Washington, D.C. 20549

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

 

4582 SOUTH ULSTER STREET PARKWAY, SUITE 1100
DENVER, COLORADO 80237

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On April 28, 2008

 

 

You are cordially invited to attend the 2008 Annual Meeting of Stockholders (the “Meeting”) of APARTMENT INVESTMENT AND MANAGEMENT COMPANY (“Aimco” or the “Company”) to be held on Monday, April 28, 2008, at 8:00 a.m. at The Ritz-Carlton, Georgetown, 3100 South Street, NW, Washington, DC 20007, for the following purposes:

 

1. To elect eight directors, for a term of one year each, until the next Annual Meeting of Stockholders and until their successors are elected and qualify;

 

2. To ratify the selection of Ernst & Young LLP, to serve as independent registered public accounting firm for the Company for the fiscal year ending December 31, 2008; and

 

3. To transact such other business as may properly come before the Meeting or any adjournment(s) thereof.

 

Only stockholders of record at the close of business on February 29, 2008, will be entitled to notice of, and to vote at, the Meeting or any adjournment(s) thereof.

 

We are pleased to take advantage of new Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe the new rules will allow us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Meeting.

 

On or about March 14, 2008, we intend to mail our stockholders a notice containing instructions on how to access our 2008 proxy statement and annual report and vote online. The notice also provides instruction on how you can request a paper copy of these documents if you desire, and how you can enroll in e-delivery. If you received your annual materials via email, the email contains voting instructions and links to the annual report and proxy statement on the Internet.

 

WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, PLEASE VOTE AS SOON AS POSSIBLE TO ENSURE THAT YOUR SHARES ARE REPRESENTED.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

Lisa R. Cohn

Secretary

 

March 5, 2008

 

Important Notice Regarding the Availability of Proxy Materials for
Aimco’s Annual Meeting of Stockholders to be held on April 28, 2008.

 

This proxy statement, Aimco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and Aimco’s 2007 Annual Report to Stockholders are available free of charge at the following website: www.edocumentview.com/aiv.

 

Table of Contents

 

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
4582 SOUTH ULSTER STREET PARKWAY, SUITE 1100
DENVER, COLORADO 80237

 

 

 

 

PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 2008

 

 

 

 

The Board of Directors (the “Board”) of Apartment Investment and Management Company (“Aimco” or the “Company”) has made these proxy materials available to you on the Internet, or, upon your request, has delivered printed versions of these materials to you by mail. We are furnishing this proxy statement in connection with the solicitation by our Board of proxies to be voted at our 2008 Annual Meeting (the “Meeting”). The Meeting will be held Monday, April 28, 2008, at 8:00 a.m. at The Ritz-Carlton, Georgetown, 3100 South Street, NW, Washington, DC 20007, and at any and all adjournments or postponements thereof.

 

Pursuant to rules recently adopted by the Securities and Exchange Commission, we are providing access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to each stockholder entitled to vote at the Meeting. The mailing of such Notice is scheduled to begin on or about March 14, 2008. All stockholders will have the ability to access the proxy materials over the Internet and request to receive a printed copy of the proxy materials by mail. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, the Notice includes instructions on how stockholders may request proxy materials in printed form by mail or electronically by email on an ongoing basis.

 

This solicitation is made by mail on behalf of Aimco’s Board. Costs of the solicitation will be borne by Aimco. Further solicitation of proxies may be made by telephone, fax or personal interview by the directors, officers and employees of the Company and its affiliates, who will not receive additional compensation for the solicitation. The Company has retained the services of The Altman Group, Inc., for an estimated fee of $6,500, plus out-of-pocket expenses, to assist in the solicitation of proxies from brokerage houses, banks, and other custodians or nominees holding stock in their names for others. The Company will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy material to stockholders.

 

Holders of record of the Class A Common Stock of the Company (“Common Stock”) as of the close of business on the record date, February 29, 2008 (the “Record Date”), are entitled to receive notice of, and to vote at, the Meeting. Each share of Common Stock entitles the holder to one vote. At the close of business on the Record Date, there were 91,736,837 shares of Common Stock issued and outstanding.

 

Whether you are a “stockholder of record” or hold your shares in “street name,” you may direct your vote without attending the Meeting in person.

 

If you are a stockholder of record, you may vote via the Internet by following the instructions on the Notice. If you request printed copies of the proxy materials by mail, you may also vote by signing and submitting your proxy card and returning by mail or by submitting your vote by telephone. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity.

 

If you are the beneficial owner of shares held in street name, you may be eligible to vote your shares electronically over the Internet or by telephone by following the instructions on the Notice. If you request printed copies of the proxy materials by mail, you may also vote by signing the voter instruction card provided by your bank or broker and returning it by mail. If you provide specific voting instructions by mail, telephone or the Internet, your shares will be voted by your broker or nominee as you have directed.

The persons named as proxies are officers of Aimco. All proxies properly submitted in time to be counted at the Meeting will be voted in accordance with the instructions contained therein. If you submit your proxy without voting instructions, your shares will be voted in accordance with the recommendations of the Board. Proxies may be revoked at any time before voting by filing a notice of revocation with the Corporate Secretary of the Company, by filing a later dated proxy with the Corporate Secretary of the Company or by voting in person at the Meeting.

 

You are entitled to attend the Meeting only if you were an Aimco stockholder or joint holder as of the Record Date or you hold a valid proxy for the Meeting. If you are not a stockholder of record but hold shares through a broker or nominee (i.e., in street name), you should provide proof of beneficial ownership as of the Record Date, such as your most recent account statement prior to February 29, 2008, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership.

 

The principal executive offices of the Company are located at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237.

 

ELECTION OF DIRECTORS

 

Pursuant to Aimco’s Articles of Restatement (the “Charter”) and Amended and Restated Bylaws (the “Bylaws”), directors are elected at each Annual Meeting of Stockholders and hold office for one year, and until their successors are duly elected and qualify. Aimco’s Bylaws currently authorize a Board consisting of not fewer than three nor more than nine persons.

 

The nominees for election to the eight positions on the Board selected by the Nominating and Corporate Governance Committee of the Board and proposed by the Board to be voted upon at the Meeting are:

 

James N. Bailey

Terry Considine

Richard S. Ellwood

Thomas L. Keltner

J. Landis Martin

Robert A. Miller

Thomas L. Rhodes

Michael A. Stein

 

Messrs. Bailey, Considine, Ellwood, Keltner, Martin, Miller, Rhodes and Stein were elected to the Board at the last Annual Meeting of Stockholders. Messrs. Bailey, Ellwood, Keltner, Martin, Miller, Rhodes and Stein are not employed by, or affiliated with, Aimco, other than by virtue of serving as directors of Aimco. Unless authority to vote for the election of directors has been specifically withheld, the persons named in the accompanying proxy intend to vote for the election of Messrs. Bailey, Considine, Ellwood, Keltner, Martin, Miller, Rhodes and Stein to hold office as directors for a term of one year until their successors are elected and qualify at the next Annual Meeting of Stockholders. All nominees have advised the Board that they are able and willing to serve as directors.

 

If any nominee becomes unavailable for any reason (which is not anticipated), the shares represented by the proxies may be voted for such other person or persons as may be determined by the holders of the proxies (unless a proxy contains instructions to the contrary). In no event will the proxy be voted for more than eight nominees.

 

The vote of a plurality of all the votes cast at the Meeting at which a quorum is present is necessary for the election of a director. For purposes of the election of directors, abstentions or broker non-votes as to the election of directors will not be counted as votes cast and will have no effect on the result of the vote. Unless instructed to the contrary in the proxy, the shares represented by the proxies will be voted FOR the election of the eight nominees named above as directors.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH
OF THE EIGHT NOMINEES.

