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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registranto | ||
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ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
BRT REALTY TRUST | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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BRT REALTY TRUST
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
(516) 466-3100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 7, 201112, 2014
The Annual Meeting of Shareholders of BRT Realty Trust will be held on Monday,Wednesday, March 7, 2011,12, 2014, at 9:00 a.m. local time, at the offices of BRT Realty Trust, 60 Cutter Mill Road, Suite 303, Great Neck, New York 11020,11021, for the following purposes:
2.
Shareholders of record at the close of business on January 17, 2011 will be15, 2014 are entitled to notice of and to vote at our annual meeting. It is important that your common shares of beneficial interest be represented and voted at the meeting. You can vote your common shares of beneficial interest by completing and returning the proxy card. Certain shareholders can also vote their common shares of beneficial interest over the internet or by telephone. If internet or telephone voting is available to you, voting instructions are printed on the proxy card sent to you. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement.
S. Asher Gaffney
Secretary
Great Neck, New York
January 28, 201122, 2014
BRT REALTY TRUST20112014 ANNUAL MEETING
PROXY STATEMENT
| Page | ||||
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General | 1 | ||||
Questions and Answers About the Meeting and Voting | 1 | ||||
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Governance of Our Company | |||||
General | |||||
Code of Business Conduct and Ethics | 4 | ||||
Risk Oversight | 4 | ||||
Leadership Structure | |||||
Committees of the Board of Trustees | 5 | ||||
Trustee Qualifications | 6 | ||||
Independence of Trustees | |||||
Compensation Committee Interlocks and Insider Participation | |||||
Compensation of Trustees | |||||
Non-Management Trustee Executive Sessions | |||||
Communications with Trustees | |||||
Information Regarding Beneficial Ownership of Principal Shareholders, Trustees and Management | |||||
Election of Trustees (Proposal 1) | 13 | ||||
Advisory | |||||
| 17 | ||||
Independent Registered Public Accounting Firm (Proposal | 17 | ||||
General | 17 | ||||
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Audit and Other Fees | |||||
Approval Policy for Audit and Non-Audit Services | |||||
Report of the Audit Committee | |||||
Executive Compensation | |||||
Compensation Discussion and Analysis | |||||
Highlights | 21 | ||||
| 21 | ||||
Say-on-Pay | 22 | ||||
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Objectives of our Executive Compensation Program | |||||
Compensation Setting Process | 23 | ||||
Components of Executive Compensation | 24 | ||||
Chairman of the Board's Compensation | 27 | ||||
| 27 | ||||
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Analysis | |||||
Summary Compensation Table | |||||
Grant of | |||||
Outstanding Equity Awards at Fiscal Year-End | |||||
Option Exercises and Stock Vested | |||||
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Certain Relationships and Related Transactions | |||||
Introduction | |||||
Related Party Transactions | |||||
Policies and Procedures | |||||
Section 16(a) Beneficial Ownership Reporting Compliance | |||||
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Other Matters |
PROXY STATEMENT
Our board of trustees is furnishing you with this proxy statement to solicit proxies on its behalf to be voted at the 20112014 annual meeting of shareholders of BRT Realty Trust. In this proxy statement we refer to BRT Realty Trust as "BRT," "we," "our," "us," "our company," or the "Trust."Trust" and to our common shares of beneficial interest as "common shares" or "shares." The meeting will be held at our offices, 60 Cutter Mill Road, Suite 303, Great Neck, New York, at 9:00 a.m., local time, on Monday,Wednesday, March 7, 2011.12, 2014.
The date of this proxy statement is January 28, 2011, the approximate date on which we are mailing this proxy statement and the accompanying form of proxy to our shareholders. Our fiscal year begins on October 1st and ends on September 30th. References in this proxy statementUnless otherwise indicated or the context otherwise requires, all references to a year (e.g. 2013), refer to the "year 2010" or "fiscal 2010" refers to the twelve months from October 1, 2009 throughapplicable fiscal year ended September 30 2010.th.
Our executive offices are located at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021. Our telephone number is (516) 466-3100.
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING PROCEDURES
What is the purpose of the annual meeting?
ShareholdersAt our annual meeting, shareholders will vote on the following matters:
Who is entitled to vote?
We are mailing this proxy statement on or about January 22, 2014 to our shareholders of record at the close of business on January 17, 2011 are entitled to notice of and to vote at the annual meeting of shareholders.15, 2014. The record date was established by our board of trustees. YouShareholders as of the close of business on the record date of January 15, 2014 are entitled to notice of and to vote their shares at the meeting. Each share is entitled to one vote for each common share of beneficial interest you own on January 17, 2011 and shareholders do not have the right to vote cumulatively in the election of trustees. Our common shares of beneficial interest, or "common shares," constitute our only outstanding class of voting securities and will vote as a single class on all matters to be considered at the annual meeting.
What constitutes a quorum?
A quorum is the presence in person or by proxy of shareholders holding a majority of shares entitled to vote at the meeting. On the record date, there were 13,932,79914,303,487 common shares outstanding and entitled to vote. In order to carry on the business at the meeting, wea majority of our outstanding shares must have a quorumbe present in person or by proxy. This means that at least 6,966,4007,151,744 common shares must be represented at the meeting, either in person or by proxy, to constitute a quorum. The affirmative voteGenerally, action cannot be taken at the meeting unless a quorum is present.
How do I vote?
Because many shareholders cannot attend the meeting in person, it is necessary that a large number of common shares be represented by proxy. Most shareholders have a choice of voting over the internet,Internet, by using a toll-free telephone number or by completing a proxy card and mailing it in the postage paid envelope provided. Please refer to your proxy card or to the information provided by your bank, broker, or other holder of record to see which options are available to you. You should be aware that if you vote over the internet,Internet, you may incur costs, such as telephone and internetInternet access charges, for which you will be responsible. The internetInternet and telephone voting facilities for shareholders of record will close at 11:59 p.m., E.S.T.D.S.T. on March 6, 2011.11, 2014. If you vote by telephone or via the internet,Internet, it is not necessary to return a proxy card. The internet and telephone voting procedures are designed to authenticate shareholders by use of a control number, and to allow you to confirm that your instructions have been properly recorded.
If you wish to name as a proxy someone other than the proxies named on the proxy card, you may do so by crossing out the name of the designated proxies and inserting the name of another person. In that case, you should sign the proxy card and deliver it to the person so named, and the person so
named must then be present to vote at the meeting. Proxy cards so marked should not be mailed to us or to our transfer agent, American Stock Transfer and Trust Company, LLC.
Is my vote important?
YouYes. Under applicable rules, brokers, banks and other nominees are prohibited from voting shares held in street name on matters pertaining to the election of trustees unless the client specifically instructs his or her nominee to vote their shares. Shares held in street name and for which voting instructions are not provided and accordingly, as to which bank, brokers and other nominees do not have discretionary authority to vote on their clients' behalf, are referred to "broker non-votes."
The advisory proposal to approve executive compensation requires the approval of the majority of shares actually voted at the meeting. Accordingly, "broker non-votes" and abstentions will not impact the approval or disapproval of this proposal.
The proposal to elect the nominees as trustees requires the approval of a majority of our outstanding shares. Because "broker non-votes" and abstentions will have the effect of a vote against the election of the nominees to serve as trustees, it is very important that you vote your shares.
Who will count the vote?
A representative of our transfer agent, American Stock Transfer and Trust Company, LLC, will tabulate the votes and act as inspector of elections.
Can I revoke my proxy before it is exercised?
If you hold stock directly in your name, you can revoke your proxy at any time before it is exercised. To revoke your proxy you may filevoted at the annual meeting by filing a written revocation with our Secretary, or you may deliverdelivering to American Stock Transfer and Trust Company, LLC a properly executed proxy bearing a later date. If you vote by telephone or internetInternet you may also revoke your proxy with a timely and valid later telephone or internetInternet vote, as the case may be. You may also revoke your proxy by attending the meeting and voting in person. If not so revoked, the common shares represented by such proxy will be voted.
