INCUMBENT DIRECTORS

Class III

GEORGE E. CATES

Mr. Cates, age 67, has served as a director since 1994 and served as Chairman of the Board of Directors from the time of its initial public offering in February 1994 until September 2002. Mr. Cates served as our President and Chief Executive Officer from February 1994 until his planned retirement in October 2001. Mr. Cates was President and Chief Executive Officer of The Cates Company from 1977 until its merger with us in February 1994. Mr. Cates also serves as a director for First Horizon National Corporation (term ending in April 2005). Committees: None

JOHN S. GRINALDS

General Grinalds, age 67, has served as a director since November 1997. General Grinalds became the President of The Citadel in Charleston, South Carolina in 1997. Prior to assuming the presidency of The Citadel, General Grinalds was the headmaster of Woodberry Forest School in Virginia. From 1989 to 1991, General Grinalds held the rank of Major General and was the commanding general of the Marine Corps Recruit Depot in San Diego, California. General Grinalds is also a director of Carolina First Bank. Committees: Audit, Compensation, Nominating and Corporate Governance

SIMON R. C. WADSWORTH

Mr. Wadsworth, age 57, has been Executive Vice President, Chief Financial Officer and a director since March 1994. Committees: None

Class I Directors

JOHN F. FLOURNOY

Mr. Flournoy, age 64, has served as a director since November 1997. Mr. Flournoy has been the Chairman and Chief Executive Officer of Flournoy Development Company for 38 years. Flournoy Development Company has been in multi-family housing development and construction primarily in the Southeastern United States for over 30 years. Mr. Flournoy also serves as a director of the W.C. Bradley Company and the Columbus Bank and Trust Company. Committees: None

ROBERT F. FOGELMAN

Mr. Fogelman, age 69, has served as a director since July 1994 and has been the President of Fogelman Investment Company, a privately owned investment firm, for more than eight years. Committees: Compensation, Nominating and Corporate Governance

MICHAEL S. STARNES

Mr. Starnes, age 60, has served as a director since July 1998. Mr. Starnes founded M.S. Carriers, Inc., a truckload transportation and logistics company, in 1978 and served as Chairman and Chief Executive Officer until its merger with Swift Transportation Co., Inc. in June 2001. Mr. Starnes served as President of M.S. Carriers, a subsidiary of Swift Transportation Co., Inc. from June 2001 until his planned retirement in June 2004. Mr. Starnes is also a director of Regions Financial Corporation. Committees: Audit, Compensation, Nominating and Corporate Governance

The Board of Directors recommends a vote “FOR” each of the Nominees for Class II Directors

13

STOCK OWNERSHIP

Security Ownership of Management

The following table sets forth the beneficial ownership of our common stock as of February 28, 2005 by (i) each director, (ii) each director nominee, (iii) each executive officer named in the Summary Compensation Table, and (iv) all directors, nominees and executive officers as a group. Except as otherwise indicated, the address of each officer, director and/or nominee listed below is c/o 6584 Poplar Avenue, Suite 300, Memphis, Tennessee 38138.

Name of Beneficial Owner				Amount and Nature of Beneficial Ownership				Percent of Class (1)
George E. Cates					783,868	(2)			3.51	%
John F. Flournoy					655,428	(3)			2.93	%
Robert F. Fogelman					623,003	(4)			2.79	%
H. Eric Bolton, Jr.**					236,419	(5)			1.06	%
Simon R. C. Wadsworth					191,154	(6)			*
Ralph Horn**					47,537	(7)			*
Michael S. Starnes					12,185	(8)			*
John S. Grinalds					11,198	(9)			*
Alan B. Graf, Jr.**					8,321	(10)			*
All Directors, Nominees and Executive Officers as a group (9 Persons)					2,569,113				11.50	%

 

---

(1)

Based on 21,058,126 shares of common stock outstanding on February 28, 2005, plus 1,013,396 shares of common stock issuable in exchange for limited partnership units and 266,186 shares issuable upon exercise of options exercisable within 60 days of February 28, 2005, that was held by the listed individuals as a group. With respect to each listed person (and all listed persons, as a group), the beneficial ownership of such person or group includes the number of shares of common stock issuable to such person or group in exchange for limited partnership units plus the number of shares of common stock issuable to such person or group in respect to options exercisable within 60 days of February 28, 2005. Except as indicated in the footnotes to this table, each listed person possesses sole voting and investment power with respect to all shares of common stock shown as owned by such person.