 

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

 

The firm of Ernst & Young LLP, the Company’s independent registered public accounting firm for the year ended December 31, 2007, was selected by the Audit Committee to act in the same capacity for the fiscal year ending December 31, 2008, subject to ratification by Aimco’s stockholders. The aggregate fees billed for services rendered by Ernst & Young LLP during the years ended December 31, 2007 and 2006, are described below under the caption “Principal Accountant Fees and Services.”

 

Representatives of Ernst & Young LLP will be present at the Meeting and will be given the opportunity to make a statement if they so desire and to respond to appropriate questions.

 

The affirmative vote of a majority of the votes cast regarding the proposal is required to ratify the selection of Ernst & Young LLP. Accordingly, abstentions or broker non-votes will not affect the outcome of the vote on the proposal. Unless instructed to the contrary in the proxy, the shares represented by the proxies will be voted FOR the proposal to ratify the selection of Ernst & Young LLP to serve as independent registered public accounting firm for the Company for the fiscal year ending December 31, 2008.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION
OF THE SELECTION OF ERNST & YOUNG LLP.

 

The executive officers of the Company and the nominees for election as directors of the Company, their ages, dates they were first elected an executive officer or director, and their positions with the Company or on the Board are set forth below.

 

 

The following is a biographical summary for at least the past five years of the current directors and executive officers of the Company.

 

Terry Considine.  Mr. Considine has been Chairman of the Board and Chief Executive Officer since July 1994. Mr. Considine also serves as Chairman and Chief Executive Officer of American Land Lease, Inc., another publicly held real estate investment trust. Mr. Considine devotes substantially all of his time to his responsibilities at Aimco.

Jeffrey W. Adler.  Mr. Adler was appointed Executive Vice President and Chief Property Operations Officer in December 2007, focusing on customer knowledge, branding, Internet, process and automation. Previously, he served as Executive Vice President — Conventional Property Operations from February 2004 until December 2007. Mr. Adler joined the Company in January 2002 as Senior Vice President of Risk Management and added the responsibility of Senior Vice President, Marketing in November 2002.

 

Harry G. Alcock.  Mr. Alcock was appointed Executive Vice President in October 1999. Mr. Alcock has had responsibility for acquisition and financing activities of the Company since July 1994, serving as a Vice President from July 1996 to October 1997 and as a Senior Vice President from October 1997 to October 1999. He focuses on transactions related to Aimco’s portfolio of properties in the western portion of the United States.

 

Timothy J. Beaudin.  Mr. Beaudin was appointed Executive Vice President and Chief Development Officer in October 2005. Prior to joining Aimco and beginning in 1995, Mr. Beaudin was with Catellus Development Corporation, a San Francisco, California-based real estate investment trust. During his last five years at Catellus, Mr. Beaudin served as Executive Vice President, with management responsibility for development, construction and asset management.

 

Lisa R. Cohn.  Ms. Cohn was appointed Executive Vice President, General Counsel and Secretary in December 2007. From January 2004 to December 2007, Ms. Cohn served as Senior Vice President and Assistant General Counsel. She joined Aimco in July 2002 as Vice President and Assistant General Counsel. Prior to joining the Company, Ms. Cohn was in private practice with the law firm of Hogan & Hartson LLP.

 

Miles Cortez.  Mr. Cortez was appointed Executive Vice President and Chief Administrative Officer in December 2007. Mr. Cortez joined Aimco in August 2001 as Executive Vice President, General Counsel and Secretary. Prior to joining the Company, Mr. Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver, Colorado law firm, from December 1997 through September 2001. He served as president of the Colorado Bar Association from 1996 to 1997 and the Denver Bar Association from 1982 to 1983.

 

Anthony R. D’Alto.  Mr. D’Alto was appointed Executive Vice President — Property Operations in December 2007 and is responsible for day-to-day property operations. Mr. D’Alto joined Aimco in December 2003 as a Regional Vice President and was promoted to Division Vice President for the Gulf Division in November 2004. Prior to joining Aimco, Mr. D’Alto served for approximately 30 years in various operating positions primarily in the automotive and rental car industry, most recently from 1999 to 2002 as Senior Vice President of ANC Rental Corporation where he was responsible for the operations of its subsidiaries, Alamo Rent-a-Car, LLC and National Car Rental System, Inc.

 

Patti K. Fielding.  Ms. Fielding was appointed Executive Vice President — Securities and Debt in February 2003 and Treasurer in January 2005. She is responsible for debt financing and the treasury department. From January 2000 to February 2003, Ms. Fielding served as Senior Vice President — Securities and Debt. Ms. Fielding joined the Company as a Vice President in February 1997.

 

Scott W. Fordham.  Mr. Fordham was appointed Senior Vice President and Chief Accounting Officer in January 2007. From January 2006 through December 2006, Mr. Fordham served as vice president and chief accounting officer of Brandywine Realty Trust, a real estate investment trust. Prior to the merger of Prentiss Properties Trust with Brandywine Realty Trust, Mr. Fordham served as Senior Vice President and Chief Accounting Officer of Prentiss Properties Trust and was in charge of the corporate accounting and financial reporting groups. Prior to joining Prentiss Properties Trust in 1992, Mr. Fordham worked in public accounting with PricewaterhouseCoopers LLP. Mr. Fordham is a certified public accountant.

 

Lance J. Graber.  Mr. Graber was appointed Executive Vice President in October 1999. He focuses on transactions related to Aimco’s portfolio of properties in the eastern portion of the United States.

 

Thomas M. Herzog.  Mr. Herzog was appointed Executive Vice President in July 2005 and Chief Financial Officer in November 2005. In January 2004, Mr. Herzog joined Aimco as Senior Vice President and Chief Accounting Officer. Prior to joining Aimco, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from June 2002 to January 2004 and as Chief Technical Advisor from March 2000 to June 2002. Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 until 2000.

James G. Purvis.  Mr. Purvis was appointed Executive Vice President — Human Resources in February 2003. Prior to joining Aimco, from October 2000 to February 2003, Mr. Purvis served as the Vice President of Human Resources at SomaLogic, Inc., a privately held biotechnology company in Boulder, Colorado.

 

David Robertson.  Mr. Robertson has been Executive Vice President since February 2002, President and Chief Executive Officer of Aimco Capital since October 2002, and Chief Investment Officer since March 2007. In addition to serving as Chairman of Aimco’s Investment Committee, Mr. Robertson is responsible for portfolio strategy, capital allocation, investments, joint ventures, asset management and transaction activities. Since February 1996, Mr. Robertson has served as Chairman of Robeks Corporation, a 150-unit privately held chain of specialty food stores that he founded.

 

Robert Y. Walker, IV.  Mr. Walker was appointed Senior Vice President in August 2005 and became Chief Accounting Officer in November 2005. He was promoted to Executive Vice President in July 2006 and in January 2007 became the Chief Financial Officer of Property Operations, which includes financial oversight of Redevelopment. From June 2002 until he joined Aimco, Mr. Walker served as Senior Vice President and Chief Financial Officer at Miller Global Properties, LLC, a Denver-based private equity, real estate fund manager. From May 1997 to June 2002, Mr. Walker was employed by GE Real Estate, serving as Global Controller from May 2000 to June 2002.

 

James N. Bailey.  Mr. Bailey was first elected as a Director of the Company in June 2000 and is currently Chairman of the Nominating and Corporate Governance Committee and a member of the Audit and Compensation and Human Resources Committees. Mr. Bailey co-founded Cambridge Associates, LLC, an investment consulting firm, in 1973 and currently serves as its Senior Managing Director and Treasurer. He is also a director of The Plymouth Rock Company, SRB Corporation, Inc., Direct Response Corporation and Homeowners Direct Company, all four of which are insurance companies and insurance company affiliates. In addition, he is a director of Getty Images, Inc., a publicly held company. He also serves as an Overseer for the New England Aquarium. Mr. Bailey is a member of the Massachusetts Bar and the American Bar Associations.