Under New York Stock Exchange Rules, the proposal to ratify the appointment of BDO USA, LLP as independent auditors for the 2011 fiscal year is considered a "discretionary" item. This means that brokerage firms may vote in their discretion on this proposal on behalf of clients who have not furnished voting instructions at least ten days before the date of the meeting. In contrast, the election of trustees and the advisory votes on executive compensation and the frequency of the advisory votes on executive compensationIf your shares are non-discretionary items. This means that brokerage firms that have not received voting instructions from their clients on these proposals may not vote on them. The so called "broker non-votes," as well as abstentions to vote on these proposals, will be includedheld in the calculationname of a broker, bank or other nominee, you must contact such nominee and comply with the number of votes considerednominee's procedures if you want to be presentrevoke or change the instructions that you previously provided to the nominee. Attendance at the meeting for purposeswill not by itself automatically revoke a previously granted proxy.
Table of determining a quorum. Abstentions and broker non-votesContents
How will have the effect of a vote against Proposal 1 (the election of the nominees as trustees), Proposal 2 (the approval, by non-binding vote, of executive compensation) and Proposal 4 (to ratify the appointment of BDO USA, LLP as our independent auditors for fiscal 2011). The frequency of the advisory vote on executive compensation (Proposal 3) receiving the greatest number of votes (every one, two or three years) willmy shares be considered the frequency recommended by shareholders. Abstentions and broker non-votes will therefore have no effect on such vote.voted?
All common shares entitled to vote and represented by properly completed proxies received prior to the meeting and not revoked, will be voted at the meeting in accordance with your instructions. If no choice is indicated on the proxy card received from a registered holder, the persons named as your proxies will vote the common shares "FOR" the four nominees (Kenneth F. Bernstein, Fredric H. Gould, Gary Hurand, and Elie Weiss) for Class III Trustee, "FOR", the approval of the non-binding vote onadvisory proposal approving executive compensation, "FOR" three years with respect to frequency of the non-binding vote on executive compensation, and "FOR" ratification of the appointment of BDO USA, LLP as our independent auditorsregistered public accounting firm for fiscal 2011,2014, and as the proxy holders may determine, in their discretion, with respect to other matters that properly come before the meeting. The board of trustees is not currently aware of any business to be acted upon at the meeting other than that which is described in this proxy statement. A representative of American Stock Transfer
Who is soliciting my vote and Trust Company, LLC will tabulatewho pays the votes and act as inspector of elections.
We are soliciting proxies and will pay the entire cost of soliciting proxies, including preparing and mailing this proxy statement. In addition to the solicitation of proxies by mail and through our regularfull-time and part-time employees, we will request banks, brokers, custodians, nominees and other record holders to forward copies of the proxy statement and other soliciting materials to persons for whom they hold common shares and to request instruction on how to vote the shares. We will reimburse such record holders for their reasonable out-of-pocket expenses in forwarding proxies and proxy materials to shareholders. We have retained AST Phoenix Advisory PartnersAdvisors for a fee of $4,500, plus reasonable out of pocket expenses, to aid in the solicitation of proxies from our shareholders. To the extent necessary in order to ensure sufficient representation at the meeting, we or our proxy solicitor may solicit the return of proxies by personal interview, mail, telephone, facsimile, Internet or other means of communication or electronic transmission. The extent to which this will be necessary depends upon how promptly proxies are returned. We urge you to send in your proxy without delay.
What is householding?
Shareholders who share the same address and last name may receive only one copy of the proxy materials unless we, in the case of shareholders of record, or such shareholder's broker, bank or nominee, in the case of shareholders whose shares are held in street name, has received contrary instructions. This practice, known as "householding," is designed to reduce printing and mailing costs. Shareholders desiring to discontinue householding and receive a separate copy of the proxy materials, may (1) if their shares are held in street name, notify their broker, bank or nominee or (2) if they are shareholders of record, direct a written request to: BRT Realty Trust, 60 Cutter Mill Road, Suite 303, Great Neck, NY 11021, Attn: Secretary.
Are our proxy materials available on the Internet?
Our proxy materials are available at:www.brtrealty.com/annualmeetingmaterials.pdf.
When are shareholder proposals due for the 2015 Annual Meeting?
Our annual meeting of shareholders for the year ending September 30, 2014 is scheduled to be held in March 2015. In order to have any proposal presented by a shareholder at the meeting included in the proxy statement and form of proxy relating to the 2014 meeting, the proposal, in writing and addressed to our secretary, must be received by us no later than September 24, 2014. Upon timely receipt of any such proposal, we will determine whether to include such proposal in the proxy statement in accordance with applicable regulations.
For any proposal that is not submitted for inclusion in next year's proxy statement, but is instead intended to be presented directly at the 2015 annual meeting of shareholders, rules and regulations
promulgated pursuant to the Securities Exchange Act of 1934, as amended, permit us to exercise discretionary authority to the extent conferred by proxy if we:
We are governed by a board of trustees and by the committees of the board. Members of the board are kept informed about our business through discussions with our chairman, our president and chief executive officer and our other officers, by reviewing materials provided to them and by participating in meetings of the board and its committees. During fiscal 2010,2013, the board held four meetings and other than Kenneth F. Bernstein (who missed a meeting due to the death of an immediate family member), each trustee attended at least 75% of the aggregate number of board and applicable committee meetings, other than Mr. Ginsburg who attended 71.4% of such meetings. We typically schedule a board meeting in conjunction with our annual meeting of shareholders and encourage our trustees to attend the annual meeting of shareholders. EightApproximately 82% of the ten individuals then serving as trustees attended our 20102013 annual meeting of shareholders.
Our board of trustees has three committees: an audit committee, a compensation committee and a nominating and corporate governance committee. The board has affirmatively determined that each of Kenneth F. Bernstein, Alan H. Ginsburg, Louis C. Grassi, Gary Hurand, Jeffrey Rubin, Jonathan H. Simon and Elie Weiss, a majority of our trustees, is "independent" for the purposes of Section 303A of the Listed Company Manual of the New York Stock Exchange, and all of the members of each of the audit committee, the compensation committee and the nominating and corporate governance committee are independent for the purposes of Section 303A. Messrs. Fredric H. Gould, Jeffrey A. Gould and Matthew J. Gould are not independent under New York Stock Exchange Rules because, among other reasons, they serve as executive officers of the Trust. The board based these determinations primarily on a review of the responses of our trustees to questions regarding employment and compensation history, affiliations and family and other relationships, discussions with trustees and relevant facts and circumstances provided to management of any relationships bearing on the independence of a trustee.
In determining the independence of each of the foregoing trustees, the board considered that (i) Gary Hurand holds approximately a 40% beneficial interest in a family entity which owns a preferred limited partnership interest in Gould Investors L.P. (an affiliate of our company—see "Certain Relationships and Related Transactions"), the preferred limited partnership interest owned by the Hurand family entity has a deemed value of $14,678,000 (the redemption price of the interest) and very limited voting rights, and no member of the Hurand family, including Mr. Hurand, has any management involvement in Gould Investors L.P., and the board concluded that the Hurand family entity's passive investment in Gould Investors L.P. did not disqualify Mr. Hurand from being independent; (ii) Gould Investors L.P. and an entity affiliated with Gould Investors L.P. owns less than 2% of the outstanding shares of Newtek Business Services, Inc., a public company in which Jeffrey Rubin was a director and an executive officer until March 2009, and the board concluded that such investment by Gould Investors L.P. and an affiliated entity in Newtek Business Services, Inc. did not disqualify Mr. Rubin from being independent; (iii) Elie Weiss is the son-in-law of Gary Hurand, an independent trustee, and an entity controlled by him participated on a pari passu basis as a 25% participant in a $2 million mortgage loan originated by us in February 2007 (prior to Mr. Weiss joining the Board), which was paid off in January 2009, and the board concluded that such relationships did not disqualify Mr. Weiss from being independent; and (iv) an entity in which Jonathan H. Simon is a control person entered into a contingent contract to acquire a development site in Manhattan, New York from Gould Investors L.P. for approximately $17 million (this entity's purchase price offer was competitive with the best offers received). Due to the crisis in the real estate and credit markets, this entity terminated the contract and made a termination payment to Gould Investors L.P. in December, 2008, and the board concluded that the transaction between Gould Investors L.P. and the entity controlled by Mr. Simon did not disqualify Mr. Simon from being independent.