(2)

Includes 391,667 shares owned directly by Mr. Cates, as to 355,402 of which Mr. Cates has sole voting power and as to 36,265 of which Mr. Cates has shared voting power, (6,730 shares held by Mr. Cates through an individual retirement account, and 29,535 shares Mr. Cates owns in a joint account with his wife); 201,233 shares that Mr. Cates has the current right to acquire upon redemption of limited partnership units; 140,670 shares that Mr. Cates has the right to acquire upon the exercise of options that are exercisable within 60 days of February 28, 2005; and 1,886 shares held in a deferred compensation account. Also includes 10,209 shares and 38,203 limited partnership units owned by Mr. Cates’ wife, over which Mr. Cates exercises no voting or investment power.

(3)

Includes 607,989 shares owned directly by Mr. Flournoy; 41,271 shares that Mr. Flournoy has the current right to acquire upon redemption of limited partnership units; and 6,168 shares held in a deferred compensation account.

(4)

Includes 42,500 shares held by Romar Partnership as to which Mr. Fogelman shares voting and investment power; 570,500 shares that Mr. Fogelman has the current right to acquire upon redemption of limited partnership units; 3,000 shares that Mr. Fogelman has the right to acquire upon the exercise of options that are exercisable within 60 days of February 28, 2005; and 7,003 shares held in a deferred compensation account.

(5)

Includes 24,236 shares owned directly by Mr. Bolton, as to 16,597 of which Mr. Bolton has sole voting power and as to 7,639 of which Mr. Bolton has shared voting power; 110,000 shares that Mr. Bolton has the current right to acquire upon redemption of limited partnership units; 98,699 shares that Mr. Bolton has the right to acquire upon the exercise of options that are exercisable within 60 days of February 28, 2005, and 3,484 shares attributed to Mr. Bolton in the Company’s Employee Stock Ownership Plan.

14

---

(6)

Includes 113,650 shares owned directly by Mr. Wadsworth, as to 83,204 of which Mr. Wadsworth has sole voting power and as to 11,795 of which Mr. Wadsworth has shared voting power and 18,651 shares held by Mr. Wadsworth through an individual retirement account; 3,499 shares attributed to Mr. Wadsworth in the Company’s Employee Stock Ownership Plan; 52,188 shares that Mr. Wadsworth has the right to acquire upon redemption of limited partnership units; and 21,817 shares that Mr. Wadsworth has the right to acquire upon the exercise of options that are exercisable within 60 days of February 28, 2005.

(7)

Includes 37,000 shares owned directly by Mr. Horn; 1,000 shares that Mr. Horn has the right to acquire upon the exercise of options that are exercisable within 60 days of February 28, 2005; and 9,537 shares held in a deferred compensation account.

(8)

Includes 3,000 shares owned directly by Mr. Starnes; 1,000 shares that Mr. Starnes has the right to acquire upon the exercise of options that are exercisable within 60 days of February 28, 2005; and 8,185 shares held in a deferred compensation account.

(9)

Includes 1,425 shares owned directly by General Grinalds; 678 shares held by General Grinalds through an individual retirement account; 185 shares held in a trust; 8,371 shares held in a deferred compensation account; and 539 shares owned by General Grinalds’ wife.

(10)

Includes 4,000 shares owned directly by Mr. Graf; and 4,321 shares held in a deferred compensation account.

*

Represents less than 1% of total.

**

Director Nominee.

Security Ownership of Certain Beneficial Owners

The following table sets forth information as of December 31, 2004, regarding each person known to the Company to be the beneficial owner of more than five percent of its common stock:

Name and Address of Beneficial Owner				Amount and Nature of Beneficial Ownership				Percent of Class (1)
Cohen & Steers Capital Management, Inc. (2) 757 Third Avenue New York, NY 10017-2013					1,898,200				8.58	%
JPMorgan Chase & Co. (3) 270 Park Avenue New York, NY 10017					1,201,529				5.43	%

 

---

(1)

Based on 20,856,791 shares of common stock outstanding on December 31, 2004, plus 1,013,396 shares of common stock issuable in exchange for common limited partnership units of limited partnership interest in Mid-America Apartments, L.P. and upon exercise of 266,186 options exercisable within 60 days of December 31, 2005 that were held by all directors, director nominees and executive officers named in the Summary Compensation Table.

(2)

The indicated ownership is based solely on a Schedule 13G filed with the SEC by the beneficial owner. The Schedule 13G indicates that this entity has sole power to vote or to direct the vote for 1,875,300 shares and sole power to dispose or to direct the disposition of 1,898,200 shares.

