Preferred Apartment Communities, Inc. (NYSE:APTS) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The compensation committee (the "Committee") of the Board of Directors (the "Board") of Preferred Apartment Communities, Inc. ("we", "us", or the "Company") approved the grant of 256,098 Class B Units (the "Class B Units") of Preferred Apartment Communities Operating Partnership, L.P. (the "Partnership") to agreements entered into as of January 29, 2018, but effective as of January 2, 2018, to certain of our officers and directors and to certain other employees of either the Company's manager or another affiliate of the Company who provide services to the Company and/or the Partnership. These grants were calculated using an aggregate compensation to all grantees of $5,654,100.
The Class B Unit grants to four of our top six executive officers, totaling 168,571 Class B Units, were in lieu of reimbursement for aggregate annual cash compensation of $3,450,000 for 2018, for services to be rendered for the benefit of the Company and/or the Partnership. The Class B Units to these four executive officers will vest one year from the date of grant. In addition, Class B Unit grants to the other two executive officers, totaling 19,546 Class B Units, were in lieu of reimbursement for aggregate cash compensation of $400,000 for the three years of 2018, 2019 and 2020, for services to be rendered for the benefit of the Company and/or the Partnership. The Class B Units to the other two executive officers will vest ratably over three years from the date of grant. In making these grants, the Company acted in its capacity as the general partner of the Partnership.
The Class B Units can be earned based upon an aggregate $5,654,100 increase in the market capitalization of the Company from a baseline value set on the date of grant. All market capitalization calculations will be based on the total number of shares outstanding on the date of grant which was 38,576,926 shares of common stock of the Company. A determination of the number of earned Class B Units will occur on the first anniversary of the date of grant and, to the extent not fully earned on that date, additional determinations will be made at the end of each calendar quarter thereafter until the Class B Units are fully earned or forfeited.
Earned Class B Units, once vested, will automatically convert on a one-for-one basis into Class A Units of the Partnership. Class A Units are exchangeable for shares of the Company's common stock on a one-for-one basis, or cash, as selected by the Company. The shares of the Company's common stock, if and when issued, will be issued to the Company's 2011 Stock Incentive Plan, as amended.
The Class B Units are designed to qualify as "profits interests" in the Partnership for federal income tax purposes. As a general matter, the profits interests characteristics of a Class B Unit mean that at the time of grant it will not be economically equivalent in value to a Class A Unit. The economic value of a Class B Unit can increase over time as it is earned.
The foregoing summary of the 2018 Class B Unit Award Agreements are qualified in their entirety by reference to the form of 2018 Class B Unit Award Agreement (1-Year), a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and the form of 2018 Class B Unit Award Agreement (3-Year), a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K, both of which are incorporated by reference herein.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
* Represents a management contract, or compensatory plan, contract or arrangement required to be filed to Regulation S-K.
PREFERRED APARTMENT COMMUNITIES INC ExhibitEX-10.1 2 ex-10_1x2018xclassbxonexye.htm FORM OF 1-YEAR AWARD AGREEMENT (2018) Exhibit FORM (1-Year Vesting)PREFERRED APARTMENT COMMUNITIES,…To view the full exhibit click here
About Preferred Apartment Communities, Inc. (NYSE:APTS)
Preferred Apartment Communities, Inc. is a real estate investment trust (REIT). The Company is formed primarily to acquire and operate multifamily properties in select-targeted markets throughout the United States. It operates through three segments: multifamily communities, retail and real estate related financing. The multifamily communities segment consists of owned residential multifamily communities. It owns approximately 20 multifamily communities with a total of over 6,140 units in over eight states. The retail segment consists of owned grocery-anchored shopping centers. The Company owns over 31 grocery-anchored centers across over seven Sunbelt states. It owns Champions Village, a Randalls-anchored shopping center. The financing segment consists of a portfolio of real estate loans, bridge loans and other financial instruments, which partially finance the development, construction and prestabilization carrying costs of multifamily communities and other real estate assets.