The board has adopted a charter for each committee, as well as corporate governance guidelines that address the make-up and functioning of the board. You can find each charter and the corporate governance guidelines by accessing the corporate governance section of our website atwww.brtrealty.com. Copies of these charters and the corporate governance guidelines may be obtained by writing to us at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, Attention: Secretary.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to all trustees, officers, employees, agents and consultants, including our chief executive officer, principal financial officer, principal accounting officer or controller or person performing similar functions. The code of business conduct and ethics covers a variety of topics, including those required by the Securities and Exchange Commission and the New York Stock Exchange. Topics covered include, but are not limited to, conflicts of interest, confidentiality of information, and compliance with laws and regulations. The code of business conduct and ethics, as amended and restated, is available at the corporate governance section of our website atwww.brtrealty.com and may be obtained by writing to us at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, Attention: Secretary. During fiscal 2010,2013, there were no waivers of the provisions of the code of business conduct and ethics with respect to any of our trustees, officers, employees, agents or consultants. We will post any amendments to, or waivers of, our code of business conduct and ethics as amended and restated, on our website.
Management is responsible for the day-to-day management of risks we face. Our board of trustees has overall responsibility for overseeing risk management with a focus on the more significant risks facing us. Our audit committee oversees risk policies and processes related to our financial statements, financial reporting processes and liquidity risks, our nominating and corporate governance committee oversees corporate governance risks and our compensation committee oversees risks relating to remuneration of our officers and employees. The compensation committee does not believe that the compensation programs which are in place give rise to any risk that is reasonably likely to have a material adverse effect on us.
At each quarterly meeting of the audit committee, a portion of the meeting is devoted to reviewing material credit risks, our loan portfolio, status of foreclosure and similar proceedings,the status of the properties in our real estate portfolio, our loan portfolio and credit risks, if any, with respect thereto, and other matters (including related party transactions) which might have a material adverse impact on current or future operations, and, as required, the audit committee reviews risks arising from related party transactions.operations. In addition, at each meeting of the audit committee, our chief financial officer, as well asinternal auditor and the independent registered public accounting firm
reviewing or auditing, as the case may be, our financial statements, reports to the committee with respect to compliance by our employeesus with our internal control policies in order to ascertain that no failures of a material nature have occurred. This process assists the audit committee in overseeing the risks related to our financial statements and the financial reporting process.
At each meeting of the board of trustees, a portion of the meeting is dedicated to reviewing and discussingtrustees review significant risk issues reviewed by the audit committee.
Our company is led by Fredric H. Gould,Israel Rosenzweig, chairman of our board, and Jeffery A. Gould, president and chief executive officer. The board of trustees believes that: (i) separating the role of chairman and chief executive officer is the most appropriate structure at this time because it makes the best use of the abilities of Fredric H. GouldMessrs. Rosenzweig and Jeffery A. Gould; and (ii) its risk oversight activities does not have any effect on the board's leadership structure.
Committees of the Board of Trustees
Our board of trustees has three standing committees: an audit committee, a compensation committee, and a nominating and corporate governance committee. In addition, the board has appointed a special committee—its term expires in 2014. The board has adopted a charter for each standing committee, as well as corporate governance guidelines that address the make-up and functioning of the board. The charter for each standing committee requires that such committee be comprised of at least three independent directors and in the case of the audit committee, also requires that at least one member of the committee qualify as a "financial expert." All of the members of each committee were independent during their period of service on such committee and in the case of the audit committee, each such member was also financially literate.
You can find each charter and the corporate governance guidelines by accessing the corporate governance section of our website atwww.brtrealty.com. Copies of these charters and the corporate governance guidelines may be obtained by writing to us at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, Attention: Secretary.
The table below provides membership and meeting information for each of the board committees for 2013:
Name | Audit | Compensation | Nominating and Corporate Governance | Special | ||||
---|---|---|---|---|---|---|---|---|
Kenneth F. Bernstein | ||||||||
Alan H. Ginsburg | ü | |||||||
Louis C. Grassi | Chair* | ü | ü | |||||
Gary Hurand | ü | Chair | ||||||
Jeffrey Rubin | Chair | ü | ||||||
Jonathan H. Simon | ü | |||||||
Elie Weiss | ü | ü | Chair | |||||
Number of Meetings | 4 | 3 | 2 | — |
Audit Committee
Our board of trustees has adopted an audit committee charter delineating the composition and responsibilities of the audit committee. The audit committee charter requires that the audit committee be comprised of at least three members, all of whom are independent trustees and at least one of whom is an "audit committee financial expert." Our board of trustees has determined that all of the members of our audit committee are independent for the purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 303.01 of the Listed Company Manual of the New York Stock Exchange, and that Louis C. Grassi, chairman of the audit committee, qualifies as the "audit committee financial expert."
The audit committee, which is comprised of Louis C. Grassi (Chairman), Gary Hurand and Elie Weiss, met five times during fiscal 2010. (Elie Weiss joined the committee in March 2010 in connection with the annual board meeting in place of Alan H. Ginsburg). Among other things, the auditThis committee is responsible for assisting the board in its oversight ofoverseeing, among other things, (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements,
(iii) our independent registered public accounting firm's qualification and independence, and (iv) the performance of the accounting firm performing our internal control audit function, and of our independent registered public accounting firm, and(v) for the preparation of the audit committee report required by the Securities and Exchange Commission for inclusion in this proxy statement. The board has determined that each memberThis committee is also responsible for the selection and engagement of the audit committee satisfies the financial literacy requirements of the New York Stock Exchange.our independent registered public accounting firm and for approving related party transactions.
Compensation Committee
The compensation committee, which is comprised of Jeffrey Rubin (chairman), Alan H. Ginsburg and Jonathan H. Simon, all of whom are independent, met three times during fiscal 2010. The compensationThis committee reviews and makes recommendations to the boardand/or determinations with respect to the salaries, bonuses and stock incentive awards of our trustees and named executive officers and employees.officers.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee, which is comprised of Gary Hurand (chairman), Louis C. Grassi and Elie Weiss, all of whom are independent, met once in fiscal 2010. TheThis committee's principal responsibilities of this committee include proposing to the board of trustees a slate of nominees for election to the board of trustees at the annual meeting of shareholders, making a recommendation to the board of trustees with respect to the independence of each trustee, identifying and recommending candidates to fill vacancies on the board of trustees or committees thereof between annual meetings of shareholders, proposing a slate of officers to the trustees for election at the annual meeting of the board and monitoring corporate governance matters, including overseeing our corporate governance guidelines.
Special Committee
This committee was established in March 2011 to, among other things, review, analyze, monitor and make recommendations with respect to our management structure and the advisory agreement pursuant to which we make payments to our advisor, REIT Management Corp., which is wholly-owned by Fredric H. Gould, a trustee and former Chairman of the Board. See "Executive Compensation—Compensation Discussion and Analysis—Analysis—Advisor Fees."
The board believes that it should be comprised of trustees with complementary backgrounds, and that trustees should, at a minimum, have expertise that may be useful to us. Our nominating and corporate governance committee has not adopted a formal diversity policy in connection with the consideration of trustee nominations or the selection of nominees. It considers the personal and professional attributes and the business experience of each trustee candidate to promote diversity of expertise and experience among our trustees. Additionally, trustees should possess the highest personal and professional ethics and should be willing and able to devote the required amount of time to our business.