(3)

The indicated ownership is based solely on a Schedule 13G filed with the SEC by the beneficial owner. The Schedule 13G indicates that this entity has sole power to vote or to direct the vote for 733,429 shares, shared power to vote or to direct the vote for 1,800 shares, sole power to dispose or to direct the disposition of 1,184,829 shares and shared power to dispose or to direct the disposition of 1,800 shares.

15

---

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s directors and executive officers file with the Commission initial reports of ownership and reports of changes in ownership of the Company’s common stock and furnish the Company with copies of all forms filed.

To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the past fiscal year all Section 16(a) filing requirements applicable to the Company’s directors and executive officers were completed on a timely basis.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information concerning total compensation earned or paid to our Chief Executive Officer and certain other of our executive officers for services rendered to us.

								Annual Compensation												Long-Term Compensation
																				Awards
Name and Position				Year				Salary				Bonus				Other Annual Compen- sation (1)				Restricted Stock Awards				Securities Underlying Options/ SARs
H. Eric Bolton, Jr.
Chairman, President					2004			$	369,219			$	359,300			$	123,593	(2)		$	206,283	(4)			—
and Chief Executive					2003			$	334,615			$	260,050			$	116,620	(2)		$	—				—
Officer					2002			$	296,512			$	4,562			$	105,415	(2)		$	549,984	(5)			60,000
Simon R. C. Wadsworth
Executive Vice					2004			$	241,235			$	234,500			$	115,403	(3)		$	134,519	(4)			—
President, Chief					2003			$	222,692			$	170,050			$	102,932	(3)		$	—				—
Financial Officer					2002			$	213,615			$	4,562			$	97,388	(3)		$	397,488	(5)			40,000
and Director

 

---

(1)

Represents supplemental bonus pursuant to the Company’s LESOP, the majority of which was offset against the indebtedness of the executive officers to the Company described in “Indebtedness of Management to the Company” above, and matching contributions to the Company’s Executive Deferred Compensation Retirement Plan.

(2)

Mr. Bolton’s offsets of indebtedness related to the Company’s LESOP in 2004, 2003 and 2002 were each $88,987.50. The Company matches to Mr. Bolton’s deferred compensation account were $10,665, $10,087, and $8,674 for 2004, 2003 and 2002, respectively.

(3)

Mr. Wadsworth’s offsets of indebtedness related to the Company’s LESOP in 2004, 2003 and 2002 were each $81,187.50. The Company matches to Mr. Wadsworth’s deferred compensation account were $12,299, $6,730, and $8,953 for 2004, 2003 and 2002, respectively.

(4)

Mr. Bolton’s and Mr. Wadsworth’s restricted stock issuances of 5,358 and 3,494 shares, respectively, were made under the Company’s 2004 Stock Plan. The restricted stock issuances were made in 2005 for work performed in 2004. The shares will vest in two equal annual amounts in 2006 and 2007, but dividends will be paid on the full amount of restricted stock issued from the day of issuance.

(5)

Mr. Bolton’s and Mr. Wadsworth’s restricted stock issuances of 21,813 and 15,775 shares, respectively, were made under the Company’s Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan. The restricted stock issuances included 4,269 shares and 3,202 shares for Mr. Bolton and Mr. Wadsworth, respectively, made in 2003 for work performed in 2002. These shares fully vested in 2004. The restricted stock issuances also included 17,544 shares and 12,573 shares for Mr. Bolton and Mr. Wadsworth, respectively, made in 2002 that will vest in equal annual amounts from 2007 through 2011. All of the restricted stock issuances pay dividends from the day of issuance.

16

---

Option/SAR Grants in Last Fiscal Year

No options or stock appreciation rights were granted to executive officers during the year ended December 31, 2004.

2004 Aggregated Option Exercises and Fiscal Year-End Option Values

The following table provides information on options held by executive officers through December 31, 2004, and the value of each of their unexercised options at December 31, 2004.

				Exercised Options
Name				Shares Acquired on Exercise				Value Realized (1)				Number of Securities Underlying Unexercised Options/SARs at December 31, 2004 Exercisable/ Unexercisable				Value of Unexercised In-The-Money Options/SARs at December 31, 2004 (2) Exercisable/ Unexercisable
H. Eric Bolton, Jr.					82,151			$	715,375				66,899/79,950				$1,151,565/$1,362,843
Simon R. C. Wadsworth					76,588			$	681,834				17/52,700				$324/$897,028

 

---

(1)

Based on the market value of the underlying securities at exercise less the exercise price.

