1)
Benjamin C. Bishop, Jr. ......................... 37,767 0.18%(1)
Thomas J. Crocker ............................... 780,419 3.61%(2)
David B. Hiley .................................. 151,744 0.71%(3)
Victor A. Hughes, Jr. ........................... 509,904 2.39%(4)
John R. S. Jacobsson ............................ 11,450 0.05%(1)
George F. Staudter .............................. 18,039 0.09%(1)
James C. Teagle ................................. 231,189 1.08%(5)
6
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
------------------------ ------------------ ----------------
Executive Officers:
Christopher L. Becker ........................... 66,666 0.31%(6)
Thomas C. Brockwell ............................. 66,845 0.32%(6)
Drew P. Cunningham .............................. 66,666 0.31%(6)
Robert E. Onisko ................................ 300,831 1.41%(7)
James L. Stephens ............................... 39,350 0.19%(8)
------- ----
Total Shares Held by All Executive Officers
and Directors as a Group (13 persons) 2,296,835 10.19%(9)
========= =====
---------
(1) Includes 4,000 Shares which are subject to presently exercisable
options.
(2) Includes 466,666 Shares which are subject to presently exercisable
options.
(3) Includes 129,000 Shares which are subject to presently exercisable
options.
(4) Includes 180,000 Shares which are subject to presently exercisable
options.
(5) Includes 196,250 Shares which are subject to presently exercisable
options. Also includes 13,950 Shares owned by spouse.
(6) Includes 66,666 Shares which are subject to presently exercisable
options.
(7) Includes 200,000 Shares which are subject to presently exercisable
options.
(8) Includes 12,000 Shares which are subject to presently exercisable
options.
(9) Sole voting and dispositive power as to 2,282,885 Shares, and 13,950
Shares with shared voting and dispositive power. Includes 1,399,914
Shares which are subject to presently exercisable options, or options
which are exercisable within 60 days.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and greater-than-10% shareholders to file
reports with the SEC and the New York Stock Exchange on changes in their
beneficial ownership of Koger Equity common stock and to provide Koger Equity
with copies of the reports. Based on our review of these reports and of
certifications furnished to us, we believe that all of these reporting persons
complied with their filing requirements for 2001.
7
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS
The Board of Directors oversees the business and affairs of Koger
Equity and monitors the performance of management. In accordance with corporate
governance principles, the Board does not involve itself in day-to-day
operations. The directors keep themselves informed through discussions with the
Chairman, key executive officers and our principal external advisers (legal
counsel, auditors, investment bankers and other consultants), by reading
reports and other materials that we send them and by participating in Board and
committee meetings.
Each of the Directors attended at least 75% of the Board of Directors
meetings and meetings held by committees of the Board of Directors of which
they were members.
THE COMMITTEES OF THE BOARD
The Compensation Committee. The Compensation Committee establishes and
approves all elements of compensation for certain executive officers. Each
year, as the SEC requires, the committee reports to you on executive
compensation. The Report on Executive Compensation for 2001 by the Compensation
Committee begins on page 15 of this proxy statement. The committee administers
the Company's Stock Option Plans and 1998 Equity and Cash Incentive Plan, as
Amended and Restated, and has sole authority for awards under the Plans,
including timing, pricing and amount. The committee also makes recommendations
to the Board of Directors in regard to the grant of bonuses and supplemental
contributions to the Company's 401(k) Plan. The Compensation Committee met
seven times during 2001.
The Audit Committee. The Audit Committee recommends the selection of
the independent auditors to the Board, approves the scope of the annual audit
by the independent auditors, reviews audit findings, accounting policies and
quarterly and annual financial statements. As required by the SEC, the
committee reports to you concerning its activities during the last year. The
Report of the Audit Committee begins on page 21 of this proxy statement. The
committee meets privately, outside the presence of Koger Equity management,
with both the independent auditors and the firm which provides internal audit
services. The Audit Committee met seven times in 2001 and members of the Audit
Committee consulted with the officers of the Company, the firm which provides
internal audit services and the independent auditors at various times
throughout the year.
HOW WE COMPENSATE DIRECTORS
Annual Retainer Fee. We compensate directors who are not employees of
Koger Equity or its subsidiaries with an annual retainer of $20,000, except
for the Chairman, who receives an annual retainer of $50,000.
8
Meeting Fees. We pay non-employee directors a fee of:
- $2,000 for attendance at each Board meeting; and
- $500 for attendance at each committee meeting.
Expenses and Benefits. We reimburse all directors for travel and other
related expenses incurred in attending shareholder, Board and committee
meetings.
Special Fees Paid to a Director. During October of 2000, the Board of
Directors formed a special committee to evaluate and take an active role in
negotiating the sale of certain assets of the Company to an affiliate of Apollo
Real Estate Advisors, LP ("Apollo") (see "Certain Relationships and
Transactions" beginning on page 19 of this proxy statement). The Board of
Directors elected D. Pike Aloian to serve as chairman of this committee and
authorized the payment to him of $15,000 per month for such services. Mr.