When considering candidates for trustee, the nominating and corporate governance committee will take into account a number of factors, including the following:
The nominating and corporate governance committee will consider candidates for trustee suggested by shareholders, applying the criteria for candidates described above, considering the additional information referred to below and evaluating such nominees in the same manner as other candidates. Shareholders wishing to suggest a candidate for trustee should write to our Secretary and include:
Before nominating a sitting trustee for re-election at an annual meeting of shareholders, the nominating and corporate governance committee will consider:
When seeking candidates for trustee, the nominating and corporate governance committee may solicit suggestions from management, incumbent trustees or others. The nominating and corporate governance committee or its chairman will interview a candidate if it believesis believed the candidate might be suitable to be a trustee. The nominating and corporate governance committee may also ask the candidate to meet with management. If the nominating and corporate governance committee believes a candidate would be a valuable addition to the board, it will recommend the candidate's election to the full board.
The nominating and corporate governance committee generally intends to recommend that the board nominate incumbent trustees whom the committee believes will continue to make important contributions to us, inasmuch as the committee believes that the continuing service of qualified incumbents promotes stability and continuity, giving us the benefit of the familiarity and insight into our affairs that its trustees have accumulated during their tenure, while contributing to the board's ability to work as a collective body.
The following standards for "director" independenceIn determining whether our trustees are applicable to us in accordance withindependent, we apply the New York Stock ExchangeExchange's corporate governance listing standards:standards. Such standards provide:
shareholder or officer of an organization that has a relationship with us or any of our subsidiaries);
Under "director" independence standards, the board must affirmatively determine that a trustee has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a trustee. The board has not adopted any requirements or standardsaffirmatively determined that each of Kenneth F. Bernstein, Alan H. Ginsburg, Louis C. Grassi, Gary Hurand, Jeffrey Rubin, Jonathan H. Simon and Elie Weiss, constituting approximately 64% of our trustees, is "independent" for "director" independence beyondthe purposes of Section 303A of the Listed Company Manual of the New York Stock Exchange, corporate governance listing standards.and all of the members of our committees are independent for the purposes of Section 303A. The board based these determinations primarily on a review of the responses of our trustees to questions regarding employment and compensation history, affiliations and family and other relationships, discussions with trustees and relevant facts and circumstances provided to management of any relationships bearing on the independence of a trustee.
In determining the independence of each of the foregoing trustees, the board considered that Gary Hurand owns approximately a 40% beneficial interest in a family entity which owns a preferred limited partnership interest in Gould Investors L.P., an affiliate of our company, that is primarily engaged in the ownership and operation of real estate properties held for investment. See "Certain Relationships and Related Transactions." The preferred limited partnership interest owned by the Hurand family entity had, as of December 31, 2013, a deemed value of approximately $11.7 million (the redemption price of the interest) and limited voting rights, and no member of the Hurand family, including Mr. Hurand, has any management involvement in Gould Investors. For 2013, distributions of approximately $850,000 were accrued and paid on the interests owned by the Hurand family entity. In September 2013, the family entity and Gould Investors agreed that until April 2014, the family entity would defer its right to require Gould Investors to purchase, and Gould Investors would defer its right to redeem, up to 25% of the outstanding preferred interest (a redemption value of up to approximately $2.9 million) that would otherwise be subject to potential redemption or repurchase until such date. In connection therewith, the parties agreed to reduce the annual distribution rate on such deferred partnership interests from 8% to 5%.
The board concluded that the foregoing did not disqualify Mr. Hurand from being independent.
Compensation Committee Interlocks and Insider Participation
The members of the compensation committee are Jeffrey Rubin (Chairman), Alan H. Ginsburg and Jonathan H. Simon. None of the members of the compensation committee has ever been an officer or employee of our company or any of our subsidiaries or has had any relationship with the Trust that would require disclosure under Item 404 of Regulation S-K (Certain Relationships and Related Party Transactions) and no "compensation committee interlocks" existed during fiscal 2010.
Non-managementThe following table sets forth the cash compensation payable to the non-management members of our board of trustees are paid an annual retainerfor service on our board and the committees thereof:
| | Committee | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Board | Audit | Compensation | Nominating | Special | |||||||||||
Annual retainer | $ | 20,000 | $ | 5,000 | $ | 4,000 | $ | 3,000 | — | |||||||
Presence in-person at meeting | 1,200 | 1,000 | 1,000 | 1,000 | 1,000 | |||||||||||
Presence by telephone at meeting | 750 | 750 | 750 | 750 | 1,000 | |||||||||||
Chairman's annual retainer | 200,000 | (1) | 10,000 | 8,000 | 4,000 | — |
In addition, each member of the audit committee is paid an annual retainer of $5,000, the chairman of the audit committee is paid an additional annual retainer of $10,000, each member of the compensation committee is paid an annual retainer of $4,000, the chairman of the compensation committee is paid an additional annual retainer of $8,000, each member of the nominatingin 2012 and corporate governance committee is paid an annual retainer of $3,000 and the chairman of the nominating and corporate governance committee is paid an additional annual retainer of $4,000. Each non-management member of our board of trustees is also paid $1,200 for each board meeting and $1,000 for each committee meeting attended in person and $750 for each board meeting and committee meeting attended by telephone conference. In fiscal 2010,2013, each non-management member of our board of trustees was awarded 3,0003,100 and 3,250, restricted common shares, respectively, under the BRT Realty Trust 2009 Incentive Plan.Plan and 2012 Incentive Plan, respectively. The restricted shares have a five year vesting period, subject to acceleration upon the occurrence of specified events, during which period the registered owner is entitled to vote and receive distributions, if any, on such shares. Non-management trustees who reside outside of the local area in which our executive office is located also receive reimbursementare reimbursed for travel expenses incurred in attending board and committee meetings.
The following table sets forth the cash and non-cash compensation of trustees for the fiscal year ended September 30, 2010:2013:
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Total ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Kenneth F. Bernstein* | 24,500 | 20,475 | 44,975 | |||||||
Alan H. Ginsburg* | 27,500 | 20,475 | 47,975 | |||||||
Fredric H. Gould | 100,000 | (3) | 66,465 | 166,465 | ||||||
Matthew J. Gould | — | 86,468 | 86,468 | |||||||
Louis C. Grassi* | 48,500 | 20,475 | 68,975 | |||||||
Gary Hurand* | 41,500 | 20,475 | 61,975 | |||||||
Israel Rosenzweig | 100,000 | (3) | 28,823 | 128,823 | ||||||
Jeffrey Rubin* | 39,750 | 20,475 | 60,225 | |||||||
Jonathan H. Simon* | 34,250 | 20,475 | 54,725 | |||||||
Elie Weiss* | 38,250 | 20,475 | 58,725 |
Name(1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Total ($)(4) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Kenneth F. Bernstein* | 22,400 | 13,320 | (5) | 35,720 | ||||||
Alan H. Ginsburg* | 32,750 | 13,320 | (5) | 46,070 | ||||||
Fredric H. Gould | — | 35,520 | (6) | 35,520 | (7) | |||||
Matthew J. Gould | — | 35,520 | (6) | 35,520 | (7) | |||||
Louis C. Grassi* | 48,600 | 13,320 | (5) | 61,920 | ||||||
Gary Hurand* | 39,650 | 13,320 | (5) | 52,970 | ||||||
Jeffrey Rubin* | 39,600 | 13,320 | (5) | 52,920 | ||||||
Jonathan H. Simon* | 32,650 | 13,320 | (5) | 45,970 | ||||||
Elie Weiss* | 31,900 | 13,320 | (8) | 45,220 |
information regarding payments to Fredric H. Gould, Matthew J. Gould and Israel Rosenzweig.