(2)

Based upon the closing price of the Company’s common stock on the New York Stock Exchange on December 31, 2004 of $41.22 per share, less the exercise price.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee in 2004 consisted of Messrs. Horn (Chairman), Fogelman, Grinalds and Starnes. During 2004 no employee of the Company participated in decisions related to the compensation of our Chief Executive Officer or other executive officers. None of the Company’s executive officers served as a director or member of the compensation committee of any other entity whose executive officers served on the Company’s Board of Directors or Compensation Committee.

17

---

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

General

The Compensation Committee of the Board of Directors is currently composed solely of independent directors. The Compensation Committee is responsible for ensuring that a proper balance of current compensation and longer-term equity-based rewards are offered to executive management to provide incentives to increase shareholder value. The Compensation Committee determines each executive officer’s compensation annually, including base salary, discretionary cash bonuses, and stock incentive awards. The Company’s compensation policy is to reward performance, which leads to long-term growth in shareholder value per share.

Our executive compensation program is designed to attract, retain, and reward the executives responsible for leading us toward the achievement of our business objectives. The Compensation Committee makes decisions each year regarding executive compensation, including base salaries, bonus awards, and stock-based compensation. All compensation for executive officers is reviewed by the full Board of Directors. The Compensation Committee has furnished the following report on executive compensation for 2004.

Philosophy and Policies for Executive Officer Compensation

The general philosophy underlying our executive compensation program is:

•

to align the financial interests of our executives with those of its shareholders, both in the short and long term;

•

to provide incentives for achieving and exceeding our annual and long-term performance goals; and

•

to attract, retain and motivate highly competent executives by providing total compensation that is competitive with compensation at other well-managed companies in the REIT industry, and

•

to reward superior corporate and individual performance.

In determining executive compensation, the Compensation Committee considers our financial and operating performance relative to companies with similar annual revenues, capitalization, and business operations, as well as the performance of each individual executive officer. The Committee also, in its discretion, considers such other factors as it deems relevant to providing compensation that is competitive in the marketplace, rewards successful financial performance, and aligns executive officers’ interests with those of our shareholders.

Base Salary and Annual Incentive Compensation

Executive management’s compensation, including their salaries, is based upon the competitive market for their services, their specific responsibilities, experience and overall performance. The Company conducts a survey annually (“Survey”) of multifamily Real Estate Investment Trusts (“REITs”) by reviewing publicly available information on compensation of the REITs’ senior management personnel, with special emphasis on those of similar geographic concentration, size, and/or business focus as the Company. This information is compiled and made available to the Compensation Committee in advance of its meeting in the beginning of each year.

The Compensation Committee sets executive compensation programs to be competitive with REITs which are included in the Survey, taking into account individually each component of compensation, including base salary, annual bonus programs, and long term incentive plans which it believes will best align executive management’s interests with those of shareholders over a long term period. The Compensation Committee intends for each component and the aggregate of the compensation program to be competitive.

For 2004, after review of the Survey and each component of compensation, the Compensation Committee increased Messrs. Bolton’s and Wadsworth’s base salaries to $358,800 and $234,000, respectively, which it felt was in line with the increases received by the general employee base of the Company.

For 2005, after review of the Survey and each component of compensation, the Compensation Committee increased Messrs. Bolton’s and Wadsworth’s base salaries to $369,564 and $241,020, respectively, which it felt was in line with the increases received by the general employee base of the Company.

18

---

For 2004, the participants in the annual executive bonus plan, which is re-evaluated at the beginning of each year, were Messrs. Bolton and Wadsworth. In setting the 2004 annual bonus plan the Compensation Committee adopted a plan which took into account growth of Funds Available for Distribution (“FAD”) per share (defined as Funds From Operations less recurring capital expenditures) over 2003, and the achievement of individual goals as approved by the Compensation Committee. In a year when no FAD growth is achieved, the Compensation Committee has the option of approving, or not, a bonus payment considering the Company’s performance relative to the performance of its peers over the same time period. The Compensation Committee also has the ability to factor in any unique variables that may or may not occur that impact the Company’s performance. The scope of the plan was set with the goal of making it an important part of executive management’s total compensation and making the plan competitive with programs offered by those REITs included in the Survey. As a result of the FAD growth over 2003 and the percentage of achievement of individual goals as approved by the Compensation Committee, Messrs. Bolton and Wadsworth were awarded total bonuses of $565,083 and $368,519, respectively, for work performed in 2004. Messrs. Bolton and Wadsworth received $358,800 and $234,000, respectively in cash and the remainder in 5,358 and 3,494 shares of restricted stock, respectively, which vest in two equal annual installments in 2006 and 2007 and which are paid dividends from the date of issuance.