 

Richard S. Ellwood.  Mr. Ellwood was first elected as a Director of the Company in July 1994. Mr. Ellwood is currently a member of the Audit, Compensation and Human Resources, and Nominating and Corporate Governance Committees. Mr. Ellwood was the founder and President of R.S. Ellwood & Co., Incorporated, which he operated as a real estate investment banking firm until December 31, 2004. Prior to forming his firm, Mr. Ellwood had 31 years experience on Wall Street as an investment banker, serving as: Managing Director and senior banker at Merrill Lynch Capital Markets from 1984 to 1987; Managing Director at Warburg Paribas Becker from 1978 to 1984; general partner and then Senior Vice President and a director at White, Weld & Co. from 1968 to 1978; and in various capacities at J.P. Morgan & Co. from 1955 to 1968. Mr. Ellwood currently serves as a director of Felcor Lodging Trust, Incorporated, a publicly held company. He also serves as a trustee of the Diocesan Investment Trust of the Episcopal Diocese of New Jersey and is chairman of the diocesan audit committee.

 

Thomas L. Keltner.  Mr. Keltner was first elected as a Director of the Company in April 2007 and is currently a member of the Audit, Compensation and Human Resources, and Nominating and Corporate Governance Committees. In March 2007, Mr. Keltner became the Executive Vice President and Chief Executive Officer — Americas and Global Brands for Hilton Hotels Corporation. Mr. Keltner joined Hilton Hotels Corporation in 1999 and has served in various roles. Mr. Keltner has more than 20 years of experience in the areas of hotel development, acquisition, disposition, franchising and management. Prior to joining Hilton Hotels Corporation, from 1993 to 1999 Mr. Keltner served in several positions with Promus Hotel Corporation, including President, Brand Performance and Development. Before joining Promus Hotel Corporation, he served in various capacities with Holiday Inn Worldwide, Holiday Inns International and Holiday Inns, Inc. In addition, Mr. Keltner was President of Saudi Marriott Company, a division of Marriott Corporation, and was a management consultant with Cresap, McCormick and Paget, Inc.

 

J. Landis Martin.  Mr. Martin was first elected as a Director of the Company in July 1994 and is currently Chairman of the Compensation and Human Resources Committee. Mr. Martin is also a member of the Audit and Nominating and Corporate Governance Committees and serves as the Lead Independent Director of Aimco’s Board. Mr. Martin is the Founder and Managing Director of Platte River Ventures LLC, a private equity firm. In November 2005, Mr. Martin retired as Chairman and CEO of Titanium Metals Corporation, a publicly held

integrated producer of titanium metals, where he served since January 1994. Mr. Martin served as President and CEO of NL Industries, Inc., a publicly held manufacturer of titanium dioxide chemicals, from 1987 to 2003. Mr. Martin is also a director of Halliburton Company, a publicly held provider of products and services to the energy industry and Crown Castle International Corporation, a publicly held wireless communications company.

 

Robert A. Miller.  Mr. Miller was first elected as a Director of the Company in April 2007 and is currently a member of the Audit, Compensation and Human Resources, and Nominating and Corporate Governance Committees. Mr. Miller has served as the President of Marriott Leisure since 1997. Prior to Marriott Leisure, from 1984 to 1988, Mr. Miller served as Executive Vice President & General Manager of Marriott Vacation Club International and then as its President from 1988 to 1997. In 1984, Mr. Miller and a partner sold their company, American Resorts, Inc., to Marriott. Mr. Miller co-founded American Resorts, Inc. in 1978, and it was the first business model to encompass all aspects of timeshare resort development, sales, management and operations. Prior to founding American Resorts, Inc., from 1972 to 1978 Mr. Miller was Chief Financial Officer of Fleetwing Corporation, a regional retail and wholesale petroleum company. Prior to joining Fleetwing, Mr. Miller served for five years as a staff accountant for Arthur Young & Company. Mr. Miller is past Chairman of the American Resort Development Association (ARDA) and currently serves as Chairman of the ARDA International Foundation.

 

Thomas L. Rhodes.  Mr. Rhodes was first elected as a Director of the Company in July 1994 and is currently a member of the Audit, Compensation and Human Resources, and Nominating and Corporate Governance Committees. Mr. Rhodes is Chairman of National Review magazine where he has served as President since November 1992 and as a Director since 1988. From 1976 to 1992, he held various positions at Goldman, Sachs & Co., was elected a General Partner in 1986 and served as a General Partner from 1987 until November 1992. Mr. Rhodes is Chairman of the Board of Directors of The Lynde and Harry Bradley Foundation and Vice Chairman of American Land Lease, Inc., a publicly held real estate investment trust.

 

Michael A. Stein.  Mr. Stein was first elected as a Director of the Company in October 2004 and is currently the Chairman of the Audit Committee. Mr. Stein is also a member of the Compensation and Human Resources and Nominating and Corporate Governance Committees. From January 2001 until its acquisition by Eli Lilly in January 2007, Mr. Stein served as Senior Vice President and Chief Financial Officer of ICOS Corporation, a biotechnology company based in Bothell, Washington. From October 1998 to September 2000, Mr. Stein was Executive Vice President and Chief Financial Officer of Nordstrom, Inc. From 1989 to September 1998, Mr. Stein served in various capacities with Marriott International, Inc., including Executive Vice President and Chief Financial Officer from 1993 to 1998. Mr. Stein serves on the Boards of Directors of Getty Images, Inc. and Nautilus, Inc., which are both publicly held companies, and the Board of Directors of Providence Health & Services, a not-for-profit health system operating 26 hospitals and more than 35 other health care facilities across Alaska, Washington, Montana, Oregon and California.

 

The Board has determined that to be considered independent, an outside director may not have a direct or indirect material relationship with Aimco or its subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). A material relationship is one that impairs or inhibits — or has the potential to impair or inhibit — a director’s exercise of critical and disinterested judgment on behalf of Aimco and its stockholders. In determining whether a material relationship exists, the Board considers all relevant facts and circumstances, for example, whether the director or a family member is a current or former employee of the Company, family member relationships, compensation, business relationships and payments, and charitable contributions between Aimco and an entity with which a director is affiliated (as an executive officer, partner or substantial stockholder). In addition to the factors mentioned, the Board has previously evaluated a potential investment relationship between a Considine family partnership and a fund managed by Mr. Martin, which investment was on the same terms as those offered to other potential investors. The Board consults with the Company’s counsel to ensure that such determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent director,” including but not limited to those categorical

standards set forth in Section 303A.02 of the listing standards of the New York Stock Exchange as in effect from time to time.

 

Consistent with these considerations, the Board affirmatively has determined that Messrs. Bailey, Ellwood, Keltner, Martin, Miller, Rhodes and Stein are independent directors (collectively the “Independent Directors”).

 

The Board held five meetings during the year ended December 31, 2007. The Board has established standing Audit, Compensation and Human Resources, and Nominating and Corporate Governance committees. Except as noted, during 2007, no director attended fewer than 75% of the total number of meetings of the Board and any committees of the Board upon which he served. Mr. Keltner attended 67% of the meetings of the Compensation and Human Resources and Nominating and Corporate Governance Committees. Following his election to the Board and appointment to those committees, the Compensation and Human Resources and Nominating and Corporate Governance Committees each met three times, and Mr. Keltner was unable to attend one meeting of each committee due to a long standing commitment established prior to his nomination to Aimco’s Board.

 

The Corporate Governance Guidelines, as described below, provide that the Company generally expects that the Chairman of the Board will attend all annual and special meetings of the stockholders. Other members of the Board are not required to attend such meetings. Messrs. Considine, Bailey, Ellwood, Martin, Miller, Rhodes and Stein attended the Company’s 2007 annual meeting of stockholders, and the Company anticipates that all of the members of the Board will attend the 2008 annual meeting of stockholders.

 

Below is a table illustrating the standing committee memberships and chairmen, and additional detail on each committee follows the table.

 

 

 

 

Audit Committee.

