8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 2009
Post Properties, Inc.
Post Apartment Homes, L.P.
(Exact name of registrant as specified in its charter)
Georgia
Georgia
(State or other jurisdiction of incorporation)
1-12080
0-28226
(Commission File Number)
58-1550675
58-2053632
(IRS Employer Identification Number)
4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327
(Address of principal executive offices)
Registrants telephone number, including area code (404) 846-5000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
(Post Properties, Inc. is providing certain disclosure regarding officer and director compensation
that is not otherwise required to be disclosed in this Form 8-K. This disclosure is provided to
give context to the disclosures required in this Form 8-K.)
(e) On February 9, 2009 the Executive Compensation and Management Development Committee (the
Committee) of the Board of Directors (the Board) of Post Properties, Inc. (the Company)
ratified and approved changes to the Companys officer and director compensation programs to reduce
overall compensation expenses. During the year ended December 31, 2008, the Company reduced its
headcount by approximately 15%, including an approximately 25% reduction in headcount in corporate
office positions, through a combination of asset sales, outsourcing, attrition and positions
eliminated. However, in light of the current economic
environment, management, the Board and the Committee concluded that additional measures were
necessary.
Changes to the Companys compensation programs in response to the current economic environment
include the following:
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a salary freeze for executive officers and certain associates; |
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the elimination or reduction of annual cash bonuses for the Companys executive
officers and certain associates; |
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the voluntary elimination of cash and stock based compensation by the Chairman of
the Board for 2009; |
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the suspension of future awards under the Companys Shareholder Value Plan; |
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the reduction of long-term stock-based compensation; and |
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an offer to buy out all outstanding awards under the Companys
Shareholder Value Plan. |
The Committee also recently ratified and approved special one-time sale process bonuses to two
named executive officers.
Salary Freezes and Cash Bonus Reductions
The Company implemented a salary freeze for executive officers and associates with base salaries
greater than $50,000. In addition, 2008 annual bonuses (payable in 2009) were reduced or
eliminated as follows: the annual bonus of the Companys Chief Executive Officer was eliminated,
annual bonuses of the Companys other named executive officers were reduced to approximately 30% of
their 2008 annual bonus targets, and annual bonuses of other executive officers were reduced to
approximately 50% of their 2008 annual bonus targets. Annual bonuses for other corporate
associates who receive bonuses were reduced to approximately 90% of their 2008 annual bonus
targets. The purpose of the annual cash bonus plan is to provide at-risk cash compensation
contingent upon achieving annual corporate and individual objectives. The Committee determined
that the overall corporate budget objective was not met and therefore no named executive officer
was entitled to the portion of the bonus contingent upon achieving the corporate budget objective.
The Committee also exercised its discretion to award less than the full amount
of the award that was contingent upon achieving individual objectives. Bonuses paid to the
Companys named executive officers for 2008 as compared to bonuses paid for 2007 and target bonuses
for 2008 are as follows:
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2007 Actual |
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2008 Target |
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2008 Actual |
Name |
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Title |
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Bonus |
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Bonus |
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Bonus |
David P. Stockert
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President and Chief
Executive Officer
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$ |
325,000 |
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$ |
420,000 |
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$ |
0 |
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Christopher J. Papa
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Executive Vice
President and Chief
Financial Officer
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$ |
200,000 |
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$ |
256,000 |
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$ |
76,800 |
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Thomas L. Wilkes
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Executive Vice
President and
President, Post
Apartment
Management
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$ |
200,000 |
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$ |
264,000 |
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$ |
79,200 |
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Sherry W. Cohen
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Executive Vice
President and
Corporate Secretary
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$ |
140,000 |
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$ |
174,000 |
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$ |
52,200 |
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Thomas D. Senkbeil, who until December 31, 2008 served as the Companys Executive Vice President
and Chief Investment Officer, was not contractually entitled to an annual bonus for 2008
performance. In connection with his separation from service, the Company agreed to pay him a bonus
equal to the average percentage of target bonus paid out to Messrs. Wilkes and Papa and Ms. Cohen.
Accordingly, Mr. Senkbeil received a bonus of $87,300, which is equal to approximately 30%
of his target bonus for 2008.
