UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934 (Amendment No. ____)
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| x | Definitive Proxy Statement |
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| ¨ | Soliciting Material Pursuant to Rule 14a-12 |
AMREP CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
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AMREP CORPORATION
(An Oklahoma corporation)
NOTICE OF 20102013 ANNUAL MEETING OF SHAREHOLDERS
September 13, 201019, 2013
NOTICE IS HEREBY GIVEN that the 20102013 Annual Meeting of Shareholders of AMREP Corporation (the “Company”) will be held at the Conference Center at Normandy Farm, Route 202 and Morris Road, Blue Bell,offices of Drinker Biddle & Reath LLP, One Logan Square, Suite 2000, Philadelphia, Pennsylvania on September 13, 201019, 2013 at 9:00 A.M. Eastern Time for the following purposes:
(1) To elect two directorsone director in Class II to hold office until the 2013 Annual Meeting2016 annual meeting of shareholders and until their successors arehis successor is elected and qualified;
(2) To approve, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed in the accompanying proxy statement;
(3) To approve, on an advisory basis, the preferred frequency of shareholder advisory votes on the compensation paid to the Company’s named executive officers; and
(2)(4) To consider and act upon such other business as may properly come before the meeting.
In accordance with the Company’s By-Laws, the Board of Directors has fixed the close of business on July 30, 201026, 2013 as the record date for the determination of shareholders of the Company entitled to notice of and to vote at the meeting and any continuation or adjournment thereof. The list of such shareholders will be available for inspection by shareholders during the ten days prior to the meeting at the offices of the Company, 300 Alexander Park, Suite 204, Princeton, New Jersey.Jersey 08540.
Whether or not you expect to be present at the meeting, please mark, date and sign the enclosed proxy and return it to the Company in the self-addressed envelope enclosed for that purpose. The proxy is revocable and will not affect your right to vote in person in the event you attend the meeting.
By Order of the Board of Directors
Irving Needleman,Christopher V. Vitale, Secretary
| Dated: | August 17, 201015, 2013 |
| | Princeton, New Jersey |
Important Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting To Be Held On September 13, 201019, 2013
The Proxy Statement and Annual Report to Shareholders
are are available at http://www.cfpproxy.com/6674
6674.
Upon the written request of any shareholder of the Company, the Company will provide to such shareholder a copy of the Company’s annual report on Form 10-K for fiscal 2010,2013, including the financial statements, and the schedules thereto, filed with the Securities and Exchange Commission. Any request should be directed to Irving Needleman, Secretary, AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540.08540, Attention: Corporate Secretary. There will be no charge for such report unless one or more exhibits thereto are requested, in which case the Company’s reasonable expenses of furnishing exhibits may be charged. |
AMREP CORPORATION
300 Alexander Park, Suite 204
Princeton, New Jersey 08540
__________________________
PROXY STATEMENT
__________________________
ANNUAL MEETING OF SHAREHOLDERS
To be Held at 9:00 A.M. Eastern Time on September 13, 201019, 2013
This Proxy Statementproxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of AMREP Corporation (the “Company”) for use at the Annual Meeting of Shareholders of the Company to be held on September 13, 2010,19, 2013, and at any continuation or adjournment thereof (the “Annual Meeting”). The Annual Meeting will be held at the Conference Center at Normandy Farm located at Route 202 and Morris Road, Blue Bell,offices of Drinker Biddle & Reath LLP, One Logan Square, Suite 2000, Philadelphia, Pennsylvania.
The Annual Report of the Company on Form 10-K for the fiscal year ended April 30, 20102013 filed on July 21, 201016, 2013 with the Securities and Exchange Commission is included in this mailing but does not constitute a part of the proxy solicitation material. This Proxy Statement and the accompanying Notice of 20102013 Annual Meeting of Shareholders and proxy card are first being sent to shareholders on or about August 17, 2010.15, 2013.
Information Concerning the Annual Meeting
Information Concerning the Annual Meeting |
QUESTIONS AND ANSWERS CONCERNING THE ANNUAL MEETING
What will be voted on at the Annual Meeting?
AtThere are three matters scheduled for a vote:
| · | Proposal Number 1: Election of one director in Class II to hold office until the 2016 annual meeting of shareholders and until his successor is elected and qualified; |
| · | Proposal Number 2: Approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement; and |
| · | Proposal Number 3: Approval, on an advisory basis, of the preferred frequency of shareholder advisory votes on the compensation paid to the Company’s named executive officers. |
What if another matter is properly brought before the Annual Meeting?
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, shareholders willit is the intention of the persons named in the accompanying proxy to vote on the election of two nominees to serve on the Board.those matters in accordance with their best judgment.
How does the Board recommend I vote on the proposal?proposals?
The Board recommends that you vote “FOR” eachthe election as director of the two nomineesnominee named in this Proxy Statement. In addition, the Board recommends that you vote “FOR” the approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement and that you select the option of “ONE YEAR” for the
preferred frequency of shareholder advisory votes on the compensation paid to the Company’s named executive officers.
Who is entitled to vote at the Annual Meeting?
Only shareholders of record as of the close of business on July 30, 2010,26, 2013, the date fixed by the Board in accordance with the Company’s By-Laws, are entitled to notice of and to vote at the Annual Meeting.
If I have given a proxy, how do I revoke that proxy?
Anyone giving a proxy may revoke it at any time before it is exercised by giving the Secretary of the Company written notice of the revocation, by submitting a proxy bearing a later date or by attending the Annual Meeting and voting.
How will my proxy be voted?
All properly executed, unrevoked proxies in the enclosed form that are received in time will be voted in accordance with the shareholders’ directions and, unless contrary directions are given, will be voted for“FOR” the election as directorsdirector of the nomineesnominee named in this Proxy Statement.Statement, “FOR” the approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement and for the option of “ONE YEAR” for the preferred frequency of shareholder advisory votes on the compensation paid to the Company’s named executive officers.
How many votes are needed to elect directors?
The two nominees receiving the highest number of “FOR” votes will be elected as directors. This is referred to as a plurality.
What if a nominee is unwilling or unable to serve?
This is not expected to occur but, in the event that it does, proxies will be voted for a substitute nominee designated by the Board or, in the discretion of the Board, the position may be left vacant.
How will abstentions and broker non-votes affect the voting?What are “broker non-votes”?
Abstentions and broker non-votes have no effect on the voting for election of directors. Under the rules that govern brokers, uncontested elections of directors had previously been considered routine matters, andif brokers or nominees who held stockhold shares in “street name” could vote the shares withouton behalf of beneficial owners do not have instructions from their clients. These rules, however, were recently amended, and consequently, if a customer or account holder does not instruct the broker or nominee on how to vote on matters deemed by the New York Stock Exchange to be “non-routine” (which include the proposals in the uncontested director electionthis Proxy Statement), a broker non-vote of those shares will occur.occur, which means the shares will not be voted on such matters. If you hold your shares are held in “street name,” you must cast your vote or instruct your nominee or broker to do so if you want your vote to be counted with respect to the proposals in this Proxy Statement.
How are votes counted?
Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count votes as follows:
| · | for Proposal Number 1 (for the election of a director), votes “For” and “Withhold” and broker non-votes; |
| · | for Proposal Number 2 (approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement), votes “For” and “Against,” abstentions and broker non-votes. Abstentions are treated as shares present and entitled to vote on Proposal Number 2 and, therefore, will have the same effect as a vote “Against” Proposal Number 2; and |
| · | for Proposal Number 3 (approval, on an advisory basis, of the preferred frequency of shareholder advisory votes on the compensation paid to the Company’s named executive officers), votes for “One Year,” “Two Years” and “Three Years,” abstentions and broker non-votes. Abstentions will have no effect on the outcome of the vote on Proposal Number 3. |
Broker non-votes have no effect and will not be counted towards the election of directors.vote total for any proposal.
How many votes are needed to approve each proposal?
| · | With respect to Proposal Number 1 (for the election of a director), the one nominee receiving the highest number of “FOR” votes from the holders of shares present in person or represented by proxy and entitled to vote will be elected as director. This is referred to as a plurality. |
| · | Proposal Number 2 (approval, on an advisory basis, of the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement) must receive “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote in order to be approved. |
| · | With respect to Proposal Number 3 (approval, on an advisory basis, of the preferred frequency of shareholder advisory votes on the compensation paid to the Company’s named executive officers), the choice of one year, two years or three years that receives the highest number of votes from the holders of shares present in person or represented by proxy and entitled to vote will be deemed to be the frequency preferred by the shareholders. |
How many shares can be voted at the Annual Meeting?
As of July 30, 2010,26, 2013, the Company had issued and outstanding 5,996,2127,195,454 shares of Common Stock,common stock, par value $.10 per share.share (“Common Stock”). Each share of Common Stock is entitled to one vote on matters to come before the Annual Meeting.
How many votes will I be entitled to cast at the Annual Meeting?
You will be entitled to cast one vote for each share of Common Stock you held at the close of business on July 30, 2010,26, 2013, the record date for the Annual Meeting, as shown on the list of shareholders at that date prepared by the Company’s transfer agent for the Common Stock.
What is a “quorum?”
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock of the Company authorized to vote will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes will be counted in determining whether a quorum is present at the Annual Meeting. Broker non-votes will not be counted in determining whether a quorum is present at the Annual Meeting since broker non-votes have no effect and will not be counted towards the vote total for any proposal contained in this Proxy Statement.
Who may attend the Annual Meeting?
All shareholders of the Company who owned shares of record at the close of business on July 30, 201026, 2013 may attend the Annual Meeting. If you want to vote in person and you hold Common Stock in street name (i.e.(i.e., your shares are held in the name of a brokerage firm,broker, dealer, custodian bank or other nominee), you must obtain a proxy card issued in your name from the firm that holds your shares and bring that proxy card to the Annual Meeting, together with a copy of a statement from that firm reflecting your share ownership as of the record date, and valid identification. If you hold your shares in street name and want to attend the Annual Meeting but not vote in person, you must bring to the Annual Meeting a copy of a statement from the firm that holds your shares reflecting your share ownership as of the record date, and valid identific ation.identification.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth in the following table is information concerning the beneficial ownership, as defined in Rule 13d-3 under the Securities Exchange Act of the1934, as amended, of Common Stock of the Company by the persons who, to the knowledge of the Company, own beneficially more than 5% of the outstanding shares. The table also sets forth the same information concerning beneficial ownership for each director of the Company, each named executive officer of the executive officers named in the Summary Compensation Table on page 12Company, and all directors and executive officers of the Company as a group. Unless otherwise indicated, (i) reported ownership is as of July 30, 2010,26, 2013, and (ii) the Company understands that the beneficial owners have sole voting and investment power with respect to the shares beneficially owned by them. In the case of directors and executive officers, the information below has been provided by such persons at the request of the Company.