The table below shows the aggregate number of unvested restricted shares awarded to and held by the named trustees and the value thereof as of September 30, 2010:2013:
Name | Unvested Restricted Shares | Market Value of Unvested Restricted Stock ($) | |||||
---|---|---|---|---|---|---|---|
Kenneth F. Bernstein(1) | 15,450 | 110,777 | |||||
Alan H. Ginsburg(1) | 15,450 | 110,777 | |||||
Fredric H. Gould(2) | 45,425 | 325,697 | |||||
Matthew J. Gould(2) | 48,600 | 348,462 | |||||
Louis C. Grassi(1) | 15,450 | 110,777 | |||||
Gary Hurand(1) | 15,450 | 110,777 | |||||
Israel Rosenzweig(2) | 39,450 | 282,857 | |||||
Jeffrey Rubin(1) | 15,450 | 110,777 | |||||
Jonathan H. Simon(1) | 15,450 | 110,777 | |||||
Elie Weiss(1) | 15,450 | 110,777 |
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Non-Management Trustee Executive Sessions
In accordance with New York Stock Exchange listing standards, our non-management trustees meet regularly in executive sessions without management. "Non-management" trustees are all those trustees who are not employees or officers of our company and include trustees, if any, who are not employees or officers but who were not determined to be "independent" by our board of trustees. The board has not designated a "Lead Director" or a single trustee to preside at executive sessions. The person who presides over executive sessions of non-management trustees is one of the committee chairmen. To the extent practicable, the presiding trustee at the executive sessions is rotated among the chairmen of the board's committees.
Shareholders and interested persons who want to communicate with our board or any individual trustee can write to:
BRT Realty Trust
60 Cutter Mill Road, Suite 303
Great Neck, NY 11021
Attention: Secretary
Your letter should indicate that you are a shareholder of BRT Realty Trust. Depending on the subject matter, the Secretary will:
At each board meeting, the Secretary will present a summary of communications received, if any, since the last meeting that were not forwarded and make those communications available to the trustees on request.
In the event that a shareholder, employee or other interested person would like to communicate with our non-management trustees confidentially, they may do so by sending a letter to "Non-Management Trustees" at the address set forth above. Please note that the envelope should contain a clear notation that it is confidential.
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
SHAREHOLDERS, TRUSTEES AND MANAGEMENT
The following table sets forth information concerning our common shares owned as of January 17, 201115, 2014 by (i) each person beneficially owning five percent or more of our common shares, (ii) each trustee, (ii) each executive officer named in the Summary Compensation Table, and (iii) all trustees and executive officers as a group.
Name of Beneficial Owner | Number of Shares Beneficially Owned(1) | Percent of Class | |||||
---|---|---|---|---|---|---|---|
Kenneth F. Bernstein(2) | 26,498 | * | |||||
Alan H. Ginsburg(2) | 24,030 | * | |||||
Fredric H. Gould(2)(3) | 3,453,103 | 24.1 | % | ||||
Jeffrey A. Gould(2)(4) | 3,295,160 | 23.0 | % | ||||
Matthew J. Gould(2)(5) | 3,217,285 | 22.5 | % | ||||
Mitchell Gould | 112,729 | * | |||||
Louis C. Grassi(2) | 28,593 | * | |||||
Gary Hurand(2)(6) | 366,796 | 2.6 | % | ||||
David W. Kalish(7) | 458,258 | 3.2 | % | ||||
Mark H. Lundy(8) | 146,394 | 1.0 | % | ||||
Israel Rosenzweig(2) | 399,902 | 2.8 | % | ||||
Jeffrey Rubin(2) | 26,498 | * | |||||
Jonathan H. Simon(2) | 24,030 | * | |||||
Elie Weiss(2)(9) | 41,371 | * | |||||
George Zweier | 46,490 | * | |||||
Gould Investors L.P(10) | 2,801,425 | 19.6 | % | ||||
Greenwood Investments, Inc.(11) | 1,000,400 | 7.0 | % | ||||
All trustees and executive officers as a group (18 persons) | 5,684,767 | 39.7 | % |
Name of Beneficial Owner | Amount of Beneficial Ownership(1) | Percent of Class | |||||
---|---|---|---|---|---|---|---|
Kenneth F. Bernstein(2) | 16,898 | * | |||||
Alan H. Ginsburg(2) | 14,430 | * | |||||
Fredric H. Gould(2)(3) | 3,506,453 | 25.2 | % | ||||
Jeffrey A. Gould(2)(4) | 416,082 | 3.0 | % | ||||
Matthew J. Gould(2)(5) | 3,199,550 | 23.0 | % | ||||
Mitchell Gould | 82,729 | * | |||||
Louis C. Grassi(2) | 18,993 | * | |||||
Gary Hurand(2)(6) | 357,196 | 2.6 | % | ||||
David W. Kalish(7) | 429,010 | 3.2 | % | ||||
Mark H. Lundy(8) | 108,819 | * | |||||
Jeffrey Rubin(2) | 16,898 | * | |||||
Jonathan H. Simon(2) | 14,330 | * | |||||
Elie Weiss(2) | 31,731 | * | |||||
George Zweier | 35,490 | * | |||||
Gould Investors L.P(11) | 2,777,264 | 19.9 | % | ||||
All Trustees and Executive Officers as a group (17 persons)(9)(10) | 5,750,216 | 41.3 | % |
wholly owned by him is the other general partner. Does not include 7,512 common shares owned by Mrs. Fredric H. Gould,his spouse, as to which shares Mrs. Fredric H. Gouldshe has sole voting and investment power and Mr. Fredric H. Gouldas to which he disclaims beneficial interest.ownership.
ELECTION OF TRUSTEES
(Proposal 1)
The board of trustees is divided into three classes, each of which is elected for a staggered term of three years. Our Third Amended and Restated Declaration of Trust provides for the number of trustees to be between five and fifteen, the exact number to be determined by our board of trustees. The board has fixed the number of trustees at ten.eleven. The board may, following the meeting, increase or decrease the size of the board and fill any resulting vacancy or vacancies.
At the annual meeting of shareholders, four Class III Trustees (Kenneth F. Bernstein, Fredric H. Gould, Gary Hurand and Elie Weiss) are standing for election to our board of trustees. Each nominee has been recommended to our board of trustees by the nominating and corporate governance committee for election at the annual meeting and each nominee has been nominated by our board of trustees to stand for election at the annual meeting, to hold office until our 20142017 annual meeting and until his successor is elected and qualified. Class I Trustees will be considered for election at our 20122015 annual meeting and Class II Trustees will be considered for election at our 20132016 annual meeting. Proxies will not be voted for a greater number of persons than the number of nominees named in the proxy statement.
We expect each nominee to be able to serve if elected. However, if any nominee is unable to serve as a trustee, unless a shareholder withholds authority, the persons named in the proxy card may vote for any substitute nominee proposed by the board of trustees. Each nominee, if elected, will serve until the annual meeting of shareholders to be held in 2014.2017. Each other trustee whose current term will continue after the date of our 20112014 annual meeting will serve until the annual meeting of shareholders to be held in 20122015 with respect to the Class I Trustees, and 20132016 with respect to the Class II Trustees.
The following table sets forth certain information regarding each nominee for election to the board of trustees:
Nominees for Election Asas Class III Trustees Whose Term ExpiresWill Expire in 20142017
Name and Age | Principal Occupation for the past Five Years and other Directorships or Significant Affiliations | |
---|---|---|
Kenneth F. Bernstein | Trustee since |
Fredric H. Gould | Trustee since |
Name and Age | Principal Occupation for the past Five Years and other Directorships or Significant Affiliations | |
---|---|---|
Gary Hurand | Trustee since 1990; President of Dawn Donut Systems, Inc. since 1971; President of Management Diversified, Inc., a real property management and development company, since 1987; Director of Citizens Republic Bancorp Inc. and predecessor | |
Elie Weiss | Trustee since |
Vote Required for Approval of Proposal 1
The affirmative vote of a majority of the outstanding common shares is required for the election of each nominee for trustee.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ELECTION OF KENNETH F. BERNSTEIN, FREDRIC H. GOULD, GARY HURAND, AND ELIE WEISS AS CLASS III TRUSTEES. THE PERSONS NAMED IN THE PROXY CARD INTEND TO VOTE SUCH PROXY FOR THE ELECTION OF SUCH PERSONS AS TRUSTEES OF KENNETH F. BERNSTEIN, FREDRIC H. GOULD, GARY HURAND AND ELIE WEISS.
