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Section 1: DEF 14A (DEF14A)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
 
Filed by the Registrant
 
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))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-12
 
Mid-America Apartment Communities, Inc.
(Name of Registrant as Specified in Its Charter)
 
 
 
(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
 
Payment of Filing Fee (Check the appropriate box):
No fee required.
 
 
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
 
 
 
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  PROXY STATEMENT

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

2020 ANNUAL MEETING OF SHAREHOLDERS

Tuesday, May 19, 2020

12:30 p.m. local time

 

MAA Corporate Headquarters

5th Floor

 

6815 Poplar Avenue, Suite 500

Germantown, Tennessee 38138

 

MID-AMERICA APARTMENT COMMUNITIES, INC.

 



 

April 7, 2020

 

TO MY FELLOW SHAREHOLDERS

 

 

I am pleased to invite you to attend the 2020 Annual Meeting of Shareholders of Mid-America Apartment Communities, Inc. The meeting will be held at 12:30 p.m., local time, on Tuesday, May 19, 2020, at our corporate headquarters located at 6815 Poplar Avenue, Suite 500, Germantown, Tennessee 38138. The Notice of Annual Meeting of Shareholders and Proxy Statement, both of which accompany this letter, provide details regarding the business to be conducted at the meeting, as well as other important information about us.

 

If you are one of our long-term shareholders, you may have noticed that MAA has changed to the Notice and Access delivery format allowed under the Securities and Exchange Commission rules to distribute meeting materials this year. Under this delivery method, unless a prior shareholder request required otherwise, we mailed or electronically delivered a Notice of Internet Availability of Proxy Materials to eligible shareholders, which provided instructions on how to electronically access the materials related to the Annual Meeting of Shareholders rather than shipping and mailing hard copies. We believe this delivery format will

1) help us to reduce the printing and postage expenses associated with our annual meetings,
2) provide you with additional time to review materials by making them available sooner, and
3) reduce our environmental impact by minimizing our paper and ink usage as well as the energy and fuel required to print and ship bulk materials.

 

Of course, if you received a Notice of Internet Availability of Proxy Materials you still have the option to request hard copies, but we encourage all of our shareholders to not only review the materials online but to also sign up for electronic delivery of future notices to further reduce our collective impact on the environment.

 

We’ve included some information on our journey to formalize and enhance our sustainability efforts in the accompanying Proxy Statement and we invite you to visit https://www.maac.com/about-us/sustainability/ to learn more about our thoughts on sustainability and review our inaugural sustainability report to be issued later this year.

 

Whether or not you plan to attend the 2020 Annual Meeting of Shareholders in person, I encourage you to vote in advance of the meeting. Please review the instructions in How to Vote in the accompanying Proxy Statement to ensure that your shares will be represented and voted. Your vote is important. Along with the other members of the Board of Directors and management, I look forward to greeting you at the meeting if you are able to attend. Thank you for your support.

 

  Sincerely,
   
 


H. Eric Bolton, Jr.
Chairman of the Board of Directors and Chief Executive Officer

 

We intend to hold our annual meeting in person. However, we are actively monitoring coronavirus (COVID-19) developments in relation to the health and safety of our shareholders and associates, including protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our annual meeting in person, we will announce alternative arrangements for the meeting, which may include holding the meeting solely by means of remote communication, as promptly as practicable. We will file a Form 8-K with the SEC to announce any alternative arrangements. If you are planning to attend our meeting, please check our website at http://ir.maac.com/ one week prior to the meeting for updated information.


 

TABLE OF CONTENTS

 

         
    INTRODUCTION 1 References And Abbreviations
    2 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
    3 PROXY STATEMENT HIGHLIGHTS
    3   PROPOSAL 1:  Election Of Directors
    5   PROPOSAL 2:  Executive Compensation
    8   PROPOSAL 3:  Independent Registered Public Accounting Firm
           
           
  1            
PROPOSAL ELECTION OF DIRECTORS 9 PROPOSAL 1: ELECTION OF DIRECTORS
9 The Board’s Role And Responsibilities
13 Board Structure
16 Board Governance
20 Process For Identifying And Selecting Director Nominees
22 Director Nominees For Election
    29 Director Compensation
       
  Dont miss our discussion on ESG - page 11
               
               
  2            
PROPOSAL EXECUTIVE COMPENSATION 32 PROPOSAL 2: EXECUTIVE COMPENSATION
32 Executive Officers Of The Registrant
33 COMPENSATION DISCUSSION AND ANALYSIS
33   Table Of Contents For Compensation Discussion And Analysis
34   Total Direct Compensation Approach
40   Program Structure and Governance
46   2019 Direct Executive Compensation
52   Conclusion
52 Compensation Committee Report
53 Executive Compensation Tables
61 CEO Pay Ratio
               
               
  3            
PROPOSAL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 63 PROPOSAL 3: INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
63 Audit And Non-Audit Fees
64 Audit Committee Policies
65 Other Practices
66 Audit Committee Report
   
   
               
               
               
    SECURITY OWNERSHIP 67 Security Ownership Of Certain Beneficial Owners
    67 Security Ownership Of Management
    69 Securities Authorized For Issuance Under Equity Compensation Plans
               
               
               
    GENERAL INFORMATION 69 Meeting Information
    72 Voting Information
    74 Non-GAAP Financial Measures
    75 Other Matters
         
    Dont miss Requirements to Attend the Annual Meeting in Person - page 69
    Dont miss How to Vote - page 73
       
                 

 

 



 

REFERENCES AND ABBREVIATIONS

For your reference, the below listing provides the definitions of various references and abbreviations used throughout the following Proxy Statement.

 

MEETING AND MATERIALS
Annual Meeting 2020 Annual Meeting of Shareholders of Mid-America Apartment Communities, Inc.
Annual Meeting Notice Notice of 2020 Annual Meeting of Shareholders
Annual Report Annual Report to Shareholders for the Year Ended December 31, 2019
Beneficial Shareholder A Beneficial Shareholder is a shareholder whose shares are held by a bank, brokerage firm or other nominee. Such shares are often referred to as being held in Street Name.
MAA, we, us, our Mid-America Apartment Communities, Inc.
Notice of Internet Availability Notice Regarding Internet Availability of Proxy Materials
Proxy Statement This Proxy Statement
Shareholder of Record or Registered Shareholder A Shareholder of Record, also referred to as a Registered Shareholder, is a shareholder who owns their shares directly through MAA’s transfer agent, Broadridge Corporate Issuer Solutions, Inc.
   
EXECUTIVE AND DIRECTOR COMPENSATION (1)
AIP Annual Incentive Plan
Director Deferred Compensation Plan Non-Qualified Deferred Compensation Plan for Outside Company Directors
Executive Deferred Compensation Plan Non-Qualified Executive Deferred Compensation Plan
FAD Funds Available for Distribution
FFO Funds From Operations
FFO per Share Funds From Operations per Diluted Common Share and Unit
GOI Gross Operating Income
LTIP Long-Term Incentive Program
NEO Named Executive Officer
NOI Net Operating Income
Pearl Meyer Pearl Meyer & Partners, LLC
TSR Total Shareholder Return
   
ACCOUNTING AND AUDITING
ASC Accounting Standards Codification
FASB Financial Accounting Standards Board
GAAP Generally Accepted Accounting Principles
   
GENERAL AND COMMON ABBREVIATIONS
Board Board of Directors of Mid-America Apartment Communities, Inc.
CEO Chief Executive Officer
CFO Chief Financial Officer
COO Chief Operating Officer
ESG Environmental, Social and Governance
EVP Executive Vice President
GC General Counsel
GRESB Global Real Estate Sustainability Benchmark
NYSE New York Stock Exchange
REIT Real Estate Investment Trust
SEC Securities and Exchange Commission

 

(1) A reconciliation of non-GAAP financial measures to the most comparable GAAP measure can be found on page 75.

 

 

   2020 PROXY STATEMENT  1

 



 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

ITEMS OF BUSINESS
VOTING PROPOSALS BOARD
RECOMMENDATION

Proposal 1 

Elect the 12 director nominees named in the Proxy Statement to serve until the 2021 Annual Meeting of Shareholders, and until their successors have been duly elected and qualified. 

ü FOR 

Each Nominee 

Proposal 2 

Advisory (non-binding) vote to approve NEO compensation. 

ü FOR

Proposal 3 

Ratify Ernst & Young LLP as MAA’s independent registered public accounting firm for 2020. 

ü FOR
Shareholders will also consider any other business as may properly come before the meeting or any adjournment or postponement thereof.
   

ANNUAL MEETING ADMISSION  
 
To attend the Annual Meeting in person, you must:
 
 
1. Be a shareholder (or authorized proxy thereof) of MAA common stock as of the close of business on March 13, 2020, the record date.  
2. Register in advance for an admission ticket by May 14, 2020:  
  HAVE YOUR

16-digit control number ready  

(printed on proxy card or voter instruction form)  

 
  GO TO www.ProxyVote.com  
  LOOK FOR “Register for Meeting”  
3. Bring your admission ticket, valid photo identification, and required legal proxy documentation (if applicable), to the Annual Meeting.  
       

Your vote is very important. PLEASE VOTE YOUR SHARES in advance regardless of whether or not you plan to attend the Annual Meeting.
   
By Order of the Board of Directors,
 
 
 
Leslie B.C. Wolfgang 
Senior Vice President, Chief Ethics and Compliance Officer, and Corporate Secretary
   
April 7, 2020 
   
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR MAA’S ANNUAL MEETING TO BE HELD ON MAY 19, 2020
The following materials are available at http://materials.ProxyVote.com/59522J
   
Notice of the Annual Meeting of Shareholders to be held on May 19, 2020
   
2020 Proxy Statement
   
Annual Report to Shareholders for fiscal year ended December 31, 2019
   
A Notice Regarding the Internet Availability of Proxy Materials or the proxy statement, form of proxy and accompanying materials are first being sent to shareholders on or about April 7, 2020.






  LOGISTICS  
     
  DATE AND TIME  
  Tuesday, May 19, 2020  
  12:30 p.m. local time  
     
  PLACE  
  MAA Corporate Headquarters  
  6815 Poplar Avenue, Suite 500  
  Germantown, Tennessee 38138  
     
  WHO CAN VOTE  
  Shareholders of record at the close of business on Friday, March 13, 2020, the record date, are entitled to receive this notice and vote.  
     

 

       
  HOW TO VOTE  
     
  MOST SHAREHOLDERS may vote in any of the following ways:  
     
    ONLINE  
    www.ProxyVote.com  
       
    BY PHONE  
    800-690-6903  
       
    BY MAIL  
    Complete, sign, date and return a valid Proxy Card or Voter Instruction Form in the postage-paid envelope provided  
       
    IN PERSON  
    Vote in person with a ticket obtained from registering in advance, a valid photo identification and legal proxy or authorization letter (if applicable)  
       
  If you are a BENEFICIAL SHAREHOLDER and are unable to vote following the above instructions, follow the instructions as provided by your bank or broker on your Voter Instruction Form to direct the voting of your shares.  
  See page 73 for additional information on how to vote and page 69 for requirements to attend the Annual Meeting in person.  
       


  2020 PROXY STATEMENT 2

 

 

 

 

PROXY STATEMENT HIGHLIGHTS

 

PROPOSAL 

1 

ELECT THE 12 DIRECTOR NOMINEES NAMED IN THE PROXY STATEMENT TO SERVE UNTIL THE 2021 ANNUAL MEETING OF SHAREHOLDERS.

BOARD
RECOMMENDATION
 

FOR  

 

DIRECTOR NOMINEES
A = Audit, C = Compensation, NCG = Nominating and Corporate Governance, REI = Real Estate Investment OTHER
        COMMITTEES   PUBLIC
  AGE GENDER TENURE A C NCG REI POSITION BOARDS

H. Eric Bolton, Jr. 

Chairman

63 M 1997      

⌂ 

CHAIR 

CEO of MAA 1

Russell R. French 

INDEPENDENT 

SEC Financial Expert 

74 M 2016       Special Limited Partner of Moseley & Co. VI, LLC and Class B Partner of Moseley & Co. VII, LLC and Moseley & Co. SBIC, LLC None

Alan B. Graf, Jr. 

LEAD INDEPENDENT 

SEC Financial Expert 

66 M 2002

⌂ 

CHAIR 

     

EVP and CFO of FedEx Corporation (1)

See page 24 

Toni Jennings 

INDEPENDENT

71 F 2016     Chairman of Jack Jennings & Sons, Inc. 2

James K. Lowder 

INDEPENDENT

70 M 2013     Chairman and President of The Colonial Company None

Thomas H. Lowder 

INDEPENDENT

70 M 2013     Past Chairman and CEO of Colonial Properties Trust None

Monica McGurk

INDEPENDENT

50 F 2016     Chief Growth Officer of Kellogg Company None

Claude B. Nielsen 

INDEPENDENT

69 M 2013  

⌂ 

CHAIR

  Chairman and Past CEO of Coca-Cola Bottling Company United, Inc. None

Philip W. Norwood 

INDEPENDENT

72 M 2007  

⌂ 

CHAIR

  Past President and CEO of Faison Enterprises, Inc. None

W. Reid Sanders 

INDEPENDENT

70 M 2010       President of Sanders Properties, LLC 2

Gary Shorb 

INDEPENDENT

69 M 2012     Executive Director of the Urban Child Institute, Past President and CEO of Methodist Le Bonheur Healthcare None

David P. Stockert 

NON-MANAGEMENT

58 M 2016       Past CEO of Post Properties, Inc. 1

 

(1) On March 9, 2020, FedEx Corporation announced that Mr. Graf will retire effective December 31, 2020. See page 24 for additional information.

 

See pages 22-29 for more information.

 

DIVERSITY

 

     
     
     
  The Board believes that diversity in personal attributes such as gender, race, ethnicity and age, among other factors, is important to ensure the broadest range of ideas and perspectives are contributed to Board discussions and to represent our associates, residents and investors. As such, the Board is committed to actively pursuing qualified candidates that will add diversity in these areas. The Board has directed the Nominating and Corporate Governance Committee to make diversity of race or ethnicity a key criteria for the next director addition to the Board.  

 

See pages 14 and 21-22 for more information.

 

  2020 PROXY STATEMENT 3

 

 

 

 

 

PROXY STATEMENT HIGHLIGHTS PROPOSAL 1: ELECTION OF DIRECTORS

  

KEY EXPERIENCE, QUALIFICATIONS AND SKILLS

  

           
  The Board believes that experience or expertise in the following areas is particularly relevant to MAA’s business and structure and should be possessed by one or more members of the Board. These factors, along with others, were considered in selecting the nominees for election.  
           
  Real Estate Industry – Investment 6 Nominees ⌂⌂⌂⌂⌂⌂  
  Real Estate Industry – Development/Construction 6 Nominees ⌂⌂⌂⌂⌂⌂  
  Public Company Platforms 10 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂  
  Financial Literacy 9 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂  
  Capital Markets 9 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂  
  Strategic Planning and Oversight 12 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂  
  Risk Oversight 9 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂  
  Organization Leadership 12 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂  
  Corporate Governance 10 Nominees ⌂⌂⌂⌂⌂⌂⌂⌂⌂⌂  

  

See pages 21-29 for more information.