For 2005, the participants in the annual executive bonus plan are Messrs. Bolton and Wadsworth. In setting the 2005 annual bonus plan the Compensation Committee has adopted a plan, which takes into account growth of Funds From Operations (“FFO”) per share over 2004, and the achievement of individual goals as approved by the Compensation Committee. The FFO growth determines the potential bonus based on a sliding scale defined as a percentage of salary. Each executive’s individual performance against their personal goals then determines the amount of that potential bonus they are entitled to receive. The Compensation Committee has the ability to factor in any unique variables that may or may not occur that impact the Company’s FFO performance, but may or may not subsequently impact the Company’s share price, to help ensure that the potential bonus is in line with actual shareholder performance realized for the year. The scope of the plan was set with the goal of making it an important part of executive management’s total compensation and making the plan competitive with programs offered by those REITs included in the Survey.

Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan

The Fourth Amended and Restated 1994 Restricted Stock and Stock Option Plan (the “1994 Plan”) was established in 1994 to be the Company’s long-term incentive plan for executive officers and other selected employees. The objective of the program is to retain and motivate executives to improve long-term stock performance. The Compensation Committee has the authority, within limitations set forth in the 1994 Plan, (i) to establish rules and regulations concerning the 1994 Plan, (ii) to determine the persons to whom options and restricted securities may be granted, (iii) to fix the number of shares of common stock to be covered by each option and (iv) to set the terms and provisions of each option and restricted security to be granted. Stock options are generally granted at the prevailing market value and will only have value if the Company’s stock increases in value.

In compliance with the time limitations of the 1994 Plan, as of January 1, 2004, no further grants can be made under the 1994 Plan.

2004 Stock Plan

At the May 24, 2004 Annual Meeting of Shareholders, shareholders approved the 2004 Stock Plan. The 2004 Stock Plan mirrors the 1994 Plan and allows for future grants of options and shares of restricted stock. The 2004 Stock Plan reserved 500,000 shares of the authorized and unissued shares of common stock of the Company to be awarded through the plan.

On March 9, 2005, the Compensation Committee granted a total of 8,852 shares of restricted stock through the 2004 Stock Plan to executive management as part of their bonus package for work performed in 2004. The shares of restricted stock will vest in two equal annual installments. As of that date, no other grants had been made through the 2004 Stock Plan.

19

---

Long-Term Performance Based Incentive Compensation Plan

Summary of Long-Term Performance Based Incentive Compensation Plan

The Compensation Committee by authorization of the Board of Directors of the Company submitted the Long-Term Performance Based Incentive Plan for Executive Officers (the “Long-Term Plan”) which was approved by shareholders on June 2, 2003. The Long-Term Plan allows executive management to earn performance units that convert into shares of restricted stock based on achieving defined total shareholder investment return performance levels. The potential award of performance units which convert into shares of restricted stock is based on the Company’s performance from January 1, 2003 through December 31, 2005. Any performance units earned will be granted on December 31, 2005 and are immediately convertible into shares of restricted stock. While these shares of restricted stock will be entitled to dividend payments, they will not be transferable or have voting privileges until they vest. Dependent upon the executive officer’s continued employment with the Company, any shares of restricted stock awarded will vest 20% annually from 2006 through 2010. In the event of death, disability, retirement or change of control any unvested shares of restricted stock will immediately vest.

Shareholder investment performance is calculated by the combination of dividends paid plus either (i) the market closing price of the Company’s common stock on December 31, 2005, or (ii) the value of the Company’s common stock at the close of business December 31, 2005. The value of the Company’s common stock will be calculated by using a 12.5 multiple of Funds Available for Distribution (“FAD”) per share earned in 2005. The methodology utilized will be that which generates the highest performance unit award pay-out at December 31, 2005.

The number of performance units to be issued is dependent upon the compounded shareholder investment return performance as indicated in the following table:

Compounded Shareholder Investment Return Performance				Percentage of Value Created to be Awarded
<= 10.0%				0%
10.1% – 11.0%				1%
11.1% – 12.0%				2%
>= 12.1%				3%

 

In addition to the above, the compounded shareholder investment return performance must rank within the top one-third of peer multifamily REITs as defined by the Compensation Committee.