 

The Audit Committee currently consists of the seven Independent Directors, and the Audit Committee Chairman is Mr. Stein. The Audit Committee makes determinations concerning the engagement of the independent registered public accounting firm, reviews with the independent registered public accounting firm the plans and results of the audit engagement (including the audit of the Company’s financial statements and the Company’s internal control over financial reporting), reviews the independence of the independent registered public accounting firm and considers the range of audit and non-audit fees. The Audit Committee also provides oversight for the Company’s financial reporting process, internal control over financial reporting and the Company’s internal audit function.

 

The Audit Committee held seven meetings during the year ended December 31, 2007. The Audit Committee has a written charter that was adopted effective November 6, 2003, and last updated on February 27, 2008, which

charter is posted on Aimco’s website (www.aimco.com) and is also available in print to stockholders, upon written request to Aimco’s Corporate Secretary. As set forth in the Audit Committee’s charter, no director may serve as a member of the Audit Committee if such director serves on the audit committee of more than two other public companies, unless the Board determines that such simultaneous service would not impair the ability of such director to effectively serve on the Audit Committee. No member of the Audit Committee serves on the audit committee of more than two other public companies.

 

Audit Committee Financial Expert

 

Aimco’s Board has determined that the Company has at least one audit committee financial expert serving on the Audit Committee, and has designated Mr. Stein as an “audit committee financial expert.” Each member of the Audit Committee is independent, as that term is defined by Section 303A of the listing standards of the New York Stock Exchange relating to audit committees.

 

Compensation and Human Resources Committee.

 

The Compensation and Human Resources Committee currently consists of the seven Independent Directors, and the Compensation and Human Resources Committee Chairman is Mr. Martin. The Compensation and Human Resources Committee’s purposes are to: oversee the Company’s compensation and employee benefit plans and practices, including its executive compensation plans and its incentive-compensation and equity-based plans; to review and discuss with management the Compensation Discussion and Analysis; and to direct the preparation of, and approve, a report on executive compensation to be included in the Company’s proxy statement for its annual meeting of stockholders or Annual Report on Form 10-K filed with the Securities and Exchange Commission. The Compensation and Human Resources Committee held seven meetings during the year ended December 31, 2007. The Compensation and Human Resources Committee has a written charter that was adopted effective January 29, 2004, and last updated on January 30, 2007, which charter is posted on Aimco’s website (www.aimco.com) and is also available in print to stockholders, upon written request to Aimco’s Corporate Secretary.

 

Nominating and Corporate Governance Committee.

 

The Nominating and Corporate Governance Committee currently consists of the seven Independent Directors, and the Nominating and Corporate Governance Committee Chairman is Mr. Bailey. The Nominating and Corporate Governance Committee’s purposes are to: identify and recommend to the Board individuals qualified to serve on the board; advise the Board with respect to Board composition, procedures and committees; develop and recommend to the Board a set of corporate governance principles applicable to Aimco and its management; and oversee evaluation of the Board and management (in conjunction with the Compensation and Human Resources Committee). The Nominating and Corporate Governance Committee held four meetings during the year ended December 31, 2007. The Nominating and Corporate Governance Committee has a written charter that was adopted effective March 8, 2004, which charter is posted on Aimco’s website (www.aimco.com) and is also available in print to stockholders, upon written request to Aimco’s Corporate Secretary.

 

The Nominating and Corporate Governance Committee selects nominees for director on the basis of, among other things, experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries, understanding of Aimco’s business environment and willingness to devote adequate time and effort to Board responsibilities. The Nominating and Corporate Governance Committee assesses the appropriate balance of criteria required of directors and makes recommendations to the Board.

 

When formulating its Board membership recommendations, the Nominating and Corporate Governance Committee also considers advice and recommendations from others, including stockholders, as it deems appropriate. Such recommendations are evaluated on the basis of the same criteria noted above. The Nominating and Corporate Governance Committee will consider as nominees to the Board for election at next year’s annual meeting of stockholders persons who are recommended by stockholders in writing, marked to the attention of Aimco’s Corporate Secretary, no later than July 1, 2008. During 2007, no such recommendations were received.

 

The Board is responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of stockholders. Based on recommendations from the Nominating

and Corporate Governance Committee, the Board determined to nominate the eight incumbent members of the Board for re-election.

 

Separate Sessions of Non-Management Directors and Lead Independent Director.

 

Aimco’s Corporate Governance Guidelines (described below) provide that the non-management directors shall meet in executive session without management on a regularly scheduled basis, but no less than four times per year. The non-management directors, which group is made up of the seven Independent Directors, met in executive session without management four times during the year ended December 31, 2007. Mr. Martin was the Lead Independent Director who presided at such executive session in 2007, and he has been designated as the Lead Independent Director who will preside at such executive sessions in 2008.

 

The following table sets forth the number of meetings held by the Board and each committee during the year ended December 31, 2007.

 

 

In formulating its recommendation for director compensation, the Nominating and Corporate Governance Committee reviews director compensation for independent directors of companies in the real estate industry and companies of comparable market capitalization, revenue and assets. For the year ended December 31, 2007, Aimco paid the directors serving on the Board as follows:

 

 

 

 

Compensation for Independent Directors in 2008 is an annual fee of 4,000 shares of fully vested Common Stock each, which shares were awarded January 29, 2008, a fee of $1,000 for attendance in person or telephonically at each meeting of the Board, and a fee of $1,000 for attendance at each meeting of any Board committee.

 

Effective November 6, 2003, the Board adopted a code of ethics entitled “Code of Business Conduct and Ethics” that applies to the members of the Board, all of Aimco’s executive officers and all employees of Aimco or its subsidiaries, including Aimco’s principal executive officer, principal financial officer and principal accounting officer. The Code of Business Conduct and Ethics is posted on Aimco’s website (www.aimco.com) and is also available in print to stockholders, upon written request to Aimco’s Corporate Secretary. If, in the future, Aimco amends, modifies or waives a provision in the Code of Business Conduct and Ethics, rather than filing a Current Report on Form 8-K, Aimco intends to satisfy any applicable disclosure requirement under Item 5.05 of Form 8-K by posting such information on Aimco’s website (www.aimco.com), as necessary.

 

Effective March 8, 2004, the Board adopted and approved Corporate Governance Guidelines, which were last amended in August 2006. These guidelines are available on Aimco’s website (www.aimco.com) and are also available in print to stockholders, upon written request to Aimco’s Corporate Secretary. In general, the Corporate Governance Guidelines address director qualification standards, director responsibilities, the lead independent director, director access to management and independent advisors, director compensation, director orientation and continuing education, management succession, and an annual performance evaluation of the Board.

 

Any interested parties desiring to communicate with Aimco’s Board, the Lead Independent Director, any of the Independent Directors, Aimco’s Chairman of the Board, any committee chairman, or any committee member may directly contact such persons by directing such communications in care of Aimco’s Corporate Secretary. All communications received as set forth in the preceding sentence will be opened by the office of Aimco’s General Counsel for the sole purpose of determining whether the contents represent a message to Aimco’s directors. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or any group or committee of directors, the General Counsel’s office will make sufficient copies of the contents to send to each director who is a member of the group or committee to which the envelope or e-mail is addressed.

 

To contact Aimco’s Corporate Secretary, correspondence should be addressed as follows:

 

Corporate Secretary

Office of the General Counsel

Apartment Investment and Management Company

4582 South Ulster Street Parkway, Suite 1100

Denver, Colorado 80237

 

The Audit Committee oversees Aimco’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report on Form 10-K with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. A written charter approved by the Audit Committee and ratified by the Board governs the Audit Committee.

 

The Audit Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and letter required by Independence Standards Board Standard No. 1 as adopted by the Public Company Accounting Oversight Board in Rule 3600T, and has discussed with the independent registered public accounting firm their independence from the Company and its management, and has considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with maintaining such firm’s independence.