  

CORPORATE GOVERNANCE

  

     
 

BOARD PRACTICES 

■      Lead Independent Director 

■      100% Independent Audit, Compensation and Nominating and Corporate Governance Committees 

■      Annual Board and committee evaluations 

■      Regular executive sessions of independent and non-management directors 

■      Required retirement (not eligible for nomination at age 75) 

■      Director, CEO and NEO equity ownership requirements 

■      Prohibition against hedging or pledging equity 

■      Reimbursement of director education events 

■      Ability for shareholders and other interested parties to communicate directly with Board 

■      Accountable for public Code of Conduct 

■      Public Corporate Governance Guidelines 

■      Board authority to retain external advisors 

■      Regular director, CEO and executive succession planning 

 
     
 

SHAREHOLDERS RIGHTS 

■      Annual elections of all directors 

■      Majority voting in uncontested elections with resignation policy 

■      Bylaws include shareholder proxy access rights 

■      Annual Say on Pay advisory vote 

■      Shareholder rights to call special meetings (10% aggregate ownership) 

■      No shareholder rights plan (poison pill) 

■      Long standing active shareholder engagement with over 400 formal interactions in 2019 representing nearly 2/3rds of outstanding shares 

 

 

See pages 13-21 for more information.

  

ESG

  

         
  Ensuring the long-term success of MAA for our shareholders requires a long-term approach in all that we do. With the support and oversight of our Board, we are on a journey to formalize and enhance our ESG efforts. In 2019, we completed our first GRESB assessment to help assess and benchmark our ESG performance and provide a baseline for our inaugural sustainability report. In 2020, we will publish our inaugural sustainability report to include quantitative disclosure of key performance metrics related to our emissions, energy and water usages, and waste generation, including absolute and normalized scope 1 and 2 greenhouse gas emissions as well as our plans for progressive improvement.  
         
  OPEN ARMS FOUNDATION  Learn more at https://www.maac.com/about-us/open-arms-foundation/  
  Open Arms is MAA’s corporate charity and the heart of MAA’s service culture. Through Open Arms, we provide housing close to medical facilities for individuals who have to travel away from their home for long-term medical care. MAA donates two-bedroom apartments and our associates volunteer their time (both during and outside of work hours) to run the charity and raise additional funds to fully furnish the units and pay all of the utilities. Open Arms relieves the financial burden of long-term lodging near specialized medical facilities by doing what we do best, creating homes where family, friends and even pets can be together.      
     
    2019  
  Apartments Donated 53 homes in 13 states  
  Families Helped 126  
  Nights of Rest Provided 15,441  
  MAA Rent Concessions $ 594,104  
  Associate Fundraisers/Donations $ 726,085  
       
     
         

 

See pages 11-12 for more information.

 

  2020 PROXY STATEMENT 4

 


 

PROXY STATEMENT HIGHLIGHTS PROPOSAL 2: EXECUTIVE COMPENSATION

 

PROPOSAL

2

ADVISORY (NON-BINDING) VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION.

BOARD
RECOMMENDATION 

FOR

 

 

EXECUTIVE COMPENSATION PHILOSOPHY

 

     
  The Compensation Committee believes that the compensation programs for our executive officers should balance the following objectives.  
     
  ■      Attract and retain highly qualified executives  
  ■      Not overpay compared to industry peers  
  ■      Not incentivize undue risk  
  ■      Be fair and equitable  
  ■      Reflect individual responsibilities and qualifications  
  ■      Be quantifiable  
  ■      Align with our culture  
  ■      Align with business strategy and key strategic objectives  
  ■      Align with overall MAA performance  
  ■      Balance annual and long-term strategic goals  
  ■      Reward superior performance  
  ■      Align executive interests with shareholders  
  ■      Reward for creating long-term shareholder value  
  ■      Be sustainable  
  ■      Be supported by shareholders  

  

See page 34 for more information.

 

OTHER CONSIDERATIONS AND SAY ON PAY

  

 

 

In addition to the concepts represented in our executive compensation philosophy, the Compensation Committee considers various other factors when determining executive compensation, including:

 

■     Labor market conditions, 

■     Personal development, 

■     Quality of internal working relationships, leadership and human capital development, 

■     Ability to assume increased responsibilities, and 

■     Results of our shareholders’ input on executive compensation. 

 
     
 

94.3% APPROVAL 

FOR 

Say on Pay 

In 2019

Annual Say on Pay 

Shareholder Vote 

APPROVED EVERY YEAR 

Since Introduced in 2011

Say on Pay 

Average Approval Rate 

Since 2011 

96%

 
         

See pages 35 and 39 for more information.

 

EXECUTIVE COMPENSATION PRACTICES

 

         
  WHAT WE DO   WHAT WE DON’T DO  
 

ü  Align pay with performance 

ü  Mitigate undue risk in compensation programs 

ü  Include vesting periods on share awards 

ü  Require compliance with NEO share ownership guidelines 

ü  Require compliance with NEO share holding period policy 

ü  Utilize an independent compensation consultant who provides no other services to MAA 

ü  Cap award payouts 

ü  Maintain clawback policy allowing for recoupment of performance-based incentive compensation in certain circumstances 

ü  Conduct an annual compensation program risk assessment 

  NO Dividends ordividend equivalents on unearned performance shares 

NO Repricing underwater stock options 

NO Exchanges of underwater stock options for cash 

NO Multi-year guaranteed bonuses 

NO Inclusion of the value of equity awards in severance calculations 

NO Evergreen provisions in equity plans 

NO Tax “gross ups” for excess parachute payments 

NO “Single trigger” employment or change in control agreements 

NO  Overlapping performance metrics among annual and long-term incentive plans for NEOs 

 
       
 

 

     

 

See pages 37-39 for more information.

 

  2020 PROXY STATEMENT 5

 


 

PROXY STATEMENT HIGHLIGHTS PROPOSAL 2: EXECUTIVE COMPENSATION

 

2019 MAA PERFORMANCE

 

  IN 2019, MAA:  
 

■   Increased same store portfolio revenues by 3.4% over 2018 while holding same store expense growth to 2.9%,

 

■   Acquired one multifamily community consisting of 271 units and entered into two pre-purchase development deals for an additional 609 units expected to be delivered during 2021,

 

■   Redeveloped 8,329 units at an average cost of $5,876 per unit, achieving average rental rate increases of approximately 9.8% above non-renovated units,

 

■   Invested $113 million in our development pipeline, starting construction on three new projects and one expansion project to an existing multifamily community and completing the development of two expansion projects to existing multifamily communities, ending the year with five developments under construction for a total of 1,499 units,

 

■   Issued $300 million of 3.950% senior unsecured notes due in 2029 at an issue price of 99.720% with an additional $250 million of 3.950% senior unsecured notes due in 2029 with a reoffer yield of 2.985%, and $300 million of 2.750% senior unsecured notes due in 2030 through our primary operating partnership,

 

■   Ended the year with total debt to adjusted total assets (as defined in the covenants for the bonds issued by our primary operating partnership) of 31.4%, compared to 32.6% as of December 31, 2018,

 

■  Ended the year with total debt outstanding of $4.5 billion at an average effective interest rate of 3.8%, with 98.4% fixed or hedged against rising interest rates for an average of 7.6 years and 90.2% of our total NOI unencumbered, and

 

 ■   Completed our first GRESB assessment to help assess and benchmark our ESG performance and provide a baseline for our inaugural sustainability report to be issued in 2020.

 

 

 

See pages 46-47 for more information.

  

TOTAL SHAREHOLDER RETURN

  

  ANNUALIZED 2017 LTIP THREE YEAR TSR (1)  
 

  

 

  

(1)   In order to eliminate the impact of the volatility generated by the price fluctuations of any one market day, the calculations for the three year TSR returns for MAA and the SNL U.S. REIT Multifamily Index under the 2017 LTIP utilizes the average of the closing stock prices in December 2016 and December 2019 as the beginning and ending stock prices for the annualized return calculations. 

 

  

See page 48 for more information.

 

DIVIDENDS

 

         
 

In 2019, MAA returned nearly 

$437 MILLION in dividends 

to common shareholders 

In 2019, MAA declared its 

104th COMMON QUARTERLY 

DIVIDEND PAYMENT

MAA has 

NEVER SUSPENDED 

NOR REDUCED 

our common dividend

 
     
  ANNUAL DIVIDEND PAID PER COMMON SHARE  
     
     

  

See page 48 for more information.

 

  2020 PROXY STATEMENT 6

 


 

PROXY STATEMENT HIGHLIGHTS PROPOSAL 2: EXECUTIVE COMPENSATION

 

2019 EXECUTIVE TOTAL DIRECT COMPENSATION

  

     
  The Compensation Committee strives to find the appropriate balance of compensation elements to provide a fixed base of cash compensation to attract talented executives (Salary), incent executives to achieve key business results and reward executives for their individual contributions to those results (AIP) and to tie executives’ interests to the long-term interests of our shareholders (LTIP). The mix of these elements established for the 2019 compensation packages of our executive officers is indicated below.  
     
  TOTAL 2019 DIRECT COMPENSATION TARGET PAY MIX  
 

 

 

 

 

 
     

  

See page 44-46 for more information.

  

2019 DIRECT COMPENSATION REALIZED

  

                                         
Compensation realized by NEOs during 2019 related to their respective 2019 compensation packages:  
                                         
                2019 LTIP   TOTAL COMPENSATION
REALIZED IN 2019 FROM
2019 COMPENSATION
PLANS
 
          2019 AIP     Shares Of Restricted Stock Earned (1)   At Risk Target
Realizable in
Future Years (2)
      Shares of  
            Amount   Percent of Opportunity             Restricted  
      SALARY     Earned   Target   Maximum         Cash   Stock (1)  
  H. Eric Bolton, Jr.    $ 812,500      $2,157,100   151%   100%     20,908   16,067    $2,969,600        20,908  
  CEO                                      
  Thomas L. Grimes, Jr.    $ 515,234      $1,083,600   150%   100%     9,722   7,469    $1,598,834          9,722  
  COO                                      
  Albert M. Campbell, III  $ 502,750      $   900,006   143%   99%     9,487   7,288    $1,402,756          9,487  
  CFO                                      
  Robert J. DelPriore    $ 490,265      $   883,801   144%   100%     9,251   7,107    $1,374,066          9,251  
  GC                                      
                                         
 

(1)   Shares of restricted stock will vest over various time periods, remaining subject to forfeiture until vested, dependent upon continued employment in good standing with MAA.

 

(2)   Represents Target performance shares of restricted stock still at risk as they are realizable under the Three Year Relative TSR metric for which the performance period does not end until December 31, 2021.

 

 
  Other compensation realized by NEOs during 2019 included awards earned for the Three Year Relative TSR metric under the 2017 LTIP, for which the performance period ended December 31, 2019 and NEOs earned 89.19% of their respective maximum opportunity.  
                                         

 

See pages 49-50 for more information

 

  2020 PROXY STATEMENT 7

 


 

PROXY STATEMENT HIGHLIGHTS PROPOSAL 3: INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

PROPOSAL 

3 

RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS MAA’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020.

BOARD
RECOMMENDATION
 

FOR  

 

 

PRACTICES RELATED TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  

  AUDIT COMMITTEE PRACTICES  
 

■     Sole authority to appoint or replace the independent registered public accounting firm 

■     Pre-approves all auditing services 

■     Pre-approves all permitted non-audit services 

■     Annual evaluation of independent registered public accounting firm’s performance 

■     Routine separate executive sessions with representatives of the independent registered public accounting firm as well as with management and the Director of Internal Audit 

■     Maintains an anonymous whistleblower platform 

■     Ensures the rotation of the lead audit partner and audit engagement team partners of the independent registered public accounting firm 

■     All members of the Audit Committee are independent 

■     Two SEC financial experts 

 
     
  MAA PRACTICES  
 

■     Will not hire an individual who is concurrently an employee of the independent registered public accounting firm 

■     Will not hire an individual in an accounting or financial reporting oversight role if in a position to influence MAA’s independent registered public accounting firm’s operations or policies 

■     CFO or Principal Accounting Officer must approve the hiring of individuals who previously served on MAA’s independent registered public accounting firm’s audit engagement team 

■     Cooling off period required for individuals who previously served on MAA’s independent registered public accounting firm’s audit engagement team to serve in an accounting or financial reporting oversight role

■     Disclose all individuals hired who previously served on MAA’s independent registered public accounting firm’s audit engagement team to the Audit Committee

 
     
 

Annual Ratification by Shareholders of the Audit Committee’s Appointment of Ernst & Young LLP 

AVERAGES OVER 99% 

(over last 10 years)

 

 

  

See pages 64-65 for more information.

  

AUDIT AND NON-AUDIT FEES

  

         
  Fees 2019 2018  
  Audit $ 2,416,184 $ 2,570,737  
  Audit-Related - -  
  Tax 365,770 476,035  
  All Other 2,000 2,000  
  Total $ 2,783,954 $ 3,048,772  
         
 

The Audit Committee has pre-approved all audit and non-audit services provided by our independent registered public accounting firm since 2002 and has determined that the nature and level of non-audit related services that Ernst & Young LLP provides to MAA is compatible with maintaining the independence of Ernst & Young LLP. 

 

 

See pages 63-64 for more information.

  

REPRESENTATION AT ANNUAL MEETING

  

 

 

A representative of Ernst & Young LLP is expected to be present at the Annual Meeting to make a statement if they so desire and to answer any appropriate questions.

 

 

 

See page 63 for more information.

 

  2020 PROXY STATEMENT 8

 


 

ELECTION OF DIRECTORS

 

PROPOSAL 1: ELECTION OF DIRECTORS

  

       
    MATTER TO BE VOTED  
 

 

Election of the 12 director nominees named herein to serve until the 2021 Annual Meeting of Shareholders, and until their successors have been duly elected and qualified.

 

Our Board proposes that H. Eric Bolton, Jr., Russell R. French, Alan B. Graf, Jr., Toni Jennings, James K. Lowder, Thomas H. Lowder, Monica McGurk, Claude B. Nielsen, Philip W. Norwood, W. Reid Sanders, Gary Shorb and David P. Stockert, all of whom are currently serving as directors, be elected for a term of one year. 

 
       
    VOTE REQUIRED  
 

 

Each director nominee will be elected if there is a quorum at the Annual Meeting, either in person or by proxy, and the votes cast “FOR” each director nominee exceeds the votes cast “AGAINST” each director nominee.

 

We have no reason to believe that any of the nominees for director will not agree or be available to serve as a director if elected. However, should any director nominee become unable or unwilling to serve, the proxies may be voted for a substitute director nominee or to allow the vacancy to remain open until filled by our Board. 

 
       
    IMPACT OF ABSTENTIONS  
 
 
Abstentions will have no legal effect on whether each director nominee is approved.
 
       
    IMPACT OF BROKER NON-VOTES  
 
 
Broker non-votes will have no legal effect on whether each director nominee is approved.
 
       
    BOARD RECOMMENDATION  
 
 
Our Board recommends a vote FOR each of the director nominees.
 
       

  

Our Board believes that it is necessary for our directors to possess a variety of backgrounds, skills and viewpoints in order to provide strong leadership to MAA. When searching for new candidates, the Nominating and Corporate Governance Committee considers the evolving needs of our Board and searches for candidates that fill any current or anticipated future gaps, considering each candidates credentials both independently and within the entirety of the Board.