Voluntary Elimination of Cash and Incentive Compensation by the Chairman of the Board
The Chairman of the Board of Directors of the Company voluntarily and irrevocably waived any rights
he might have to receive the special stock option and restricted stock awards designated for the
Chairman in the Companys compensation structure for non-employee directors and received in lieu
thereof the $60,000 restricted stock grant awarded to all other non-employee directors on December
31, 2008. Mr. Goddard has also irrevocably waived all of his compensation for service in 2009,
including his right to receive his $100,000 annual retainer as well as his right to receive any
stock option or restricted stock award for service in 2009. The Committee accepted and approved
Mr. Goddards waiver.
Suspension of Shareholder Value Plan Awards
The Committee evaluated all of the Companys long-term incentive plans and arrangements in an
effort to reduce compensation expense while still properly incentivizing senior management. Given
the complexity of the Companys Shareholder Value Plan and the volatility in stock prices of
publicly traded REITs, the Committee determined that future awards under the Shareholder Value
Plan, including awards that would have been made for the 2009-2011 performance period, should be
suspended. Over the near term, the Committee does not intend to replace the suspended awards
under the Shareholder Value Plan with other forms of incentive compensation.
2008 Long-Term Stock-Based Compensation
The target level for 2008 long-term compensation for the Companys named executive officers set at
the beginning of 2008 included 33% stock options, 33% restricted stock and 33% Shareholder Value
Plan awards. As described above, Shareholder Value Plan awards were suspended by the Committee and
were not replaced with any other form of incentive compensation. Accordingly, the total target
level for 2008 long-term compensation was initially reduced by 33%. The remaining amounts of 2008
long-term compensation were then allocated to the named executive officers in the form of stock
options and restricted stock.
Given the current trading price of the Companys stock versus historical levels, the Committee
limited the overall number of stock options and restricted stock to be awarded to the Companys
executive officers for 2008 performance versus the 2008 target level. For stock options, the
number of shares awarded were calculated by dividing the dollar amount of the stock option proposed value by $2.50,
versus the actual Black-Scholes value of the stock options on the grant date of $2.095, which
decreased the total value of stock options awarded to the Companys named executive officers by
16.2%. For restricted stock, the number of shares awarded were calculated by dividing the dollar amount of the
restricted stock proposed value by $15.00 (rounded up to the nearest
whole share), versus the closing price of the Companys common stock on the
grant date of $12.22, which decreased the total number of shares and value of restricted stock
awarded to the Companys named executive officers by 18.5%. Accordingly, the value of the actual
stock option and restricted stock awards granted on February 9, 2009 to the named executive officers (excluding Mr.
Senkbeil, who was not eligible to receive a long-term incentive award for 2008 performance due to
his separation from service) was $291,811 less in the aggregate than the original target level.
Giving effect to the suspension of Shareholder
Value Plan awards and the limitation on stock option and restricted stock awards, the long-term
incentive value for the named executive officers (excluding Mr. Senkbeil) was $1,116,811 less in
the aggregate than the original 2008 target level. A summary for each named executive officer is
as follows:
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Restricted |
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Stock and |
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Option |
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Actual vs. |
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Original |
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Original |
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Original |
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Target LTI |
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Target |
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Actual LTI |
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Target LTI |
Name |
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Value |
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Value |
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Value |
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Value |
David P. Stockert |
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$ |
900,000 |
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$ |
600,000 |
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$ |
493,463 |
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-45.2 |
% |
Christopher J. Papa |
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$ |
600,000 |
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$ |
400,000 |
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$ |
329,365 |
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-45.1 |
% |
Thomas L. Wilkes |
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$ |
600,000 |
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$ |
400,000 |
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$ |
329,365 |
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-45.1 |
% |
Sherry W. Cohen |
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$ |
375,000 |
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$ |
250,000 |
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$ |
205,996 |
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-45.1 |
% |
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Restricted |
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Actual |
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Stock |
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Actual |
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Stock |
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Actual |
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Number of |
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Option |
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Actual Stock |
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Number of |
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Original |
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Restricted |
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Restricted |
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Original |