Aloian served in this capacity for approximately seven months until such time
as the terms of the transaction with Apollo had been defined. He received
$100,000 in connection with such service. Of the total, $55,000 related to
activities conducted in 2000 and $45,000 related to the 2001 activities, all of
which was paid in 2001.
Directors who are Koger Equity Inc. Employees. We do not compensate
our employees for service as a director. We do, however, reimburse them for
travel and other related expenses.
Stock Options Held by Board Members. Each member of the Board of
Directors who is not also an employee of the Company currently holds an option
to purchase 4,000 Shares other than Messrs. Hughes and Teagle who were
employees of the Company at the time of grant. These options were granted on
August 19, 1997, and are fully exercisable at a per share price of $19.8125.
The Stock Investment Plan. Directors may elect to receive payment of
part or all of their monthly retainer in Shares by participating in the
Company's Stock Investment Plan. Additional information concerning the Stock
Investment Plan is on page 14 of this proxy statement.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows annual compensation and long-term
compensation of the Chief Executive Officer and certain other named executive
officers whose salary and bonus for the fiscal year ended December 31, 2001,
exceeded $100,000. Throughout the remainder of this proxy statement, these five
persons will be referred to as the "Named Officers."
9
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
------------------------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION RESTRICTED OPTIONS/ ALL OTHER
---------------------------- STOCK SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S) (1) (2)
--------------------------- ---- -------- ----------- ---------- ---------- ------------
Thomas J. Crocker(5) ......... 2001 $300,000 $330,769(3) -- -- $9,094(4)
Chief Executive Officer 2000 250,000 204,806 -- 700,000 8,400
1999 -- -- -- -- --
Robert E. Onisko(6) .......... 2001 $200,000 $175,846(3) -- -- $6,394(4)
Chief Financial Officer 2000 166,667 128,204 -- 300,000 6,131
1999 -- -- -- -- --
Christopher L. Becker(7) ..... 2001 $200,000 $175,846(3) -- -- $5,888(4)
Senior Vice President 2000 107,693 26,923 -- 200,000 3,328
1999 -- -- -- -- --
Thomas C. Brockwell(8) ....... 2001 $200,000 $183,846(3) -- -- $5,956(4)
Senior Vice President 2000 107,693 26,923 -- 200,000 3,301
1999 -- -- -- -- --
Drew P. Cunningham(9) ........ 2001 $200,000 $175,846(3) -- -- $ 506(4)
Senior Vice President 2000 107,693 26,923 -- 200,000 243
1999 -- -- -- -- --
---------------
(1) For information concerning the number and market value of Shares
subject to the Company's stock option plans as to the Named Officers,
reference is made to the "Aggregated Option Exercises During 2001 and
Year-End Option Values" table and the notes thereto beginning on page
11 of this proxy statement.
There were no options granted to the Chief Executive Officer or the
other Named Officers during the fiscal year ended December 31, 2001.
(2) Includes the taxable portion of certain excess life insurance premiums
(as defined by the Internal Revenue Code) paid by the Company on
behalf of each qualifying employee, including the Named Officers (the
"Life Insurance Premiums") and 401(k) Plan contributions, each of
which were Company benefits which did not discriminate in scope, terms
or operation in favor of the Named Officers and were available
generally to all salaried employees of the Company.
(3) Includes a cash bonus which was earned for calendar year 2001, but was
paid in 2002: as to Mr. Crocker, $325,000; as to Mr. Onisko, $172,000;
as to Mr. Becker, $172,000; as to Mr. Brockwell, $180,000; and as to
Mr. Cunningham, $172,000.
(4) Includes a matching cash contribution for calendar year 2001 made by
the Company to the account of each qualifying employee, including each
Named Officer, under the 401(k) Plan, which contribution was equal to
50% of such employee's contributions to his or her
10
account under the 401(k) Plan, subject to a maximum employee
contribution of six percent of eligible compensation.
- As to Mr. Crocker, for 2001, includes Life Insurance Premiums
in the amount of $844 and a 401(k) contribution in the amount
of $5,100. Also includes a Stock Investment Plan contribution
in the amount of $3,150.
- As to Mr. Onisko, for 2001, includes Life Insurance Premiums
in the amount of $1,294, and a 401(k) contribution in the
amount of $5,100.
- As to Mr. Becker, for 2001, includes Life Insurance Premiums
in the amount of $788, and a 401(k) contribution in the
amount of $5,100.
- As to Mr. Brockwell, for 2001, includes Life Insurance
Premiums in the amount of $506, and a 401(k) contribution in
the amount of $5,100. Also includes a Stock Investment Plan
contribution in the amount of $350.
- As to Mr. Cunningham, for 2001, includes Life Insurance
Premiums in the amount of $506.
(5) Mr. Crocker was appointed as Chief Executive Officer of the Company on
March 1, 2000.
(6) Mr. Onisko was appointed as Chief Financial Officer of the Company on
March 1, 2000.
(7) Mr. Becker was appointed as Senior Vice President of the Company on
June 19, 2000.