Table of ContentsTRUSTEES.
The following tables settable sets forth certain information regarding trustees whose terms will continue after the date of the annual meeting:
Class I Trustees Whose Term Expires in 20122015
Name and Age | Principal Occupation for the past Five Years and other Directorships or Significant Affiliations | |
---|---|---|
Alan H. Ginsburg | Trustee since | |
Jeffrey A. Gould | Trustee since |
Name and Age | Principal Occupation for the past Five Years and other Directorships or Significant Affiliations | |
---|---|---|
Jonathan H. Simon | Trustee since |
Class II Trustees Whose Term Will Expire in 20132016
Name and Age | Principal Occupation for the past Five Years and other Directorships or Significant Affiliations | |
---|---|---|
Matthew J. Gould | Trustee since | |
Louis C. Grassi | Trustee since | |
Israel Rosenzweig | Chairman of the Board of Trustees since 2013, Trustee and Vice Chairman of the Board of Trustees from 2012 through 2013 and Senior Vice President from 1998 through 2012; Vice President of Georgetown Partners, Inc., since 1997; from 2000 to 2009, President of GP Partners, Inc., an affiliate of Gould Investors L.P., which provided advisory services in the real estate and financial services industries to an investment advisor; Senior Vice President of One Liberty Properties, Inc. since 1989. His experience as a |
Name and Age | Principal Occupation for the past Five Years and other Directorships or Significant Affiliations | |
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Jeffrey Rubin | Trustee since |
PROPOSAL 2
ADVISORY APPROVAL OF
COMPENSATION OF EXECUTIVES ("SAY-ON-PAY")
(Proposal 2)
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") requires that we seek a non-binding advisory vote from our shareholders to approve the compensation awarded to our named executive officers as disclosed in this proxy statement. Although the advisory vote is non-binding, the Compensation Committee and the Board will review the results of the vote and will consider our shareholders' concerns and take them into account in future determinations concerning our executive compensation program. The Board of Trustees recommends that you indicate your support for the Company's compensation policies and procedures for its named executive officers, as outlined in the resolution below. Accordingly, the following resolution will be submitted for a shareholder vote at the 20112014 Annual Meeting:
"RESOLVED,"RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the BRT Realty Trust 2011
2014 proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis and accompanying compensation tables and related information disclosed in the Executive Compensation section of such proxy statement)."
THE BOARD OF TRUSTEES RECOMMENDS
A VOTE IN FAVOR OF THE ADOPTION OF THIS RESOLUTION
PROPOSAL 3ADVISORY VOTE ON THE FREQUENCYAT WHICH WE WILL SEEK SHAREHOLDER ADVISORYVOTES ON EXECUTIVE COMPENSATION
In addition to requesting the shareholder advisory approval of the executive compensation program, the Dodd-Frank Act also requires that once every six years we seek shareholder approval of how often we will seek advisory approval of executive compensation. The Dodd-Frank Act requires that we present every one, two or three years, or abstain as alternatives for shareholders.
The Board has determined that an advisory vote on executive compensation every three years is the best approach for the Trust based on a number of considerations, including the following:
Although the vote on this Proposal is advisory and non-binding, the Board will carefully consider the voting results. The alternative (i.e., one year, two years, or three years) that receives the most votes will be deemed approved by the shareholders.
THE BOARD OF TRUSTEES RECOMMENDSA VOTE OF EVERY THREE YEARS FOR THE FREQUENCYAT WHICH WE WILL PRESENT TOSHAREHOLDERS AN ADVISORY VOTE ON COMPENSATION OF EXECUTIVES
RESOLUTION.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 4)3)
The audit committee and the board of trustees is seeking ratification of the appointment of BDO USA, LLP ("BDO") as our independent registered public accounting firm for the fiscal year ending September 30, 2011.2014. Representatives of BDO, and Ernst & Young LLP, our auditors for more than the past three fiscal years,2013, are expected to be present at the annual meeting and will have the opportunity
to make a statement if such representatives desire to do so and will be available to respond to appropriate questions.
We are not required to have our shareholders ratify the selection of BDO as our independent registered public accounting firm. We are doing so because we believe it is good corporate practice. If our shareholders do not ratify the selection, the audit committee will reconsider whether or not to retain BDO, but may, after reconsidering, still decide to retain such independent registered public accounting firm. Even if the selection is ratified, the audit committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our best interests.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF BDO AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2011.
On December 14, 2010, the audit committee of our board of trustees dismissed Ernst & Young LLP as our independent registered public accounting firm.
Ernst & Young's reports on our consolidated financial statements for the fiscal years ended SeptemberTHE YEAR ENDING SEPTEMBER 30, 2010 and 2009 did not contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended September 30, 2010 and 2009 and through December 14, 2010, (i) there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Ernst & Young, would have caused Ernst & Young to make a reference thereto in its reports on our consolidated financial statements for such periods and (ii) there have been no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K.
On December 28, 2010, the audit committee of our board of trustees engaged BDO as our independent registered public accountants, as of and for the fiscal year ending September 30, 2011 and the interim periods prior to such year-end. During our two most recent fiscal years and through December 28, 2010, we did not consult with BDO regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, nor did BDO provide advice to us, either written or oral, that was an important factor considered by us in reaching a decision as to an accounting, auditing or financial reporting issue. Further, during our two most recent fiscal years and through December 28, 2010, we did not consult with BDO on any matter described in Item 304(a)(2)(i) or (ii) of Regulation S-K.
Table of Contents2014.
The following table presents, except as otherwise indicated, BDO's fees (including expenses) for the services indicated for 2013 and 2012:
| 2013 | 2012 | |||||
---|---|---|---|---|---|---|---|
Audit fees(1)(2) | $ | 525,964 | $ | 384,936 | |||
Audit-related fees | — | — | |||||
Tax fees | — | — | |||||
All other fees | — | — | |||||
| | | | | | | |
Total fees | 525,964 | $ | 384,936 | ||||
| | | | | | | |
| | | | | | | |
| Fiscal 2010 | Fiscal 2009 | |||||
---|---|---|---|---|---|---|---|
Audit fees(1) | $ | 433,201 | $ | 553,224 | |||
Audit related fees(2) | — | 43,500 | |||||
Tax fees(3) | 15,130 | 23,500 | |||||
All other fees | — | — | |||||
TOTAL FEES | $ | 448,331 | $ | 620,224 | |||
Approval Policy for Audit and Non-Audit Services
The audit committee annually reviews and approves the retention of our independent registered public accounting firm for each fiscal year and the audit of our financial statements for such fiscal year, including the fee associated with the audit. In addition, the audit committee approves the provision of tax related and other non-audit services. Any fees for the audit and any fees for non-audit services in excess of those approved by the audit committee must receive the prior approval of the audit committee.
Proposals for any non-audit services to be performed by our independent registered public accounting firm must be approved in advance by the audit committee in advance at a regularly scheduled meeting, by unanimous consent or at a meeting held by telephone conference.committee.
For fiscal 2010,2013, the audit committee pre-approved all of the audit, tax and non-audit services rendered by our independent registered public accounting firm.firm, other than certain Rule 3-14 audits required with respect to certain properties we acquired, which audits were approved by the chairman of the audit committee pursuant to delegated authority and which were reported to the full audit committee at its next meeting following such engagement.
The audit committee of the board of trustees is comprised of three independent trustees and operates under a written charter adopted by the board of trustees. The board of trustees has determined that each member of the audit committee is "independent," as required by Section 10A(m)(3)was independent during his service on the committee.