Beneficial Owner | Shares Owned | % of Class(a)Class
|
| | |
Nicholas G. Karabots, (Director) P.O. Box 736
Fort Washington, PA 19034
et al | 3,574,1062,503,180 (2)(1)
| 59.6 |
| | 34.8 |
Albert V. Russo (Director), Lena Russo, Clifton Russo, Lawrence Russo c/o American Simlex Company 401 Broadway New York, NY 10013 | 1,117,0401,273,867 (2)
| 17.7 |
| John H. Lewis, et al | 726,288 (3) | 18.610.1 |
| Robert E. Robotti, et al | 571,590 (4) | 7.9 |
Other Directors and Executive Officers | | |
Robert E. Robotti, et al (4)
| 361,586(4)
| 6.0 (4)
|
| | |
Other Directors and Executive Officers | | |
| | |
Edward B. Cloues, II | 3,000 | * | 2,500 | * |
Lonnie A. Coombs | 3,766 | * | 3,500 | * |
Michael P. Duloc | 2,500 (5) | * |
John F. Meneough | -Theodore J. Gaasche | - |
Irving Needleman | - | - |
| Peter M. Pizza | - | - |
| Samuel N. Seidman | 14,000 13,500 | * |
James WallChristopher V. Vitale | - | 3,057 (6) -
| * |
| Jonathan B. Weller | 1,5001,800 | - |
| | * |
Directors and Executive Officers as a Group (11(9 persons) | 4,718,2031,298,433 (2),(3),(5),(6) | 78.718.0 |
_____________________________
* Indicates less than 1%.
| (1) | The shareholdings include 500 shares for each of Messrs. Coombs, Karabots, Russo and Seidman that such persons havefollowing table sets forth information regarding the right to acquire pursuant to options, all of which are presently exercisable, issued under the Company’s Non-Employee Directors Option Plan, which was terminated in 2005. |
(2) | Includes 481,728 shares owned by The Karabots Foundation, a private non-profit corporation founded by Mr. Karabots and of which he is the President, Foundation Manager and one of two directors. Mr. Karabots disclaims beneficial ownership of Common Stock by Nicholas G. Karabots, Glendi Publications, Inc. and Kappa Media Group, Inc., each of P.O. Box 736, Fort Washington, PA 19034. The information in the shares ownedtable is based solely on Amendment No. 29 filed jointly by The Karabots Foundation.these persons on July 8, 2013 to the Schedule 13D filed with the Securities and Exchange Commission on August 4, 1993. |
(3)Beneficial Owner | Shares Owned Beneficially | % of Class (a) |
| Nicholas G. Karabots | 2,503,180 (b) | 34.8 |
| Glendi Publications, Inc. | 1,738,424 (c) | 24.2 |
| Kappa Media Group, Inc. | 512,337 (d) | 7.1 |
_____________________________
| (a) | Based upon the number of issued and outstanding shares of Common Stock at July 26, 2013. |
| (b) | Mr. Karabots has sole power to vote or direct the vote, and sole power to dispose or direct the disposition, of such shares, of which 2,250,761 shares are owned indirectly through Glendi Publications, Inc. and Kappa Media Group, Inc. |
| (c) | Mr. Karabots has the sole power to vote or direct the vote, and sole power to dispose or direct the disposition, of these shares, which are directly owned by Glendi Publications, Inc. |
| (d) | Mr. Karabots has the sole power to vote or direct the vote, and sole power to dispose or direct the disposition, of these shares, which are directly owned by Kappa Media Group, Inc. |
| (2) | Albert V. Russo, Lena Russo, Clifton Russo and Lawrence Russo have reported that they share voting power as to these shares and that each of them has sole dispositive power as to the following numbers of such shares representing the indicated percentages of the outstanding Common Stock: Albert V. Russo – 664,241 (11.1%821,068 (11.4%); Lena Russo – 33,740 (0.6%(0.5%); Clifton Russo – 237,617 (4.0%(3.3%); and Lawrence Russo – 181,442 (3.0%(2.5%). |
(4)(3) | The following table sets forth information regarding the beneficial ownership of Common Stock by John H. Lewis, Osmium Partners, LLC (“Osmium Partners”), Osmium Capital, LP (“Fund I”), Osmium Capital II, LP (“Fund II”), and Osmium Spartan, LP (“Fund III”; Fund I, Fund II and Fund III, collectively, the “Funds”), each of 300 Drakes Landing Road, Suite 172, Greenbrae, CA 94904. The information in the Companytable is based solely on a Form 3 filed jointly by these persons with the Securities and Exchange Commission on July 8, 2013 and a Schedule 13D filed jointly by these persons with the Securities and Exchange Commission on March 27, 2013. |
Beneficial Owner | Shares Owned Beneficially | % of Class(a) |
| John H. Lewis | 726,288 (b) | 10.1 |
| Osmium Partners | 701,788 (c) | 9.8 |
| Fund I | 248,752 (d) | 3.5 |
| Fund II | 406,307 (d) | 5.6 |
| Fund III | 46,729 (d) | * |
_____________________________
| (a) | Based upon the number of issued and outstanding shares of Common Stock at July 26, 2013. |
| (b) | Mr. Lewis has sole power to vote or direct the vote, and sole power to dispose or direct the disposition, of 24,500 of such shares, and shares with Osmium Partners the power to vote or direct the vote, and the power to dispose or direct the disposition, of a total of 701,788 of such shares, which are directly owned by the Funds. |
| (c) | Osmium Partners shares with Mr. Lewis the power to vote or direct the vote, and dispose or direct the disposition, of these shares, which are directly owned by the Funds. |
| (d) | The shares are directly owned by the beneficial owner, and the power to vote or direct the vote, and the power to dispose or direct the disposition, of such shares is shared with Mr. Lewis and Osmium Partners. |
| (4) | The following table sets forth information regarding the beneficial ownership of Common Stock by Robert E. Robotti, Robotti & Company, Incorporated (“R&CoI”), Robotti & Company, LLC (“R&CoL”) and, Robotti & Company Advisors, LLC (“R&CoA”) and RVB Value Fund, L.P. (“RV”), alleach of 52 Vanderbilt Avenue,6 East 43rd Street, New York, NY 10017,11017-4651, Kenneth R. Wasiak of 515488 Madison Avenue, New York, NY 10022 and Ravenswood Management Company, L.L.C. (“RMC”), The Ravenswood Investment Company, L.P. (“RIC”) and Ravenswood Investments III, L.P., (“RI”), alleach of 104 Gloucester Road, Massapequa, NY 11758. The information in the table is derived from a Schedule 13Dbased solely on Amendment 2 filed jointly by these persons on February 15, 2012 to the Schedule 13D filed with the Securities and Exchange Commission on October 26, 2007. |
Beneficial Owner | Shares Owned Beneficially | % of Class (a) |
Robert E. Robotti (b),(c),(d),(e) | 361,586 | 6.0 |
R&CoI (b),(c) | 176,386 | 2.9 |
R&CoL (b) | 6,200 | * |
R&CoA (c) | 170,186 | 2.8 |
Kenneth R. Wasiak (d),(e) | 185,200 | 3.1 |
RMC (d),(e) | 185,200 | 3.1 |
RIC (d) | 130,378 | 2.2 |
RI (e) | 54,822 | * |
| Beneficial Owner | Shares Owned Beneficially | % of Class (a) |
| Robert E. Robotti | 571,590 | (b),(c),(d),(e),(f) | 7.9 |
| R&CoI | 571,590 | (b),(c) | 7.9 |
| R&CoL | 4,100 | (b) | * |
| R&CoA | 567,490 | (c) | 7.9 |
| RV | 23,322 | (d) | * |
| Kenneth R. Wasiak | 160,887 | (d),(e),(f) | 2.2 |
| RMC | 160,887 | (d),(e),(f) | 2.2 |
| RIC | 86,597 | (e) | 1.2 |
| RI | 50,698 | (f) | * |
_____________________________
| | (a) | Based upon the number of issued and outstanding shares of Common Stock at July 30, 2010.26, 2013. |
| | (b) | Each of Mr. Robotti and R&CoI share with R&CoL the power to vote or to direct the vote, and share the power to dispose or to direct the disposition, of 6,2004,100 shares of Common Stock owned by the discretionary customers of R&CoL. |
| | (c) | Each of Mr. Robotti and R&CoI share with R&CoA the power to vote or to direct the vote, and share the power to dispose or to direct the disposition, of 170,186406,603 shares of Common Stock owned by the advisory clients of R&CoA. |
| | (d) | Each of RMC and Messrs. Robotti and Wasiak and RMC share with RICRV the power to vote or to direct the vote, and share the power to dispose or to direct the disposition, of 130,37823,322 shares of Common Stock owned by RV. |
| (e) | Each of RMC and Messrs. Robotti and Wasiak share with RIC the power to vote or direct the vote, and the power to dispose or direct the disposition, of 86,597 shares of Common Stock owned by RIC. |
| | (e) (f) | Each of RMC and Messrs. Robotti and Wasiak and RMC share with RI the power to vote or to direct the vote, and share the power to dispose or to direct the disposition, of 54,82250,698 shares of Common Stock owned by RI. |
In an institutional investment manager’s report on Form 13F filed by Mr. Robotti with the Securities and Exchange Commission on May 18, 2010,15, 2013, he reported that at March 31, 2010,2013, he had sole voting authority and shared investment discretion over 548,308 shares and sole voting authority and investment discretion over 408,205an additional 3,525 shares of Common Stock of the Company.Stock.
| (5) | Held jointly with Mr. Duloc’s spouse. |
(6) | Includes 287 shares held in the Company’s Savings and Salary Deferral Plan allocated to the account of Mr. Wall. |
PROPOSAL NUMBER 1
ELECTION OF DIRECTORSDIRECTOR
The Board is a classified board divided into three classes -– Class I, consistingClass II and Class III, each of which consists of two directors Class II consisting of two directors and Class III consisting of three directors. Each class of directors
serveswho serve for a term of three years. At this Annual Meeting, twoone Class II directorsdirector will be elected to serve until the 2016 annual meeting of shareholders and until his successor is elected and qualified. Effective on the date of the 2013 Annual Meeting, the size of the Board will be reduced from six members to five members and until their successors are elected and qualified.the number of Class II directors will be reduced from two directors to one director.
TheAt the recommendation of its Nominating and Corporate Governance Committee, the Board is nominating Lonnie A. Coombs, and Samuel N. Seidman, who are theis an incumbent Class II directors,director, for electionreelection at the Annual Meeting. Although the Board does not expect that either of the persons nominatedMr. Coombs will be unable to serve as a director, should either of themhe become unavailable for election it is intended that the shares represented by proxies in the accompanying form will be voted for the election of a substitute nominee or nominees selectedrecommended to the Board by the BoardNominating and Corporate Governance Committee or, in the discretion of the Board, the position may be left vacant.
The Board unanimously recommends a vote “FOR” the two Class II nominees.
The following information relates to the nomineesnominee of the Board for election and the other directors whose terms of office do not expire this year.the Company.
NomineesNominee to serve until the 20132016 Annual Meeting of Shareholders (Class II):
LONNIE A. COOMBS, age 62,65, has been a director of the Company since 2001. Mr. Coombs is a certified public accountant and provides accounting, tax and business consulting services, and has been engaged in this occupation for more than the past five years with his firm, Lonnie A. Coombs, CPA. Mr. Coombs brings to the Board the expertise in financial and accounting matters he has accumulated over his almostapproximately 40 years as a practicing certified public accountant, and the diverse business knowledge he has gained in dealing through his practice with a broad range of commercial enterprises.