  

When evaluating potential candidates, the Nominating and Corporate Governance Committee considers a variety of factors including expertise in areas relevant to the real estate industry, operating as a public company, financial expertise and navigating capital markets. They also consider experience in broader aptitudes such as strategic planning, risk oversight, corporate governance and human capital development. In addition to these key skills, the Nominating and Corporate Governance Committee also feels it is important for the Board to have a breadth of viewpoints and experiences by including a variety of backgrounds and expertise as well as diversity in attributes such as gender, race, age and tenure. The Nominating and Corporate Governance Committee also evaluates a candidate’s ability to provide quality service to the Board and considers any conflicts of interest, integrity and ethical character of the candidate and their commitment to the goal of maximizing long-term shareholder value. With respect to the nomination of continuing directors for re-election, the individual’s past contributions to our Board are also considered.

  

THE BOARD’S ROLE AND RESPONSIBILITIES

The Board is elected by shareholders and represents shareholder interests in the long-term success of MAA. Except for matters voted upon by shareholders, the Board acts as the ultimate decision maker of MAA. While management is responsible for the daily operations of MAA, the Board operates in an oversight capacity.

 

  2020 PROXY STATEMENT 9

 


  

KEY BOARD RESPONSIBILITIES

  

STRATEGY

  

Strategic planning and oversight of management’s execution of MAA’s strategic vision is a primary responsibility of the Board. Annually, management and the Board review and discuss detailed strategic plans for the next several years, including changes from previous strategic positions, market and economic projections, peer performance benchmarking data, areas of focus for each functional area, expected financial statement and shareholder investment impacts, resource requirements, risks and stress test scenarios, among other topics.

  

Throughout the year the Board and its committees receive updates from management and actively engage in further discussions regarding execution of the strategy, variables impacting results and changes to the strategic plan.

  

Each year, the Board holds one of its quarterly meetings in a different MAA market. In addition to its regular Board and committee meetings, the Board visits several properties representing different aspects of MAA’s strategy. The Board believes these on-site visits provide insight into MAA’s markets, operations, resident base, human capital management, technology usage and allocation of capital investments, and allow for better oversight of the company’s strategies.

  

RISK MANAGEMENT

  

While management is responsible for the day to day management of our risk exposures, both the Board as a whole and its respective committees serve active roles in overseeing the management of our risks. Our Board or its committees regularly review, with members of our senior management and outside advisors, information regarding our strategy and key areas of the company including operations, investment transactions and development, finance, information technology, human capital, legal and regulatory, as well as the risks associated with each. Senior management as well as outside advisors also periodically meet with each committee and make representations associated with their respective risk oversight responsibilities as outlined below:

  

AUDIT COMMITTEE
Accounting practices and policies

Internal controls over financial reporting

Tax, including REIT compliance

Fraud assessments

Financial policies

Internal Audit

Cybersecurity

Ethics and compliance programs

Whistleblower platform

Independence of independent registered public accounting firm

 

COMPENSATION COMMITTEE
Executive compensation

Overall compensation practices and policies for all associates

Independence of compensation consultant

 

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Corporate governance

Independence of Board

Conflicts of interest and related party transactions

Board composition

 

While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our Board is regularly informed through committee reports about risks assigned to committees. In addition, the Board periodically reviews the results of our enterprise risk management efforts and receives legal and operational updates from executive management at every meeting.

 

SUCCESSION PLANNING

The Board is responsible for appointing our CEO and for ensuring that adequate succession plans are in place to address both planned CEO succession as well as potential unexpected or emergency succession needs. The Nominating and Corporate Governance Committee oversees succession planning for both the Board and CEO, routinely obtaining input from and updating the full Board on succession plan reviews.

  

The Nominating and Corporate Governance Committee also oversees succession planning and associate development of executive and senior management positions to ensure adequate bench strength is available to meet the long-term needs of MAA. The CEO and other executive management periodically update the Nominating and

 

  2020 PROXY STATEMENT 10

 


 

Corporate Governance Committee and the full Board on senior management succession plans including associate development plans and areas of risk.

  

The Board has exposure to internal succession candidates on an ongoing basis, meeting with executives both inside and outside of Board meetings at least four times a year and also periodically meeting with key senior managers.

 

The Compensation Committee considers succession planning input from the Board and the Nominating and Corporate Governance Committee when determining compensation packages for the Board and NEOs.

 

ESG

Ensuring the long-term success of MAA for our shareholders requires a long-term approach in all that we do. The Board is directly responsible for setting MAA’s strategy, which includes long-term sustainability planning. Committees of the Board support sustainability within their respective purviews: the Nominating and Corporate Governance Committee directs the corporate governance aspects of MAA, the Audit Committee ensures that MAA’s accounting policies and procedures and auditing controls support the reporting of high quality financial statements, and the Compensation Committee considers the need to attract and retain qualified associates to deliver on our long-term strategic directives.

 

In response to investor engagement in 2018, the Board took steps to support management’s formalization of its ESG efforts and periodically receives updates from management on various aspects of ESG.

 

SOCIAL

 

         
  Open Arms Foundation  
         
 

As our corporate charity that has been in place since soon after our initial public offering, the Open Arms Foundation is our primary focus in regards to social impact. The foundation supplies fully-furnished apartments to families and individuals who have to travel away from their own home to receive specialized longer-term medical treatment. These homes help ease the financial burden of long-distance lodging needs while providing a home where family, friends and even pets can support their loved one.

  

Since MAA formed the Open Arms Foundation our Board has authorized the annual donation of apartment homes from across our portfolio for the exclusive use as Open Arms homes. In addition, MAA makes donations during the holidays directly to individuals and families staying in Open Arms homes to help bring some joy to their season.

 

Open Arms is managed and operated 100% by MAA associates who donate time both during and outside of work hours to run the charity, raise additional funds to fully furnish the units and pay all of the utilities, and support our guests from throughout the world. 

 
         
    2019

To learn more about 

The Open Arms Foundation: 

https://www.maac.com/about-us/open-arms-foundation/ 

 

 

 
  Apartments Donated 53 homes in 13 states  
  Families Helped 126  
  Nights of Rest Provided 15,441  
  MAA Rent Concessions $ 594,104  
  MAA Holiday Donations $ 7,800  
  Associate Fundraisers/Donations $ 726,085  
       
  Other Civic and Charitable Contributions  
 

In addition to providing a home away from home for those in medical crisis, we further support the communities where our residents live and our associates work by making financial contributions to various civic and charitable organizations.

 

These organizations work to enrich the economic and cultural environments of communities and encompass areas of focus from public safety, education, access to economic opportunities and quality of life to promoting diversity and sustainable living. In 2019, we made approximately $750,000 in commitments to such organizations to assist them in creating better environments and opportunities for us all. 

 
         

 

  2020 PROXY STATEMENT 11





ENVIRONMENTAL
 
The very nature of multi-family housing – using limited land resources to house thousands of families - is based in sustainability concepts. MAA is committed to ensuring that the impact we make on not only our associates, residents and investors, but also the surrounding communities, is a positive one.
 

 

Below are some of the steps we’ve taken so far to formalize and strengthen our focus on improving our environmental impact and disclosures.

 

2018

Formed a CEO-led ESG executive steering committee responsible for setting our company-wide sustainability strategy.

 

 

Organized an Environmental Committee comprised of department heads across the company tasked with evaluating how we can further enhance our ongoing efforts to decrease our environmental impact.

 

2019

The Compensation Committee and full Board included responsibility for enhancing MAA’s sustainability efforts and ensuring that MAA is doing the work required to be in a position to produce its inaugural sustainability report by the end of 2020 in our CEO’s annual goals.

 

`

The Compensation Committee included responsibility for the implementation of our formal ESG efforts, including participation in the GRESB assessment, in our CFO’s annual goals and annual incentive opportunity.

 

 

Completed our first GRESB assessment to assist in assessing and benchmarking our current state of ESG performance and provide insight for establishing our ESG goals.

 

  Engaged an ESG consultant to help guide us in building our ESG program, establishing our environmental management system, improving our GRESB reporting and publishing or inaugural sustainability report.


 

And here’s what’s coming next.

2020

Complete our second GRESB assessment.

 

Publish our inaugural sustainability report providing quantitative disclosure of key performance metrics related to our emissions, energy and water usages, and waste generation, including absolute and normalized scope 1 and 2 greenhouse gas emissions as well as our sustainability policies and plans for progressive improvement.

 

  Continued incorporation of executive compensation goals tied to ESG initiatives.


 

Environmental Stewardship in Action

While we are working on formalizing, documenting and providing disclosure of our ESG efforts in addition to continually striving for improvement, below are some examples of environmental stewardship we have already implemented.

 



  Conserving Resources
 

■ Low-flow toilets and WaterSense plumbing fixtures

■ Smart irrigation and water use efficiency audits

■ Landscape innovations minimizing turf and using drought tolerant plant material

■ Utility monitoring systems

 

  Reducing Waste
 

■ On-site trash recycling options for residents

■ Trash compactions to reduce pick-ups

■ Online leasing and communication tools

■ Use of carpets made with recycled content

■ Vendor partnerships to recycle carpet and other flooring material

 

   Increasing Energy Efficiency
 

■ Reduced watt, high performance lighting fixtures in community breezeways and common areas

■ Routine maintenance and audits of HVAC systems and upgrades to efficient equipment

■ Energy Star rated appliances

■ Smart thermostats

   


 

GOVERNANCE

MAA is proud of our history of strong corporate governance. We are consistently recognized by third parties as having overall lower risk in areas of corporate governance and executive compensation in relation to various peer groups. Our Nominating and Corporate Governance Committee routinely reviews our corporate governance policies, considering developing best practices and the long-term best interests of our shareholders.

 

Policies regarding our Board and corporate structure, director and executive compensation, equity ownership and internal controls over the quality of our financial statements are provided throughout this proxy statement.

 

You can also find more documents and information related to our corporate governance practices on our website by going to http://ir.maac.com/Corporate-Governance.

 

 

To learn more visit https://www.maac.com/about-us/sustainability/
To share your thoughts email [email protected]

 

   2020 PROXY STATEMENT 12

 



 

BOARD STRUCTURE

We believe that our current board leadership model, when combined with the experience of our Board, the strong leadership of our independent directors and Lead Independent Director, the committees of the Board and the corporate governance policies in place, strikes an appropriate balance between informed, consistent leadership and independent oversight, allowing for efficiency and accountability, ultimately creating an environment for the effective execution of the Board’s duties and responsibilities.

 

COMBINED CEO AND CHAIRMAN

Provides benefit of management’s perspectives on MAA to enhance the Board’s oversight functions

 

LEAD INDEPENDENT DIRECTOR

Provides an appropriate contact for matters concerning the CEO and ensures agendas include all topics of interest to the Board

 

83%

SUPERMAJORITY OF INDEPENDENT DIRECTORS

Provides for strong oversight of CEO and management

 

NON-MANAGEMENT AND INDEPENDENT DIRECTOR EXECUTIVE SESSIONS

Ensures candid discussions

 

100%

INDEPENDENT AUDIT, COMPENSATION, AND NOMINATING AND CORPORATE GOVERNANCE COMMITTEES

Provides for better control and oversight of critical areas of responsibility

 

 

EQUAL VOTES

Each director’s vote holds the same weight to ensure all viewpoints are represented in decisions

 

 

DIVERSITY

Offers a breadth of knowledge, experiences, viewpoints and expertise

 

SEC FINANCIAL EXPERTS

Two SEC financial experts ensure the Audit Committee has the unique skills and expertise required to perform the committee’s oversight responsibilities

 

   
 

EXTERNAL CONSULTANTS

Ability to retain external consultants, experts and legal counsel provides the Board with appropriate resources to protect the interests of shareholders

 

 

DIRECT COMMUNICATION

WITH BOARD

Provides shareholders and other interested parties with the ability to communicate with the groups representing their best interests: Board, committees, non-management directors or independent directors


 

 

CURRENT BOARD COMPOSITION

The following table reflects our current Board composition.

 

         

Other

Public

Company

Boards

     
Name Age (1)

Gender

Director Since Committee Memberships      
A C NCG REI      

H. Eric Bolton, Jr.

Chairman

63 M 1997       XC 1   L Lead Independent Director

Russell R. French

INDEPENDENT

74 M 2016 X, SFE       -   INDEPENDENT Indicates that our Board has affirmatively determined the 10 Directors indicated meet the independence standards of our Corporate Governance Guidelines, the listing standards of the NYSE and applicable SEC rules

Alan B. Graf, Jr.

INDEPENDENT

66 M 2002 L, XC, SFE      

1

See page 24

   

Toni Jennings

INDEPENDENT

71 F 2016   X X   2    

James K. Lowder

INDEPENDENT

70 M 2013     X X -   NM Non-Management Director

Thomas H. Lowder

INDEPENDENT

70 M 2013   X   X -   A Audit Committee

Monica McGurk

INDEPENDENT

50 F 2016   X X   -   C Compensation Committee

Claude B. Nielsen

INDEPENDENT

69 M 2013   X XC   -   NCG Nominating and Corporate Governance Committee

Philip W. Norwood

INDEPENDENT

72 M 2007   XC   X -   REI Real Estate Investment Committee

W. Reid Sanders

INDEPENDENT

70 M 2010 X       2   X Committee Member

Gary Shorb

INDEPENDENT

69 M 2012 X   X   -   XC Committee Chairman

David P. Stockert

NM

58 M 2016       X 1   SFE SEC Financial Expert

 

(1) Age is as of May 19, 2020, the meeting date for the Annual Meeting.

 

   2020 PROXY STATEMENT 13

 



 

BOARD DIVERSITY

The Board believes that diversity provides a breadth of knowledge, viewpoints and experiences that contribute to a stronger board and cultivates better decisions. The Board also believes that a diverse company will attract highly qualified associates and be appealing to residents, which will ultimately produce the best results for our shareholders. The current Board represents diversity in many areas, including those listed below.

 

■ Industry knowledge

 

■ Company structure and leadership models

 

■ Technical areas of expertise

 

■ Geographic market knowledge of our portfolio footprint

 

■ Gender

 

■ Age

 

■ Tenure on Board

 

The Board believes that diversity in personal attributes such as gender, race, ethnicity and age are important to ensure the broadest range of ideas and perspectives are contributed to Board discussions. In addition, to be in a position to best lead MAA, the Board believes it is important that they reflect the diversity of our associates and residents. To that end, the Board is dedicated to expanding diversity in all areas, including personal attributes, and is committed to actively pursuing qualified candidates that will add diversity in areas such as race and ethnicity to the Board. As such, the Board has directed the Nominating and Corporate Governance Committee to make diversity of race or ethnicity a key criteria for the next director addition to the Board.

 

BOARD AND COMMITTEE MEETINGS

 

MEETINGS OF THE BOARD, COMMITTEES AND OTHER GROUPS  

 

The below schedule provides the number of meetings that the Board, each committee and certain other groups of the Board held during 2019.  

 

4 Board
8 Audit Committee
3 Compensation Committee
4 Nominating and Corporate Governance Committee
7 Real Estate Investment Committee
4 Non-Management Directors
4 Independent Directors

 

As Lead Independent Director, Mr. Graf presides over the meetings of both the non-management directors and the independent directors.  