The role of the Exchange Act and the rules and regulations promulgated thereunder and by the listing standards of the New York Stock Exchange.
The audit committee is appointed by the board of trusteesto, among other things, select and engage our independent registered public accounting firm and to oversee and monitor among other things, theour financial reporting process, the independence and performance of the independent registered public accounting firm the Trust's internal controls and the performancefunctioning of the accounting firm performing theour internal audit function on behalf of the Trust.controls. It is themanagement's responsibility of executive management to prepare the Trust's financial statements in accordance with generally accepted accounting principles and it is the responsibility of the independent registered public accounting firm to perform an independent audit of the Trust's financial statements and to express an opinion on the conformity of those financial statements with generally accepted accounting principles.
In this context,performing its duties, the audit committee committee:
In addition, the audit committee Committee
The audit committee was provided with a report by the independent registered public accounting firm that included a descriptionTable of material issues raised by its most recent "peer review" and any inquiry or investigation by governmental or professional authorities within the past few years respecting one or more independent audits carried out by the independent registered public accounting firm.Contents
The audit committee meets with the independent registered public accounting firm and the accounting firm performing the internal control audit function, with and without management present, to discuss the results of their examinations, their evaluations of the internal controls, and the overall quality of the Trust'sour financial reporting. In fiscal 2010, the audit committee reviewed and discussed with the independent registered public accounting firm, the accounting firm performing the Trust's internal audit function and management, the Trust's compliance with Section 404 of the Sarbanes-Oxley Act of 2002 regarding the audit of internal controls over financial reporting.
Based on the reviews and discussions referred to above, the audit committee recommended that the Trust's audited consolidated financial statements for the year ended September 30, 20102013 be included in the Trust's Annual Report on Form 10-K for the year ended September 30, 20102013 for filing with the Securities and Exchange Commission.
Louis C. Grassi (Chairman)
Gary Hurand
Elie Weiss
Compensation Discussion and Analysis
The following are highlights of our compensation practices; we encourage you to read the more detailed information set forth herein:
This compensation discussion and analysis describes our compensation objectives and policies as applied to our namedchief executive officer, chief financial officer and our three other most highly compensated officers (collectively, the "named executive officers") in fiscal 2010.2013. This discussion and analysis focuses on the information contained in the compensation tables that follow this discussion and analysis. We also describe compensation actions taken historically to the extent it enhances an understanding of our executive compensation disclosure. OurGenerally, our compensation committee oversees our compensation program, recommends the compensation of executive officers employed by us on a full-time basis to our board of
trustees for its approval, and our audit committee reviews the appropriateness of the allocation to us under a shared services agreement of the compensation of executive officers who perform services for us on a part time basis. Another element of our compensation program is the fee paid by us to our advisor, REIT Management Corp., pursuant to an amended and restatedthe advisory agreement, and the related payment by our advisor of compensation to certain of our executive officers, including certain of our named executive officers.
Historically, we have used the following compensation structure with respect to the compensation paid by us to our executive officers:
Table
Say-on-Pay
In reviewing our compensation philosophy and practices and in approving base salaries for calendar 2013 and bonuses paid for services rendered in 2013, the compensation committee was aware of Contentsthe results of our March 2011 "say-on-pay" vote in which approximately 96% of the shares that voted on such proposal voted to approve our executive compensation practices, and viewed such results as generally supportive of our compensation philosophy, practices and determinations.
Objectives of our Executive Compensation Program
TheA principal objective of our compensation program with respect to executivefor full-time officers who devote their full-time to our affairs is to ensure that the total compensation paid to such officersthem is fair and competitive. The compensation committee believes that relying on this principle will permitpermits us to retain and motivate our executivethese officers. We have historically experienced a low level of employee (including executive) turn-over. In the event that a senior executive officer is added to our staff, the compensation of such officer is negotiated on a case-by-case basis, with the goal being to provide a competitive salary and an equity interest sufficient to motivate the executive and align his interests with those of our shareholders.
With respect to senior executive officers whose compensation is allocated to us under the shared services agreement (i.e., part-time officers) it is our objective that each of these executive officers receives compensation which, as allocated to us, is reasonable for the services they perform on our behalf. In addition, the compensation committee must be satisfiedbehalf, and that those executives who devote their time to us on a part-time basis provide us with sufficient time and attention to fully meet our needs and to fully perform their duties on our behalf. The compensation committee is of the opinion that believes that:
Our compensation committee believes effectively; and
management, finance, banking, legal (including SEC reporting), accounting and tax matters that an organization our size could not otherwise afford. The Committee is currently conducting a review of our organization structure and compensation practices.
Full-time ExecutiveFull-Time Officers
To establish compensation for our executive officers for fiscal 2010, the compensation committee reviewed the annual compensation survey prepared for the National Association of Real Estate Investment Trusts (NAREIT) to understand the base salary, bonus, long-term incentives and total compensation paid by other REITs to their executive officers to assist us in providing a fair and competitive compensation package to our full-time executive officers. Although there are many companies engaged in real estate lending, there are few companies which engage in the short-term, bridge lending business in which we engage or have a market capitalization comparable to ours. As a result, the NAREIT compensation survey, although helpful, does not provide information which is directly applicable to us. Accordingly, and sinceSince we have only tenseven full-time employees, we determine compensation for our full-time employees, including our executive officers, on a case-by-case basis and our compensation decisions are subjective. We dohave not utilizeto date used specific performance targets.targets though it is anticipated that performance goals will be established in connection with the grant in the future of performance based awards to our senior executives.
For our full-time executive officers, other than the president and chief executive officer, the recommendations of our president and chief executive officer plays a significant role in the compensation-setting process, since the president and chief executive officer is aware of each executive officer's duties and responsibilities and is most qualified to assess the level of each officer's performance in carrying out his duties and responsibilities. The president and chief executive officer, prior to making recommendations to the compensation committee concerning each executive officer's compensation, consults with the chairman of our board of trustees and other senior executive officers. During this process, they considerthe compensation committee considers our overall performance for the immediately preceding fiscal year including, without limitation, the progress of our business in general, our multi-family property acquisition activities, progress made at the Teachers Village project, our revenues, results from operations. In fiscal 2010, which was a difficult year for our company due to the continuing impact of the recessionary environmentoperations and the challenges faced in the credit markets and in commercialmanagement of our real estate consideration was given to an executive's activities in
workouts and foreclosures, property operations and sale of properties after acquisition in foreclosure as well as loan origination activities.portfolios. Since executive officers have different responsibilities, no performance criteria is given more weight than any other. In considering base compensation, the president and chief executive officer, chairman of the board and other senior executive officers assessesassess an individual's performance, which assessment is highly subjective. After this process, the president and chief executive officer proposes to the compensation committee with respect to each full-time executive officer, a base salary for the next year, a cash bonus applicable to the preceding fiscal year (which is paid in the following calendar year), and the number of shares of restricted stock to be awarded to each individual executive officer. At its annual compensation committee meeting, the compensation committee reviews these recommendations. The compensation committee has discretion to accept, reject or modify the recommendations. The final decision by the compensation committee on compensation matters related to executive officers other then with respect to the president and chief executive officer, is reported to the board of trustees, which, except as may be otherwise appropriate under applicable law, can approve or modify the action of the committee.
With respect to our president and chief executive officer, after the compensation committee has reviewed the NAREIT compensation survey for any helpful information, andconsidered our overall performance for the preceding fiscal year, the chairman of the committee meets with the president and chief executive officer to discuss and review his total compensation, including the compensation he receives from our advisor and from the other parties to the shared services agreement. The compensation committee then determines annual base compensation, and bonus, if any, for the president and chief executive officer and reports its determinations to the board of trustees. The number of shares of restricted stock to be awarded to the president and chief executive officer is considered and determined by the committee annually, at the same time the committee considers and approves all restricted stock awards to be made for that year.