Directors continuing in office until the 2014 Annual Meeting of Shareholders (Class III):
SAMUEL N. SEIDMANTHEODORE J. GAASCHE, age 76,51, has been a director of the Company since 1977. Mr. Seidman is the President of Seidman & Co., Inc., an economic consulting and investment banking firm that he founded, and also serves as director, Chairman of the Board of Directors, President and Chief Executive Officer of Productivity Technologies Corp., a manufacturer of metal forming and materials handling automation equipment and a wirer of control panels. He has held these positions for more than the past five years. He is a former director of InkSure Technologies Inc. Mr. Seidman provides the Board with his experience as a public company director, having served on a number of boards over the years. He also has a strong business background b oth through operating his own economic consulting and investment banking business and having managed several other businesses.
Directors continuing in office until the 2011 Annual Meeting (Class III):
NICHOLAS G. KARABOTS, age 77, has been a director of the Company since 1993January 2013 and currently serves as the Vice Chairman of the Executive Committee of the Board. Mr. KarabotsGaasche is the ChairmanExecutive Vice President, Operations of Spartan Organization, Inc., a private company that advises various print, publishing and other portfolio companies. Mr. Gaasche was the Board of DirectorsPresident and Chief Executive Officer of Kappa Media Group,the Company from August 2011 to January 2013. Mr. Gaasche had served as the Company’s Vice President–Corporate Development from February 2011 to August 2011. From 2009 through July 2011, he was Executive Vice President, Operations of Spartan Organization. Mr. Gaasche was the Company’s Vice President–Corporate Development on a less than full-time basis while he also was employed by Spartan Organization. For over twenty years until 2008, Mr. Gaasche held positions of increasing responsibility at various divisions of SunGard Data Systems Inc., Spartan Organization, Inc., Jericho National Golf Club, Inc.most recently as the Chief Executive Officer of SunGard Availability Services, a division of SunGard that provided disaster recovery, managed information technology and other private companies that are primarily engaged in the publishing, printing, recreational sports and real estate businesses, and has held these positions for more than the past five years.related services. Mr. KarabotsGaasche brings to the Board his extensive business experience, obtained through over 50 yearsincluding his knowledge of owningthe Company as its former President and operating a variety of businesses, including businesses involved in real estate development and publishing.Chief Executive Officer.
ALBERT V. RUSSO, age 56,59, has been a director of the Company since 1996. Mr. Russo is the Managing Partner of real estate entities Russo Associates and Pioneer Realty and is a Partner of American Simlex Company, a textile exporter, and has held these positions for more than the past five years. Mr. Russo is also the Managing Partner of 401 Broadway Building, a real estate company which acquired its
principal asset in 2006 from a court appointed receiver for 401 Broadway Realty Company, of which he was a general partner, in connection with the resolution of a dispute among the partners. Mr. Russo has been involved in the ownership and management of commercial real estate for more than 25 years and contributes to the Board his specialized knowledge of the real estate business.
Directors continuing in office until the 2015 Annual Meeting of Shareholders (Class I):
EDWARD B. CLOUES, II, age 65, has been a director of the Company since 1994 and currently serves as the Chairman of the Board and of the Executive Committee of the Board. He also serves as a director of Hillenbrand, Inc. and as a director and Chairman of the Board of each of Penn Virginia Corporation and PVR GP, LLC, the General Partner of PVR Partners, L.P. For more than five years prior to its sale on April 1, 2010, Mr. Cloues was a director, the Chairman of the Board and the Chief Executive Officer of K-Tron International, Inc., a material handling equipment manufacturer. Prior to joining K-Tron International, Inc., Mr. Cloues was a law firm partner at a major global law firm where he specialized in mergers and acquisitions and other business law matters. That experience combined with the experience gained from his former 12 year chief executive officer position with K-Tron International, Inc., which had been publicly held prior to its sale, has given him a strong background in dealing with complex business transactions and general management issues. Additionally, he brings to the Board a broad understanding of governance and compensation issues as a result of his service on several other public company boards.
JONATHAN B. WELLER, age 63,66, has been a director of the Company since 2007. After his retirement from full-time employment in April 2006, Mr. Weller worked as an Adjunct Lecturer at the Wharton
School of the University of Pennsylvania from January 2007 to May 2009. From June 2004 to April 2006, Mr. Weller was Vice Chairman of Pennsylvania Real Estate Investment Trust, a public national owner, manager and operator of retail properties. He also served as Pennsylvania Real Estate Investment Trust’s President and Chief Operating Officer from 1994 to June 2004, and served on its Board of Trustees from 1994 to March 2006. Mr. Weller is a director of PVR GP, LLC, the General Partner of PVR Partners, L.P. (“PVR”) and had been a director of PVG GP, LLC, the General Partner of Penn Virginia GP Holdings, L.P., prior to its merger with PVR. He also is a member of the Advisory Board of Momentum Real Estate Fund, LLC. Mr. Weller brings to the Board 36 years of experience in the real estate business as well as experience in dealing with complex financial transactions. Also, his service on other public company boar dsboards enhances the Board’s ability to deal with governance and compensation matters.
DirectorsDirector continuing in office until the 20122013 Annual Meeting of Shareholders (Class I)II):
EDWARD B. CLOUES, IISAMUEL N. SEIDMAN, age 62,79, has been a director of the Company since 19941977. Mr. Seidman is the President of Seidman & Co., Inc., an economic consulting and currently serves as the Chairman of the Board. Since April 2010, Mr. Cloues has been retired. For more than five years prior to his retirement, Mr. Cloues was a director, the Chairmaninvestment banking firm that he founded, and the Chief Executive Officer of K-Tron International, Inc., a material handling equipment manufacturer, which, until April 2010 was publicly held. Mr. Clouesalso serves as a director of Hillenbrand, Inc., Penn Virginia Corporation and Penn Virginia Resource GP, LLC, the General Partner of Penn Virginia Resource Partners, L.P. Mr. Cloues has also been a law firm partner specializing in business law matters and that experience combined with the experience gained from his former exe cutive position has given him a strong background in dealing with complex business transactions. Additionally, he brings to the Board a broad understanding of governance and compensation issues as a result of his service on other public company boards and of general management issues as a result of his service as chief executive officer of a public company.
JAMES WALL, age 73, has been a director of the Company since 1991. Mr. Wall is Senior Vice President of the Company and Chairman of the Board of Directors, President and Chief Executive Officer of AMREP Southwest Inc.Productivity Technologies Corp., a wholly-owned subsidiarymanufacturer of the Company,metal forming and materials handling automation equipment and a wirer of control panels. He has held these positions for more than the past five years. He is a former director of InkSure Technologies Inc. Mr. Seidman provides the Board with his experience as a public company director, having served on a number of boards over the years. He also has a strong business background both through operating his own economic consulting and investment banking business and having managed several other businesses.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE CLASS II NOMINEE.
PROPOSAL NUMBER 2
ADVISORY VOTE ON THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS
Under the Dodd-Frank Wall has spent more thanStreet Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the last 40 years closely involvedExchange Act, the Company’s shareholders are entitled to vote to approve, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed in this Proxy Statement in accordance with the planning, engineering design, developmentrules of the Securities and marketingExchange Commission. The compensation paid to the Company’s named executive officers subject to the vote is disclosed in the compensation table, and the related narrative disclosure contained in this Proxy Statement.
The Board is asking the shareholders to indicate their support for the compensation paid to the Company’s named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the shareholders of AMREP Corporation hereby APPROVE, on a nonbinding advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2013 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the executive compensation table and narrative discussion accompanying the proxy statement.”
Because the vote is advisory, it is not binding on the Board or the Company. In accordance with the Dodd-Frank Act, the vote to approve the compensation of the Company’s principal real estate holdingnamed executive officers shall not be construed: (i) as overruling any decision by the Company or the Board; (ii) to create or imply any change in Rio Rancho, New Mexico, which remains a significant assetthe fiduciary duties of the Company or the Board; or (iii) to create or imply any additional fiduciary duties for the Company or the Board. Nevertheless, the views expressed by the shareholders, whether through this vote or otherwise, are important to management and has also been involvedthe Board and, accordingly, the Board and the Compensation Committee intend to consider the results of this vote in other aspectsmaking determinations in the future regarding executive compensation arrangements.
Advisory approval of this proposal requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL NUMBER 3
ADVISORY VOTE ON PREFERRED FREQUENCY OF SHAREHOLDER ADVISORY VOTES ON THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS
Under the Dodd-Frank Act and Section 14A of the Exchange Act, the Company’s shareholders are entitled, at least once every six years, to indicate on an advisory basis their preference regarding how frequently the Company should solicit a non-binding advisory vote on the compensation paid to the Company’s named executive officers as disclosed in the Company’s proxy statement. Accordingly, the Company is asking shareholders to indicate whether they would prefer an advisory vote every one year, every two years or every three years. Alternatively, shareholders may abstain from casting a vote.
After considering the benefits and consequences of each alternative, the Board recommends that the advisory vote on the compensation paid to the Company’s named executive officers be submitted to the shareholders every year. The Board believes that an annual advisory vote on executive compensation will allow the shareholders of the Company to provide the Company with their direct input on the Company’s compensation philosophy, policies and practices as disclosed in the Company’s proxy statement every year and that an annual advisory vote on executive compensation is consistent with the Company’s general policy of seeking input from, and engaging in discussions with, the shareholders of the Company on corporate governance matters and the Company’s executive compensation philosophy, policies and practices.
Accordingly, the Board is asking shareholders to indicate their preferred voting frequency by voting for one, two or three years or abstaining from voting on this proposal. Shareholders may cast a non-binding advisory vote on their preferred voting frequency by selecting the option of one year, two years, or three years, or abstain from voting, when voting in response to the following resolution:
“RESOLVED, that the shareholders of AMREP Corporation hereby determine, on a nonbinding advisory basis, whether the preferred frequency of a shareholder advisory vote on the executive compensation paid to the Company’s named executive officers as set forth in the Company’s proxy statement should be every one year, every two years, or every three years.”
While the Board believes that its recommendation is appropriate at this time, the shareholders are not voting to approve or disapprove that recommendation, but are instead asked to indicate their preferences, on an advisory basis, as to whether the non-binding shareholder advisory vote on the approval of the Company’s real estate business. This coupledexecutive officer compensation practices should be held every one year, every two years or every three years. The option among those choices that receives the highest number of votes from the holders of shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be deemed to be the frequency preferred by the shareholders.
In accordance with his established presencethe Dodd-Frank Act, the vote on the frequency of the shareholder advisory vote on the compensation of the Company’s named executive officers shall not be construed: (i) as overruling any decision by the Company or the Board; (ii) to create or imply any change in the Rio Rancho civic, businessfiduciary duties of the Company or the Board; or (iii) to create or imply any additional fiduciary duties for the Company or the Board. Nevertheless, the Board and government comm unities makes him well qualified to present insightsthe Compensation Committee value the opinions of the shareholders in this matter and, to the restextent there is any significant vote in favor of one frequency over the other options, even if less than a majority, the Board will consider the shareholders’ concerns and evaluate any appropriate next steps. However, because this vote is advisory and therefore not binding on the Board or the Company, the Board may decide that it is in the best interests of the Board on maximizingshareholders that the value to the Company of its real estate holdings.