 

The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting. The Audit Committee held seven meetings during fiscal year 2007.

 

None of the Audit Committee members have a relationship with the Company that might interfere with exercise of his independence from the Company and its management.

 

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements and management’s report on internal control over financial reporting be included in the Annual Report on Form 10-K for the year ended December 31, 2007, for filing with the Securities and Exchange Commission. The Audit Committee has also determined that provision by Ernst & Young LLP of other non-audit services is compatible with maintaining Ernst & Young LLP’s independence. The Audit Committee and the Board have also recommended, subject to stockholder ratification, the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2008.

 

Date: March 5, 2008

 

MICHAEL A. STEIN (CHAIRMAN)
JAMES N. BAILEY
RICHARD S. ELLWOOD
THOMAS L. KELTNER
J. LANDIS MARTIN
ROBERT A. MILLER
THOMAS L. RHODES

 

The above report will not be deemed to be incorporated by reference into any filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates the same by reference.

 

The aggregate fees billed for services rendered by Ernst & Young LLP during the years ended December 31, 2007 and 2006 were approximately $8.95 million and $11.60 million, respectively, and are described below.

 

Audit Fees

 

Fees for audit services totaled approximately $5.54 million in 2007 and approximately $7.27 million in 2006. These amounts include fees associated with the annual audit of the financial statements of Aimco, its internal control over financial reporting and the financial statements of certain of its consolidated subsidiaries and unconsolidated investees. Fees for audit services also include fees for the reviews of interim financial statements in Aimco’s Quarterly Reports on Form 10-Q, registration statements filed with the Securities and Exchange Commission (“SEC”), other SEC filings, equity or debt offerings, comfort letters and consents.

 

Audit-Related Fees

 

Fees for audit-related services totaled approximately $0.29 million in 2007 and approximately $0.72 million in 2006. Audit-related services principally include various audit and attest work not required by statute or regulation, benefit plan audits, and accounting consultations.

 

Tax Fees

 

Fees billed for tax services totaled $3.12 million in 2007 and $3.61 million in 2006. Such amounts included fees for tax compliance services for approximately 300 subsidiaries or affiliates of the Company of $2.74 million in 2007 and $3.17 million in 2006. The portion of the total representing fees for tax planning services amounted to approximately $0.38 million in 2007 and approximately $0.44 million in 2006.

 

All Other Fees

 

Fees for all other services not included above were zero in 2007 and in 2006. There were no fees billed or incurred in 2007 and 2006 related to financial information systems design and implementation.

 

Included in the fees above are audit and tax compliance fees of $4.92 million and $6.81 million for 2007 and 2006, respectively, for services provided to consolidated and unconsolidated partnerships for which an Aimco subsidiary is the general partner. Audit services were provided to approximately 130 such partnerships and tax compliance services were provided to approximately 300 such partnerships during 2007.

 

In 2003, the Audit Committee adopted the Audit and Non-Audit Services Pre-Approval Policy (the “Pre-approval Policy”), which the Audit Committee reviewed and again approved, with minor modifications, in October 2007. The Pre-approval Policy describes the Audit, Audit-related, Tax and Other Permitted services that have the general pre-approval of the Audit Committee, typically subject to a dollar limit of $50,000. The term of any general pre-approval is generally 12 months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. At least annually, the Audit Committee will review and pre-approve the services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval from the Audit Committee. In accordance with this review, the Audit Committee may add to or subtract from the list of general pre-approved services or modify the permissible dollar limit associated with pre-approvals. As set forth in the Pre-approval Policy, unless a type of service has received general pre-approval and is anticipated to be within the dollar limit associated with the general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent registered public accounting firm. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the rules on independent registered public accounting firm independence. The Audit Committee will also consider whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service, for reasons such as its

familiarity with Aimco’s business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance Aimco’s ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor will necessarily be determinative. All of the services described above were approved pursuant to the annual engagement letter or in accordance with the Pre-approval Policy; none were approved pursuant to Rule 2-01(c)(7)(i)(C) of SEC Regulation S-X.

 

The following table sets forth certain information available to the Company, as of February 25, 2008, with respect to Aimco’s equity securities beneficially owned by (i) each director and director nominee, the chief executive officer, the chief financial officer and the three other most highly compensated executive officers who were serving as of February 25, 2008, and (ii) all directors and executive officers as a group. The table also sets forth certain information available to the Company, as of February 25, 2008, with respect to shares of Common Stock held by each person known to the Company to be the beneficial owner of more than 5% of such shares. This table reflects options that are exercisable within 60 days. Unless otherwise indicated, each person has sole voting and investment power with respect to the securities beneficially owned by that person. The business address of each of the following directors and executive officers is 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, unless otherwise specified.

 

 

 

 

This Compensation Discussion & Analysis addresses the following:

 

 

Aimco’s Executive Compensation Philosophy

 

Aimco’s philosophy in setting compensation for executive officers is to provide competitive compensation that allows Aimco to attract and retain executive talent together with variable elements that reward performance. The Compensation and Human Resources Committee (the “Committee”) reviews the performance of and determines the compensation for the Chief Executive Officer. The Committee also reviews and approves the decisions made by the Chief Executive Officer as to the compensation of Aimco’s other executive officers. Aimco uses the following guidelines for compensation decisions:

 

 

Components of Executive Compensation

 

Total compensation for Aimco’s executive officers is comprised of the following components:

 

 

Together, these components comprise total compensation.

 

How the Committee determines the amount of target total compensation for the CEO.

 

The Committee sets Mr. Considine’s target total compensation at a level that reflects the Committee’s understanding of what is required in the market to attract and retain comparable talent for a comparable position. At the beginning of the year, the Committee determined target total compensation for Mr. Considine. To determine target total compensation for Mr. Considine, the Committee used an analysis provided by Aimco’s Human Resources team of proxy data for comparable positions from a peer group consisting of certain other multifamily REITs and certain Large Cap REITs in areas other than multifamily and also used REIT and general industry survey data. For Mr. Considine, the peer companies were: Archstone-Smith Trust, AvalonBay Communities Inc., Boston Properties, Inc., BRE Properties, Inc., Brookfield Property Corp., Camden Property Trust, Developers Diversified Realty Corp., Duke Realty Corp., Equity Office Properties Trust, Equity Residential, Essex Property Trust, Inc., Forest City Enterprises, Inc., General Growth Properties, Inc., Hilton Hotels Corp., Home Properties, Inc., Host

Marriott Corp., Kimco Realty Corp., Macerich Co., Marriott International, Inc., Prologis, Post Properties, Inc., Public Storage, Inc., Simon Property Group, Inc., Starwood Hotels & Resorts, United Dominion Realty Trust and Vornado Realty Trust. The median of market compensation for other chief executive officers served as the primary factor in determining the target total compensation for Mr. Considine. Other factors included an assessment of Mr. Considine’s objectives for the year and the Committee’s discretion.

 

How the Committee determines the allocation of Mr. Considine’s target total compensation between base and bonus.

 

The Committee’s philosophy with respect to Mr. Considine’s base compensation is to set a fixed base compensation amount to provide a level of base compensation that is competitive with pay for comparable chief executive officer positions in real estate companies and companies in other industries with similar revenue size and management complexity. Prior to 2006, Mr. Considine’s base compensation was paid in cash. For 2006 and 2007, Mr. Considine’s base compensation has been in the form of a stock option subject to vesting based on achievement of a performance threshold. In 2006, the performance threshold was satisfied. In 2007, the performance threshold was not satisfied and the option granted for such year expired prior to becoming exercisable. Bonus compensation is the amount in excess of base compensation that, together with base compensation, constitutes total compensation. Bonus compensation is tied both to the achievement of company objectives and specific individual goals.

 

How Aimco determines the amounts of target total compensation for executive officers (other than the CEO).