 

DIRECTOR ATTENDANCE  

All of the directors attended more than 75% of the meetings of our Board and their respective committees during the calendar year 2019.  

 

INDEPENDENT DIRECTORS

A director is considered independent if our Board affirmatively determines that the director has no direct or indirect material relationship with us. Consistent with the requirements of the SEC and the NYSE, our Board reviews all relevant transactions or relationships between each director, or any of his or her family members, and us, our senior management and our independent auditors. Our Board has adopted the following categorical standards.

 

A director who is an employee or whose immediate family member is one of our executive officers is not independent until three years after the end of such employment relationship.

 

A director who receives, or whose immediate family member receives, more than $120,000 in any given 12-month period in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), is not independent until three years after he or she ceases to receive more than $120,000 in any given 12-month period in such compensation.

 

A director who is affiliated with or employed by, or whose immediate family member is affiliated with or employed in a professional capacity by, any of our present or former internal or external auditors is not independent until three years after the end of the affiliation or the employment or auditing relationship.

 

A director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of our present executive officers serve on that company’s Compensation Committee is not independent until three years after the end of such service or the employment relationship.

 

A director who is an executive officer or an employee, or whose immediate family member is an executive officer, of a company that makes payments to, or receives payments from, us for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, is not independent until three years after falling below such threshold.

 

   2020 PROXY STATEMENT 14

 



 

Our Board consults with both internal and external counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent”, including those set forth in pertinent listing standards of the NYSE, as in effect from time-to-time.

 

REGULAR MEETINGS WITHOUT MANAGEMENT

Both our non-management directors and our independent directors regularly meet without management present. The Board has determined that Mr. Stockert is not an independent director because he was the CEO of Post Properties, Inc. which MAA acquired within the past five years. We consider Mr. Stockert to be a non-management director. As such, Mr. Stockert meets from time-to-time with the independent directors without the participation of management.

 

STANDING COMMITTEES

Our Board has four standing committees: Audit; Compensation; Nominating and Corporate Governance; and Real Estate Investment. All of the members of the Audit, Compensation and Nominating and Corporate Governance committees are independent, pursuant to the standards set forth in our Corporate Governance Guidelines, the NYSE listing standards and applicable SEC rules. The Real Estate Investment Committee consists of three independent members and two non-independent members. The responsibilities of each committee are outlined below.

 

AUDIT RESPONSIBILITIES

100%

Independent Membership

■ Appoint, determine the compensation of, oversee and evaluate the work of the independent registered public accounting firm
■ Review and discuss with management and the independent registered public accounting firm the annual audited and quarterly unaudited financial statements and our disclosure under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-Qs and Form 10-K

8

Meetings in 2019

■ Discuss earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, and discuss generally the financial information and earnings guidance which has been or will be provided to analysts and rating agencies
■ Review and discuss with management and the independent registered public accounting firm the adequacy and effectiveness of our systems of internal accounting and financial controls

2

SEC Financial Experts

■ Establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters
■ Review with management and the independent registered public accounting firm our compliance with the requirements for qualification as a REIT
  ■ Meet with management responsible for oversight of the Company’s cybersecurity, crisis management and enterprise risk management programs at least annually to discuss the Company’s cybersecurity risks, including a review of the endeavors management has undergone to identify, assess, monitor and address those risks as well as response and recovery plans to address cybersecurity incidents
  ■ Review and reassess annually the Audit Committee Charter and submit any recommended changes to the Board for its consideration
  ■ Issue a report annually as required by the SEC’s proxy solicitation rules

 

COMPENSATION RESPONSIBILITIES

100%

Independent Membership

■ Review and approve our compensation objectives
■ Review and recommend the compensation programs, plans, and awards for the CEO to the Board and review and approve the same for the other executive officers, after taking into consideration any past “Say-on-Pay” votes by our shareholders
  ■ Review and approve any employment and severance arrangements and benefits of the CEO and other executive officers

3

Meetings in 2019

■ Recommend to the Board how often MAA should submit the “Say-on-Pay” vote to shareholders
■ Recommend the compensation for directors to the Board
■ Evaluate and oversee risks associated with the company’s compensation policies and practices
■ Act as administrator, as may be required, for our equity-related incentive plans
  ■ Review and discuss with management the information contained in the Compensation Discussion and Analysis section of the Proxy Statement
  ■ Assess the independence of, retain and oversee compensation consultants, outside counsel and other advisors assisting the committee with the performance of its duties
  ■ Review and reassess annually the Compensation Committee Charter and recommend any proposed changes to the Board for approval
  ■ Issue a report annually related to executive compensation, as required by the SEC’s proxy solicitation rules

 

   2020 PROXY STATEMENT 15

 

 



 

NOMINATING AND CORPORATE GOVERNANCE RESPONSIBILITIES

100%

Independent Membership

■ Provide assistance and oversight in identifying qualified individuals to serve as members of the Board and make recommendations to the Board regarding the selection and approval of the nominees for director to be submitted to a shareholder vote at the annual meeting of shareholders
■ Review the qualification and performance of incumbent directors to determine whether to recommend them as director nominees for re-election

4

Meetings in 2019

■ Review and consider candidates for directors who may be suggested by any director or executive officer, or by any shareholder if made in accordance with our charter, bylaws and applicable law
■ Provide assistance and oversight in recruiting and recommending qualified nominees for new or vacant positions on the Board
■ Make committee membership recommendations to the Board
■ Oversee the annual evaluation of the effectiveness of the current policies and practices of the Board and its committees
  ■ Review considerations relating to board composition and develop and recommend criteria for membership including diversity, independence, experience, expertise and skills to the Board for its approval
  ■ Review potential director conflicts of interest
  ■ Review and reassess annually the Nominating and Corporate Governance Committee Charter and submit any proposed changes to the Board for approval
  ■ Review and recommend to the Board appropriate corporate governance principles that best serve the practices and objectives of the Board
  ■ Review the orientation process and the continuing education program for all directors, as may be required by applicable listing standards or other regulatory requirements
  ■ Oversee succession planning for both the Board and CEO, and routinely obtain input from and update the full Board on succession plan reviews

 

REAL ESTATE

INVESTMENT

RESPONSIBILITIES

Majority

Independent Membership

■ Consider and approve or disapprove specific property acquisitions presented by management which fall within the individual and aggregate committee approval levels as periodically established by the Board
■ Consider and approve or disapprove the acquisition of land and subsequent initiation of construction for development projects presented by management which fall within the individual and aggregate committee approval levels as periodically established by the Board

7

Meetings in 2019

■ Refer and make a recommendation to the Board regarding proposed transactions which fall outside of the individual or aggregate approval levels as periodically established by the Board
■ Consider and approve or disapprove disposition of individual properties not listed as a potential disposition property in the annual strategic plan as reviewed and approved by the Board as well as any property for which the disposition would result in materially less net proceeds than previously considered by the Board
■ Review and reassess annually the Real Estate Investment Committee Charter and submit to the Board any recommended changes

 

 

Our Board may, from time-to-time, form other committees as circumstances warrant. Such committees will have authority and responsibility as delegated by our Board.

 

BOARD GOVERNANCE

We believe that effective corporate governance is critical to our long-term sustainability and our ability to create long-term value for our shareholders. We continuously review our corporate governance policies and compare them to other public companies, our peers and industry best practices, and consider feedback we receive from investors and what we believe is in the long-term best interests of all of our shareholders. We will continue to monitor emerging developments in corporate governance and enhance our policies and procedures when required by regulation or when our Board determines that it would benefit our shareholders.

 

   2020 PROXY STATEMENT 16



GOVERNANCE DOCUMENTS 

 

AUDIT COMMITTEE CHARTER

The Audit Committee Charter outlines the duties and responsibilities of the committee in fulfilling its responsibility to oversee the integrity of MAA’s financial statements, MAA’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualification and independence, the performance of MAA’s Internal Audit Department and independent registered public accounting firm, as well as the oversight of MAA’s cybersecurity efforts.

 

COMPENSATION COMMITTEE CHARTER

The Compensation Committee Charter outlines the duties and responsibilities of the committee in fulfilling its responsibilities to discharge the responsibilities of the Board relating to compensation of MAA’s executive officers, including: establishing compensation policies and incentive and equity-based award plans to attract, motivate and retain high quality leadership and compensating them in a manner consistent with the interests of MAA’s shareholders; overseeing MAA’s risk assessment and risk management relative to compensation structures; reviewing and discussing the Compensation Discussion and Analysis to be included in the Proxy Statement; and providing the Compensation Committee Report for inclusion in the Proxy Statement that complies with the rules and regulations of the SEC.

 

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER

The Nominating and Corporate Governance Committee Charter outlines the duties and responsibilities of the committee to provide assistance to the Board in identifying and recommending individuals qualified to serve as directors of MAA, review the composition of the Board, review and recommend corporate governance policies for MAA, guide CEO and director succession plans and procedures, and oversee the evaluation of the Board, its committees and management.

 

REAL ESTATE INVESTMENT COMMITTEE CHARTER

The Real Estate Investment Committee Charter outlines the duties and responsibilities of the committee to consider and approve or disapprove specific property acquisitions, dispositions or development projects for MAA.

 

CODE OF CONDUCT

MAA’s Code of Conduct reflects our commitment to achieving high standards of business, personal and ethical conduct. The Code of Conduct is applicable to our Board, executive officers and all other associates, including our CEO, CFO (Principal Financial Officer) and Principal Accounting Officer. Each member of our Board and all of our executive officers annually review the requirements in the Code of Conduct, attest in writing to meet the standards therein and affirm their compliance with those standards. Amendments to or waivers from our Code of Conduct (to the extent applicable to our CEO, Principal Financial Officer or Principal Accounting Officer) are publicly disclosed on our website. No waivers to the Code of Conduct have been made as of the date of this Proxy Statement.

 

WHISTLEBLOWER POLICY

The Whistleblower Policy sets forth the procedures established by the Audit Committee to allow for the receipt, retention and treatment of complaints received by MAA regarding accounting, internal accounting controls or auditing matters as well as the confidential, anonymous submission of concerns regarding questionable accounting and auditing matters.

 

Full copies of our Corporate Governance Guidelines, Code of Conduct, Whistleblower Policy and all committee charters are available upon request at no charge.

 

Online

 

http://ir.maac.com/Corporate-Governance

 

Information from our website is not incorporated by

reference into this Proxy Statement.

 

  By Mail

 

MAA ATTN: Legal Department

6815 Poplar Avenue, Suite 500

Germantown, TN 38138


 

  2020 PROXY STATEMENT 17

 


 

CORPORATE GOVERNANCE GUIDELINES

Approved by the Board and reviewed annually by the Nominating and Corporate Governance Committee, the Corporate Governance Guidelines reflect the principles by which the Board operates. These guidelines help to ensure that the Board is operating in a fashion that allows it to represent the best interests of our shareholders. Each member of our Board and our NEOs annually review the requirements in the Corporate Governance Guidelines and affirm in writing their compliance with these standards. The guidelines encompass the following requirements, among others.

 

DIRECTOR INDEPENDENCE

At least a majority of directors on the Board must be independent.

 

OTHER PUBLIC BOARD SERVICE

Directors can only serve on a total of three other public boards. In addition, directors must notify the Nominating and Corporate Governance Committee before accepting any new directorship to a public board.

 

RESIGNATION UPON EMPLOYMENT CHANGE

Directors who have a change in employer or significant change in job responsibilities must submit an offer of resignation from the Board and all committees for consideration.

 

MANDATORY RETIREMENT AGE

Directors are ineligible for nomination for re-election following their 75th birthday unless a waiver is granted by the Board for special circumstances.

 

MAJORITY VOTE

Incumbent directors must tender their resignation to the Board for consideration if they fail to receive a majority of the vote for re-election in an uncontested election.

 

FREQUENCY OF MEETINGS

The Board is required to meet at least four times a year.

 

COMPLIANCE WITH ETHICS AND COMPLIANCE POLICIES

Directors and NEOs are required to comply with all MAA ethics and compliance policies. Any waivers must be approved by disinterested members of the Board and publicly disclosed.

 

NON-MANAGEMENT AND INDEPENDENT DIRECTOR MEETINGS

Non-management directors are required to meet in executive session at regularly scheduled Board meetings and independent directors are required to meet at least once a year.

 

BOARD ACCESS TO MANAGEMENT AND ADVISORS

The Board and its committees have full and free access to all associates and the authority to engage independent advisors without notifying or receiving approval from MAA.

 

ATTENDANCE AT ANNUAL MEETING

Directors are encouraged to attend annual meetings of shareholders. We have historically scheduled a Board meeting on the same day as our annual meeting of shareholders so that our directors will be on site for the meeting. All directors attended our 2019 Annual Meeting of Shareholders.

 

MINIMUM SHARE OWNERSHIP

Within five years of appointment, non-management directors must own 5x the annual cash retainer fee in shares of MAA stock or the equivalent. The CEO must own 3x his base salary and other NEOs must own 2x their respective base salary within three years of appointment to their respective position.

 

HOLDING PERIOD REQUIREMENT

NEOs are required to retain ownership of at least 50% of net shares, after the payment of taxes, acquired through equity incentive plans until they retire, otherwise terminate or are no longer serving as an NEO.

 

DIRECTOR EDUCATION

Directors are encouraged to attend accredited director education programs for which expenses are reimbursed by MAA. In addition, educational materials and presentations by external experts are periodically provided to the Board and its committees on various topics of interest and evolving areas.

 

ANNUAL PERFORMANCE EVALUATIONS

The Nominating and Corporate Governance Committee oversees the anonymous evaluation by directors of the performance of the Board and each of their respective committees on an annual basis. Results are reviewed and discussed by the committees and the Board as a whole.

 

BYLAWS AND CHARTER PROVISIONS

 

PROXY ACCESS

MAA’s bylaws allow a shareholder or a group of up to 20 shareholders that have collectively owned at least three percent of MAA’s common stock continually for a period of at least three years to nominate and include in our proxy materials director nominees constituting up to 20% of the Board, provided that the shareholder(s) and the nominees(s) satisfy the requirements specified in our bylaws.

 

  2020 PROXY STATEMENT 18

 


 

SPECIAL MEETINGS OF SHAREHOLDERS

MAA’s bylaws allow any of the following to call a special meeting of the shareholders.

 

CEO

President

Majority of the Board

Majority of the independent directors

Shareholders representing more than 10% of voting shares

 

Information on how shareholders can request a special meeting and the requirements to do so can be found in our bylaws.

 

ANNUAL ELECTIONS OF ALL DIRECTORS

MAA’s charter requires the annual election of all directors. The Board believes that annual elections is an appropriate timeframe to ensure that directors are being held accountable to shareholders.

 

Copies of our bylaws and charter can be found on the SEC website at https://www.sec.gov.

 

Bylaws See Exhibit 3.2(i) to the Form 8-K which was filed on March 14, 2018
   
Charter See Exhibit 3.1 to the Form 10-K which was filed on February 24, 2017

 

POLICIES REGARDING THE ABILITY OF EMPLOYEES OR DIRECTORS TO ENGAGE IN HEDGING TRANSACTIONS OR PLEDGING OF SECURITIES

Under MAA’s policies, directors, executive officers and certain designated employees who in the ordinary course of the performance of their duties have access to material, nonpublic information regarding MAA or any of MAA’s subsidiaries are prohibited from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the individuals covered under the policies.