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Option |
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Stock |
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Target |
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Stock Grant |
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Shares |
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Target |
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Grant |
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Options |
Name |
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Value |
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Value |
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Granted |
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Value |
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Value |
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Granted |
David P. Stockert
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$ |
400,000 |
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$ |
325,871 |
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26,667 |
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$ |
200,000 |
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$ |
167,592 |
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80,000 |
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Christopher J. Papa
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$ |
250,000 |
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$ |
203,671 |
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16,667 |
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$ |
150,000 |
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$ |
125,694 |
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60,000 |
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Thomas L. Wilkes
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$ |
250,000 |
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$ |
203,671 |
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16,667 |
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$ |
150,000 |
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$ |
125,694 |
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60,000 |
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Sherry W. Cohen
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$ |
150,000 |
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$ |
122,200 |
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10,000 |
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$ |
100,000 |
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$ |
83,796 |
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40,000 |
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Offer to Buy Out Remaining Cash-Based Awards Under Shareholder Value Plan
There are two open performance periods under the Shareholder Value Plan 2007-2009 and 2008-2010
and no participant currently has a vested right to receive any award for these two periods. In
connection with suspending future awards under the Shareholder Value Plan, and thereby reducing
overall long-term incentive compensation as described above, on February 9, 2009 the Committee also
authorized the Company to offer all participants the right to receive 40% of their target potential
award for the two open performance periods under the plan in exchange for participants unvested
right to receive any award if the Company achieves target bonus thresholds at the end of the two
performance periods.
Under the Shareholder Value Plan, participants have the opportunity to receive a percentage (0% to
300%) of their target bonus for each performance period based on the Companys total shareholder
return in relation to the total shareholder return reported for such period in the National
Association of Real Estate Investment Trusts (NAREIT) total return index for all equity real
estate investment trusts whose return is reported in the index, as measured at the end of a
three-year performance period. The Company did not achieve the target thresholds for the 2006-2008
performance period. Since the plans inception in 2002, the Company has paid out as follows:
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Payout |
Performance Period |
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(% of Target) |
2002-2004 |
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0 |
% |
2003-2005 |
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90 |
% |
2004-2006 |
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70 |
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2005-2007 |
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50 |
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2006-2008 |
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0 |
% |
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Average |
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42 |
% |
The offer to the plan participants relates to the 2007-2009 and the 2008-2010 performance periods.
Estimated liabilities for awards under the plan are accrued on a quarterly basis over the
applicable three-year performance period even though the determination of the ultimate payout, if
any, is not made until the end of each performance period.
These estimated liabilities will be
eliminated in future periods for all awards terminated as part of the exchange. As a result, the
Committee concluded that the Company could potentially reduce its overall general and
administrative expenses by not making awards for the 2009-2011 performance period and future
performance periods and by permitting participants to exchange their unvested rights with respect
to the 2007-2009 and 2008-2010 performance periods. In evaluating the potential exchange, the
Committee reviewed the relative performance of the Companys stock to the NAREIT index over the
life of the two remaining awards to help in determining the appropriate buyout amount and the
likelihood that liabilities would have to be accrued in a future quarter and payouts would
ultimately have to be made for the awards.
In addition, the Committee considered a Monte Carlo valuation prepared by an independent
consultant for the 2008-2010 performance period, which estimated the value as of December 31, 2008
to be 54.8% of target. No independent valuation was performed for the 2007-2009 performance period
due to the smaller relative size of the total targeted potential awards under that performance
period. After considering this information together with historic payout levels for prior
performance periods and the suspension of future awards under the Shareholder Value Plan, the
Committee determined that it was appropriate to offer 40% of the target potential award, which was
slightly below the 42% average payout level for the five prior performance periods.