The number of performance units awarded will equal the percentage of value created to be awarded times the total shareholder value created, divided by the value or price per share used in the generation of the shareholder investment return performance. The performance units will then be allocated 60% to the Chief Executive Officer and 40% to the Chief Financial Officer.

Modification of Long-Term Performance Based Incentive Compensation Plan

Based upon the then current share price and share price projections, a potential award for the Long-Term Plan and the example provided in the proxy statement dated April 30, 2003, was presented as $3,632,429. Due to the performance of the Company and associated growth in the Company’s share price over the last two years, if the Long-Term Plan were to have ended in 2004, under its terms, the total award would have exceeded $14 million.

As a result of the size of the potential award that may become grantable at December 31, 2005, and believing that a potential award of this magnitude is not in the best long-term interest of the Company, Messrs. Bolton and Wadsworth approached the Compensation Committee of the Board of Directors and offered to allow the Long-Term Plan to be modified to cap the total of any potential award to $3,632,429, the amount originally presented as an example to shareholders. The Compensation Committee voted to accept this modification to the Long-Term Plan effective with the filing of this proxy statement.

20

---

Key Management Restricted Stock Program

In 2002, the Company issued 97,881 restricted shares of common stock to 15 key managers through the 1994 Plan. As a result of two managers leaving the employment of the Company, as of December 31, 2004, only 86,477 shares remain issued. Of these shares, a total of 30,117 were issued to executive management. These shares will vest 20% a year for five consecutive years beginning in 2007. The shares had the ability to early vest in 2002 through 2004 if certain pre-set performance goals based on funds available for distribution growth had been met. Recipients receive dividend payments on the shares of restricted stock prior to vesting.

Non-Qualified Executive Deferred Compensation Plan

The Non-qualified Deferred Compensation Plan is the Company’s long-term incentive plan for key employees who are not qualified for participation in the Company’s 401(k) plan. Under the terms of this plan, key employees may elect to defer a percentage of their compensation and the Company matches a portion of their salary deferral with similar provisions as apply for the Company’s 401(k) plan. This plan is designed so that the employees’ investment earnings should be the same as the earning assets in the Company’s 401(k) plan.

Compensation of Chief Executive Officer

Based upon the criteria and plans described above, Mr. Bolton’s employment agreement with the Company, entered into in December 1999, provided for a base salary of $358,800 for the year ended December 31, 2004. The Compensation Committee considered this annual base salary to be competitive with comparable REITs to the Company. During the calendar year 2004, Mr. Bolton received $259,250 in bonus compensation, $258,750 related to work performed in 2003.

Employment Agreements

The Company entered into employment agreements with Messrs. Bolton and Wadsworth in December 1999. These employment agreements have substantially similar terms, except for their base salary provisions. Each one (i) has a term of one year that renews automatically on the first day of each month for an additional one-month period, so that on the first day of each month, unless sooner terminated in accordance with the terms of the agreement, the remaining term is one year; (ii) provides for annual base salaries for the executives, subject to change at the discretion of the Compensation Committee; and (iii) allows for annual incentive/bonus compensation.

Upon the executive’s termination due to death or permanent disability or in the event the executive is terminated without cause by the Company or suffers a constructive termination of his employment in the absence of a change of control, the Company will pay the executive all amounts due to the executive as of the date of termination under the terms of all incentive and bonus plans, and will also continue to pay the executive his base salary as then in effect for one year after the termination. In addition, all stock options granted to the executive shall become fully vested and exercisable in accordance with their terms on the termination date, or the executive may elect to receive an amount in cash equal to the in-the-money value of the shares covered by all such options. Finally, the Company will pay to the executive all legal fees incurred by the executive in connection with his termination without cause or constructive termination by the Company.

If the executive is terminated without cause or suffers a constructive termination in anticipation of, on, or within three years after a change in control of the Company, the executive is entitled to receive a payment equal to the sum of two and 99/100 (2.99) times his annual base salary in effect on the date of termination plus two and 99/100 (2.99) times his average annual cash bonus paid during the two immediately preceding fiscal years. To the extent that an excise tax on excess parachute payments will be imposed on the executive under Section 4999 of the Internal Revenue Code as a result of such payment, the Company shall pay the executive an additional amount sufficient to reimburse him for taxes imposed pursuant to Sections 280G and 4999 of the Internal Revenue Code. In addition, all stock options granted to the executive shall become fully vested and exercisable in accordance with their terms on the termination date, or the executive may elect to receive an amount in cash equal to the greater of (i) the in-the-money value of the shares covered by all such options or (ii) the difference between the highest per share price for shares of the Company paid in connection with the change of control and the per share exercise price of the

21

---

options held by the executive, multiplied by the number of shares covered by all such options. Finally, the Company will pay to the executive all legal fees incurred by the executive in connection with the change of control.