Company hold an advisory vote on executive compensation more or less frequently than the option preferred by the shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE OF “ONE YEAR” FOR THE PREFERRED FREQUENCY OF SHAREHOLDER ADVISORY VOTES ON THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS AS SET FORTH IN THIS PROXY STATEMENT.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Governance Standards
The Company’s Common Stock is listed on the New York Stock Exchange, and the Company is subject to the Exchange’s Corporate Governance Standards (the “Governance Standards”). The Governance Standards, among other things, generally require a listed company to have independent directors within the meaning of the Governance Standards as a majority of its board of directors and for the board to have an audit committee, a nominating/corporate governance committee and a compensation committee, each composed entirely of independent directors. However,
Prior to May 29, 2012, the Company iswas a “controlled company” within the meaning of the Governance Standards because Nicholas G. Karabots and entities related to him havehad the power to vote more than a majority of the outstanding Common Stock, and theStock. The Governance Standards permit a controlled c ompanycompany to choose not to comply with those requirements.its requirements for nominating/corporate governance and compensation committees. The Board has chosenchose not to have a nominating/corporate governance committee. Also,committee and to have Mr. Karabots, who was not an independent director, as one member of the Board has chosen not to comply with the Governance Standards applicable to compensation committees. Although the Board has aBoard’s Compensation and Human Resources Committee, not all of its members are independent directors as would be required by the Governance Standards if the Company were not a controlled company.
Committee. Mr. Karabots doesdid not qualify as an independent director under the Governance Standards. He ownsStandards because he owned, and he and certain of his family members arewere executives of, publishers that arewere customers for the Company’s newsstand distribution and subscription and product fulfillment services for which the payments involved arewere in amounts greater than permitted under the Governance Standards for a director to be considered
independent. Also, his son-in-law, Michael P. Duloc, iswas the President and Chief Executive Officer of the constituent companies of the Company’s Kable Media Services Inc. subsidiary.businesses. On May 29, 2012, Mr. Wall isKarabots through a charitable gift of shares of Common Stock reduced the percentage of the Company’s outstanding shares of Common Stock that he and entities related to him had the power to vote to 45.9% and, accordingly, the Company employee and therefore does not qualify as an independent director underceased to be a controlled company within the meaning of the Governance Standards.
The Board has since established its Nominating and Corporate Governance Committee, which meets the requirements of the Governance Standards. The Governance Standards applicable to the Company’s loss of controlled company status allowed it a period of up to one year before its Compensation and Human Resources Committee must have been comprised entirely of independent directors, and Mr. Karabots continued as a member of that Committee until his resignation from that Committee on November 28, 2012. On November 28, 2012, the Board appointed Jonathan B. Weller as a member and chairman of the Compensation and Human Resources Committee. In addition, Mr. Karabots resigned from the Board on January 22, 2013 and informed the Board that he did so due to the increased demands of his privately-held businesses during the past several years which have significantly reduced the time he had available to devote to Company matters.
Based principally on their responses to questions to these persons regarding the relationships addressed by the Governance Standards and discussions with them, the Board has determined that other than his service as a director, each of Edward B. Cloues, II, Lonnie A. Coombs, Albert V. Russo, Samuel N. Seidman and Jonathan B. Weller has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company, and, therefore, meets the director independence requirements of the Governance Standards.Standards, including the heightened independence standards applicable to audit committees and compensation committees. The Board was informed that Mr. Coombs, who is a certified public accountant, (i) for many years has provided, and expects to continue to provide, business and tax consulting services to certain companies owned by Mr. Karabots, including companies that are customers f orfor the Company’s newsstand distribution and subscription and product fulfillment services, (ii) the revenues from such business and tax consulting services for the Company’s last three fiscal years have accounted for from 7.8%5.3% to 8.2%13.5% of Mr. Coombs’ professional service revenues over those periods and (iii) Mr. Coombs is also a director of two a
private companiescompany controlled by Mr. Karabots.Karabots and in the past has served as a director of other such companies. However, the Board concluded that Mr. Coombs’ relationships with Mr. Karabots and his companies is as an independent contractor, and not as an employee, partner, shareholder or officer, and would not interfere with Mr. Coombs’ independence from the Company’s management.
The nominees for election as directors are selected by the whole Board. The Board has no charter addressing the director nomination process or any specific qualifications for nominees to meet, and has not adopted a formal policy mandating the consideration of diversity as a factor in selecting and evaluating nominees, or formally defining what diversity means. The Board of Directors considers diversity broadly to include differences of viewpoint, professional experience, and individual characteristics, qualities, and skills that result in varying perspectives among the Board of Directors while simultaneously providing skills that complement the full Board of Directors such that, as a unit, the Board of Directors possesses the appropriate skills and experience to oversee the Company’s business. Th e Board of Directors has not adopted a formal policy relating to diversity because it believes that diversity is one of many underlying factors that are used in assessing a director candidate’s experience, skills, knowledge of business, management practices, and the perspective that he or she can bring to the Board of Directors, and that adopting a formal policy may encourage undue weight being given to one or a few factors, while the remaining factors the Board of Directors has historically considered, which also are not formally defined, garner less attention. Further, the Board of Directors believes that a formal policy regarding diversity may not provide it with the flexibility it requires in evaluating each individual candidate and, therefore, may not result in the selection of the best qualified nominees to the Board of Directors. The Board of Directors believes that diversity is part of the overall mix of factors it has historically considered, and continues to consider, wh en identifying and evaluating candidates for election as directors. If the Board determines in the future to seek any new director, it will consider the qualifications for the position at that time
The Board will consider candidates for director recommended by shareholders on the same basis as any other proposed nominees. Any shareholder desiring to propose a candidate for selection as a nominee of the Board for election at the 2011 Annual Meeting may do so by sending a written communication no later than May 2, 2011 to AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540, Attention: Corporate Secretary, identifying the proposing shareholder, specifying the number of shares of Common Stock held and stating the name and address of the proposed nominee and the information concerning such person that the regulations of the Securities and Exchange Commission require be included in a proxy statement relating to such person’s proposed election as a director. Shareholders should reco gnize that so long as Mr. Karabots remains the Company’s controlling shareholder, his concurrence is necessary for the election of any director.
As required by the Governance Standards, the Board has adopted Corporate Governance Guidelines (the “Guidelines”) that address various matters involving the Board and the conduct of its business. The Board has also adopted a Code of Business Conduct and Ethics setting forth principles of business conduct applicable to the directors, officers and employees of the Company. The Guidelines and Code of Business Conduct and Ethics, as well as the charters of the Board’s Nominating and Corporate Governance Committee, Audit Committee and Compensation and Human Resources Committee, may be viewed under “Corporate Governance” on the Company’s website at www.amrepcorp.com, and written copies will be provided to any shareholder upon written request to the Company at AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540, Attention: Corporate Secretary. The Company intends to disclose on its website any amendment to or waiver of any provision of the Code of Business Conduct and Ethics that applies to any of its principal executive officers, including itsofficer, principal financial andofficer, principal accounting officer.officer or controller or persons performing similar functions.
Directors are expected to attend Annual Meetings of Shareholders, and all of the directors attended last year’s Annual Meeting. The Board held fourseven meetings during the last fiscal year, and all of the directors attended at least 75% of the total of those meetings and the meetings during such year of the Board Committees of which they were members. Pursuant to the Guidelines, the Board has established a policy that the non-management directors meet in executive session at least twice per year and that the independent directors also meet in executive session at least twice per year. Since December 31, 2010, no member of management has been a director. The Chairman of the Board (currently, Edward B. Cloues, II), if in attendance, will be the presiding director at each such executive session; otherwise, those attending willmay select a presiding director.
Any shareholder or other interested person wishing to communicate with the Board or any of the directors may send a letter addressed to the member or members of the Board to whom the communication is directed in care of AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540, Attention: Corporate Secretary. All such communications will be forwarded to the specified addressee(s).
Executive Committee and Board Leadership Structure
The Board has an Executive Committee, which generally has the power of the Board and acts, as needed, between meetings of the Board. Also, inSince the absence of a Chief Executive Officer (the Company has not had a Chief Executive Officer since January 1996),no chief executive officer, the Executive Committee is charged with the oversight of the Company’s business. The current members of the Executive Committee are Messrs. Cloues, KarabotsGaasche and Russo. Mr. Cloues is Chairman of the Board and of the Executive Committee, and Mr. KarabotsGaasche is Vice Chairman of the Board and of the Executive Committee. During the last fiscal 2010,year, the Executive Committee met five timesheld one meeting on a formal basis and its members interacted frequently on an informal basis.
While it is unusual for a company not to have a chief executive officer, the Company believes that its current leadership structure is appropriate and works well for it since, as previously noted, it is a controlled company under the Governance Standards and its two major shareholders are membersmembership of the Executive Committee along withincludes Mr. Cloues who is an experienced former public company chief executive officer.officer, Mr. Gaasche who is the former chief executive officer of the Company and Mr. Russo who is one of the major shareholders of the Company.
Nominating and Corporate Governance Committee
The Board has a Nominating and Corporate Governance Committee that operates under a written charter adopted by the Board. Each member of the Nominating and Corporate Governance Committee is
an independent director, as defined by the Governance Standards. The members of this Committee are Messrs. Cloues (Chairman), Coombs, Russo, Seidman and Weller, each of whom has been determined by the Board to be an independent director within the meaning of the Governance Standards. This Committee reports regularly to the Board concerning its activities. The Nominating and Corporate Governance Committee held two meetings during the last fiscal year. In addition, a subcommittee of the Nominating and Corporate Governance Committee held two meetings during the last fiscal year to consider and approve certain related party transactions.
The duties of the Nominating and Corporate Governance Committee include identifying individuals the Committee considers qualified to be elected Board members consistent with criteria approved by the Board, and recommending persons to be nominated by the Board for election by the shareholders. When considering a nominee for election as a director, the Committee considers the experience, skills and knowledge of business and management practices a candidate may possess and the perspective he or she may bring to the Board, and employs criteria calling for, among other things, the person’s personal and professional integrity, good judgment, high level of ability and business acumen, and experience in the Company’s industries, as well as the ability of the nominee to devote sufficient time to performing their duties on the Board in an effective manner. Although the Committee has no specific policy regarding the diversity of the membership of the Board, it is the objective of the Committee that the Board be comprised of persons of diverse backgrounds such that as a unit the members of the Board will possess the necessary skills to appropriately discharge their responsibilities as the Company’s directors. The Committee is also responsible for periodically reviewing and recommending changes to the Guidelines and for overseeing the Company’s corporate governance practices.
The Nominating and Corporate Governance Committee will consider candidates for director recommended by shareholders on the same basis as any other proposed nominees. Any shareholder desiring to propose a candidate for selection as a nominee of the Board for election at the 2014 Annual Meeting of Shareholders may do so by sending a written communication no later than May 1, 2014 to the Nominating and Corporate Governance Committee, AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540, Attention: Corporate Secretary, identifying the proposing shareholder, specifying the number of shares of Common Stock held and stating the name and address of the proposed nominee and the information concerning such person that the regulations of the Securities and Exchange Commission require be included in a proxy statement relating to such person’s proposed election as a director.
Audit Committee
The Board has an Audit Committee that operates under a written charter adopted by the Board. Each member of the Audit Committee is an independent director, as defined by the Governance Standards. The members of this Committee are Messrs. Coombs (Chairman), Seidman and Weller, each of whom has been determined by the Board to be an independent director within the meaning of the Governance Standards. The Board has also determined that Mr. Coombs, who is a certified public accountant, qualifies as an audit committee financial expert within the meaning of Securities and Exchange Commission regulations. This Committee reports regularly to the Board concerning its activities. The Audit Committee held eight meetings during the last fiscal year.