Each of
the Companys named executive officers listed in the table below has agreed to terminate his
or her unvested right to receive a cash award for the 2007-2009 and the 2008-2010 performance
periods, of which the target potential amounts are set forth below, in exchange for the buyout
amount set forth below:
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Target |
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Name |
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Potential Award |
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Buyout Amount |
David P. Stockert |
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$ |
437,500 |
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$ |
175,000 |
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Christopher J. Papa |
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$ |
300,000 |
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$ |
120,000 |
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Thomas L. Wilkes |
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$ |
300,000 |
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$ |
120,000 |
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Sherry W. Cohen |
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$ |
187,500 |
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$ |
75,000 |
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The Company has offered Mr. Senkbeil $120,000 in exchange for his unvested rights with respect to
$300,000 of target potential awards, and the Company has offered 17 other plan participants an
aggregate of $183,655 in exchange for their unvested rights with respect to an aggregate of
$459,138 of target potential awards. Mr. Senkbeil and the other participants have until March 15,
2009 to accept the offer, and all payments will be made on or before the Companys first regularly
scheduled pay date which comes after March 15, 2009.
Special Sale Process Bonuses
In connection with the formal process to sell the Company initiated at the beginning of 2008 and
concluded in June, the Committee authorized a pool of bonuses that could be paid at the discretion
of the Committee at a later date. The Committee awarded special sale process bonuses from this
bonus pool to two named executive officers with respect to 2008 performance Mr. Papa and Ms.
Cohen who each received a special sale process bonus in the amount of $150,000 for their
extraordinary efforts in connection with the proposed sale transaction.
Item 5.03. Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On February 10, 2009, the Board of Directors of the Company approved an amendment to the Companys
Amended and Restated Bylaws (the Bylaws), which will be effective as of June 9, 2009, immediately
following the Companys 2009 annual meeting of shareholders. Accordingly, shareholders who wish to
submit nominations of directors or proposals of other business should comply with the notice
provisions contained in the Bylaws prior to the amendment, as the amendments will not be effective
at the 2009 annual meeting of shareholders.
Article I, Section 7 of the Bylaws has been amended to clarify, among other things, (i) that notice
procedures for shareholder nominations of directors are separate from those for proposals of other
business; (ii) that references to the Securities Exchange Act of 1934, as amended (the Exchange
Act), and related rules do not limit the application of the Bylaws advance notice provisions; and
(iii) that the Bylaws do not limit a shareholders right to request inclusion of proposals in the
Companys proxy statement pursuant to Rule 14a-8 of the Exchange Act.
The amendment also requires shareholders (and certain of their affiliates) proposing nominations or
other business to disclose additional information, including (i) hedging and derivative positions
relating to the Companys stock and (ii) whether they intend to solicit proxies in support of the
proposal or nomination.
In addition, Article I, Section 2 of the Bylaws has been amended to clarify that only business
described in the Companys notice of a special meeting may be conducted at a special meeting.
The foregoing description is not complete and is qualified in its entirety by reference to the
Amended and Restated Bylaws, attached as Exhibit 3.1 to this Current Report on Form 8-K, which is
incorporated herein by reference.
Item 8.01 Other Events.
On February 10, 2009, the Company issued a press release announcing that it will hold its annual
meeting of shareholders on June 9, 2009. The deadline for shareholders to submit nominations of
directors and proposals of other business is February 20, 2009. A copy of the press release is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
On February 11, 2009, Post Apartment Homes, L.P., the operating partnership of the Company, issued
a press release announcing that it has commenced a cash tender offer to purchase any and all of its
$185,000,000 7.70% Notes due 2010 and $100,000,000
51/8% Notes due 2011 (collectively, the Notes).
A copy of the press release is attached hereto as Exhibit 99.2 and incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
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Exhibit 3.1
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Amended and Restated Bylaws of Post Properties, Inc. |
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Exhibit 99.1
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Press Release dated February 10, 2009. |
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Exhibit 99.2
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Press Release dated February 11, 2009. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated:
February 11, 2009
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POST PROPERTIES, INC. |
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By:
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/s/ David P. Stockert
David P. Stockert
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President and Chief Executive Officer |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated:
February 11, 2009
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POST APARTMENT HOMES, L.P. |
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By: |
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POST GP HOLDINGS, INC., |
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as General Partner |
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By:
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/s/ David P. Stockert
David P. Stockert
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President and Chief Executive |
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Officer |
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EXHIBIT INDEX
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Exhibit |
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Number |
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Index |
3.1
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Amended and Restated Bylaws of Post Properties, Inc. |
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99.1
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Press Release dated February 10, 2009. |
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99.2
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Press Release dated February 11, 2009. |