Each employment agreement also contains confidentiality and non-competition provisions, as well as the agreement of the executive not to hire other employees of the Company upon severance.

Section 162(m) of the Internal Revenue Code of 1986, enacted as part of the Omnibus Budget Reconciliation Act in 1993, generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to the Company’s Chief Executive Officer and four other most highly compensated executive officers. Compensation paid to these officers in excess of $1,000,000 that is not performance-based cannot be claimed by the Company as a tax deduction. The Compensation Committee believes it is appropriate to take into account the $1,000,000 limit on the deductibility of executive compensation and to seek to qualify executive compensation awards as performance-based compensation excluded from the $1,000,000 limit. Stock options and other equity-based incentives granted under the Company’s stock incentive plans qualify as performance-based compensation. None of the executive officers received compensation in 2004 that would exceed the $1,000,000 limit on deductibility. The Committee has not determined whether it will approve any compensation arrangements that will cause the $1,000,000 limit to be exceeded in the future.

Submitted by the Compensation Committee of the Board of Directors:

Ralph Horn (Chairman)
Robert F. Fogelman
John S. Grinalds
Michael S. Starnes

22

---

PERFORMANCE GRAPH

The following graph compares the cumulative total return to the shareholders of Mid-America Apartment Communities, Inc. (“MAA”) to the S&P 500 Index and the Equity REIT Total Return Index prepared by the National Association of Real Estate Investment Trusts (“NAREIT”). It assumes that the base share price for the Company’s common stock and each index is $100 and that all dividends are reinvested. The performance graph is not necessarily indicative of future investment performance.

MID-AMERICA APARTMENT COMMUNITIES, INC.
TOTAL RETURN PERFORMANCE

    

 

Index				12/31/1999				12/31/2000				12/31/2001				12/31/2002				12/31/2003				12/31/2004
MAA					100				110				142				144				216				283
S&P 500					100				91				80				62				80				89
NAREIT Equity REITs					100				126				144				149				205				270

 

23

---

AUDIT COMMITTEE REPORT

The Audit Committee has the responsibilities and powers set forth in its charter which include the responsibility to assist our Board of Directors in its oversight of our accounting and financial reporting principles and policies and internal audit controls and procedures, the integrity of our financial statements, our compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the performance of the independent auditor and our internal audit function. The Audit Committee is also required to prepare this report to be included in our annual proxy statement pursuant to the proxy rules of the SEC.

Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures to provide for compliance with accounting standards and applicable laws and regulations. The internal auditor is responsible for testing such internal controls and procedures. The Company’s independent registered public accountants are responsible for planning and carrying out a proper audit of the Company’s annual financial statements, reviews of the Company’s quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and other procedures.

The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 2004, with our management. In addition, we have discussed with KPMG LLP, the Company’s independent registered public accountants, the matters required by Codification of Statement on Auditing Standards No. 61, the Sarbanes-Oxley Act of 2002, and other matters required by the charter of this Committee.

The Committee also has received the written disclosures and the letter from KPMG LLP required by Independence Standards Board Standard No. 1, and we have discussed with KPMG LLP their independence from the Company and its management.

The Committee has received both management’s and the independent registered public accountant’s reports on internal control over financial reporting and have discussed the results of their audits.

The Committee has discussed with the Company’s management and the independent registered public accountants such other matters and received such assurances from them as we deemed appropriate.

As a result of our review and discussions, we have recommended to the Board of Directors the inclusion of our audited financial statements in the annual report on Form 10-K/A for the year ended December 31, 2004, for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE
Alan B. Graf, Jr. (Chairman)
John S. Grinalds
Michael S. Starnes

24

---

AUDIT AND NON-AUDIT FEES

The following table shows the fees paid or accrued by the Company for audit and other services provided by KPMG LLP, the Company’s independent registered public accounting firm, for the years ended December 31, 2003 and 2004.