(8) Mr. Brockwell was appointed as Senior Vice President of the Company on
June 19, 2000.
(9) Mr. Cunningham was appointed as Senior Vice President of the Company
on June 19, 2000.
OPTIONS GRANTED DURING 2001
During the fiscal year ended December 31, 2001, the Company did not
grant any options to its Named Officers. The Company has no outstanding stock
appreciation rights.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides the following information: (1) the
aggregate number of options exercised and the value realized by the Named
Officers during the year ended December 31, 2001, and (2) the aggregate number
of options and the value of the in-the-money options in each case held by the
Named Officer as of December 31, 2001. The Company has no outstanding stock
appreciation rights. In the event of a change of control (as defined in the
option agreements), all stock options become vested.
11
AGGREGATED OPTION EXERCISES
DURING 2001 AND YEAR-END OPTION VALUES
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
-------------------------- ------------ ----------- ------------------- --------------------
Thomas J. Crocker ........ -0- $ 0 233,333/466,667 $55,417 /$110,833
Robert E. Onisko ......... -0- $ 0 100,000/200,000 $23,750 /$ 47,500
Christopher L. Becker .... -0- $ 0 66,666/133,334 $ 0 /$ 0
Thomas C. Brockwell ...... -0- $ 0 66,666/133,334 $ 0 /$ 0
Drew P. Cunningham ....... -0- $ 0 66,666/133,334 $ 0 /$ 0
---------
(1) This valuation represents the difference between $16.30, the closing
price of the Koger Equity common stock on the New York Stock Exchange
on December 31, 2001, and the exercise price of the stock options.
"In-the-money" stock options are options for which the exercise price
is less than the market price of the underlying stock on a particular
date.
LONG-TERM INCENTIVE PLAN AWARDS
The Company made no long-term incentive plan awards to any Named
Officer during the fiscal year ended December 31, 2001.
EXECUTIVE EMPLOYMENT AND RETIREMENT AGREEMENTS
Messrs. Hughes, Hiley and Teagle, retired officers of the Company, who
continue to serve on its Board with Mr. Hughes continuing as Chairman, (1)
continue to participate in the Company's medical insurance program for
employees, and (2) are vested in all stock options which continue to be
exercisable for their original terms. Messrs. Hughes and Hiley continue to
receive payments pursuant to the Supplemental Executive Retirement Plan
("SERP") as described below. Mr. Teagle received a lump sum payment of his SERP
benefit in 2000.
In 2000 the Company entered into three-year employment contracts with
Messrs. Crocker and Onisko, which among other matters contain certain change of
control provisions. The Company also entered into stock purchase agreements
whereby it would finance the purchase of up to 500,000 shares by Mr. Crocker
and up to 150,000 shares by Mr. Onisko. At December 31, 2001, the Company had
loaned Mr. Crocker $3,799,774 (of which $3,172,694 is non-recourse) and to Mr.
Onisko $1,266,583 (of which $1,057,556 is non-recourse) in connection with
their purchase of shares pursuant to their stock purchase agreements. The above
indebtedness is secured with the shares and bears an annual interest rate of
150 basis points over the applicable LIBOR rate. Interest is paid quarterly and
is current under this indebtedness. For fiscal 2001, Mr. Crocker paid $229,375
and Mr. Onisko paid $76,458 in interest pursuant to their stock purchase
agreements.
12
THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The SERP generally provides a gross benefit for life to Mr. Hughes
equal to 50% of final three-year average annual base salary, and a gross
benefit for life to Mr. Hiley equal to 35% of final three-year average annual
base salary, with the surviving spouse of these two officers receiving a
lifetime benefit of 50% of the officer's benefit. The SERP provides for a gross
benefit for 15 years to an officer selected for participation (reduced in any
case in which such officer has less than 20 years of service) equal to 50% of
final three-year average annual base salary. The benefits are reduced by:
(i) 50% of social security benefits received by the applicable
officer, and
(ii) the annuitized equivalent of profit sharing contributions
made by the Company to the account of such officer under the 401(k)
Plan.
At retirement, benefits under the SERP are paid in annuity form.
During 2001, Mr. Hughes and Mr. Hiley received payments under the SERP
of $134,739 and $60,250, respectively.
The SERP also provides Messrs. Hughes, Teagle and Hiley and their
spouses with lifetime medical coverage (which is intended to be roughly
equivalent to that provided by the Company for certain officers).
Benefits under the SERP generally vest only if the applicable officer
remains in the Company's employ for a period ranging from two to five years
after commencement of his participation in the SERP (depending upon such
officer's age at the commencement of his participation in the SERP). However,
if a change of control of the Company (as defined in the SERP) occurs and a
covered officer leaves the employ of the Company under certain circumstances,
then a participating officer, at his option, is entitled to: (i) continue to
receive his or her base salary for a period of 18 months, or (ii) immediately
become fully vested in his or her retirement benefits, receive one year of
annual base salary, in lump sum payment, and continue to be provided all
medical and other insurance benefits for one year following termination. The
only officer that participates in the SERP is James L. Stephens, Vice President
and Chief Accounting Officer of the Company.