 

Aimco sets executive officer target total compensation at a level that reflects Aimco’s understanding of what is required in the market to attract and retain comparable talent for a comparable position. At the beginning of 2007, Mr. Considine, in consultation with the Committee, determined target total compensation for the executive officers. To make these determinations, Mr. Considine worked with Aimco’s Human Resources team, which provided an analysis of data for each position drawn from proxy data for comparable positions from a peer group consisting of certain other multifamily REITs and certain other REITs in areas other than multifamily (which list of peer companies is substantially similar to that used for Mr. Considine, as described above), REIT industry survey data, and survey data for companies in other industries with comparable positions, transactional functions, and similar revenue size and management complexity. The median of market compensation for other comparable positions served as the primary factor in determining the target total compensation for executive officers. Survey data was reviewed and used to validate proxy data obtained or to provide a market comparison of the value of the position. Other factors included an assessment of each executive officer’s objectives for the year and Mr. Considine’s discretion. Aimco has used substantially the same comparisons for these positions for the past several years to assist in the determination of executive compensation. These comparisons were deemed to represent fairly information from the labor markets in which Aimco competes for executive talent.

 

How Aimco determines the allocation of executive officer target total compensation between base and bonus.

 

Aimco’s philosophy with respect to base compensation for executive officers is to set a fixed base compensation amount that is competitive with the median base pay for comparable positions in real estate companies and companies in other industries with similar revenue size and management complexity. Base compensation amounts are generally the same for officers with comparable levels of responsibility to provide internal equity and consistency among executive officers. Executive officer base compensation is generally paid in cash. In some cases, base compensation varies from that of the market median or from that of officers with comparable levels of responsibility because of the current recruiting or retention market for a particular position, or because of the tenure of a particular officer in his position.

 

Bonus compensation is the amount in excess of base compensation that, when totaled together with base compensation, constitutes total compensation.

How bonus compensation serves Aimco’s objectives.

 

Bonus compensation is used primarily to provide total compensation potential that is competitive with pay for comparable positions in real estate companies and companies in other industries with similar revenue size and management complexity. Discretionary bonus amounts above target bonus compensation amounts reward and therefore encourage outstanding individual and Company performance. Providing bonus compensation in the form of Aimco equity that vests over time (typically a period of four or five years) serves as a retention incentive, aligns executive compensation with stockholder objectives and serves as an incentive to take a longer-term view of Aimco performance. With respect to the equity portion of bonus compensation, Aimco permits each executive vice president to select up to approximately 25% of such equity compensation in stock options with the remainder in restricted stock. Aimco permits this individual election to give each executive officer the opportunity to receive a mix of restricted stock and options that best suits each individual’s investment preferences while ensuring that each executive officer’s compensation is tied to Aimco’s performance over time. When the equity is in the form of stock options, the currency is inherently performance based because the optionee only receives a benefit if and to the extent Aimco’s stock price rises after the date the option is granted. When the equity is in the form of restricted stock, the compensation is also linked to performance because the future value of the equity depends on the performance of Aimco’s stock.

 

Total compensation for 2007

 

For 2007, total compensation is the sum of base compensation and bonus compensation.

 

Base Compensation for 2007

 

Mr. Considine’s Base Compensation

 

Although historically Mr. Considine’s base compensation has been paid in cash, based on Mr. Considine’s recommendation for 2007, the Committee determined that Mr. Considine’s base compensation of $600,000 be contingent on Aimco’s achievement of a defined financial objective. For 2007, Mr. Considine’s base compensation of $600,000 was contingent on Aimco’s achievement of $3.45 per share of funds from operations, or FFO (the “2007 FFO Target”) to provide Mr. Considine an incentive highly correlated with a specific corporate objective. Accordingly, instead of paying Mr. Considine a $600,000 cash base salary, on February 5, 2007, the Committee awarded Mr. Considine a non-qualified stock option for 53,097 shares at an exercise price equal to fair market value on the date of grant ($62.63). For the purpose of calculating the number of shares subject to the stock option to be granted, the foregone $600,000 cash salary amount was divided by $11.30, which price was calculated by a nationally recognized independent investment bank using certain assumptions provided by Aimco and the Black-Scholes Option Pricing Model, which model Aimco uses to measure compensation cost under Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”). Because Aimco did not meet the 2007 FFO Target, the option did not vest and expired unexercisable. This option grant is reflected in the Summary Compensation Table — see note 6 thereto. The information with respect to this stock option as presented in the Compensation Discussion & Analysis has not been adjusted to reflect the special dividend paid January 30, 2008, to all stockholders of record on December 31, 2007. For such information, please refer to the Outstanding Equity Awards at Fiscal Year End 2007 table.

 

Other Executive Officer Base Compensation

 

For 2007, base compensation for all executive vice presidents was set between $250,000 and $400,000. Base compensation for all officers other than those at the executive vice president level was determined based on market studies and also based on external market conditions.

 

Bonus Compensation for 2007

 

Bonus compensation was determined based on Aimco’s achievement of the objectives of Aimco’s 2007 approved operating plan, including the 2007 FFO Target, specific transaction related goals, overall Aimco performance and achievement of specific individual objectives as detailed in our performance management program, Managing Aimco Performance, or MAP, which sets and monitors performance objectives for each team

member. Once Aimco’s performance against the 2007 FFO Target was determined, individual performance against goals set forth in each executive’s individual MAP were measured. The Committee (in the case of Mr. Considine), or Mr. Considine, in consultation with the Committee (in the case of the other executive officers), also had discretion to adjust the final bonus amount based on assessments of performance factors outside of the MAP process.

 

For Mr. Considine, the Committee determined at the start of 2007 that his bonus target was $3.55 million. The Committee reviewed Aimco’s and Mr. Considine’s performance based on his MAP objectives, which included:

 

 

The Committee noted that although Aimco did not meet the 2007 FFO Target, Aimco did:

 

 

Based on Aimco’s performance and Mr. Considine’s achievement of his MAP objectives, the Committee determined that for 2007 Mr. Considine should receive the following:

 

 

In addition to receiving no base compensation, Mr. Considine’s bonus was discounted to reflect that Aimco did not meet the 2007 FFO Target. Mr. Considine’s bonus compensation was in the form of a ten-year non-qualified stock option to acquire 599,078 shares, which option vests ratably over four years. The option was granted January 29, 2008. Because the equity award for 2007 bonus compensation was made in 2008, pursuant to the applicable disclosure rules, such award will be reflected in the Summary Compensation and Grants of Plan-Based Awards tables in Aimco’s proxy statement for the 2009 annual meeting of stockholders. In determining the form of Mr. Considine’s bonus, the Committee considered Aimco’s “burn rate” and discussed with Mr. Considine his preference for the form in which his equity is awarded and gave Mr. Considine latitude in making the determination. Mr. Considine prefers the risk and potential upside inherent in stock options and therefore selected all of his equity compensation in stock options. The Committee and Mr. Considine believe that it is in the stockholders’ best interest to motivate and reward Mr. Considine in this highly entrepreneurial manner. Providing bonus compensation in the form of Aimco equity that vests over time (typically a period of four or five years) serves as a retention incentive, aligns Mr. Considine’s compensation with stockholder objectives and serves as an incentive to take a longer term view of Aimco performance. Mr. Considine’s compensation is highly variable, and has fluctuated over the past five years.

 

Based on Aimco’s performance as described above and each named executive officer’s achievement of his MAP objectives, Mr. Considine, in consultation with the Committee, determined that the named executive officers should receive the compensation detailed below. In determining the 2007 bonus compensation, Mr. Considine and the Committee noted that: Mr. Herzog provided significant leadership in improving Aimco’s efficiency and allocation of capital and ensured the Company had abundant liquidity; Mr. Robertson, along with the leadership of Mr. Graber and others, spearheaded Aimco’s efforts with respect to asset management and portfolio allocation, including the Palazzo joint venture, and generating fee income; and Mr. Beaudin led Aimco’s expanded redevelopment activity.