The duties of the Audit Committee include (i) appointing the Company’s independent registered public accounting firm, approving the services to be provided by that firm and its compensation and reviewing that firm’s independence and performance of services, (ii) reviewing the scope and results of the yearly audit by the independent registered public accounting firm, (iii) reviewing the Company’s system of internal controls and procedures, (iv) reviewing with management and the independent registered public accounting firm the Company’s annual and quarterly financial statements, (v) reviewing the Company’s financial reporting and accounting standards and principles and (vi) overseeing the administration of the Guidelines. This Committee reports regularly to the Board concerning its activities. The current members of this Committee are Messrs. Coombs (Chairman), Seidman and Weller, each of whom has been determined by the Board to be an independent director within the meaning of the
Governance Standards. The Board has also determined that Mr. Coombs, who is a certified public accountant, qualifies as an audit committee financial expert withinadministration and enforcement of the meaningCompany’s Code of SecuritiesBusiness Conduct and Exchange Commission regulations. The Audit Committee held eight meetings during the last fiscal year.
Ethics. In addition to the Audit Committee’s responsibilities set forth above, the Audit Committee has, pursuant to its charter, primary responsibility in the oversight of risks that could affect the Company.
Compensation and Human Resources Committee
The Board has a Compensation and Human Resources Committee that operates under a written charter adopted by the Board. Each member of the Compensation and Human Resources Committee is an independent director, as defined by the Governance Standards. The members of this Committee are Messrs. Cloues, Russo and Weller (Chairman), each of whom has been determined by the Board to be an independent director within the meaning of the Governance Standards. This Committee reports regularly to the Board concerning its activities. During the last fiscal year, the Compensation and Human Resources Committee held one meeting on a formal basis and met periodically on an informal basis.
The Compensation and Human Resources Committee is responsible for reviewing and approving the corporate goals and objectives applicable to the Company’s chief executive officer and determining his compensation and that of the Company’s other executive officers, establishing overall compensation and benefit levels and fixing bonus pools for other employees, and making recommendations to the Board concerning other matters relating to employee and director compensation. With respect to salaries, bonuses and other compensation and benefits, the decisions and recommendations of the Compensation and Human Resources Committee are subjective and are not based on any list of specific criteria. In the past, factors influencing the Committee’s decisions regarding executive salaries have included the Committee’s assessment of the executive’s performance and any changes in functional responsibility. In determining the salary to be paid to a particular individual, the Committee applies these and other criteria, while also using its best judgment of compensation applicable to other executives holding comparable positions both within the Company and at other companies. Additionally, the Committee in developing its recommendations regarding director compensation looks to director compensation at other public companies of the Company’s size. Executive officers of the Company do not play a role in determining their compensation. Neither the Board nor the Committee has engaged compensation consultants for the purposes of determining or advising upon executive or director compensation.
Risk Oversight
The full Board isand its Executive Committee are actively involved in risk oversight and hasmanagement of risk, with the full Board having ultimate responsibility for the oversight of risks facing the Company and for the management of those risks, but the Audit Committee conducts preliminary evaluations of risk and addresses risk prior to review by the Board of Directors.Board. The Audit Committee considers and reviews with management the Company’s internal control processes,processes. The Audit Committee also considers and reviews with the Company’s independent registered public accounting firm the adequacy of the Company’s internal controls, including the processes for identifying significant risks or exposures, and elicits recommendations fo rfor the improvement of such procedures where desirable.needed. In addition to the Audit Committee’s role, the full Board is involved in the oversight and administration of risk and risk management practices by overseeing members of senior management in their risk management capacities. Members of the Company’s senior management have day-to-day responsibility for risk management and establishing risk management practices, and members of management are expected to report matters relating specifically to the Audit Committee directly thereto, and to report all other matters directly to the Executive Committee or the Board as a whole. Members of the Company’s senior management have an open line of communication to the Executive Committee and the Board and have the discretion to raise issues from time-to-time in any manner they deem appropriate, and management’s reporting on issues relating to risk management typically occurs through direct communication with directors or committeeAudit Committee or Executive Committee members as matters requiring attention typically arise.
In furtherance of its risk oversight responsibilities, the Board has evaluated the Company'sCompany’s overall compensation policies and practices for its employees to determine whether such policies and practices create incentives that could reasonably be expected to affect the risks faced by the Company and their management, of that risk, and has further assessed whether any risks arising from these policies and practices are reasonably likely to have a material adverse effect on the Company, and has concluded that the risks arising from the Company'sCompany’s policies and practices are not reasonably likely to have a material adverse effect on the Company.
The Board also has a Compensation and Human Resources Committee that operates under a written charter adopted by
EXECUTIVE OFFICERS
For information with respect to executive officers, see “Executive Officers of the Board. The Compensation and Human Resources Committee is responsible for determining salaries and bonusesRegistrant” in Part I of the Company’s Annual Report on Form 10-K for the executives of the Company and its subsidiaries, establishing overall compensation and benefit levels and fixing bonus pools for other employees, and making recommendationsyear ended April 30, 2013, filed pursuant to the Board concerning other matters relating to employees and regarding director compensation. The membersSecurities Exchange Act of this Committee are Messrs. Cloues, Karabots (Chairman) and Russo, and during the last fiscal year it held one formal meeting and met periodically on an informal basis.1934.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Overview of Compensation Program
DeterminingThe following table contains summary information regarding the compensation of the Company’s executive officers is the responsibilityas required by Item 402(n) of the Compensation and Human Resources Committee (the “Compensation Committee”) of the Board. The Compensation Committee sets management compensation policies, programs and levels, and continually monitors adherence to the Company’s compensation policy. The Compensation Committee’s compensation policy is to pay the Company’s executive officers competitively while balancing pay versus performance, and otherwise to be fair and equitable in the administration of compensation.Regulation S-K.
With respect to salaries, bonuses and other compensation and benefits, the decisions and recommendations of theSummary Compensation Committee are subjective and are not based on any list of specificTable
Name and Principal Position | Year(1) | Salary ($) | Bonus ($) | All Other Compensation(2) ($) | Total ($) |
MICHAEL P. DULOC(3) President and Chief Executive Officer of the Company’s Media Services business | 2013 2012 | 382,500 382,500 | 7,560(4) -(4) | 80,281(5) 62,973(5) | 462,781 445,473 |
PETER M. PIZZA Vice President and Chief Financial Officer of the Company | 2013 2012 | 197,400 196,695 | - - | 6,253 6,146 | 203,653 202,841 |
CHRISTOPHER V. VITALE(6) Vice President, General Counsel and Secretary of the Company | 2013 | 33,409 | - | 1,175 | 34,584 |
THEODORE J. GAASCHE(2), (7) Vice Chairman of the Executive Committee of the Board; Former President and Chief Executive Officer of the Company | 2013 2012 | 272,308 346,738 | - - | 4,355 5,112 | 276,663 351,850 |
IRVING NEEDLEMAN(8) Former Vice President, General Counsel and Secretary of the Company | 2013 2012 | 181,738 196,695 | - - | 684 653 | 184,422 197,348 |
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criteria. In the past, factors influencing the Compensation Committee’s decisions regarding executive salaries have included the Compensation Committee’s perception of the executive’s performance and any changes in functional responsibility. In determining the salary to be paid to a particular individual, the Compensation Committee applies these and other criteria, while also using its best judgment of compensation applicable to other executives holding comparable positions both within the Company and at other companies. The Compensation Committee believes that the compensation earned by each of the Company’s executive officers for fiscal 2010 was reasonable. Executive officers of the Company do not play a role in determining their compensation. Neither the Board of Directors nor the Committee has engaged compensation consultants for the purposes of deter mining or advising upon executive or director compensation.Chief Executive Officer Compensation
The Company has not had a Chief Executive Officer since January 1996. Senior management operates under the supervision of the Executive Committee of the Board.
Compensation Components for Fiscal 2010
For the fiscal year ended April 30, 2010, the principal compensation components for the Company’s executive officers named in the Summary Compensation Table at page 12 of this Proxy Statement consisted of the following:
· | base salary — fixed pay that takes into account an individual’s role and responsibilities, experience, expertise and individual performance; and |
· | perquisites and other personal benefits. |
Base Salaries
The Company provides named executive officers and other employees with base salaries to compensate them for services rendered during the fiscal year. Base salaries are determined by an annual assessment of factors deemed relevant by the Compensation Committee in its discretion, which may include position and responsibilities, experience, individual job performance relative to responsibilities, impact on development and achievement of the Company’s business strategy and competitive market factors for comparable talent. The Compensation Committee does not engage in formal benchmarking when setting the compensation of the Company’s executive officers.
Base salaries paid to the named executive officers in fiscal 2010 are shown in the Summary Compensation Table under the heading “Salary.” No salary increases have been awarded to any of the executive officers since fiscal 2008.
Perquisites and Other Personal Benefits
The Company provides its executive officers with limited perquisites and other personal benefits that are not otherwise available to all of its employees. The Company and the Compensation Committee believe the few perquisites and other personal benefits made available to the Company’s executive officers are reasonable and consistent with the Company’s overall compensation program, and better enable the Company to attract and retain employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers. Certain perquisites may be subject to the approval of the Compensation Committee, depending on the amount and type. Perquisites and personal benefits are taken into account as part of the total compensation to the named executive officers, and generally include an auto allowance and, in one case, a housing allowance.
Perquisites and other personal benefits for the named executive officers are described in the Summary Compensation Table (and related footnotes) under the heading “All Other Compensation.”
Performance Bonuses
In several past years, the Company has augmented cash compensation in appropriate circumstances with the payment of performance-based bonuses. The amount of each executive’s bonus was determined by the Compensation Committee using subjective criteria within the guidelines of the Company’s compensation policy. No bonuses have been awarded to the executive officers in respect of fiscal 2010 because in the opinion of the Compensation Committee the performance of the Company’s businesses did not justify any bonuses.
| Other Compensation Components |
Although the Company has not made any stock option grants to its executive officers since 1995, the Board determined in 2006 that the interests of the Company and its shareholders may be advanced by allowing the Company the flexibility to offer its employees and non-employee directors the opportunity to acquire or increase their ownership interest in the Company by receiving equity grants from the Company. Accordingly, at the Company’s 2006 Annual Meeting, the shareholders approved the 2006 Equity Compensation Plan (the “Equity Plan”), which had been adopted by the Board on July 14, 2006. The Equity Plan went into effect on September 20, 2006.
The Equity Plan provides that grants may be made in any of the following forms: (i) incentive stock options, (ii) nonqualified stock options (incentive stock options and nonqualified stock options are collectively referred to as “options”), (iii) stock awards, (iv) stock units, (v) stock appreciation rights (“SARs”), (vi) dividend equivalents and (vii) other stock-based awards.
The Equity Plan authorizes up to 400,000 shares of Common Stock for issuance. If and to the extent options and SARs granted under the Equity Plan terminate, expire or are cancelled, forfeited, exchanged or surrendered without being exercised or if any stock awards, stock units or other stock-based awards are forfeited or terminated, the shares subject to such grants will become available again for purposes of the Equity Plan.
The Equity Plan provides that the maximum aggregate number of shares of Common Stock with respect to which grants may be made to any individual during any calendar year is 20,000 shares, subject to certain adjustments.