The following table illustrates the annual pension benefits payable to
officers under the SERP. Since benefits shown in the table reflect a straight
life form of annuity benefit, if payment is made in the form of a joint and
survivor annuity, the annual amounts of benefit could be substantially below
those illustrated.
13
PENSION PLAN TABLE
YEARS OF SERVICE
-------------------------------------------------------------------------
FINAL AVERAGE ANNUAL REMUNERATION 15 20 25 30 35
--------------------------------- -------- -------- -------- -------- --------
$125,000............... $ 46,875 $ 62,500 $ 62,500 $ 62,500 $ 62,500
150,000............... 56,250 75,000 75,000 75,000 75,000
175,000............... 65,625 87,500 87,500 87,500 87,500
200,000............... 100,000 100,000 100,000 100,000 100,000
225,000............... 112,500 112,500 112,500 112,500 112,500
250,000............... 125,000 125,000 125,000 125,000 125,000
300,000............... 150,000 150,000 150,000 150,000 150,000
350,000............... 175,000 175,000 175,000 175,000 175,000
The compensation base used by the SERP is average base salary for the
final three years of employment. As of December 31, 2001, the base salary and
estimated years of service credit for Mr. Stephens was $130,000, and 15 years,
respectively.
STOCK INVESTMENT PLAN
The Company has a Stock Investment Plan (the "SIP") pursuant to which
participating employees and directors of the Company may purchase Shares. Under
the SIP, the Company is authorized to purchase up to an aggregate of 200,000
Shares on behalf of such participating employees and directors. Each
participating employee pays for his or her Shares pursuant to a monthly payroll
deduction plan established by the participating employee, and each
participating director pays for his Shares pursuant to a deduction from such
director's retainer.
Under the SIP, the Company contributes a portion of the purchase price
of such Shares, which contribution equals the following percentage of the total
monthly deduction from such employee's pay or such director's retainer:
- 25% of each monthly deduction less than or equal to $50;
- 20% of each monthly deduction greater than $50 but less than or equal
to $100; and
- 15% of each monthly deduction greater than $100 but less than or
equal to $1,700.
The Company also pays all commissions and related expenses of the SIP.
The Company's contribution and expenses incurred in administering the SIP
totaled approximately $37,300 for the year ended December 31, 2001.
During 2001 the Company paid the following amounts on behalf of the
following directors:
COMPANY
DIRECTOR NAME CONTRIBUTION
------------- ------------
D. Pike Aloian .......................................... $ 3,090
Benjamin C. Bishop, Jr. ................................. 3,090
Thomas J. Crocker ....................................... 3,150
David B. Hiley .......................................... 3,090
John R. S. Jacobsson .................................... 3,090
George F. Staudter ...................................... 3,090
-------
Total Company Contribution on behalf of Directors .... $18,600
=======
14
REPORT ON EXECUTIVE COMPENSATION FOR 2001
BY THE COMPENSATION COMMITTEE
The Compensation Committee of the Board administers Koger Equity's
executive compensation program. The committee has furnished the following
report on executive compensation for 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee includes Messrs. Aloian, Bishop, Jacobsson
and Staudter, none of whom serve as officers or employees of the Company or any
of its subsidiaries. In addition, none of the members of this committee is an
executive officer of a company for which an executive officer of Koger Equity
determined compensation matters.
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee is responsible for setting the total
compensation of the Chief Executive Officer (the "CEO"), Chief Financial
Officer (the "CFO") and the Senior Vice Presidents. It also reviews the
compensation, including year-end bonuses, proposed by management for other
officers of the Company. The committee has customarily sought and obtained the
full Board's ratification of its actions concerning salary increases and
bonuses granted to senior officers. The Compensation Committee is also
responsible for (i) making grants under the Company's stock option and other
incentive plans and (ii) making contributions, subject to approval by the Board
of Directors, under the 401(k) Plan and any other plan or plans as may be
determined by the Board of Directors.
The committee has designed Koger Equity's executive compensation
program to support what we believe to be an appropriate relationship between
executive pay and the creation of shareholder value. To emphasize equity
incentives, we link a significant portion of executive compensation to the
market performance of the Koger Equity common stock. The objectives of our
program are:
- To support a pay-for-performance policy among all senior
executives based on both their individual performance and the
performance of Koger Equity;
- To align the interests of executives with the long-term
interests of shareholders through awards whose value over
time depends upon the market value of Koger Equity's common
stock;
- To provide compensation comparable to that offered by other
leading companies in our industry, enabling Koger Equity to
compete for and retain talented executives who are critical
to our long-term success; and
- To motivate key executives to achieve strategic business
initiatives and to reward them for their achievement.
15
We compensate our executives through base salary, bonus paid in cash
(or a combination of cash and shares or restricted stock awards), and long-term
incentive awards (a combination of restricted stock and stock options).
We also provide our executives with employee benefits, such as
retirement and health benefits. Koger Equity has entered into employment
agreements containing change of control provisions with certain of our
executive officers to provide for certain payments and other benefits if they
are terminated following a change in control of Koger Equity.