 

The above mentioned prohibitions also apply to any covered individual’s spouse, minor children, family members living within the same household and any other affiliates or affiliated entities.

 

More specifically, MAA’s policies prohibit executing short sales (the selling of securities that are not owned at the time of sale), purchasing or selling derivative securities or hedging transactions (including the buying and selling of puts, calls, other derivative securities, derivative securities that provide the economic equivalent of owning securities, any opportunity to profit from the change in value of securities and any other hedging transaction), using securities as collateral on margin accounts and pledging securities as collateral for a loan.

 

These prohibitions relate to all MAA and MAA subsidiary securities including common stock, preferred stock, units in limited partnerships, options to purchase common stock, any other type of securities that MAA or MAA’s subsidiaries may issue (such as convertible debentures, warrants, exchange-traded options or other derivative securities), any derivative securities that provide the economic equivalent of ownership of any securities issued by MAA or MAA’s subsidiaries, and any opportunity to profit from any change in the value of any of the securities issued by MAA or MAA’s subsidiaries.

 

While MAA’s policies prohibit directors, executive officers and other individuals, affiliates and affiliated entities (as outlined above) from pledging securities as collateral on a loan, at the time the prohibition was adopted, a one-time exception was made to grandfather an existing pledge amount which was already in place. The pledge was deemed to be of immaterial risk to shareholders and cannot be increased or expanded. No additional exceptions for pledges have been made, and the Nominating and Corporate Governance Committee of the Board of Directors has determined that no other exceptions for pledges will be granted.

 

OTHER GOVERNANCE PRACTICES

 

SHAREHOLDER ENGAGEMENT

The Board’s primary role is to represent the long-term interests of our shareholders. MAA’s management and our dedicated investor relations team continually engage with shareholders on a variety of topics through industry and investor conferences, non-deal road shows, MAA-hosted investor days, property tours, quarterly earnings calls and one-on-one calls and meetings, among other vehicles. The Board oversees our engagement practices and is routinely updated with feedback received from investors. We also consider all communications to our Board and its committees and use those as opportunities to reach out to investors to learn more about their positions.

 

Our shareholder’s views are important to us and several past and pending changes to our governance practices have been designed and implemented in collaboration with shareholders including moving from staggered to annual

 

  2020 PROXY STATEMENT 19

 


 

elections of directors, amending our bylaws to encompass proxy access rights for shareholders and the issuance of our inaugural sustainability report later in 2020.

 

In 2019 we had over 400 formal interactions with shareholders collectively representing approximately 2/3rds of the outstanding shares of our common stock. Shareholders with questions can reach our Investor Relations team at [email protected] or (866) 576-9689.

 

COMMUNICATING DIRECTLY WITH OUR BOARD

Shareholders and other interested parties can communicate in writing with our Board, any of its committees, its non-management directors as a group or its independent directors as a group by using the following address.

 

MAA ATTN: Corporate Secretary

6815 Poplar Avenue, Suite 500

Germantown, TN 38138

 

INDEPENDENT EXTERNAL CONSULTANT HELPS SET DIRECTOR COMPENSATION

The Board periodically engages an independent external compensation consultant to benchmark non-employee director compensation and make recommendations to the Nominating and Corporate Governance Committee on appropriate compensation packages.

 

PRACTICES RELATED TO EXECUTIVE COMPENSATION

For information specific to governance practices in place in regards to our NEOs, please see Program Structure and Governance in this Proxy Statement with the materials provided related to Proposal 2: Advisory Vote to Approve Executive Compensation.

 

PRACTICES RELATED TO FINANCIAL REPORTING, ACCOUNTING POLICIES AND AUDITING

For information specific to governance practices in place in regards to our accounting policies and procedures, controls over financial reporting and auditing practices, please see Audit Committee Policies in this Proxy Statement with the materials provided related to Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm.

 

PROCESS FOR IDENTIFYING AND SELECTING DIRECTOR NOMINEES

 

The Board is responsible for recommending director nominees to our shareholders for election at our annual meetings and, from time to time, for appointing directors to fill vacancies on the Board. Our Board has delegated the responsibility for evaluating Board needs and the process of identifying and recruiting director candidates for Board consideration to the Nominating and Corporate Governance Committee.

 

The Nominating and Corporate Governance Committee routinely evaluates current and future needs taking into consideration various elements as may be important from time-to-time including the factors listed below.

 

The appropriate Board size to allow for efficient and effective functioning

Current or expected seat openings from resignations or retirements from age limit

Key experiences, qualifications, attributes and skills of particular relevance to MAA’s business and structure

New qualifications needed to address MAA’s long-term strategy, changes in regulations and general business and industry developments

Diversity of the Board

Shareholder engagement feedback, results of recent director elections and the advisory Say on Pay vote

Specific knowledge and expertise required related to committee responsibilities

Results of recent Board and committee performance evaluations

Input from the Board and the CEO

 

IDENTIFICATION OF POTENTIAL CANDIDATES

From time-to-time, the Nominating and Corporate Governance Committee will utilize a search consultant to identify potential candidates who may otherwise be unknown to the committee or who meet specific criteria the committee has identified as critical for the director nominee. The Nominating and Corporate Governance Committee also reviews all candidates that are recommended by directors and NEOs as well as candidates recommended by shareholders in accordance with our charter, bylaws and applicable law.

 

Shareholders interested in recommending or nominating a candidate for election should review the three options for doing so outlined below along with other information in this Proxy Statement as referenced and additional requirements that are provided in our bylaws. A copy of our bylaws can be found on the SEC website (https://www.sec.gov) as Exhibit 3.2(i) to the Form 8-K which was filed on March 14, 2018.

 

  2020 PROXY STATEMENT 20


 


 

RECOMMEND A CANDIDATE TO THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Shareholders can recommend a director candidate for consideration by our Nominating and Corporate Governance Committee. To recommend a candidate for the 2021 Annual Meeting of Shareholders, the recommendation must be received at our corporate headquarters no later than December 8, 2020 and you must include the required information specified in our bylaws.

 

DIRECTLY NOMINATE A CANDIDATE FOR ELECTION BY SHAREHOLDERS

Shareholders who meet the requirements provided in our bylaws can directly nominate a candidate for election by our shareholders at an annual meeting. To directly nominate a candidate for election by our shareholders at the 2021 Annual Meeting of Shareholders, other than pursuant to the proxy access provision of our bylaws, you must provide the information required at our corporate headquarters no later than February 18, 2021. See Shareholder Proposal Requirements for the 2021 Annual Meeting of Shareholders in the General Information section of this Proxy Statement for additional details.

 

HAVE YOUR DIRECTOR NOMINEE INCLUDED IN OUR PROXY MATERIALS

Pursuant to the proxy access provisions of our bylaws, shareholders who meet the requirements can have their director nominee included in our proxy materials for an annual meeting. To have a nominee included in our proxy materials for the 2021 Annual Meeting of Shareholders you must meet the requirements outlined in our bylaws and submit the required information to our corporate headquarters no later than December 8, 2020. See Proxy Access Notice Requirements for the 2021 Annual Meeting of Shareholders in the Meeting and Voting Information section of this Proxy Statement for additional details.

 

SELECTION OF DIRECTOR NOMINEES

The Nominating and Corporate Governance Committee evaluates all potential candidates identified against a current needs assessment. General characteristics applicable to all directors as well as individual skills and experiences that should be represented on the Board as a whole, but not necessarily by each director, are considered. Members of the Nominating and Corporate Governance Committee as well as other members of the Board and members of management meet with director nominee candidates to ascertain their qualifications. The Nominating and Corporate Governance Committee recommends potential director nominees to the Board for their consideration and feedback.

 

While the exact criteria and weight given to any one item will vary for a given situation, the following are the types of considerations the Nominating and Corporate Governance Committee will take into account when evaluating a potential candidate.

 

ABILITY TO SERVE

The Nominating and Corporate Governance Committee will determine whether they believe the candidate will be able to provide quality service to the Board and our shareholders.

 

Material relationships with MAA

Potential conflicts of interest

Time availability

Independence status

Service on other public company boards

Schedule flexibility

 

GENERAL CHARACTERISTICS OF NOMINEE

The Board believes there are certain personal characteristics that every director must have in order to provide quality representation for our shareholders.

 

Personal and professional integrity, ethics and values

Mature wisdom and sound judgement

Inquiring and independent analysis

Ability to objectively appraise management performance

Willingness to represent the best interests of shareholders

 

KEY EXPERIENCE, QUALIFICATIONS AND SKILLS

The Board believes that there are key experiences, qualifications and skills that are particularly relevant to MAA’s business and structure and should be possessed by one or more members of the Board.

 

Real Estate Industry – Investment

Real Estate Industry – Development/Construction

Public Company Platforms

Financial Literacy

Capital Markets

Strategic Planning and Oversight

Risk Oversight

Organization Leadership

Corporate Governance

 

PERSONAL ATTRIBUTES

The Board believes that diversity in viewpoints, perspectives and ideas is a tremendous asset which should be actively embraced. A diverse Board provides for more engaging discussions and allows for better understanding of our residents, leadership of our associates and representation of the long-term best interests of our shareholders.

 

■ Age ■ Race and Ethnicity
■ Gender ■ Background

 

  2020 PROXY STATEMENT 21

 


 

DIRECTOR NOMINEES FOR ELECTION

 

OVERVIEW

The Board believes that each nominee for election has high ethical standards and has the time, ability and desire to represent the best interests of our shareholders. Furthermore, the Board feels the unique skills of each nominee collectively provide a strong foundation for the Board’s strategic oversight responsibilities. In addition, the nominees are located and do business within the geographic footprint of our portfolio, which we believe provides the Board with important market expertise.

 

The following graphs and table provide an overview of the nominees as a group, including identification of the number of director nominees that satisfy each of the factors our Board has identified as being a key experience, qualification or skill relevant to our business and structure. Additional contributions by each director are outlined in the Individual Director Nominee Details section. Ages are as of the Annual Meeting.

 

 

 

  

         KEY EXPERIENCE, QUALIFICATIONS AND SKILLS SPECIFIC TO MAA         
   AGE  TENURE POSITION   

Real Estate Industry

– Investment

 

Real Estate
Industry

– Devvelopment/
Construction

Public Company Platforms  Financial Literacy  Capital Markets  Strategic Planning and Oversight  Risk Oversight  Organization Leadership  Corporate Governance  

H. Eric Bolton, Jr.

Chairman

63 1997 CEO of MAA  

Russell R. French

INDEPENDENT

SEC Financial Expert

74 2016 Special Limited Partner of Moseley & Co. VI, LLC and Class B Partner of Moseley & Co. VII, LLC and Moseley & Co. SBIC, LLC    

Alan B. Graf, Jr.

LEAD INDEPENDENT

SEC Financial Expert

66 2002

EVP and CFO of FedEx Corporation

 

     

Toni Jennings

INDEPENDENT

71 2016 Chairman of Jack Jennings & Sons, Inc.        

James K. Lowder

INDEPENDENT

70 2013 Chairman and President of The Colonial Company          

Thomas H. Lowder

INDEPENDENT

70 2013 Past Chairman and CEO of Colonial Properties Trust  

Monica McGurk

INDEPENDENT

50 2016 Chief Growth Officer of Kellogg Company        

Claude B. Nielsen

INDEPENDENT

69 2013 Chairman and Past CEO of Coca-Cola Bottling Company United, Inc.      

Philip W. Norwood

INDEPENDENT

72 2007 Past President and CEO of Faison Enterprises, Inc.        

W. Reid Sanders

INDEPENDENT

70 2010 President of Sanders Properties, LLC      

Gary Shorb

INDEPENDENT

69 2012 Executive Director of the Urban Child Institute, Past President and CEO of Methodist Le Bonheur Healthcare            

David P. Stockert

NON-MANAGEMENT

58 2016 Past CEO of Post Properties, Inc.  

 

  2020 PROXY STATEMENT 22

 


INDIVIDUAL DIRECTOR NOMINEE DETAILS
Individual information including the specific qualifications of each of the nominees for director is set forth in the following summaries. Director nominee ages are given as of the date of the Annual Meeting.
 
H. ERIC BOLTON, JR.
Chief Executive Officer – Mid-America Apartment Communities, Inc.
       
 
AGE  
63
Mr. Bolton joined MAA in 1994 as Vice President of Development, was named Chief Operating Officer in February 1996, and was subsequently promoted to President in December 1996. Mr. Bolton has served as our Chief Executive Officer since October 2001, and he became our Chairman of the Board in September 2002.
 
Immediately prior to joining MAA, Mr. Bolton served as Executive Vice President and Chief Financial Officer of Trammell Crow Realty Advisors, for which he worked for more than five years. Prior to that, Mr. Bolton worked in the commercial banking industry for seven years.
 
LOCATION  
Germantown, TN
     
 
MAA BOARD SERVICE
 
STATUS  
Not Independent
 
TENURE  
Director since February 1997
 
ROLE  
-          Chairman of the Board
   
-          Chairman Real Estate Investment Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
EastGroup Properties, Inc.
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Investment
Multifamily operations
 
Real Estate Industry – Development/Construction
REIT structure
 
Public Company Platforms
Advisory Board of Governors of NAREIT
 
Financial Literacy
Previously on Executive Committee of National Multifamily
Housing Council
 
Capital Markets
 
Strategic Planning and Oversight
Civic and community development
 
Risk Oversight
   
 
Organization Leadership
   
 
Corporate Governance
   

RUSSELL R. FRENCH
       
 
AGE  
74
Mr. French has been a special limited partner of Moseley & Co. VI, LLC since 2007 and a Class B Partner of both Moseley & Co. VII, LLC and Moseley & Co. SBIC, LLC since 2014. In addition, Mr. French has been a member of Moseley & Co. V, LLC, the general partner of a venture capital fund, since 2000.
 
Mr. French is a retired venture capitalist and was previously a member of Moseley & Co. III and a partner of Moseley & Co. II, positions he held for more than five years. Prior to his career as a venture capitalist, Mr. French was a securities lawyer for King & Spalding LLP for 15 years. Mr. French is an Emeritus Trustee of Emory University.
 
LOCATION  
Atlanta, GA
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since December 2016
 
ROLE  
-          Audit Committee
   
-          SEC Financial Expert
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
Post Properties, Inc. (1993-2016)
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Investment
Industry and business analysis
 
Public Company Platforms
Long-term company performance analysis
 
Financial Literacy
Public board Audit Committee service
 
Capital Markets
Securities law
SEC Financial Expert
 
Strategic Planning and Oversight
 
Risk Oversight
Historical knowledge and perspective of Post Properties Inc.
portfolio
 
Organization Leadership
 
Corporate Governance
   

 

  2020 PROXY STATEMENT 23

 



 
ALAN B. GRAF, JR.
Chief Financial Officer – FedEx Corporation
       
 
AGE  
66
Mr. Graf has been the Executive Vice President and Chief Financial Officer of FedEx Corporation since 1998 and is a member of FedEx Corporation’s Executive Committee. Mr. Graf served as Executive Vice President and Chief Financial Officer for FedEx Express, FedEx’s predecessor, from 1991 to 1998. Mr. Graf joined FedEx in 1980 as a senior financial analyst and held various management positions throughout the Finance Division prior to 1991.
 