 

 

The cash bonuses shown above appear in the Summary Compensation Table under the column headed “Non-Equity Incentive Plan Compensation.”

 

With respect to 2007 bonus compensation in the form of equity awards, both the shares of restricted stock and the stock options were granted January 29, 2008, and vest ratably over four years. Because the equity awards for 2007 bonus compensation were made in 2008, pursuant to the applicable disclosure rules, such awards will be reflected in the Summary Compensation and Grants of Plan-Based Awards tables in Aimco’s proxy statement for the 2009 annual meeting of stockholders. For the purpose of calculating the number of shares of restricted stock to be granted, the dollars allocated to restricted stock were divided by $39.28 per share, which was the average of the closing trading prices of Aimco’s Common Stock on the five trading days up to and including the grant date. The five-day average was used to provide a more fair approximation of the value of the stock at the time of grant by muting the effect of any single day spikes or declines. For the purpose of calculating the number of shares subject to the stock options to be granted, the dollars allocated to stock options were divided by $4.34, which price was calculated by a nationally recognized independent investment bank using certain assumptions provided by Aimco and the Black-Scholes Option Pricing Model, which model Aimco uses to measure compensation cost under SFAS 123R. The stock options have an exercise price per share of $39.85, which is equal to the fair market value of

Aimco’s Class A Common Stock on January 29, 2008 (pursuant to Aimco’s 2007 Stock Award and Incentive Plan (the “2007 Plan”) “fair market value” is defined as the closing price of Aimco’s Class A Common Stock on the grant date).

 

Other Compensation

 

From time to time, Aimco determines to provide executives with additional compensation in the form of discretionary cash or equity bonuses. In 2005, Aimco determined that Messrs. Robertson and Graber were each eligible for a cash payment upon the closing of a specified transaction, which was anticipated to occur in 2006. Ultimately, the transaction closed in 2007, and those cash bonuses were paid in 2007 and appear in the Summary Compensation Table under column headed “Bonus.” Also during 2007, Mr. Robertson’s responsibilities were expanded to include Aimco’s portfolio strategy, capital allocation, investments, joint ventures, asset management and transaction activity. In conjunction with that change, Mr. Robertson was awarded a six-year non-qualified stock option grant to acquire 584,113 shares of Aimco’s Class A Common Stock at an exercise price per share of $55.64. The option award is shown in the Grants of Plan-Based Awards Table. The information with respect to this stock option as presented in the Compensation Discussion & Analysis has not been adjusted to reflect the special dividend paid January 30, 2008, to all stockholders of record on December 31, 2007. For such information, please refer to the Outstanding Equity Awards at Fiscal Year End 2007 table.

 

Post-Employment Compensation and Severance Arrangements

 

401(k)

 

Aimco provides a 401(k) plan that is offered to all Aimco team members. Aimco matches 100% of participant contributions to the extent of the first 3% of the participant’s eligible compensation and 50% of participant contributions to the extent of the next 2% of the participant’s eligible compensation. For 2007, the maximum match by Aimco was $9,000, which is the amount that Aimco matched for each of Messrs. Herzog, Robertson, and Beaudin’s 2007 401(k) contributions. Because Mr. Considine’s base compensation for 2007 was not in cash, he did not have taxable wages in 2007 and thus was not eligible to participate in the 401(k) plan. Other than the 401(k) plan, Aimco does not provide post-employment benefits. Aimco does not have a pension plan, a SERP or any similar arrangements.

 

Deferred Compensation Plan

 

Aimco established a deferred compensation plan in 2005. Each calendar year, Aimco’s officers with a minimum annual base salary of $150,000 and a title of Vice President or above may participate in the deferred compensation plan. Participating employees may defer up to 50% of their annual base salary. Participants may also defer up to 100% of any performance-based cash bonus. Although the deferred compensation plan permits voluntary contributions by Aimco on behalf of an employee, Aimco has not made any such contributions. At the time the deferral election is made, the participant must also indicate at what future age or by what future date the participant wishes to have the deferral distributed to him or her. The participant must also choose to receive the deferral in either a lump sum payment, or in annual installments over a period of five or ten years. During 2007, six employees participated, and through the end of 2007, an aggregate of approximately $378,218 had been deferred under this plan. The deferred compensation plan is intended to comply with Section 409A of the Internal Revenue Code and is intended to qualify as a “top hat” plan under the Employee Retirement Income Security Act of 1974, as amended.

 

Executive Employment and Severance Arrangements

 

In response to a stockholder proposal seeking certain limitations regarding executive severance arrangements, in July 2004, the Committee adopted an executive severance policy. That policy provides that Aimco shall seek stockholder approval or ratification of any future severance agreement for any senior executive officer that provides for benefits, such as lump-sum or future periodic cash payments or new equity awards, in an amount in excess of 2.99 times such executive officer’s base salary and bonus. Compensation and benefits earned through the termination date, the value of vesting or payment of any equity awards outstanding prior to the termination date,

pro rata vesting of any other long-term awards, or benefits provided under plans, programs or arrangements that are applicable to one or more groups of employees in addition to senior executives are not subject to the policy. Even prior to the Committee’s response to the stockholder proposal, it had been Aimco’s longstanding practice not to enter into agreements with senior executives to provide excessive severance arrangements.

 

Mr. Considine’s employment contract, which has remained unchanged since Aimco’s initial public offering in 1994, provides that upon a change in control of the Company or a termination of employment under certain circumstances, Mr. Considine will be entitled to a payment equal to three times his average annual salary for the previous 36 months. The contract provides that during the term of the contract and for one year thereafter, Mr. Considine will not engage in the acquisition, development, operation or management of other multifamily rental apartment properties outside of the Company. In addition, the contract provides that Mr. Considine will not engage in any active or passive investment in property relating to multifamily rental apartment properties, with the exception of the ownership of up to 1% of the securities of any publicly traded company involved in those activities.

 

None of Messrs. Herzog, Robertson or Graber has an employment agreement or severance arrangement. As agreed to in connection with the recruitment of Mr. Beaudin, if Mr. Beaudin’s employment is terminated other than for cause, Mr. Beaudin is entitled to a separation payment in an amount equal to his base salary of $350,000. In connection with the recruitment and retention of Messrs. Herzog, Robertson and Beaudin, certain restricted stock grants provide for accelerated vesting if Aimco terminates such person’s employment without cause, and one restricted stock grant to Mr. Robertson also includes an accelerated vesting provision if he voluntarily terminates his employment.

 

Other Benefits; Perquisite Philosophy

 

Aimco’s executive officer benefit programs are substantially the same as for all other eligible officers and employees. Aimco does not provide executives with more than minimal perquisites, such as reserved parking places.

 

Stock Ownership Guidelines

 

Aimco believes that it is in the best interest of Aimco’s stockholders for Aimco’s officers to own Aimco stock. During 2006, the Committee and management established stock ownership guidelines for Aimco’s executive and other officers. Equity ownership guidelines for executive officers are determined as a minimum of the lesser of a multiple of the executive’s base salary or a fixed number of shares. For non-executive officers, the ownership guidelines require retention of a portion of all stock awards up to the amount of such officer’s base salary. The Committee and Mr. Considine reviewed each executive officer’s holdings in light of the stock ownership guidelines and each executive officer’s accumulated realized and unrealized stock option and restricted stock gains.

 

Aimco’s stock ownership guidelines require the following

 

 

Each of Messrs. Considine, Herzog, Robertson, Beaudin and Graber exceed the ownership targets established in Aimco’s stock ownership guidelines.

 

Role of Outside Consultants and Executive Officers

 

The Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Committee. The Committee has engaged Aon Consulting (“Aon”), as its independent compensation

consultant. At the direction of the Committee, Aon coordinates and consults with James G. Purvis, Executive Vice President of Human Resources, and his executive compensation team, regarding executive compensation matters. Aon provides the Committee with an independent view of both market data and plan design.