GENERAL
The committee annually reviews the base salaries of our executives to
determine if adjustments are appropriate to ensure that their salaries are
competitive.
In determining the compensation paid to the executive officers in
2001, the Compensation Committee took into consideration a number of factors,
including among others, the performance of the Company's stock relative to its
peers, the improvement in the Company's operations, including increases in
rental revenues and lease terms, and the accomplishment of several important
strategic initiatives.
During 2001 at a time when the economy, in general, and the real
estate industry, in particular, was either down or flat, the Company
accomplished the following:
(i) Quarterly dividends were maintained at $.35 per outstanding
share. In addition, in connection with the sale of certain
older assets described in (v) below, the Company paid a
capital gain distribution in the form of a special dividend
of $1.74 per share.
(ii) Koger's stock price increased from $15.5625 to $16.30 during
2001, a 4.7% increase, which together with an annual dividend
of $1.40 made a total return during 2001 to shareholders of
13.7%. When the $1.74 capital gain distribution described in
(i) above is included, total shareholder return was 24.9% in
2001.
(iii) The overall percent leased rate of its buildings at December
31, 2001, was maintained at 90%.
(iv) Its average rental rate per usable square foot increased from
$18.07 to $18.65, or 3.2% over the prior year.
(v) Consistent with its policy of recycling capital by selling of
assets that no longer fit its portfolio standards, the
Company sold 75 suburban office buildings and one retail
center, reducing the number of its operating properties to
120 buildings from 194 and reducing the size of its portfolio
by approximately 3.96 million rentable square feet at
December 31, 2001. In furtherance of this recycling process
Koger Equity acquired in January 2002, an 805,972 square foot
building located in the Central Perimeter submarket of
Atlanta, Georgia. This building was completed in 1991.
16
'
While the Compensation Committee considered all of these
accomplishments and although the committee has from time to time reviewed the
executive compensation levels of other REITs and referred to other available
information concerning the salaries of executive officers in peer group
companies, it did not, and has not as yet, set any specific objective criteria
in arriving at any particular executive officer's compensation. Therefore, the
Compensation Committee made a subjective determination in setting the
compensation of the CEO, CFO and the Senior Vice Presidents. The two primary
factors considered in determining annual bonus amounts were total shareholder
return and performance relative to budget.
The Compensation Committee has more recently been engaged in a
comprehensive study with the assistance of a compensation consulting firm
looking toward the development of a comprehensive compensation plan with
objective criteria for establishing levels of compensation, both annual and
long-term and bonus and other incentive plans.
BASE SALARIES AND BONUSES OF EXECUTIVES
Although there was no increase in the base salaries of the Company's
executive officers for 2001, the base salaries of our executives approximate
the median for salaries of executives in the Comparison Group. The committee
awarded bonus compensation for 2001 to each executive based on the executives
scope of responsibility, the specific contributions made by the executive to
Koger Equity's performance over all and to the performance within the
executive's area of responsibility and the CEO's recommendation.
BASE SALARY AND BONUS OF THE CEO
In arriving at the compensation paid Thomas J. Crocker, the CEO, during
2001, the Compensation Committee considered the outstanding performance of the
Company under his leadership as CEO.
For 2001 Mr. Crocker was paid a base salary at the annual rate of
$300,000. For 2001 the committee determined that Mr. Crocker's contribution to
Koger Equity's performance warranted a bonus of $325,000, payable in cash on
February 21, 2002, the date the bonus was granted.
LONG-TERM INCENTIVE AWARDS IN 2001
We have provided long-term incentive awards for executives by granting
stock options. The committee believes that the granting of stock options has
helped align the interests of its top executives with shareholders because
these executives receive value only if the market value of the common stock
increases. However, the committee has been reconsidering the grant of stock
options and replacing them with restricted stock grants the vesting of which
would be tied to performance.
17
SECTION 162(M) LIMITATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a federal income tax deduction to public companies
for certain compensation over $1,000,000 paid to Named Officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Having considered the requirements of Section
162(m) of the Code, the Compensation Committee believes that stock option
grants and other awards made pursuant to its various plans meet such
requirements and are, therefore, exempt from the limitations on deductibility.
Historically, the compensation of each Named Officer has been well below the
$1,000,000 limit. Although the Compensation Committee intends to structure most
awards under its equity plans to comply with Section 162(m), it has reserved
and will continue to reserve the right to structure awards that do not comply
with that Section where it believes doing so is in the best interests of the
Company and its shareholders.
CONCLUSION
The Compensation Committee believes that the compensation packages of
the Company's executive officers have been generally commensurate with the
Company's financial performance and the total value received by its
shareholders. The Compensation Committee intends to continue the review of
executive officers' compensation with the assistance of an outside compensation
consultant and will make such modifications in its approach to executive
compensation as it determines to be appropriate in light of the Company's
financial condition, the performance of its officers and peer group analysis.
This report is furnished by the Compensation Committee.
D. Pike Aloian
Benjamin C. Bishop, Jr.