Mr. Graf also serves on the boards of the Indiana University Foundation and the University of Memphis.
 
LOCATION  
Memphis, TN
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since June 2002
 
ROLE  
-          Lead Independent Director
   
-          Chairman Audit Committee
   
-          SEC Financial Expert
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
NIKE, Inc.
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Public Company Platforms
SEC Financial Expert
 
Financial Literacy
Public board Audit Committee Chairman service
 
Capital Markets
Technology and cybersecurity
 
Strategic Planning and Oversight
Management and development of geographically dispersed human capital
 
Risk Oversight
 
Organization Leadership
Succession planning
 
Corporate Governance
   

GOVERNANCE NOTE:  On March 9, 2020, FedEx Corporation announced that Mr. Graf will retire effective December 31, 2020. His successor will become EVP and CFO-Elect effective June 1, 2020 and will assume the role of CFO on September 22, 2020. Mr. Graf will serve as CFO until September 22, 2020 and remain at FedEx Corporation as executive vice president and senior advisor through the end of the year to ensure a smooth transition of responsibilities.

TONI JENNINGS
Chairman of the Board of Directors – Jack Jennings & Sons, Inc.
       
 
AGE  
71
Ms. Jennings currently serves as the Chairman of the Board of Jack Jennings & Sons, Inc., a commercial construction firm, a position she has held for 13 years.
 
Ms. Jennings served as the first female Lieutenant Governor for the State of Florida from 2003 to 2007. Prior to that, Ms. Jennings served as President of Jack Jennings & Sons, Inc. from 1982 to 2003. During this time, Ms. Jennings also served in the Florida state legislature, from 1976 to 2000, including 20 years in the Florida Senate where she served the last four years as Senate President.
 
Ms. Jennings also serves on the boards of Seaside National Bank and Trust, Nemours Foundation and Winter Park Health Foundation.
 
LOCATION  
Orlando, FL
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since December 2016
 
ROLE  
-          Compensation Committee
   
-          Nominating and Corporate Governance Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
Brown & Brown, Inc.
 
Next Era Energy, Inc.
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
Post Properties, Inc. (1993-2016)
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Development/Construction
Legislative and political acumen
 
Public Company Platforms
Public board Compensation Committee service
 
Capital Markets
Non-profit leadership and oversight
 
Strategic Planning and Oversight
Civic and community development
 
Organization Leadership
Historical knowledge and perspective of Post Properties Inc. portfolio
 
Corporate Governance


 

  2020 PROXY STATEMENT 24

 



 
JAMES K. LOWDER
Chairman of the Board of Directors and President – The Colonial Company
       
 
AGE  
70
Mr. Lowder has served as Chairman of the Board of Directors and President of The Colonial Company and its subsidiaries since 1995.
 
Mr. Lowder is a member of the Home Builders Association of Alabama, the Greater Montgomery Home Builders Association, and serves on the Board of Directors of the Alabama Power Company, a subsidiary of Southern Company.
 
James K. Lowder is the brother of Thomas H. Lowder, another one of our directors.
 
LOCATION  
Montgomery, AL
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since October 2013
 
ROLE  
 
-          Nominating and Corporate Governance
           Committee
   
-          Real Estate Investment Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Development/Construction
Commercial real estate industry
 
Public Company Platforms
Alternative energy solutions
 
Strategic Planning and Oversight
Historical knowledge and perspective of Colonial Properties
Trust portfolio
 
Organization Leadership
 
Corporate Governance
   

THOMAS H. LOWDER
       
 
AGE  
70
Mr. Lowder served as the Chairman of the Board of Trustees for Colonial Properties Trust from 1993 to October 2013 and as its Chief Executive Officer from 1993 to 2006 and again from 2008 to 2013. Mr. Lowder became President and Chief Executive Officer of Colonial Properties, Inc., Colonial Properties Trust’s predecessor, in 1976.
 
Mr. Lowder also serves on the boards of the Children's Hospital of Alabama and Crippled Children's Foundation.
 
Thomas H. Lowder is the brother of James K. Lowder, another one of our directors.
 
LOCATION  
Mountain Brook, AL
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since October 2013
 
ROLE  
-          Compensation Committee
   
-          Real Estate Investment Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Investment
Multifamily, office and retail operations
 
Real Estate Industry – Development/Construction
MAA market expertise
 
Public Company Platforms
Management and development of geographically dispersed
human capital
 
Financial Literacy
 
Capital Markets
Business operations in Southeast U.S. markets
 
Strategic Planning and Oversight
REIT structure
 
Risk Oversight
Public company compensation
 
Organization Leadership
Non-profit oversight
 
Corporate Governance
Succession planning
     
Historical knowledge and perspective of Colonial Properties
Trust portfolio
     

 

  2020 PROXY STATEMENT 25

 



 
MONICA McGURK
Chief Growth Officer – Kellogg Company
       
 
AGE  
50
Ms. McGurk has been the Chief Growth Officer of Kellogg Company since January 2019 after serving as Chief Revenue and eCommerce Officer upon joining the company in July 2018. Previously, Ms. McGurk served as the Chief Growth Officer for Tyson Foods, Inc. until September 2017, having joined the company in 2016 and serving as Executive Vice President of Strategy and New Ventures, and President of Foodservice. Prior to joining Tyson Foods, Inc., Ms. McGurk worked for The Coca-Cola Company as Senior Vice President, Strategy, Decision Support and eCommerce, North America Group from 2014 to 2016, and as Vice President, Strategy and eCommerce from 2012 to 2014.
 
Prior to her employment with The Coca-Cola Company, Ms. McGurk served for eight months as the Chief Executive Officer of The Alumni Factor, a digital media and information services start up. From 1992 to 2012, Ms. McGurk served in a variety of roles at McKinsey & Company, a global management consulting firm, including eight years as a partner.
 
Ms. McGurk recently served on the Governor’s Blue Ribbon Commission on Advanced Analytics and Computing for the State of Arkansas and was a presenter for the Center for Women in Leadership Executive Speaker Series in 2019.
 
LOCATION  
Winnetka, IL
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since March 2016
 
ROLE  
-          Compensation Committee
   
-          Nominating and Corporate Governance Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Public Company Platforms
Advanced analytics and consumer insights
 
Financial Literacy
Digital marketing
 
Strategic Planning and Oversight
eCommerce
 
Risk Oversight
Enhanced branding
 
Organization Leadership
Innovation in web-based services
 
Corporate Governance
Change and growth management
 
CLAUDE B. NIELSEN
Chairman of the Board of Directors – Coca-Cola Bottling Company United, Inc.
       
 
AGE  
69
Mr. Nielsen has served as the Chairman of the Board of Directors for Coca-Cola Bottling Company United, Inc. since 2003. Mr. Nielsen served as Chief Executive Officer of Coca-Cola Bottling Company United, Inc. from 1991 to his planned retirement in 2016, having been previously appointed as President in 1990. Prior to 1990, Mr. Nielsen served as President of Birmingham Coca-Cola Bottling Company.
 
Mr. Nielsen is currently a board member of the American Beverage Association.
 
LOCATION  
Birmingham, AL
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since October 2013
 
ROLE  
 
-          Chairman Nominating and Corporate Governance
            Committee
   
-          Compensation Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Public Company Platforms
Management and development of geographically dispersed
human capital
 
Financial Literacy
 
Capital Markets
Business operations in Southeast U.S. markets
 
Strategic Planning and Oversight
Succession planning
 
Risk Oversight
Historical knowledge and perspective of Colonial Properties
Trust portfolio
 
Organization Leadership
 
Corporate Governance
   


 

  2020 PROXY STATEMENT 26

 



 
PHILIP W. NORWOOD
Chairman of the Board of Directors – Pacelot Milliken Enterprises, Inc.
       
 
AGE  
72
Mr. Norwood served as the President and Chief Executive Officer of Faison Enterprises, Inc., a real estate development and investment company, from 1994 until his retirement in March 2013. Prior to joining Faison Enterprises, Inc., Mr. Norwood was Chief Executive Officer and Chairman of Trammell Crow Realty Advisors, and also served as Vice Chairman of Trammell Crow Company.
 
Currently, Mr. Norwood is Principal at Haviland Capital, LLC, a real estate development and private equity investment firm. Mr. Norwood has been a member of several real estate associations and serves as the Chairman of the Board of Directors for Pacolet Milliken Enterprises, Inc.
 
LOCATION  
Waxhaw, NC
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since August 2007
 
ROLE  
-          Chairman Compensation Committee
   
-          Real Estate Investment Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Investment
Participation in real estate associations
 
Real Estate Industry – Development/Construction
Business operations in Southeast U.S. markets
 
Capital Markets
   
 
Strategic Planning and Oversight
   
 
Risk Oversight
 
Organization Leadership
   
 
W. REID SANDERS
President – Sanders Properties, LLC
       
 
AGE  
70
Mr. Sanders was the co-founder and served as the Executive Vice President of Southeastern Asset Management, and the President of Longleaf Partners Funds, from 1975 to 2000. Prior to 1975, Mr. Sanders served as an investment officer and worked in credit analysis and commercial lending in the banking industry from 1971 to 1975.
 
Mr. Sanders currently serves as the President of Sanders Properties, LLC. In addition, Mr. Sanders serves on the Board of Directors of Independent Bank, is on the Advisory Board of SSM Venture Partners III, L.P. and serves on the Investment Committee for several limited partnerships involved in commercial real estate.
 
LOCATION  
Memphis, TN
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since March 2010
 
ROLE  
-          Audit Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
Granite Point Mortgage Trust
 
Two Harbors Investment Corp.
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
Silver Bay Realty Trust Corp. (2016-2017)
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Investment
Commercial real estate
 
Public Company Platforms
Acquisition and divestiture transaction analysis
 
Financial Literacy
REIT structure
 
Capital Markets
   
 
Strategic Planning and Oversight
 
Organization Leadership
   
 
Corporate Governance
   


 

  2020 PROXY STATEMENT 27

 



 
GARY SHORB
Executive Director – The Urban Child Institute
       
 
AGE  
69
Mr. Shorb served as the President and Chief Executive Officer of Methodist Le Bonheur Healthcare, an integrated healthcare system that comprises a seven-hospital operation with $2 billion in annual revenues, from 2001 to his planned retirement in 2016, continuing to serve as a Senior Advisor to the Chief Executive Officer through April 2017. Mr. Shorb joined Methodist Le Bonheur Healthcare in 1990 as Executive Vice President.
 
Before joining Methodist Le Bonheur Healthcare, Mr. Shorb served as President of the Regional Medical Center in Memphis, Tennessee for four years. Prior to his work in the healthcare industry, Mr. Shorb worked as a project engineer with Exxon and served as a Lieutenant Commander in the U.S. Navy.
 
Mr. Shorb serves on a number of civic and non-profit boards and is currently serving as the Executive Director of The Urban Child Institute.
 
LOCATION  
Memphis, TN
     
 
MAA BOARD SERVICE
 
STATUS  
Independent
 
TENURE  
Director since May 2012
 
ROLE  
-          Audit Committee
   
-          Nominating and Corporate Governance Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
None
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
None
   
 
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Financial Literacy
Critical service industry expertise
 
Strategic Planning and Oversight
Management and development of geographically dispersed
human capital
 
Risk Oversight
 
Organization Leadership
Business operations in Southeast U.S. markets
     
Non-profit leadership and oversight
     
Civic and community development
     
Succession planning

DAVID P. STOCKERT
       
 
AGE  
58
In 2019, Mr. Stockert became one of three general partners in Sweetwater Opportunity Fund, L.P., an Atlanta-based private real estate investment fund.
 
Mr. Stockert served as Chief Executive Officer and President of Post Properties, Inc. from 2002 to 2016, and as its President and Chief Operating Officer from 2001 to 2002.
 
Prior to joining Post Properties, Inc., Mr. Stockert served as Executive Vice President of Duke Realty Corporation from 1999 to 2000, and as Senior Vice President and Chief Financial Officer of Weeks Corporation from 1995 to 1999. Prior to joining Weeks Corporation, Mr. Stockert was an investment banker and a certified public accountant.
 
Mr. Stockert currently serves on the boards of multiple civic and charitable organizations in the Atlanta area.
 
LOCATION  
Atlanta, GA
     
 
MAA BOARD SERVICE
 
STATUS  
Non-Management
 
TENURE  
Director since December 2016
 
ROLE  
-          Real Estate Investment Committee
   
   
 
CURRENT PUBLIC DIRECTORSHIPS
 
Duke Realty Corporation
 
FORMER PUBLIC DIRECTORSHIPS WITHIN PAST 5 YEARS
 
Post Properties, Inc. (2002-2016)
     
   
 
MAA KEY EXPERIENCE, QUALIFICATIONS AND SKILLS
ADDITIONAL EXPERIENCE AND EXPERTISE
 
Real Estate Industry – Investment
Multifamily operations
 
Real Estate Industry – Development/Construction
MAA market expertise
 
Public Company Platforms
Management and development of geographically dispersed
human capital
 
Financial Literacy
 
Capital Markets
Business operations in Southeast U.S. markets
 
Strategic Planning and Oversight
REIT structure
 
Risk Oversight
Digital marketing
 
Organization Leadership
Non-profit leadership and oversight
 
Corporate Governance
Civic and community development
     
Historical knowledge and perspective of Post
Properties Inc. portfolio
     

 

  2020 PROXY STATEMENT 28

 




 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have adopted a Code of Conduct, which specifies our policy relating to conflicts of interest. The Code of Conduct states that a “conflict of interest” exists when an individual’s private interests interfere in any way or would appear from the perspective of a reasonable person to interfere in any way with the interests of MAA. Under the Code of Conduct, an associate who becomes aware of a potential conflict of interest must report the conflict to a supervisor, our Legal department, Internal Audit department or Human Resources group. If the potential conflict of interest involves our CEO, any of our executive officers, or a director, our Board will determine whether to grant a waiver if a conflict of interest is determined to exist. On an annual basis, the Nominating and Corporate Governance Committee, as well as the full Board, reviews the independence of each director, all transactions involving related parties and any potential conflict of interests. In addition, our Audit Committee charter specifies that the Audit Committee will review and discuss with management and our independent registered public accounting firm material related party transactions as required by applicable accounting and regulatory pronouncements. All transactions involving related parties must be approved by a majority of the disinterested members of our Board.

 

Based on the information presented to it, the Board and the Nominating and Corporate Governance Committee determined that no related party transactions occurred or were proposed since the beginning of 2019.

 

MATERIAL RELATIONSHIPS 

None of our non-management directors had relationships with us during 2019 that the Board determined were material.

 

INDEBTEDNESS OF MANAGEMENT 

None of our NEOs nor directors were indebted to us during 2019.

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 

Messrs. Norwood (Chairman), J. Lowder and Nielsen, and Mses. Jennings and McGurk served as members of the Compensation Committee during 2019. None of the members of the Compensation Committee is or was an officer or associate of MAA. During 2019, none of our NEOs served as a director or member of the Compensation Committee of any other entity whose executive officers served on our Board or Compensation Committee.