The Equity Plan provides that it is to be administered and interpreted by the Board or a committee designated by it. At this time, no such committee has been formed. The administrator of the Equity Plan has the authority to (i) determine the individuals to whom grants will be made under the Equity Plan, (ii) determine the type, size, terms and conditions of the grants, (iii) determine when grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, (iv) amend the terms and conditions of any previously issued grant, subject to certain limitations, and (v) deal with any other matters arising under the Equity Plan.
Should the administrator of the Equity Plan elect to make grants under the Equity Plan, it will do so with regard to the provisions of Accounting Standards Codification Topic 718, Stock Compensation. Under this standard, grants of equity-classified awards will result in compensation expense for the Company based on the grant date fair value of the awards.
Tax Implications
Payments during fiscal 2010 to the Company’s executives were made with regard to the provisions of Section 162(m) of the Internal Revenue Code. Section 162(m) limits the annual deduction that may be claimed by a “public company” for compensation paid to certain individuals to $1 million, except to the extent that any excess compensation is “performance-based compensation.” It is the Compensation Committee’s intention that compensation will not be awarded that exceeds the deductibility limits of Section 162(m).
Summary Compensation Table |
Name and Principal Position | Year(1)
| Salary ($) | Bonus(2) ($)
| Change in Pension Value and Non-qualified Deferred Compensation Earnings (3)
($)
| All Other Compensation(4)
($)
| Total
($)
|
JAMES WALL
Senior Vice President; Chairman of the Board, President and Chief Executive Officer of the Company’s AMREP Southwest Inc. subsidiary
| | 2010
2009
2008
| | 283,868
283,868
283,868
| | -
-
-
| | 275,477
136,294
65,543
| | 6,227
10,312
18,494
| | 565,572
430,474
367,905
|
PETER M. PIZZA
Vice President, Chief Financial Officer and Treasurer
| | 2010
2009
2008
| | 191,052
191,052
185,265
| | -
-
-
| | 6,539
1,470
543
| | 5,692
14,487
14,008
| | 203,283
207,009
199,816
|
IRVING NEEDLEMAN
Vice President, General Counsel and Secretary
| | 2010
2009
2008
| | 191,052
191,052
185,265
| | -
-
-
| | -
-
-
| | 227
7,840
4,733
| | 191,279
198,892
189,998
|
MICHAEL P. DULOC
President and Chief Executive Officer of the Company’s Kable Media Services, Inc. subsidiary
| | 2010
2009
2008
| | 376,027
376,442
372,115
| | -
-
-
| | 13,473
849
(5)
| | 68,028(6)
82,312
56,989
| | 457,528
459,603
429,104
|
JOHN F. MENEOUGH
Executive Vice President, Fulfillment Services of the Company’s Kable Media Services, Inc. subsidiary; President and Chief Operating Officer of Palm Coast Data LLC
| | 2010
2009
2008
| | 346,948
349,266
346,600
| | -
-
-
| | -
-
-
| | 1,594
8,494
4,761
| | 348,542
357,760
351,361
|
(1) The year references are to the fiscal years ended April 30.
| (2) | Bonuses for the named executives are entirely discretionary with the Compensation Committee. |
(3) | The amounts reported represent the increases for the indicated years in the actuarial present values of the retirement benefits under the Company’s Retirement Plan for Employees, which was frozen effective March 1, 2004 ( see “Pension Benefits” below). Discount rates of 5.435% for 2010, 7.083% for 2009 and 6.42% for 2008 were used for the present value calculations. A lower discount rate has the effect of increasing the actuarial present value. |
(4) | The amounts reported for 2010 include auto allowances for certain of the named executives and payment of life insurance premiums and, additionally, in the case of Mr. Duloc, other perquisites and personal benefits. |
(5)(3) | InThe Company is a holding company which does substantially all of its business through three indirect wholly-owned subsidiaries (and their subsidiaries). These indirect wholly-owned subsidiaries are Palm Coast Data LLC (“Palm Coast”), Kable Media Services, Inc. (“Kable”) and AMREP Southwest Inc. (“ASW”). The Company has no chief executive officer, with Messrs. Duloc and Gaasche serving as co-principal executive officers. Mr. Duloc is the calculationChief Executive Officer of Palm Coast and Kable. Mr. Gaasche, in his capacity as Vice Chairman of the change in actuarial present valueExecutive Committee (the “Executive Committee”) of the Board, oversees the operations of ASW. |
| (4) | The Compensation and Human Resources Committee established an incentive compensation plan for fiscal 2012 and fiscal 2013 for Mr. Duloc under which he was entitled to earn a cash bonus based upon the levels of revenue and earnings (as defined) attributable to the Company’s Media Services business above stated targets. For 2012, the targets were not reached and no bonus was earned. On June 27, 2013, the Compensation and Human Resources Committee determined that one target was reached and a bonus was earned for 2008, the decrease from the use of a higher discount rate for that year than for 2007 indicated in note (3) more than offset the increase from his being one year closer to retirement, with a resultant decrease for 2008 of $795.2013. |
(6)(5) | The amount reported for 2010, inIn addition to an auto allowanceallowances and payment of life insurance premium payment, includespremiums, the amounts reported include housing expenses of $50,284$49,538 for 2012 and $64,906 for 2013, and partial reimbursement for club membership dues. |
The Company is an at-will employer and has no employment arrangements with its named executive officers. As described more fully in the Compensation Discussion and Analysis above, compensation of executive officers is set by the Compensation Committee. The decisions of the Compensation Committee are subjective and are not based on any list of specific criteria.
| Pension Benefits | |
| Name | Plan Name | Number of Years of Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | |
| James Wall | Retirement Plan | | 32.167 | | 1,431,680 | | 0 | |
| Peter M. Pizza | Retirement Plan | | 7.833 | | 49,104 | | 0 | |
Irving Needleman(3) | | - | | - | | - | | - | |
| Michael P. Duloc | Retirement Plan | | 9.500 | | 70,706 | | 0 | |
John F. Meneough(3) | | - | | - | | - | | - | |
| (6) | (1) | The number of years of credited service under the Retirement Plan (as defined below) is based on the participants’ service withMr. Vitale joined the Company through February 29, 2004, when the Retirement Plan was frozen. Years of credited service are different from the named participants’ actual years of service with the Company. As of the date the Retirement Plan was frozen, the actual years of service for each of the named participants were: Mr. Wall – 35.333 years, Mr. Pizza – 8.917 years and Mr. Duloc – 10.583 years. The difference between years of credited service and years of actual service did not augment any benefits payable to the named individuals under the Retirement Plan.in March 2013. |
(2)(7) | The actuarial present value is calculated assuming commencementMr. Gaasche ceased being an officer and employee effective January 22, 2013. On January 22, 2013, Mr. Gaasche was appointed Vice Chairman of benefits when the named individual reaches the normal retirement age of 65Executive Committee. Amounts reported in the casetable relate to executive compensation only and do not include director compensation for board service that commenced after Mr. Gaasche’s employment with the Company ceased on January 22, 2013. See “Compensation of Messrs. Pizza and Duloc and April 30, 2010 in the case of Mr. Wall, who is over age 65. Mortality assumptions for the calculation of the actuarial present value are based on the RP 2000 Static Mortality Table, separate for males and females, projected for 7 and 15 years past the valuation date for annuitants and non-annuitants, respectively and the assumed discount rate is 5.435%.Directors.” |
(3)(8) | Messrs.Mr. Needleman ceased being an officer effective March 7, 2013, and Meneough were first employed by the Company after the Retirement Plan ceased accepting participants.his employment ended on March 29, 2013. |
The Company’s named executive officers who wereMessrs. Duloc and Pizza have been Company employees since prior to March 1, 2004 and participate in Thethe Company’s Retirement Plan for Employees of AMREP Corporation (the “Retirement Plan”), which was amended effective January 1, 1998 to change the Retirement Planit into a cash balance defined benefit plan, andplan. The Retirement Plan was subsequently frozen effective March 1, 2004, so that in the determination of the benefit payable, a participant’s compensation from and after March 1, 2004 is not taken into account. A participant’s benefit under the amended Retirement Plan is now comprised of (a) the participant’s cash balance as of February 29, 2004, plus interest on the cash balance compounded(currently credited annually at the rate30-year Treasury Rate for December of 5% perthe previous year as published by the Board of Governors of the Federal Reserve System), and the participant’s periodic pension benefit under the Retirement Plan as at December 31, 1997 had the pa rticipant been at normal retirement age at that date.Mr. Wall has continued to serve the Company past the Retirement Plan’s normal retirement age of 65. Had he elected to receive his pension as a single life annuity when he turned 65, his annual retirement benefit would have been $54,290. If he had retired on May 1, 2010 and elected to receive the life annuity pension, his annual retirement benefit would have been $163,690. Assuming that Messrs. Pizza and Duloc (i) continue to be employed until age 65, and (ii) elect the life annuity form of pension, their annual retirement benefits are estimated to be: Mr. Pizza – $5,972 and Mr. Duloc – $11,813.
Retirement Plan participants with at least five years of credited service are eligible for early retirement benefits starting at age 55. A participant’s early retirement benefit under the Retirement Plan is comprised of (i) the participant’s cash balance as of February 29, 2004, plus interest on the cash balance compounded at the rate of 5% per year, and (ii)(b) the participant’s periodic pension benefit under the Retirement Plan as at December 31, 1997 had the participant been at normal retirement age at that date, reduced by 1/180 for each of the first 60 monthsdate. Assuming that they (i) continue to be employed until age 65 and by 1/360 for each of the next 60 months by which the early retirement date precedes the normal retirement date. Currently, only Mr. Pizza is eligible to(ii) elect early retirement under the Retirement Plan. If he had elected to receive early retirement benefits on May 1, 2010 and elected to receive the life annuity form of pension, histhe annual retirement benefit would have been $3,714.
Potential Payments Upon Termination or Change in Controlbenefits are estimated to be $9,993 for Mr. Duloc and $5,118 for Mr. Pizza.
The Company’s executive officers are not subject to change of control agreements or other arrangements that provide for payments upon termination or a change in control of the Company. The Company’s policies for severance payments upon termination of employment apply to the executive officers on the same basis as the Company’s other salaried employees. Additionally, the Compensation and Human Resources Committee retains the discretion to enter into severance agreements with individual executive officers on terms satisfactory to it.
In 2006, the Board adopted, and the shareholders approved, the 2006 Equity Compensation Plan (the “Equity Plan”), which authorizes stock-based awards of various kinds to employees covering up to a total of 400,000 shares of Common Stock. While there are notno individual agreements in place, under the terms of the Equity Plan described on page 11 of this Proxy Statement, theits administrator of the Equity Plan has the discretion to accelerate the vesting of, or otherwise remove restrictions on, equity awards under the Equity Plan upon a change in control of the Company. No awards have been made under the Equity Plan. Even ifIf awards are made in the future, the administrator of the Equity Plan would have a wide range of options to respond to changes in control in the best interests of the Company’s shareholders.
For purposes of the Equity Plan, a change in control would occur if: (i) the Company liquidates, dissolves, or sells all or substantially all of its assets (except to a subsidiary); (ii) a person or group of persons who did not beneficially own more than 15% of the Company’s shares as of July 14, 2006 becomes the beneficial owner of 25% or more of the Company’s shares or combined voting power; or (iii) a majority of the seats on the Board changes hands without the approval of two-thirds of the incumbent directors.