John R. S. Jacobsson, Chairman
George F. Staudter
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph sets forth the cumulative total shareholder
return on the Shares as compared with the cumulative total return of each of
the New York Stock Exchange Composite Index and the NAREIT Total Return Index,
in each case (i) on an annual basis for the period commencing December 31, 1996
and ending December 31, 2001 and (ii) assuming that $100 was invested on
December 31, 1996 and that all dividends were reinvested.
18
SHAREHOLDER RETURN PERFORMANCE GRAPH
[GRAPH]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
KE $100 $119 $ 99 $105 $105 $133
NYSE $100 $130 $152 $166 $167 $150
NAREIT $100 $199 $ 96 $ 90 $114 $131
The Company has used a different industry group for compensation
comparisons from that used for its shareholder return performance presentation.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Koger Realty Services, Inc., a Delaware corporation ("KRSI"), was
incorporated to provide, among other things, leasing and property management
services to owners of commercial office buildings. At January 1, 2001, the
Company owned all of the preferred stock of KRSI, which represented in excess
of 95% (by value) of the economic benefits of KRSI. Such preferred stock was
nonvoting stock and not convertible into the common stock of KRSI while held by
the Company. All of the outstanding common stock of KRSI was acquired by
officers and employees of KRSI, including: Victor A. Hughes, Jr., James C.
Teagle, and James L. Stephens, all of whom were officers of the Company, and
certain other employees of KRSI who were not employed by the Company. In the
event that any of the foregoing persons left the employ of KRSI, KRSI had the
right to reacquire any Shares of common stock of KRSI held by such officer or
employee. In addition to serving as officers of KRSI, Messrs. Hughes, Teagle,
and Hiley served on the Board of Directors of KRSI. In February 2001, KRSI was
merged with and into a wholly owned Florida subsidiary of the Company. In
connection with that merger, Messrs. Hughes, Teagle, and Stephens were paid
$20,555, $15,416, and $10,277, respectively, to redeem their shares of common
stock of KRSI in which they had a basis of $19,840, $14,880 and $9,920,
respectively.
19
In August 2001, Koger Equity entered into an agreement to sell select
non-core assets to AREIF Realty Trust, Inc., an affiliate of Apollo Real Estate
Advisors, LP (together "Apollo"), which sale closed in December of 2001. Mr.
Jacobsson, a director of the Company is the partner responsible for investments
at Apollo Real Estate Funds. The transaction was negotiated by a Special
Committee of the Board of Directors composed of directors who had no
affiliation with Apollo. Included in this sale were ten properties comprising
75 suburban office buildings and one retail center all of which contained more
than 3.9 million rentable square feet located in San Antonio and Austin, Texas;
Greensboro and Charlotte, North Carolina; Greenville, South Carolina; and
Birmingham, Alabama. The total consideration for the transaction was valued at
$303 million and included cash of $206.7 million and the exchange of Apollo's
5,733,772 shares of the Company's common stock (21.4% of the outstanding). In
connection with the sale, the Company received a membership interest in an
Apollo subsidiary entity, which was acquiring these assets, providing the
Company with a 20% participation in the net cash flow from the disposed assets
after Apollo had received a return of its equity investment and a 15% internal
rate of return thereon. In order to insure that the terms of the transaction
were equal to, or better than, a similar transaction with an unrelated third
party, the Company initiated a marketing period through its financial advisor
during which unrelated bidders were asked to submit competing offers to
purchase the assets associated with the agreement. Prior to the closing of the
sale, the Company did not receive any attractive alternative offers for the
assets. In connection with the transaction, Morgan Stanley & Co. Incorporated
acted as financial advisor and provided an opinion to the Special Committee of
the Board, which opinion stated that the consideration received from the
transaction was fair from a financial point of view to the Company. The Company
continues to manage the disposed assets for which it receives standard property
management fees.
With the closing of the transaction, one of the two Apollo designated
directors resigned from the Company's Board of Directors leaving Mr. Jacobsson
who continues as a director of the Company.
During 2000 the Company loaned Mr. Teagle $546,293 in connection with
his exercise of stock options. This indebtedness was secured with Shares and
bore an annual interest rate of 150 basis points over the applicable LIBOR
rate. This loan was paid in full on August 1, 2001. For 2001, $17,292 in
interest was paid on this indebtedness.
Also, during 2000 the Company entered into a management agreement with
Crocker Realty Trust ("CRT") of which Mr. Crocker is the Chairman of the Board
and Chief Executive Officer owning 2.8% of the outstanding CRT shares, Mr.
Onisko is the Treasurer and Chief Financial Officer owning 0.2% of the
outstanding CRT shares and Apollo is a principal shareholder owning 49% of the
outstanding CRT shares. This agreement provides that the Company be paid a
management fee for managing the properties of CRT based on the value of its
assets. This agreement is terminable by either party upon 90 days written
notice. Under this agreement during 2001, the Company earned fees totaling
$452,000. The terms of this agreement were approved by a committee of the
Company's Board of Directors whose members were not affiliated with CRT or
Apollo, and who determined that such terms were similar to those that could be
obtained from an unaffiliated third party.