 

DIRECTOR COMPENSATION

 

COMPENSATION PHILOSOPHY 

Upon recommendations from the Compensation Committee, the Board sets compensation for our non-management directors. Directors who are associates of MAA are not compensated for serving on the Board. In considering their recommendation to the Board on non-management director compensation, the Compensation Committee endeavors to establish a compensation program that will adequately recognize the efforts and contributions of the non-employee directors and facilitate the attraction and retention of highly qualified directors. In doing so, the committee considers many factors including the level of responsibility and liability assumed by directors, the time commitment involved, the level of expertise and skill the Board wishes to attract and retain and the additional responsibilities associated with serving on committees, as a chairman of a committee or as the Lead Independent Director.

 

The Board believes that the approach towards non-management director compensation should reflect the values used in setting executive compensation in that it should be generally in line with the median compensation offered at comparable peer companies, reflect a mix of both cash and equity compensation to ensure alignment with our shareholders and be sustainable over the long-term.

 

The consultant hired by the Compensation Committee to assist with setting executive compensation is periodically engaged to benchmark and recommend appropriate compensation for our non-management directors.

 

2019 COMPENSATION PROGRAM 

As non-management director compensation had been unchanged in 2018 from the 2017 compensation package, the Compensation Committee retained an external compensation consultant from Pearl Meyer to benchmark director compensation and provide insight into current trends and compensation structures with the goal of setting total compensation near the median level of MAA’s comparative peer group for compensation. The compensation consultant utilized the same peer group as established to evaluate executive compensation and found that while the compensation program design was in line with industry peers and the broader market in terms of structure, the average non-employee director pay was below the peer group 50th percentile.

 

  2020 PROXY STATEMENT 29

 

 

 

 

Primarily based on the compensation consultant’s analysis and recommendations, the Board increased the average non-employee director total compensation for 2019 to just under the 50th percentile benchmark level from the 2018 study.

 

ANNUAL CASH FEES 

The below 2019 annual cash fees were awarded to non-employee directors in quarterly installments following our routine quarterly Board meetings. Committee chairmen do not receive their respective committee’s service fee in addition to their chairman fee.

 

$ 75,000 Board service
$ 20,000 Audit Committee Chairman
$ 10,000 Audit Committee service
$ 17,500 Compensation Committee Chairman
$ 8,750 Compensation Committee service
$ 12,500 Nominating and Corporate Governance Chairman
$ 6,250 Nominating and Corporate Governance service
$ 7,500 Real Estate Investment Committee service
$ 25,000 Lead Independent Director

 

GRANTS OF SHARES OF RESTRICTED STOCK 

Shares of restricted stock are granted to non-employee directors following election to the Board. These shares of restricted stock vest at the end of the director’s annual term. Dividends equivalent to the dividends paid on shares of common stock are paid on these shares of restricted stock prior to vesting. Directors who choose to leave the Board before their term is completed for reasons other than retirement, disability or death, forfeit their granted shares of restricted stock.

 

$ 130,000 Value of annual grant
The actual number of shares of restricted stock issued to each non-management director (1,140 shares) was based on the closing stock price on May 21, 2019, ($114.01), the day of election to the Board by shareholders.

 

DEFERRED COMPENSATION 

In accordance with our Director Deferred Compensation Plan, directors have the option of having the comparable value of phantom stock issued into a deferred compensation account in lieu of receiving their annual cash fees and/or their grant of shares of restricted stock. If directors choose to defer their compensation in this manner, the compensation is paid out in two annual installments either in shares of our common stock or in the cash equivalent, at the director’s election, beginning in the year following the year in which the director retires from the Board.

Dividends equivalent to the dividends paid on shares of common stock are paid on these shares of phantom stock prior to payout of the shares. All dividends paid on shares of phantom stock prior to payout are dividend reinvested into additional shares of phantom stock which are also deferred under the plan.

 

MINIMUM SHARE OWNERSHIP REQUIREMENT

Within five years of joining the Board, non-employee directors are expected to own five times the cash portion of their annual cash fees (regardless of whether issued as cash or deferred), in MAA shares or the equivalent. All non-employee directors are in compliance with this share ownership requirement.

 

MIX OF COMPENSATION ELEMENTS 

The below represents the average mix of compensation elements available to non-employee directors and as actually awarded in 2019 based on the respective role(s) each non-employee director held during 2019, and the payout elections each director made.

 

AVERAGE MIX OF 2019 COMPENSATION ELEMENTS

 

 As Offered to Non-Employee Directors   As Elected By and Paid To Non-Employee Directors
     

 

CAPS ON NON-EMPLOYEE DIRECTOR COMPENSATION 

Under the Second Amended and Restated MAA 2013 Stock Incentive Plan approved by shareholders at the 2018 Annual Meeting of Shareholders, the total value of cash paid to a director in one calendar year cannot exceed $250,000 and the total value of equity awards granted to a director in one calendar year cannot exceed $400,000.

 

  2020 PROXY STATEMENT 30

 

 

 

 

DIRECTOR COMPENSATION TABLE 

The table below represents the compensation earned by each non-employee director during 2019.

 

Name   Fees Earned
or Paid in Cash
($) (1)
  Stock
Awards
($) (2)
  All Other
Compensation
($) (3)
  Total
($)
Russell R. French (4)   $ 85,000     $ 129,971     $ 4,860     $ 219,831  
Alan B. Graf, Jr. (4)   $ 120,000     $ 129,971     $ 4,860     $ 254,831  
Toni Jennings   $ 90,000     $ 129,971     $ 4,860     $ 224,831  
James K. Lowder   $ 85,625     $ 129,971     $ 4,860     $ 220,456  
Thomas H. Lowder (4)   $ 86,875     $ 129,971     $ 4,860     $ 221,706  
Monica McGurk (4)   $ 90,000     $ 129,971     $ 4,860     $ 224,831  
Claude B. Nielsen   $ 96,250     $ 129,971     $ 4,860     $ 231,081  
Philip W. Norwood (4)   $ 103,125     $ 129,971     $ 4,860     $ 237,956  
W. Reid Sanders (4)   $ 88,750     $ 129,971     $ 4,860     $ 223,581  
Gary Shorb (4)   $ 88,125     $ 129,971     $ 4,860     $ 222,956  
David P. Stockert (4)   $ 82,500     $ 129,971     $ 4,860     $ 217,331  

 

(1) Represents annual cash fees regardless of whether they were paid as cash or deferred by the director and issued as phantom stock in the Director Deferred Compensation plan.

 

(2) Represents the grant of 1,140 shares of restricted stock to each non-employee director on May 21, 2019 at the closing stock price of $114.01. The shares of restricted stock will vest on May 21, 2020, dependent upon continued service on the Board through the end of the director’s term. Each non-employee director had aggregate restricted stock awards of 1,140 shares outstanding at December 31, 2019

 

(3) Represents the dividends paid during 2019 on outstanding shares of restricted stock regardless of whether an 83(b) election was made or if the director elected to have the underlying shares issued as phantom stock in the Director Deferred Compensation Plan.

 

(4) These directors elected to have their annual cash fees issued as shares of phantom stock in the Director Deferred Compensation Plan. The table below represents the aggregate number of shares of phantom stock issued.

 

Name   Phantom
Stock Issued
Russell R. French     706  
Alan B. Graf, Jr.     996  
Thomas H. Lowder     718  
Monica McGurk     747  
Philip W. Norwood     858  
W. Reid Sanders     739  
Gary Shorb     729  
David P. Stockert     685  

 

  2020 PROXY STATEMENT 31

 

 

 

 

EXECUTIVE COMPENSATION

  

PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

       
    MATTER TO BE VOTED  
   Advisory (non-binding) vote to approve NEO compensation as disclosed in this Proxy Statement.  
       
   Section 14A of the Exchange Act requires that we provide our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs.  As such, shareholders are asked to approve the compensation paid to our NEOs as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules, including the disclosures in the Compensation Discussion and Analysis and Executive Compensation Tables sections of this Proxy Statement.  
       
    VOTE REQUIRED  
   This proposal will be approved if the votes cast “FOR” the proposal exceed the votes cast “AGAINST” the proposal.  
       
   The vote under this proposal is advisory, and therefore, not binding on us, our Board or the Compensation Committee. However, our Board, including the Compensation Committee, values the opinions of our shareholders and, to the extent there is a significant vote against the NEO compensation as disclosed in this Proxy Statement, the Board will consider what actions may be appropriate.  
       
    IMPACT OF ABSTENTIONS  
   Abstentions will have no legal effect on whether this proposal is approved.  
       
    IMPACT OF BROKER NON-VOTES  
   Broker non-votes will have no legal effect on whether this proposal is approved.  
       
    BOARD RECOMMENDATION  
   Our Board recommends a vote FOR the compensation of our NEOs as disclosed in this Proxy Statement.  


 

EXECUTIVE OFFICERS OF THE REGISTRANT  
The following individuals served as our NEOs in 2019.
   
H. ERIC BOLTON, JR. AGE 63
Mr. Bolton joined us in 1994, initially serving as Vice President of Development before being promoted to COO in February 1996 and subsequently appointed as President in December 1996. Mr. Bolton was named CEO in October 2001 and became Chairman of the Board in September 2002. Prior to joining us, Mr. Bolton was with Trammell Crow Company for more than five years, and was EVP and CFO of Trammell Crow Realty Advisors. Prior to that, Mr. Bolton worked in the commercial banking industry for seven years.
   
THOMAS L. GRIMES, JR. AGE 51
Mr. Grimes joined us in 1994, initially working on site at one of our multifamily properties. Mr. Grimes held various operational positions, including Director of Property Management and Director of Business Development where he worked with our joint venture partners, managed our new development efforts and directed our ancillary income business, before being promoted to COO in December of 2011.
   
ALBERT M. CAMPBELL, III AGE 53
Mr. Campbell joined us in 1998, initially responsible for our external reporting and forecasting efforts. Mr. Campbell held various financial positions, including Treasurer and Director of Financial Planning where he was responsible for managing the funding requirements of the business to support corporate strategy, before being promoted to CFO in January 2010. Prior to joining us, Mr. Campbell worked as a Certified Public Accountant with Arthur Andersen and served in various finance and accounting roles with Thomas & Betts Corporation.
   
ROBERT J. DELPRIORE AGE 52
Mr. DelPriore joined us in August 2013 as our EVP and GC, initially responsible for the development of our internal Legal Department before adding responsibility for Enterprise Risk Management and our Commercial Division. Prior to joining us, Mr. DelPriore was a partner in the securities department of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC from February 2008 through August 2013 and in the corporate securities group of Bass, Berry & Sims PLC; during both of which he served as counsel to MAA.


 

As described in detail under the heading Compensation Discussion and Analysis in this Proxy Statement, we seek to closely align the interests of our NEOs with the interests of our shareholders. Our compensation programs are designed to reward for the achievement of individual, functional unit and company strategic goals, as well as long-term shareholder value creation, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.

 

The vote on this proposal is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management. It is also not a vote intended to address any specific element of compensation. The vote relates to the compensation of our NEOs as described in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. While the vote is an advisory, non-binding vote, our Board values shareholder input on executive compensation and the Compensation Committee will consider the results of this vote in determining future compensation. We conduct this vote on an annual basis, and the next such vote will take place with our 2021 Annual Meeting of Shareholders.

 

  2020 PROXY STATEMENT 32

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis section provides a detailed discussion of our executive compensation. It begins with our compensation philosophy and objectives, then describes the process we undertake to set executive compensation including the factors we consider when making compensation decisions. We then discuss the structure and individual elements of our executive compensation program and review the compensation awarded to our CEO and other NEOs in 2019.

 

Throughout this Compensation Discussion and Analysis section, we have included our rationale for our executive compensation decisions and how we believe the compensation set for our executives helps MAA achieve the strategic vision of the Board and supports the long-term best interests of our shareholders.

 

To help you navigate the discussion, the following is a detailed outline of the topics covered in this Compensation Discussion and Analysis section.

 

TABLE OF CONTENTS 

         

TOTAL DIRECT COMPENSATION APPROACH

 

34 PHILOSOPHY AND OBJECTIVES
34 DECISION MAKING PROCESS
35   Say on Pay
35   Role of Compensation Consultant
35     Compensation Consultant Independence
36   Market Benchmarking Considerations
36     Compensation Comparator Group
36     Findings of Compensation Consultant
37   Role of Executive Management
37   Risk Considerations
  38   Compensation Governance Considerations
  39   Other Considerations
  39   Tax and Accounting Implications of Compensation
         
         
         
PROGRAM STRUCTURE AND GOVERNANCE 40 TOTAL DIRECT COMPENSATION STRUCTURE
41   Base Salary
41   AIP
43   LTIP
44 2019 TARGET COMPENSATION
  46   2019 COMPENSATION CAPS
         
         
         
2019 DIRECT EXECUTIVE COMPENSATION 46 2019 MAA PERFORMANCE
46   Overall MAA Financial Performance
47   AIP and LTIP Financial Metric Performance
47   Other Highlights
48   Returns to Shareholders
49 2019 DIRECT EXECUTIVE COMPENSATION REALIZED
49   2019 Direct Compensation Plans
50   Other Direct Compensation Realized in 2019
51 OTHER COMPENSATION ELEMENTS
         
         
         
CONCLUSION 52 CONCLUSION
         

 

  2020 PROXY STATEMENT 33

 



 

TOTAL DIRECT COMPENSATION APPROACH

 

PHILOSOPHY AND OBJECTIVES

The primary objective of our executive compensation program is to drive key business and strategic goals over various time frames in support of long-term shareholder value creation. We also seek to provide fair and competitive pay opportunities that align with both overall MAA and individual performance, shareholder interests and sound corporate governance practices. The Compensation Committee, and the Board in regards to the CEO, believes that, to implement this philosophy and create a balanced and reasonable compensation package in the best long-term interests of our shareholders, the below objectives must be considered and reflected in the program.

 

The Board does not apply a specific weight or otherwise necessarily value one individual concept over another as the concepts deemed to be of most relevance may change over time reflecting changing compensation environments and MAA’s strategic initiatives. The numbers have been provided to assist in understanding how our compensation objectives are integrated in the structure and elements of our executive compensation package as discussed throughout the remainder of the Total Direct Compensation Approach section of this Proxy Statement.

 

ATTRACT AND RETAIN

Total executive compensation should be sufficiently competitive against other REITs and well-managed companies within the real estate industry to attract and retain highly qualified executive management with the appropriate expertise and leadership abilities.

 

NOT OVERPAY

Total Target direct compensation is generally positioned at or near 50th percentile market values for similar roles at industry peers and other comparable companies, with a heavy emphasis on performance-based variable pay.

 

  AVOID UNDUE RISK

Compensation elements and plans should not overly incentivize executive management to take undue risks.

 

  FAIR AND EQUITABLE

Total compensation opportunities should be fair and equitable amongst the executive officers, across all MAA associates and within our industry, reflecting the breadth, scope and complexity of the individual role.

 

  REFLECT RESPONSIBILITIES AND QUALIFICATIONS

Total compensation opportunities should reflect each respective executive’s ability to impact overall MAA performance and experience, expertise and proven performance within his or her role.

 

  QUANTIFIABLE

Total compensation should be clearly defined and based on measurable objectives.

 

  ALIGN WITH MAA’S CULTURE

Total compensation opportunities should encourage ethical leadership aligned with MAA’s culture statement and Code of Conduct.

 

  ALIGN WITH OVERALL MAA PERFORMANCE (PAY FOR PERFORMANCE)

Total compensation opportunities should align executive management interests with overall MAA performance.