Executive Officers
For information with respect to identification of executive officers, see “Executive Officers of the Registrant” in Part I of the Company’s Annual Report on Form 10-K for the year ended April 30, 2010, filed pursuant to the Securities Exchange Act of 1934.
Report of the Compensation and Human Resources Committee
The Compensation and Human Resources Committee of the Board has submitted the following report for inclusion in this Proxy Statement.
The Compensation and Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on the Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2010.
The foregoing report is provided by the following directors, who constitute the Compensation and Human Resources Committee:
Nicholas G. Karabots, Chairman
Edward B. Cloues, II
Albert V. Russo
Compensation Committee Interlocks and Insider ParticipationOn August 4, 1993, pursuant to an agreement with Nicholas G. Karabots and two corporations he then owned, the Company, in exchange for 575,593 shares of its Common Stock, acquired various rights to distribute magazines for its distribution business. Prior to that date Mr. Karabots had no affiliation with the Company. The distribution rights covered various magazines published by unaffiliated publishers, as well as magazines published by Mr. Karabots’ companies. Mr. Karabots is a director, Vice Chairman of the Board and of the Executive Committee, Chairman of the Compensation and Human Resources Committee and the father-in-law of Michael P. Duloc, one of the Company’s named executive officers. Mr. Duloc’s spouse, who is Mr. Karabots’ daughter, is an officer at one of M r. Karabots’ companies to which the Company provides services. A committee of the Board (the “Independent Committee”), comprised of directors whom the Board finds to be independent of Mr. Karabots, has been established with authority to consider and, if deemed appropriate, to approve new contracts and material modifications to existing contracts between the Company and companies owned or controlled by Mr. Karabots. The members of the Independent Committee are Messrs. Russo, Seidman and Weller.
The conduct of the Company’s magazine distribution business involves the purchase of magazines from publishing companies, including those owned or controlled by Mr. Karabots, and their resale to wholesalers. During the fiscal year ended April 30, 2010, the Company distributed magazines published by Mr. Karabots’ companies pursuant to a distribution contract approved by the Independent Committee effective as of July 1, 2008.
The Company also provides subscription fulfillment services for Mr. Karabots’ publishing companies. The most recent contract for those services, which was approved by the Independent Committee, has a June 30, 2008 expiration date. The subscription fulfillment services contract is being continued under its existing terms on a month-to-month basis while the parties engage in negotiations for a renewal. The terms of any renewal will be subject to the Independent Committee’s approval.
For its fiscal year ended April 30, 2010, the Company’s revenues from the newsstand distribution and subscription fulfillment services it provided to Mr. Karabots’ companies amounted to approximately $2,330,000, which was approximately 1.9% of the Company’s consolidated revenues for that period.
Consistent with newsstand distribution services industry practice, advance payments for magazine purchases are made by distributors to publishers, including Mr. Karabots’ companies, based upon estimates of the amounts that will be due to them from the sales of their publications to the buying public. If the actual sales are less than estimated, overadvances will result, which the publishers are obligated to repay promptly, without interest. The total overadvance from the Company to Mr. Karabots’
companies at June 30, 2010 was approximately $59,000, and the highest amount of the overadvance between May 1, 2009 and June 30, 2010 was approximately $187,000.COMPENSATION OF DIRECTORS
Compensation for the non-employee members of the Board is approved by the Board, which considers recommendations for director compensation from the Company’s Compensation and Human Resources Committee.
Each non-employee member of the Board is paid an annual fee of $80,000 in equal quarterly installments and an additional $1,500 for each Board meeting attended in person or by telephone at meetings called for attendance in person and $500 for each Board meeting attended by telephone unless, in the case of a telephonic meeting, the Board determines that the meeting and attendant preparation were so brief that no payment is warranted. Additionally, the Chairmen of the Audit Committee and the Compensation and Human Resources Committee are each paid an annual fee of $7,500, and each other member of those Committees is paid an annual fee of $5,000, in equal quarterly installments. The members of the Nominating and Corporate Governance Committee serve without additional compensation. Also, in addition to the fees described above, Edward B. Cloues, II is paid an annual fee of $135,000 for his services as Chairman of the Board and of the Executive Committee in equal monthly installments, and a company owned by Nicholas G. KarabotsTheodore J. Gaasche is paid a monthly fee of $10,000$5,000 for making him available to acthis services as Vice Chairman of the Board and of the Executive Committee.
The following table summarizes the compensation earned by the Company’s directors for fiscal 2010:2013:
Name(1) | Fees Earned or Paid in Cash ($) | Total ($) | | Fees Earned or Paid in Cash ($) | Total ($) |
| Edward B. Cloues, II | | 226,000 | | 226,000 | | 228,500 | 228,500 |
| Lonnie A. Coombs | | 93,500 (2) | | 93,500 | | 96,000 | 96,000 |
| Nicholas G. Karabots | | 213,500 (2)(3) | | 213,500 | | |
Theodore J. Gaasche(1) | | 25,056 | 25,056 |
Nicholas G. Karabots(2) | | 168,376(3) | 168,376(3) |
| Albert V. Russo | | 91,000 (2) | | 91,000 | | 93,500 | 93,500 |
| Samuel N. Seidman | | 91,000 (2) | | 91,000 | | 93,500 | 93,500 |
| Jonathan B. Weller | | 91,000 | | 91,000 | | 96,068 | 96,068 |
| _________________________________ |
_____________________________| (1) | On January 22, 2013, the Board elected Mr. Wall is not included in this tableGaasche as he is an employeea member of the CompanyBoard, and receives no compensation for histhe fees reflected above relate to Board service as a director.after such election. |
| (2) | Messrs. Coombs,On January 22, 2013, Mr. Karabots Russo and Seidman each hold options for 500 shares issued underresigned from the Company’s Non-Employee Directors Option Plan, which was terminated in 2005.Board. |
| (3) | Includes $120,000$90,000 paid to a company owned by Mr. Karabots.Karabots for making him available to serve as Vice Chairman of the Board and of the Executive Committee, which services and the payment therefor ended when he resigned from the Board on January 22, 2013. |
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of April 30, 20102013 concerning Common Stock of the Company that is issuable under its compensation plans.
Plan Category | (A) Number of securities to be issued upon exercise of outstanding options, warrants and rights | | (B) Weighted average exercise price of outstanding options, warrants and rights | | (C) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) | |
| Equity compensation plans approved by shareholders | 2,000 (1) | | $ | 24.88 | | 400,000 (2) | |
| Equity compensation plans not approved by shareholders | - | | | - | | - | |
| Total | 2,000 | | $ | 24.88 | | 400,000 | |
(1)Plan Category | Represents(A) Number of securities to be issued upon exercise of outstanding options, to acquire Common Stock grantedwarrants and rights | (B) Weighted average exercise price of outstanding options, warrants and rights | (C) Number of securities remaining available for future issuance under the Company’s Non-Employee Directors Option Plan, which was terminated equity compensation plans (excluding securities reflected in 2005. column (A)) |
Equity compensation plans approved by shareholders | - | - | 400,000(1) |
Equity compensation plans not approved by shareholders | - | - | - |
Total | - | - | 400,000 |
_____________________________
(2)(1) | Represents shares of Common Stock available for grant under the Company’s 2006 Equity Compensation Plan. |
CERTAIN TRANSACTIONS
See “Compensation Committee Interlocks and Insider Participation” for information concerning transactions involvingOn August 4, 1993, pursuant to an agreement with Nicholas G. Karabots and two corporations he then owned, the Company, in exchange for 575,593 shares of Common Stock, acquired various rights to distribute magazines for its distribution business. Prior to that date Mr. Karabots had no affiliation with the Company. The distribution rights covered various magazines published by unaffiliated publishers, as well as magazines published by Mr. Karabots’ companies. Mr. Karabots was a director and Vice Chairman of the Board and of the Executive Committee until January 22, 2013 and was Chairman of the Compensation and Human Resources Committee until November 28, 2012. Mr. Karabots is the father-in-law of Michael P. Duloc, one of the Company’s executive officers. Mr. Duloc’s spouse, who is Mr. Karabots’ daughter, is an officer of one of Mr. Karabots’ companies to which the Company provides services.
A committee of the Board (the “Independent Committee”), comprised of directors whom the Board found to be independent of Mr. Karabots, was established with authority to consider and, if deemed appropriate, to approve new contracts and material modifications to existing contracts between the Company and companies owned or controlled by Mr. Karabots. The Independent Committee had no written charter establishing its policies and procedures. The approvals it has granted were based upon determinations after due inquiry that the contract terms were fair and reasonable and no less favorable to the Company than would be obtained in an arm’s length transaction with a non-affiliate having a volume of business with the Company comparable to that of Mr. Karabots. The most recent members of the Independent Committee were Messrs. Russo, Seidman and Weller. The Nominating and Corporate Governance Committee, which was established in June 2012 and is comprised of all of the independent directors, has succeeded to the responsibilities of the Independent Committee, and the terms of any future material transaction with Mr. Karabots or companies owned or controlled by Mr. Karabots, including his publishing company, will be subject to the approval of that Committee or a subcommittee of that Committee.
The conduct of the Company’s magazine distribution business involves the purchase of magazines from publishing companies, including a company owned or controlled by Mr. Karabots, and their resale to wholesalers. During the fiscal years ended April 30, 2012 and April 30, 2013, the Company distributed magazines published by Mr. Karabots’ company pursuant to a distribution contract, as amended, approved by the Independent Committee that expires June 30, 2014. Mr. Karabots’ company is the Company’s largest magazine distribution services customer. The Company’s revenue from its distribution contract with Mr. Karabots’ company was approximately $1,342,000 for fiscal 2012 and $1,238,000 for fiscal 2013.
Additionally, the Company provides subscription and product fulfillment services for Mr. Karabots’ company. The most recent contract for those services, which was approved by the Independent Committee, expired on June 30, 2008. The Company has continued to provide subscription and product fulfillment services to Mr. Karabots’ company under the terms of the expired contract on a month-to-month basis and the parties continue to engage in negotiations for a renewal. The parties have been unable to reach agreement on pricing for the renewal. During fiscal 2012, Mr. Karabots’ company deducted 10%, or approximately $15,000 for fiscal 2012, from the amounts it was billed for subscription fulfillment services. The product fulfillment services have been provided at the historic prices, which amounted to approximately $40,000 for fiscal 2012 and $28,000 for fiscal 2013. The Company’s revenue from the subscription services it provided to Mr. Karabots’ company was approximately $163,000 for fiscal 2012 and $192,000 for fiscal 2013.
For its fiscal year ended April 30, 2012, the Company’s revenues from the newsstand distribution, subscription and fulfillment services it provided to Mr. Karabots’ company amounted to approximately $1,545,000, which was approximately 2% of the Company’s consolidated revenues for that period. For its fiscal year ended April 30, 2013, the Company’s revenues from the newsstand distribution, subscription and fulfillment services it provided to Mr. Karabots’ company amounted to approximately $1,458,000, which was approximately 2% of the Company’s consolidated revenues for that period.