20
REPORT OF THE AUDIT COMMITTEE
The Audit Committee includes Messrs. Bishop, Staudter and Teagle. The
functions of the Audit Committee are focused on three areas:
- The adequacy of the Company's internal controls and financial
reporting process and the reliability of the Company's
financial statements.
- The independence and performance of the Company's internal
auditors and independent auditors.
- The Company's compliance with legal and regulatory
requirements.
The Audit Committee meets with management periodically to consider the
adequacy of the Company's internal controls and the objectivity of its
financial reporting. The committee discusses these matters with the Company's
independent auditors and with appropriate Company financial personnel and the
firm which provides internal audit services.
The Audit Committee regularly meets privately with both the
independent auditors and the firm which provides internal audit services, each
of whom has unrestricted access to the committee.
The Audit Committee also recommends to the Board the appointment of
the independent auditors and reviews periodically their performance and
independence from the Company.
The Directors who serve on the Audit Committee are all "Independent"
for purposes of the New York Stock Exchange listing standards. The Board of
Directors has determined that none of its members has a relationship to the
Company that may interfere with the committee's independence from the Company
and its management. Although the New York Stock Exchange rules generally
require that a member of an audit committee of a listed company not have been
employed by the listed company within the past three years, the rule has an
"over ride" provision which permits one such former employee to serve on the
listed company's audit committee where the company's board of directors
determines that such membership is in the best interest of the company. Mr.
Teagle, a former employee of the Company within the past three years, is a
member of the Company's Audit Committee which membership has been determined by
the Company's Board to be in the Company's best interest.
The Board has adopted a charter setting out the functions the Audit
Committee is to perform. In March, 2001, the committee re-examined and again
approved the adequacy of its charter.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls.
The independent auditors audit the annual financial statements
prepared by management and express an opinion as to whether those financial
statements fairly present in all material respects the financial position,
results of operations and cash flows of the Company in conformity with
accounting principles generally accepted in the United States of America.
21
This year, the Audit Committee reviewed the Company's audited
financial statements and met with both management and Deloitte & Touche LLP,
the Company's independent auditors, to discuss those financial statements.
Management and Deloitte & Touche LLP have represented to the Audit Committee
that the financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America.
The Audit Committee has received from and discussed with Deloitte &
Touche LLP the letter required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). These items relate to that
firm's independence from the Company. The committee also discussed with
Deloitte & Touche LLP any matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
Based on these reviews and discussions, the Audit Committee
recommended to the Board that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K filed with the SEC for the
fiscal year ended December 31, 2001.
This report is furnished by the Audit Committee.
Benjamin C. Bishop, Jr.
George F. Staudter, Chairman
James C. Teagle
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
GENERAL
During the year ended December 31, 2001, the Company engaged Deloitte
& Touche LLP to provide certain audit services. The services included the audit
of the annual financial statements, a review of the quarterly data furnished by
the Company to the SEC for the quarters ended March 31, June 30, and September
30, 2001, services performed in connection with filing of this proxy statement
and the Annual Report on Form 10-K by the Company with the SEC, attendance at
meetings with the Audit Committee and consultation on matters relating to
accounting, tax and financial reporting. The Audit Committee approved all
services performed by Deloitte & Touche LLP in advance of their performance.
Deloitte & Touche LLP has acted as independent certified public accountants for
the Company since its organization on June 21, 1988. Neither Deloitte & Touche
LLP nor any of its associates have any relationship to the Company or any of
its subsidiaries except in its capacity as auditors.
It is expected that representatives of the independent public
accountants will attend the Annual Meeting and be available to respond to
appropriate questions and be permitted to make a statement concerning the
Company should they desire.
22
As of the date hereof, the Board of Directors has not selected
independent public accountants to audit the books and accounts of the Company
for the fiscal year ending December 31, 2002. It is anticipated that auditors
will be selected later in the fiscal year.
PRINCIPAL ACCOUNTING FIRM FEES
Aggregate fees billed to the Company for the year ending December 31,
2001 by the Company's principal accounting firm, Deloitte & Touche LLP, were:
Audit Fees $138,300
Financial Information Systems Design and
Implementation Fees $ --
All Other Fees $ 93,319(a)(b)
---------
(a) Includes fees for tax consulting and other non-audit services.
(b) The Audit Committee has considered whether the provision of these
services is compatible with maintaining the principal accountant's
independence.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual
Meeting any business other than the election of directors. At the time this
proxy statement went to press, we knew of no other matters to be acted on at
the Annual Meeting, other than those discussed in this proxy statement. If any
other business should properly come before the Annual Meeting or any
adjournment thereof, the persons named on the enclosed proxy will have
discretionary authority to vote such proxy in accordance with their best
judgment.
SHAREHOLDER PROPOSALS AND NOMINATIONS TO THE BOARD
If a shareholder intends to present a proposal for action at the 2003
Annual Meeting and wishes to have such proposal considered for inclusion in the
Company's proxy materials in reliance on Rule 14a-8 under the Securities
Exchange Act of 1934, the proposal must be submitted in writing and received by
the Company by December 21, 2002. Such proposals must also meet the other
requirements of the rules of the Securities and Exchange Commission relating to
shareholder proposals.