				Audit Fees (1)				Audit-Related Fees (2)				Tax Fees (3)				All Other Fees				Total Fees
2003				$	368,500			$	11,000			$	322,700			$	—			$	702,200
2004				$	622,000			$	—			$	306,880			$	—			$	928,880

 

---

(1)

Audit fees consisted of fees for the audit of the consolidated financial statements ($260,000 for 2004) and the audit of internal control over financial reporting ($293,000 for 2004), audits of bond-financed properties and joint ventures and issuance of consents in connection with registration statements.

(2)

Audit-related fees consisted of fees for audits of financial statements of certain employee benefit plans.

(3)

Tax Fees consist of fees associated with tax compliance, tax advice, and tax planning.

SEC rules under Section 202 of the Sarbanes-Oxley Act of 2002 require the Audit Committee to pre-approve audit and non-audit services provided by our independent registered public accountants. In 2002, our Audit Committee began pre-approving all services by KPMG LLP and has pre-approved all new services since that time.

No fees were billed by KPMG LLP for professional services described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X in 2004.

PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee is responsible for selecting our independent registered public accountants and has selected KPMG LLP to audit our financial statements for the 2005 fiscal year. Accordingly, shareholder approval is not required to appoint KPMG LLP as our independent registered public accountants for fiscal year 2005. The Board of Directors believes, however, that submitting the appointment of KPMG LLP to the shareholders for ratification is a matter of good corporate governance. A representative of KPMG LLP is expected to be present at the Annual Meeting of Shareholders to make a statement if they so desire and to answer any appropriate questions.

In the event you do not ratify the appointment of KPMG LLP as our independent registered public accountants, the Audit Committee will reconsider the appointment of KPMG LLP. Even if you do ratify the appointment, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it believes that such a change would be in the best interests of the Company and our shareholders.

The presence of a quorum at the Annual Meeting of Shareholders and the affirmative vote of a majority of the votes present at the meeting, either in person or by proxy, and entitled to vote on the matter are necessary to ratify the selection of KPMG LLP as our independent registered public accountants for fiscal year 2005.

The Audit Committee of the Board of Directors unanimously
recommends a vote “FOR” adoption of Proposal No. 2.

25

---

OTHER MATTERS

The Board of Directors, at the time of the preparation of this Proxy Statement, knows of no business to come before the meeting other than that referred to herein. If any other business should come before the meeting, the person named in the enclosed proxy will have discretionary authority to vote all proxies in accordance with his best judgment.

BY ORDER OF THE BOARD OF DIRECTORS

 

Leslie B.C. Wolfgang
Vice President, Director of External Reporting and
Corporate Secretary

April 15, 2005

26

---

C/O WACHOVIA BANK
CORPORATE TRUST GROUP
EQUITY SERVICES, NC 1153
1525 WEST WT HARRIS BOULEVARD, 3C3
CHARLOTTE, NC 28288-1153

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Mid-America Apartment Communities, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

 

 

 

 

 

 

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:	MAACI1	KEEP THIS PORTION FOR YOUR RECORDS
		DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

MID-AMERICA APARTMENT COMMUNITIES, INC.

Vote On Directors

1.

ELECTION OF THREE CLASS II DIRECTORS. 01) H. Eric Bolton, Jr. 02) Alan B. Graf, Jr. 03) Ralph Horn

For All ¡

Withhold All ¡

For All Except ¡

To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s name on the line below.

Vote On Proposals

For

Against

Abstain

2.

RATIFICATION OF KPMG LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR 2005.

¡

¡

¡

3.

In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR ALL PROPOSALS.

Please sign this proxy exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, this proxy should be signed in the full corporate name by the President or other authorized officer. If a partnership, it should be signed in the full partnership name by an authorized person.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

Yes

No

HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household

¡

¡

Signature [PLEASE SIGN WITHIN BOX]	Date		Signature (Joint Owners)	Date

---

---

 

 

PROXY	MID-AMERICA APARTMENT COMMUNITIES, INC. 6584 POPLARAVENUE, SUITE 300, MEMPHIS, TENNESSEE 38138

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints H. Eric Bolton, Jr., Leslie B. C. Wolfgang and Simon R.C. Wadsworth, and each of them, as proxies, each with the power to appoint such person’s substitute, and hereby authorizes them to vote, as designated on the reverse side, all the shares of common stock of Mid-America Apartment Communities, Inc. (the “Company”) held of record by the undersigned on March 18, 2005 at the Annual Meeting of Shareholders to be held on May 19, 2005, or any adjournment thereof.

(PLEASE SEE REVERSE SIDE)

---