In the newsstand distribution services industry, it is a customary practice that advance payments for magazine purchases are made by distributors to publishers based upon estimates of the amounts that will be due to them from the sales of the publications to the buying public. If the actual sales are less than estimated, overadvances will result, which the publishers are obligated to repay. It generally takes several months following the date that a publication goes on sale to determine its complete sales history. The Company’s distribution contract with Mr. Karabots’ company calls for the advance payments to be based upon the sales histories of the publications involved. The overadvances to Mr. Karabots’ company in fiscal 2012 and 2013 were, in large part, attributable to sales declines for a number of those publications and those overadvances dissipated over time as the historic sales became more closely related to the actual sales. Based upon the Company’s estimates of actual sales, the Company believes that the highest net amount of the overadvances to Mr. Karabots’ company was approximately $2,238,000 during fiscal 2012 and $1,313,000 during fiscal 2013, and that at April 30, 2013 it was $60,000.
ASW had a loan originally from Compass Bank (the “Loan”) in the principal amount of $16,214,000 as of July 2012 that was scheduled to mature on September 1, 2012. The interest on the Loan was at the fluctuating rate of reserve adjusted 30-day LIBOR plus 3.5%, but not less than 5.0%, payable monthly, was secured by a mortgage on real estate owned by ASW having an appraised value as of October/November 2011 of $49,145,000, and required the payment of certain quarterly installments of principal. Compass Bank had rejected the Company’s request for an extension of the Loan’s maturity and the Company, despite a number of efforts over the prior several years, had not been successful in identifying any source of refinancing the Loan.
On August 13, 2012, Kappa Lending Group, LLC (“Kappa Lending”), an entity established and wholly-owned by Nicholas G. Karabots, the then Vice Chairman of the Board and Executive Committee and beneficial owner of 45.9% of the outstanding Common Stock, acquired the Loan for a discounted price of $15,250,000 plus accrued interest. On August 24, 2012, Kappa Lending and ASW amended the Loan, with the approval of a subcommittee of the Nominating and Corporate Governance Committee comprised of disinterested directors, to extend the Loan’s maturity to December 1, 2012 on its existing terms, except that no payments of principal would be required prior to that date. In August 2012, Albert V. Russo, a member of the Board, purchased a 20% participation in the Loan from Kappa Lending.
On November 19, 2012, Kappa Lending and ASW further amended the Loan, with the approval of a subcommittee of the Nominating and Corporate Governance Committee comprised of disinterested directors, effective December 1, 2012. The material terms of that amendment were as follows:
| · | The maturity of the Loan was extended by five years to December 1, 2017. |
| · | Beginning December 1, 2012, the Loan bears interest monthly at 8.5% per annum. |
| · | No payments of principal are required until maturity except that on a quarterly basis ASW is required to make principal payments in an amount equal to 25% of the net cash from sales of land (as defined) it received in the prior quarter. |
| · | As additional security for the Loan in excess of that provided to Compass Bank, Kappa Lending has received a pledge of the stock of ASW’s wholly-owned subsidiary, Outer Rim Investments, Inc., and a first mortgage on the land ASW owns in Rio Rancho, New Mexico that was not previously mortgaged to secure the Loan. Outer Rim Investments, Inc. owns approximately 12,000 acres of land in Sandoval County, New Mexico, largely comprised of scattered lots, which at present is not being actively offered for sale and which is not subject to any mortgage in favor of Kappa Lending. |
| · | A sale transaction by ASW of the newly mortgaged land for more than $50,000 or of any ASW-owned land other than land zoned and designated as a residential classification for more than $100,000 requires the approval of Kappa Lending. Otherwise, Kappa Lending is required to release the lien of its mortgage on any land being sold by ASW in the ordinary course to an unrelated party on terms ASW believes to be commercially reasonable and at a price ASW believes to be not less than the land’s fair market value or, in the case of the newly mortgaged land, its wholesale value, upon receipt of ASW’s certification to such effect. |
| · | The Loan may be prepaid at any time without premium or penalty except that if the prepayment is in connection with the disposition of ASW or substantially all of its assets there is a prepayment premium, initially 5% of the amount prepaid, with the percentage declining by 1% each year. |
| · | The Loan continues to contain a number of covenants and restrictions, including a requirement that ASW maintain a cash reserve of not less than $500,000 in the control of Kappa Lending to fund interest payments and covenants requiring ASW to maintain a minimum tangible net worth (as defined) and restricting ASW from making any distributions or other payments to the Company beyond a stated management fee, which management fee ASW is not currently paying to the Company. |
| · | The requirement that the appraised value of the collateral be at least 2.5 times the outstanding principal of the Loan was eliminated. |
The largest principal amount of the Loan outstanding at any time from August 13, 2012 through April 30, 2013 was $16,214,000 and the amount of interest paid and payable on the Loan from August 13,
2012 through April 30, 2013 was $814,473. At April 30, 2013, the outstanding principal of the Loan was $16,007,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, officers and holders of more than 10% of its Common Stock to file initial reports of ownership and reports of changes of ownership of the Common Stock with the Securities and Exchange Commission and the New York Stock Exchange. The related regulations require directors, officers and greater than 10% shareholders to provide copies of all Section 16(a) reports to the Company.
Based solely on a review of the copies of the reports received by the Company and certain written representations from the directors and executive officers, the Company believes that for the fiscal year ended April 30, 2010,2013, all required Section 16(a) reports were filed on a timely basis.
AUDIT-RELATED MATTERS
The consolidated financial statements of the Company and its subsidiaries included in the Annual Report to Shareholders for the fiscal year ended April 30, 20102013 have been audited by McGladrey & Pullen, LLP, an independent registered public accounting firm. No representative of McGladrey & Pullen, LLP is expected to attend the Annual Meeting. The Audit Committee has not yet approved the retention of an independent registered public accounting firm for fiscal 2011.2014 as the Company customarily makes its selection later in its fiscal year but engages the prior year’s independent registered public accounting firm to perform quarterly reviews pending the current year’s audit engagement.
Audit Committee Report
The Audit Committee has reviewed and discussed the Company’s audited financial statements for fiscal 20102013 with management, which has primary responsibility for the financial statements. McGladrey & Pullen, LLP, as the Company’s independent registered public accountants for fiscal 2010, are2013, is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with U.S. generally accepted accounting principles. The Committee has discussed with McGladrey & Pullen, LLP the matters that are required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA Professional Standards, Vol. 1. AU section 300)380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. 60;McGladrey & Pullen, LLP has provided to the Committee the written disclosures and the letter required by the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with McGladrey & Pullen, LLP that firm’s independence. Based on these considerations, the Audit Committee has recommended to the Board that the financial statements audited by McGladrey & Pullen, LLP be included in the Company’s Annual Report on Form 10-K for fiscal 2010.2013 for filing with the Securities and Exchange Commission.
The foregoing report is provided by the following directors who constitute the Audit Committee:
Lonnie A. Coombs, Chairman
Samuel N. Seidman
Jonathan B. Weller
Audit Fees
The following table sets forth certain information concerning the fees of McGladrey & Pullen, LLP and its affiliate, RSM McGladrey Inc., for the Company’s last two fiscal years. The reported fees, except the Audit Fees, are amounts billed to the Company in the indicated fiscal years. The Audit Fees are for services for those fiscal years.
| | Fiscal Year Ended April 30, | |
| | 2010 | | 2009 | |
| Audit Fees (1). | $ | 192,000 | | $ | 314,600 | |
| Audit-Related Fees (2) | | 21,000 | | | 20,000 | |
| Tax Fees (3) | | 41,219 | | | 72,470 | |
| All Other Fees | | - | | | - | |
| Total | $ | 254,219 | | $ | 407,070 | |
| | Fiscal Year Ended April 30, |
| | 2013 | 2012 |
Audit Fees(1) | $169,300 | $169,100 |
Audit-Related Fees(2) | 30,750 | 30,750 |
Tax Fees(3) | 51,850 | 35,690 |
All Other Fees(4) | 9,000 | - |
| Total | | |
| (1) | IncludesConsists of fees for the audit of the Company’s annual financial statements and reviews of the unaudited financial statements included in the Company’s quarterly reports to the Securities and Exchange Commission on Form 10-Q, and for 2009, also the audit of the effectiveness of internal control over financial reporting.10-Q. |
| (2) | Consists of fees for the audits of employee benefit plans. |
| (3) | Includes fees for tax compliance, tax advice and tax planning services. Suchplanning. The services principally involved research regarding the timing of the recognition of certain income, reviews of the Company’s federal and certain state income tax returns, assistance in responding to federal and state income tax audits, and research and advice on miscellaneous tax questions. |
| (4) | Consists of fees in 2013 in connection with the tax treatmentCompany’s filing of certain transactions.a registration statement under the Securities Act of 1933, as amended. |
Pre-Approval Policies and Procedures
The Audit Committee pre-approves all audit services to be provided by the independent registered public accountants and, separately, all permitted non-audit services to be performed by the independent registered public accountants.
OTHER MATTERS
The Board knows of no matters that will be presented for consideration at the Annual Meeting other than the matters referred to in this Proxy Statement. Should any other matters properly come before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote such proxy in accordance with their best judgment.
SOLICITATION OF PROXIES
The Company will bear the cost of this solicitation of proxies. In addition to solicitation of proxies by mail, the Company may reimburse brokers and other nominees for the expense of forwarding proxy materials to the beneficial owners of stockCommon Stock held in their names. Directors, officers and employees of the Company may solicit proxies on behalf of the Board but will not receive any additional compensation therefor.
SHAREHOLDER PROPOSALS
From time to time, shareholders present proposals that may be proper subjects for inclusion in the Proxy Statement and for consideration at an annual meeting. Shareholders who intend to present proposals at the 20112014 Annual Meeting of Shareholders and who wish to have such proposals included in the Company’s Proxy Statement for the 20112014 Annual Meeting of Shareholders must be certain that such proposals are received by the Company’s Secretary at the Company’s executive offices, 300 Alexander Park, Suite 204, Princeton, New Jersey 08450, not later than April 20, 2011.17, 2014. Such proposals must meet the requirements set forth in the rules and regulations of the Securities and Exchange Commission in order to be eligible for inclusion in the Proxy Statement. For any proposal that is not submitted for inclusion in next year̵ 7;syear’s Proxy Statement but is, instead, sought to be presented directly at the 20112014 Annual Meeting of Shareholders, Securities and Exchange Commission rules permit management to vote proxies in its discretion if the Company does not receive notice of the proposal prior to the close of business on July 5, 2011.1, 2014.
HOUSEHOLDING OF PROXY MATERIALS
The Securities and Exchange Commission has adopted rules that permit companies and intermediaries to satisfy delivery requirements for proxy statements and annual reports to shareholders and, if applicable, notices of Internet availability of proxy materials, with respect to two or more shareholders sharing the same address by delivering a single copy of the material addressed to those shareholders. This process, commonly referred to as “householding,” is designed to reduce duplicate printing and postage costs. The Company and some brokers may household notices of Internet availability of proxy materials, annual reports to shareholders and proxy materials, by delivering a single copy of the material to multiple shareholders sharing the same address unless contrary instructions have been received from the affected shareholders.
If a shareholder wishes to receive a separate notice of Internet availability of proxy materials, the annual report to shareholders or proxy statement, or if a shareholder received multiple copies of some or all of these materials and would prefer to receive a single copy in the future, the shareholder should submit a request by phone or in writing to the shareholder’s broker if the shares are held in a brokerage account or, if the shares are registered in the name of the shareholder, to the Company’s transfer agent, Registrar and Transfer Company, P.O. Box 645, Cranford, New Jersey 07016-0645, (800) 368-5948.
By Order of the Board of Directors
Irving Needleman,Christopher V. Vitale, Secretary
Dated: August 17, 201015, 2013