In addition, the Bylaws of the Company establish an advance notice
procedure with regard to certain matters, including shareholder proposals and
nominations of individuals for election to the Board of Directors. In general,
notice of a shareholder proposal or a director nomination for a shareholders
meeting must be received by the Company not less than 70 days, nor more than 90
days before the date of the annual meeting and must contain specified
information and conform to certain requirements, as set forth in the Bylaws in
order for the proposal or nomination to be
23
considered at a shareholder meeting. If the presiding officer at any meeting of
shareholders determines that a shareholder proposal or director nomination was
not made in accordance with the Bylaws, the Company may disregard such proposal
or nomination.
In addition, if a shareholder submits a proposal outside of Rule 14a-8
for the 2003 Annual Meeting, and the proposal fails to comply with the advance
notice procedure prescribed by the Bylaws, then the Company's proxy may confer
discretionary authority on the persons who have been appointed as proxies on
behalf of management to vote on the proposal. Proposals and nominations should
be addressed to Koger Equity, Inc., 433 Plaza Real, Suite 335, Boca Raton,
Florida 33432.
GENERAL
The Company will bear the costs of solicitation of proxies. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers and employees of the
Company, and no additional compensation will be paid to such individuals. The
Company also has retained Morrow & Co., Inc., 445 Park Avenue, New York, New
York 10022 to solicit proxies by mail, personal interview, telephone, or
telegraph, for which service the Company anticipates a cost not in excess of
$5,000 plus reasonable out-of-pocket expenses. Arrangements may also be made
with the stock transfer agent and with brokerage houses and other custodians,
nominees, and fiduciaries that are record holders of Shares for the forwarding
of solicitation material to the beneficial owners of Shares. The Company will,
upon the request of any such entity, pay such entity's reasonable expenses for
completing the mailing of such material to such beneficial owners.
Consistent with state law and pursuant to the Company's Bylaws, a
majority of the Shares entitled to vote on a particular matter, present in
person or represented by proxy, constitutes a quorum as to such matter.
The Company's Annual Report to Shareholders, which includes the
Company's Form 10-K, for the fiscal year ended December 31, 2001, which
contains financial statements and other information, is being mailed to
shareholders with this proxy statement, but it is not to be regarded as proxy
soliciting material.
AN ADDITIONAL COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED
WITH THE SEC MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER UPON WRITTEN
REQUEST TO KOGER EQUITY, INC., 433 PLAZA REAL, SUITE 335, BOCA RATON, FLORIDA
33432; PROVIDED HOWEVER, THAT A COPY OF THE EXHIBITS TO SUCH ANNUAL REPORT ON
FORM 10-K FOR WHICH THERE MAY BE A REASONABLE CHARGE, WILL NOT BE SUPPLIED TO
SUCH SHAREHOLDER UNLESS SPECIFICALLY REQUESTED.
By order of the Board of Directors
Robert E. Onisko
Chief Financial Officer
24
KOGER EQUITY, INC. LOGO
KOGER EQUITY, INC.
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 23, 2002
11:00 A.M.
THREE RAVINIA BUILDING
THREE RAVINIA DRIVE
ATLANTA, GEORGIA
Koger Equity, Inc.
433 Plaza Real, Suite 335
Boca Raton, Florida 33432 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE KOGER EQUITY,
INC. ANNUAL MEETING OF SHAREHOLDERS ON MAY 23, 2002, AND ANY ADJOURNMENTS
THEREOF.
The shares of stock you hold in your account will be voted as you specify on
the reverse side.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEM 1.
By signing the proxy, you revoke all prior proxies and appoint Victor A. Hughes,
Jr., Thomas J. Crocker and Robert E. Onisko, and each of them, with full power
of substitution and revocation, to vote your shares on the matters shown on the
reverse side and any other matters which may come before the Annual Meeting and
all adjournments.
See reverse for voting instructions
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Koger Equity, Inc., c/o Shareowner Services(SM),
P.O. Box 64873, St. Paul, MN 55164-0873.
+ Please detach here +
THE KOGER EQUITY, INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of 01. D. Pike Alolan 04. David B. Hiley 07. George F. Staudter __ Vote FOR __ Vote WITHHELD
directors 02. Benjamin C. Bishop, Jr. 05. Victor A. Hughes, Jr. 08. James C. Teagle all nominees from all nominees
03. Thomas J. Crocker 06. John R. S. Jacobsson (except as marked)
----------------------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
----------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting and any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR ALL NOMINEES IN ITEM 1.
---
Address Change? Mark Box ___ Indicate changes below: Date _____________________________________________________
-------------------------------------------------------------------
-------------------------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held
in joint tenancy, all persons must sign. Trustees, adminis-
trators, etc., should include title and authority. Corporations
should provide full name of corporation and title of authorized
officer signing the proxy.