 

  BALANCE ANNUAL AND LONG-TERM STRATEGIC GOALS

Total compensation opportunities should incentivize a balance between delivering annual results and ensuring long-term performance.

 

  REWARD SUPERIOR PERFORMANCE

Total compensation should reward executives for achieving superior individual and overall MAA performance which exceeds Target goals.

 

  ALIGN WITH SHAREHOLDERS

Total compensation should align the financial interests and goals of our executives with those of our shareholders.

 

  REWARD FOR CREATING LONG-TERM SHAREHOLDER VALUE

Executive management should benefit from creating long-term shareholder value.

 

  SUSTAINABLE

Total compensation packages should be sustainable to ensure consistency in our ability to retain qualified executive management and to continue to create long-term value for our shareholders in the future.

 

  SUPPORTED BY SHAREHOLDERS

Executive compensation packages should have the support of our shareholders.

 

DECISION MAKING PROCESS

The Compensation Committee is responsible for the compensation of executive management, both in terms of establishing the form and opportunities for each executive and in overseeing the actual awards made to each executive under our compensation plans. In regards to the CEO, the Compensation Committee makes recommendations to our Board and the non-management directors vote to approve CEO compensation.

 

  2020 PROXY STATEMENT 34

 



 

The Compensation Committee considers many factors and, from time-to-time, obtains input related to certain aspects of executive compensation from the non-management directors as well as other non-Board sources, including external consultants. The committee does not have a pre-defined framework that determines which factors may be more or less important, and the emphasis placed on any given factor may vary both among the respective executives and over time.

 

Ultimately, it is the Compensation Committee’s judgment of all factors it deems relevant at any given time that forms the basis for determining the executive compensation set for our CEO and other NEOs.

 

SAY ON PAY

The Compensation Committee carefully considers the results of the vote by shareholders to approve executive compensation. Due to the long-term nature of some compensation elements, the committee also feels it is important to obtain shareholder feedback on a routine, frequent basis. As such, the Board, on behalf of the Compensation Committee, has always recommended that the frequency of the vote to approve executive compensation be done on an annual basis.

 

The Compensation Committee considers the results of the shareholder vote on executive compensation from prior meetings when establishing executive compensation packages, and believes the historical Say on Pay vote outcomes are an endorsement by shareholders of their overall total compensation package and approach for our NEOs.

 

94.3% 

APPROVAL FOR 

Say on Pay

in 2019 

Annual Say on Pay 

Shareholder Vote 

APPROVED EVERY YEAR 

Since Introduced in 2011

Say on Pay 

AVERAGE APPROVAL RATE 

Since 2011 

96%

 

ROLE OF COMPENSATION CONSULTANT

The Compensation Committee has the power and authority to hire outside advisors or consultants to assist the committee in fulfilling its responsibilities, at MAA’s expense and upon terms established by the Compensation Committee. The Compensation Committee routinely hires external consultants to assist in reviewing our executive compensation program, establishing an appropriate benchmark comparator group, benchmarking plan design, mix of compensation elements and level of compensation opportunities, and evaluating risks associated with our executive compensation program.

 

The Compensation Committee hired Pearl Meyer in 2018 to assist with the review and development of the executive and non-employee director compensation program for 2019.

 

Compensation Consultant Independence

Prior to the retention of a compensation consultant or any other external advisor, and from time-to-time as the Compensation Committee deems appropriate, the Compensation Committee assesses the independence of such advisor from management, taking into consideration all factors relevant to such advisor’s independence, including the factors specified in NYSE listing standards.

 

The Compensation Committee assessed the independence of Pearl Meyer, taking into account the factors listed below.

 

The policies and procedures the consultant has in place to prevent conflicts of interest

Any business or personal relationships between the consultant and the members of the Compensation Committee

Any ownership of MAA common stock by the individuals whom perform consulting services for the Compensation Committee

Any business or personal relationship of the firm with any of our executive officers

 

Pearl Meyer provided the Compensation Committee with appropriate assurances and confirmation of its independent status pursuant to the factors indicated above. The Compensation Committee believes that Pearl Meyer has been independent throughout their service to the committee and that there is no conflict of interest between the firm and the Compensation Committee.

 

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MARKET BENCHMARKING CONSIDERATIONS

The Compensation Committee considers benchmark information when establishing and measuring the competitiveness of various aspects of our executive compensation packages, including the items listed below.

 

Base salary ranges

Annual and long-term incentive award ranges

Mix of cash and equity award opportunities

Target performance opportunities

Total direct compensation

Validity of package design and performance measures

 

While we believe that the type and levels of compensation opportunities we provide should be competitively reasonable and appropriate for our business needs and circumstances, the Compensation Committee’s approach is to consider competitive compensation practices amongst other relevant factors rather than establishing compensation at specific benchmark percentiles. This enables us to respond to changes in the labor market and provides us with flexibility in maintaining and enhancing the engagement, focus and motivation of our executives.

 

Broadly, however, unless otherwise warranted by performance, the Compensation Committee believes it is generally appropriate to be relatively in line with 50th percentile Target pay levels for comparable organizations against which MAA competes for business and executive talent and does not believe it is reasonable or appropriate for Target executive compensation to be materially outside of comparative benchmark ranges (either above the 75th percentile or below the 25th percentile) whether in terms of individual elements of the compensation program or overall total Target executive compensation.

 

Compensation Comparator Group

The Compensation Committee believes it is critical to select the appropriate comparator group for benchmarking purposes. In conjunction with consulting with our Compensation Committee to set 2019 executive compensation, Pearl Meyer reviewed our then current peer group considering various factors representing enterprise size and value, governance rankings, TSR performance, credit ratings, business models, markets and financial statistics, among other items. Pearl Meyer also reviewed REITs utilized by our multifamily peers for their peer groups as well as other REITs across various sectors in the industry. Any companies in extreme financial distress or which had poor executive pay governance perceptions were eliminated from consideration.

 

The Compensation Committee considered the analysis provided by Pearl Meyer and determined to adjust the peer group for determining 2019 compensation by adding two companies and removing three companies which had become incomparable to MAA’s enterprise value or were exhibiting significantly leveraged balance sheets or poor governance rankings.

 

The final comparator group adopted by the Compensation Committee for review of executive compensation for 2019 consisted of the companies listed below. At the time of the Pearl Meyer study in 2018, MAA was between the peer group 50th and 75th percentile in terms of size, as measured by revenues, assets and enterprise value.

 

Apartment Investment & Management Co. 

AvalonBay Communities, Inc. 

Boston Properties, Inc. 

Brixmor Property Group, Inc. 

Camden Property Trust 

Duke Realty Corp. 

Equity Residential 

Essex Property Trust, Inc. 

Extra Space Storage, Inc. 

Federal Realty Investment Trust 

Host Hotels & Resorts, Inc. 

Kimco Realty Corp. 

Public Storage 

Regency Centers Corporation 

UDR, Inc.

 

Findings of Compensation Consultant

Pearl Meyer performed a market pay analysis and provided the results of their benchmarking review, along with directional recommendations based on their market pay analysis at the September 2018 Compensation Committee meeting and the Compensation Committee considered the results of their analysis (as summarized below) in establishing the executive compensation program for 2019.

 

Company Performance
MAA’s performance, based on various financial metrics over the last one, two and three-year time periods, ranked between the comparator group 50th and 75th percentiles

MAA’s three-year TSR performance ranked above the 75th percentile of the comparator group and above the 50th percentile of the SNL US REIT Multifamily Index

 

Executive Compensation
MAA’s total direct compensation ranked at the 40th percentile of the comparator peer group and the 33rd percentile when compared to only the multifamily peers

MAA’s target mix placed similar weighting on variable versus fixed compensation as the 50th percentile

MAA’s target long term incentive plan places a slightly greater emphasis on performance shares than restricted stock versus the peer group overall average

 

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Overall, the Compensation Committee believed the results of the analysis indicated that total direct compensation in relation to performance and shareholder value creation was directionally misaligned with the comparator peer group. The Compensation Committee also considered that the responsibilities for some of our NEOs are broader than market benchmarks. As a result, and after consideration of other factors, the Compensation Committee felt it was appropriate to adopt moderate increases in base salaries and the opportunities under the AIP and LTIP plan for the NEOs for 2019.

 

ROLE OF EXECUTIVE MANAGEMENT

While our CEO does participate in general meetings of the Compensation Committee and provides input on compensation decisions related to the other NEOs, he does not participate in executive sessions of the Compensation Committee nor does he participate in any discussions determining his own compensation. Annually, upon request from the Compensation Committee, our CEO provides the committee with data pertinent to his and the other executive’s performance and compensation. Generally this information pertains to the achievement of individual functional goals.

 

At the end of any incentive plan measurement period, our CEO presents base results of the plan for the Compensation Committee’s review and, if necessary, further evaluation and/or adjustment. The base results are calculated and prepared by our Chief Ethics and Compliance Officer and Corporate Secretary according to the underlying plan documents and then reviewed by the Director of Finance prior to presentation to the Compensation Committee.

 

All incentive plans and any payments made thereunder are developed, adopted and awarded by the Compensation Committee. All compensation related to our CEO is recommended by the Compensation Committee to our full Board, which ultimately has responsibility for approving CEO compensation.

 

RISK CONSIDERATIONS

The Compensation Committee annually evaluates the risks involved with all of our compensation programs, including risks specifically associated with our executive compensation program, and strives to design total compensation programs that mitigate those risks without diminishing the incentive nature of the compensation. Following its 2019 evaluation, the Compensation Committee determined that our compensation programs do not create risks that are reasonably likely to have a material adverse impact on MAA.

 

The following are specific design factors that the Compensation Committee believes help to discourage undue risk taking and are therefore considered in determining the overall risk level of our executive and company-wide compensation programs.

 

 Multiple Elements

All compensation programs include both fixed amounts (as in the case of base salary) and variable amounts dependent upon performance (as in the case of incentive plans). This balanced, multi-component approach discourages undue risk taking in any one area as the greatest reward comes from balancing the results of all elements of compensation opportunities.

 

 Shareholder Approved Caps On Incentive Awards

The Second Amended and Restated MAA 2013 Stock Incentive Plan, which was approved by shareholders at the 2018 Annual Meeting of Shareholders limits the amount of performance based awards within a performance cycle granted to any one covered employee to 150,000 shares or $5 million for cash-based awards. The plan also limits the amount of stock option awards granted to any one associate within the calendar year to 100,000.

 

 Individual Award Caps

In addition to the caps approved by shareholders for awards in general, each associate’s incentive program opportunity is capped. With respect to executive officers, these caps are set by the Compensation Committee and, with respect to the CEO, the Board upon Compensation Committee recommendation, at levels below the limits approved by shareholders.

 

 Senior And Executive Awards Include Separate Short And Long Term Opportunities

Incentive opportunities for senior and executive management contain both short and long term elements. This balanced approach discourages undue risk taking as the greatest reward comes from balancing the results of both short and long term goals and ensures that executive management remains focused on both delivering results for today while also ensuring the ability to perform in the future.

 

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 Incentive Awards Are Tied To Performance (Pay For Performance)

Incentive opportunities are tied to individual and/or overall performance goals which are set in alignment with our annual and, in the case of senior and executive management, long term strategic goals. This ensures that management remains focused on executing the strategic vision of MAA.

 

 Target Levels Are Tied To MAA Guidance And Industry Return Performance

Target opportunities for senior and executive management are tied to our publicly disclosed guidance and our relative performance to the industry. While this provides an opportunity to reward superior performance, it discourages undue risk taking because it does not require performance beyond that which is determined to be realistically achievable and set by MAA.

 

 Performance Goals Are Tied To Measurable Metrics

Performance goals are tied to quantifiably measurable metrics and, in the case of senior and executive management, to financial information underlying our publicly disclosed financial statements which are audited by our independent registered public accounting firm and reviewed by the Audit Committee. This reduces the risk that performance results can be manipulated.

 

 Senior And Executive Awards Include Equity Elements

Part of the total compensation opportunity for senior and executive management includes awards of MAA equity. This helps to align senior and executive management interests with those of our shareholders and discourages the risk of maximizing short term returns to the detriment of long-term goals, as associates will benefit from the increased value achieved for investors over time. In addition, equity elements help to ensure we do not over compensate if shareholder value is not being created.

 

 External Compensation Consultant Advises On Executive Compensation Plans

The Compensation Committee utilizes an external compensation consultant to advise on the structure and opportunities set for executive compensation. This helps to ensure that MAA’s executive compensation plan opportunities both overall and on an individual NEO basis are in line with industry best practices and that we are neither over nor under paying our executive management team based on their role and responsibilities.

 

 Oversight Of Award Calculations

All incentive plan award calculations are reviewed by management and, in the case of executive awards, by the Compensation Committee with support from our Corporate Secretary.

 

 All Compensation Is Self-Funding

All elements of our compensation programs are self-funding in that performance measurements tied to performance based awards are calculated after the expense for the awards is taken into account. This minimizes the risk that associates benefit at our shareholders’ expense as awards under our compensation plans will not have a subsequent negative impact on our financial statements.

 

We believe that any risks arising from our compensation policies and practices for our associates, including our NEOs, are not reasonably likely to have a material adverse effect on the company. Furthermore, the Compensation Committee believes that the nature of the various elements of executive compensation does not encourage management to assume excessive risks.

 

COMPENSATION GOVERNANCE CONSIDERATIONS

In addition to the risk mitigating features and actions discussed under Risk Considerations, the Board has also established several corporate governance practices which are specifically related to executive compensation and also help to mitigate potential risks.

 

 Share Ownership Guidelines

To align our NEOs’ long-term financial interests with those of shareholders, our CEO is required to own three times his base salary and other NEOs are required to own two times their respective base salary, in shares of MAA stock or the equivalent, within three years of appointment to the position. All NEOs are in compliance with this requirement.

 

 Clawback Policy

If we are required to prepare and file an accounting restatement with the SEC, the Compensation Committee may require our CEO and the other NEOs to repay to MAA any portion of incentive compensation that was paid in the preceding three years that would not have been paid if such compensation had been determined based on the financial results reported in the restated financial statements.

 

 Holding Period Requirement

To further strengthen the alignment of interests between our NEOs and that of our shareholders, NEOs are required to retain ownership of at least 50% of net shares, after the payment of taxes, acquired through equity incentive plans. NEOs must continue to retain these shares until retirement or other termination of the NEO’s employment, or until the executive is no longer designated as a NEO. All of our NEOs are in compliance with the holding period requirement.

 

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 Prohibition On Hedging And Pledging Shares

In relation to MAA’s securities, NEOs are prohibited from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by NEOs. Specifically, our policy prohibits NEOs from: (i) selling a security which is not owned at the time of sale (short sale); (ii) buying or selling puts, calls, other derivative securities or other derivative securities that provide the economic equivalent of MAA securities or any opportunity to profit from a change in the value of MAA securities or engage in other hedging transactions; (iii) using securities as collateral in a margin account; and (iv) pledging securities as collateral for a loan. See page 19 for additional details on MAA’s hedging and pledging policies.

 

In addition to the governance policies listed above, the Compensation Committee has affirmatively determined NOT to implement the below compensation practices as they are generally negatively viewed within industry best practices and the Board does not believe they are in the best interests of our shareholders at this time.

 

NO Perquisites or personal benefits