 

Base Salary, Bonus Compensation, and Equity Grant Practices

 

Base salary adjustments typically take effect on July 1. The Committee (for Mr. Considine), and Mr. Considine, in consultation with the Committee (for the other executive officers), determine bonus compensation in late January or early February. The cash portion of bonus compensation is typically paid in February or March. The equity components of bonus compensation are awarded on a date determined by the Committee, typically in late January or early February.

 

Aimco grants equity in two scenarios: in connection with bonus compensation, as discussed above; and in connection with certain new-hire packages.

 

With respect to bonus compensation in the form of equity, the Committee sets the grant date for the stock option and restricted stock grants. The Committee sets grant dates at the time of its final compensation determination in late January or early February. The date of determination and date of award are not selected based on share price. In the case of new-hire packages, option grants are made on the employee’s start date or on a date designated in advance based on the passage of a specific number of days after the employee’s start date. For non-executive officers, as provided for in the 2007 Plan, the Committee has delegated the authority, up to certain limits, to the Chief Financial Officer (Thomas M. Herzog) and/or Corporate Secretary (Lisa R. Cohn) to make equity awards. The Committee and Mr. Herzog and Ms. Cohn time grants without regard to the share price or the timing of the release of material non-public information and do not time grants for the purpose of affecting the value of executive compensation.

 

During 2007, the 1997 Stock Award and Incentive Plan (the “1997 Plan”) expired. Also during 2007, the Board of Directors of Aimco adopted, and the stockholders approved, the 2007 Plan. Pursuant to the 1997 Plan, the closing price on the day prior to the date of grant is defined as “Fair Market Value.” Thus, certain Aimco stock options have an exercise price that is the closing price of Aimco’s common stock on the NYSE for the last trading day immediately prior to the grant date. Pursuant to the 2007 Plan, the closing price on the date of grant is defined as “Fair Market Value.” Aimco does not grant options at an exercise price below Fair Market Value. The Committee values the stock options based on a calculation by a nationally recognized independent investment bank using the Black-Scholes Option Pricing Model, which model Aimco uses to measure compensation cost under SFAS 123R.

 

2008 Compensation

 

The Committee has made determinations of total target compensation (base compensation plus bonus compensation) for 2008, which will be based on achievement of the objectives of Aimco’s 2008 approved operating plan and achievement of specific individual objectives. Base compensation amounts are discussed above. Target bonus compensation amounts are as follows: Mr. Considine — $3.55 million; Mr. Herzog — $1.25 million; Mr. Robertson — $2.6 million; and Mr. Graber — $1.65 million. Target bonus compensation for 2008 for Mr. Beaudin has not yet been determined. Both Aimco and individual performance will determine the amount paid for 2008 bonus compensation, and such amounts may be less than, or in excess of, these target amounts. Bonus compensation may be paid in the form of cash, options or restricted stock.

 

The Compensation and Human Resources Committee held seven meetings during fiscal year 2007. The Compensation and Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon such review, the related discussions and such other matters deemed relevant and appropriate by the Compensation and Human Resources Committee, the Compensation and Human Resources Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement to be delivered to stockholders.

 

Date: March 5, 2008

 

J. LANDIS MARTIN (CHAIRMAN)
JAMES N. BAILEY
RICHARD S. ELLWOOD
THOMAS L. KELTNER
ROBERT A. MILLER
THOMAS L. RHODES
MICHAEL A. STEIN

 

The above report will not be deemed to be incorporated by reference into any filing by Aimco under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Aimco specifically incorporates the same by reference.

 

 

 

 

 

The following table provides details regarding plan-based awards granted to the named executive officers during the year ended December 31, 2007.

 

 

 

 

The following table shows outstanding stock option awards classified as exercisable and unexercisable as of December 31, 2007, for the named executive officers, other than those awards that have been transferred for value. The table also shows unvested and unearned stock awards assuming a market value of $34.73 a share (the closing market price of the Company’s Common Stock on December 31, 2007).

 

 

 

 

 

 

The following table sets forth certain information regarding options and stock awards exercised and vested, respectively, during the year ended December 31, 2007, for the persons named in the Summary Compensation Table above. Because the option exercises and stock vestings reflected below occurred prior to the special dividend paid January 30, 2008, to all stockholders of record on December 31, 2007, the information below has not been adjusted to reflect the special dividend.

 

 

 

 

In the table and discussion that follows, payments and other benefits payable upon early termination and change in control situations are set out as if the conditions for payments had occurred and/or the terminations took place on December 31, 2007. In setting out such payments and benefits, amounts that had already been earned as of the termination date are not shown. Also, benefits that are available to all full-time regular employees when their employment terminates are not shown. The amounts set forth below are estimates of the amounts which would be paid out to the named executive officers upon their termination. The actual amounts to be paid out can only be determined at the time of such named executive officers’ separation from Aimco.

 

Mr. Considine’s 1994 Employment Contract

 

Mr. Considine’s 1994 employment contract provides that in the event Mr. Considine’s employment is terminated without cause by Aimco, by Mr. Considine with cause, or for any reason within two years following a change in control, Mr. Considine will be entitled to a payment equal to three times his average annual salary for the previous 36 months. At December 31, 2007, such payment would have been equal to approximately $1,700,000.

 

Accelerated Vesting Upon Change of Control and Accelerated Vesting upon Termination of Employment Due to Death or Disability

 

The restricted stock and stock option agreements pursuant to which restricted stock and stock option awards have been made to Messrs. Considine, Herzog, Robertson, Beaudin and Graber provide that upon a change of control or upon termination of employment due to death or disability, all outstanding shares of restricted stock become immediately and fully vested and all unvested options become immediately and fully vested and remain exercisable (along with all options already vested) for the remainder of the term of the option. The following is the value based upon the Common Stock price (and, in the case of options, minus the exercise price) of equity awards that would become exercisable or vested if there had been a change of control or a named executive had died or become disabled as of December 31, 2007: Mr. Considine — $1,620,155; Mr. Herzog — $1,665,942; Mr. Robertson — $5,323,472; Mr. Beaudin — $2,128,185; and Mr. Graber — $1,725,760.

 

Accelerated Vesting Upon Termination of Employment other than for Cause

 

Certain grants to Messrs. Herzog, Robertson and Beaudin provide for accelerated vesting if such executive’s employment is terminated other than for cause. Aimco typically does not provide accelerated vesting under such circumstances; however, in some cases in order to recruit or retain executives, such accelerated vesting is necessary or desirable. The following is the value based upon the Common Stock price (and, in the case of options, minus the exercise price) of equity awards that would become exercisable or vested if such named executive officer’s employment had been terminated by Aimco other than for cause (and, in the case of Mr. Robertson, if he voluntarily terminated his employment) as of December 31, 2007: Mr. Herzog — $274,874; Mr. Robertson — $456,352; and Mr. Beaudin — $1,551,998.

 

Non-competition and Non-Solicitation Agreements

 

Effective in January 2002 for Messrs. Considine, Robertson and Graber, and in connection with their employment by Aimco for Messrs. Herzog and Beaudin, Aimco entered into certain non-competition and non-solicitation agreements with each executive. Pursuant to the agreements, each of these executives agreed that during the term of his employment with the Company and for a period of two years following the termination of his employment, except in circumstances where there was a change in control of the Company, he could not (i) be employed by a competitor of the Company named on a schedule to the agreement, (ii) solicit other employees to leave the Company’s employ or (iii) solicit customers of Aimco to terminate their relationship with the Company. The agreements further required that the executives protect Aimco’s trade secrets and confidential information. Mr. Beaudin’s agreement does not include the non-competition covenant as described in (i) above; rather, his covenant requires that during the term of his employment with the Company and for a period of 12 months following the termination of his employment, he will not compete against the Company in any acquisition opportunities with which he was involved during his employment. For Messrs. Considine, Herzog, Robertson and