"Part-Time" ExecutivePart-Time Officers
OurFredric H. Gould, the former chairman of theour board, is a principal executive and/or sole owner of each entity which participates with us in the shared services agreement. In such capacity, our chairman,he, in consultation with our president and chief executive officer and others, determines the annual base compensation of our part-time executive officers to be paid in the aggregate by one or more of the entities which are parties to the shared services agreement. The annual base compensation, bonus, if
any, pension contribution, and perquisites of certain of our part-time executive officers (primarily those engaged in legal and accounting functions) is allocated to us and other parties to the shared services agreement, pursuant to the shared services agreement. The shared services agreement, as approved by our board of trustees, was finalized in January 2002. Our audit committee reviews the allocations made under the shared services agreement to determine that the allocations, including the payroll allocations have been made in accordance with the terms of the shared services agreement.
The compensation committee is apprised of the compensation paid to our advisor. Since the compensation we pay the advisor is pursuant to an agreement as amended, which expires on April 30, 2011 and was approved by our board of trustees, the compensation committee does not approve the fairness of any such compensation. In addition, our compensation committee is apprised of the compensation paid by our advisor and other affiliates to each of our part-time executive officers.
Compensation Consultant
In October 2008, our compensation committee engaged FPL Associates L.P., a nationally recognized compensation consulting firm specializing in the real estate industry. FPL Associates L.P. does not perform any services for us except as a compensation consultant performing services expressly set forth in an engagement letter. Prior to our engagement of FPL Associates L.P. in October 2008, it had never performed any services on our behalf or on behalf of any of our affiliates. Subsequent to the retention of FPL Associates L.P. by us in October 2008, it was retained as a compensation consultant by the compensation committee of One Liberty Properties, Inc. One Liberty Properties, Inc. may be deemed an affiliate of ours.
The primary purpose of our compensation committee's initial engagement of the compensation consultant was for the consultant to conduct a comprehensive benchmarking analysis for our senior executives, to enable our compensation committee to determine if the compensation of our senior executive officers was fair and reasonable and to assist our compensation committee in making any necessary adjustments to the compensation components. In January 2010, our compensation committee engaged FPL Associates L.P. to update its benchmarking analysis. In January 2010, the compensation consultant reviewed the compensation of our named executive officers. We did not retain a compensation consultant in connection with determining compensation for fiscal 2011.
In connection with its initial benchmarking analysis, the compensation consultant and management agreed upon a methodology to determine comparative peer groups, as follows:
The peer groups used by the compensation consultant in January 2010, for its updated benchmarking analysis, are as follows:
The following are the full-time peer group companies used by the compensation consultant in its updated benchmark analysis:
The compensation consultant used the 25th percentile as the market comparison in its conclusions because of our relatively smaller size compared to the peer group. The compensation consultant also used a plus/minus 15% threshold to define "in line" (competitive) with the market. Based on its benchmarking analysis, the compensation consultant advised that: (i) the compensation paid by us to Jeffrey A. Gould, our president and chief executive officer, is in line with market, and the compensation paid by us to Mitchell Gould, our executive vice president, and George Zweier, our chief financial officer, is in line with or slightly below market, (ii) the compensation of shared senior executives (David W. Kalish, senior vice president, finance and Mark H. Lundy, a senior vice president and general counsel) allocated to us is below 25th percentile market practices, (iii) the total compensation paid to Jeffrey A. Gould (including all compensation paid to Jeffrey Gould by affiliated companies) is above market, (iv) the total compensation paid to shared senior executives by us and affiliated companies (David W. Kalish and Mark H. Lundy) is above their peers, and (v) the equity awards are a smaller portion of total compensation compared to peers.
Components of Executive Compensation
The principal elements of our compensation program for executive officers in 20102013 were:
The special benefits and perquisites which were provided to some, but not all, of our executive officers in 2010, consisted of:
In determining 20102013 compensation, the compensation committee did not have a specific allocation goal between cash and equity-based compensation.
Base Salary
Full-Time Executive Officers
Base salary is the basic, least variable form of compensation for the job an executive officer performs and provides each full-time executive officer with a guaranteed annual income. Base salaries of executive officers compensated by us directly are generally targeted to be competitive with the salaries paid to executives performing substantially similar functions at other REITs with a market capitalization similar to ours.ours, taking into consideration the region in which our executive officers are located. Any increase in base salary is determined on a case by case basis, is not based upon a structured formula and is based upon, among other considerations, (i) our performance in the preceding fiscal year (net income or loss, cash distributions, if any, paid to shareholders, stock price performance), (ii) such executive's current base salary, (iii) amounts paid by peer group companies for executive's performing substantially similar functions, (iv) years of service, (v) current job responsibilities, (vi) the individual's performance, and (vii)(ii) the recommendation of the president and chief executive officer and other senior executive officers.
Our chairmanofficers, (iii) our performance in the preceding year (e.g., acquisition and loan activity, revenues, net income and share price performance), (iv) the individual's performance, (v) years of the board, in consultation with our presidentservice, and chief executive officer and others, determines the annual base salary to be paid to each part-time senior executive officer by all the entities which are parties to the shared services agreement.(vi) job responsibilities.
Part-Time Executive Officers
In setting the annual base salary thefor these officers, Fredric H. Gould, our former chairman of the board considers primarily the executive's responsibilities to all parties to the shared services agreement, the executive's performance, years of service, current annual base salary and the performance of the companies which participate in the shared services agreement in the preceding fiscal year.agreement. The annual base salary is allocated to the entities which are parties to the shared services agreement, including us, based on the estimated time devoted to each of the entities. The compensation committee is apprised
Our audit committee reviews annually the allocation process under the shared services agreement pursuant to which the base salary, bonus, if any, pension contributions and perquisites of our part-time executive officers is allocated to us, to determine if the allocation process was carried out in accordance with the shared services agreement. The compensation committee reviewed the part-time executive officers' compensation allocated to us and taking into consideration the services rendered to us by each such part-time executive officer determined that such amounts were reasonable.Contents
Commissions
We provide the opportunity for some of our full-time executive officers involved primarily in loan origination activities to earn a commission on each loan we originate. The commission is provided to motivateincentivize our executives engaged in loan origination group.activities. The commission, which is currently an aggregate of 10-basis12-basis points of the loans originated, is divided among some of our full-time executive officers and employees engaged primarily in those activities. Fifty percent of the commission is paid at the time the loan origination activities. Mitchell Gould is our only named executive officer who engages primarily inoriginated and the balance is paid at loan origination activities.
Table of Contentspayoff.
Bonus
We provide the opportunity for our full-time executive officers and other full-time employees to earn an annual cash bonus. We provide this opportunity both to reward our officers and employees for past performance and to motivate and retain talented people. We recognize that annual bonuses are almost universally provided by other companies with which we might compete for talent. Annual cash bonuses for our executive officers (including the three named executive officers who devote all, or substantially all of their business time to our affairs) are determined on a case-by-case basis and are determined subjectively. In arriving at thedetermining annual cash bonuses, consideration is given to both an executive's performance and to our performance.overall performance in the applicable year. Once our compensation committee has approved the annual bonus to be paid to each executive officer, the compensation committee presents its recommendations to the board of trustees for their approval. Based on our present structure and theour small number of full-time executive officers, our compensation committee has not established formulas or performance goals to determine cash bonuses for our executive officers.
Long-termLong-Term Equity Awards
We provide the opportunity for our executive officers to receive long-term equity incentive awards. Our long-term equity incentive compensation program is designed to recognize responsibilities, reward performance, motivate future performance, align the interests of our executive officers with our shareholders' and retain our executive officers. The compensation committee reviews annually management's recommendations for long-term equity incentivesawards for all our officers, trustees and employees annually and makes recommendations to our board of trustees for the grant of equity awards. In determining the long-term equity compensation component, the compensation committee considers allthe factors it considers relevant, factors, including our performance and individual performance. Existing ownership levels are not a factor in award determinations.
We do not have a formal policy with respect to whether equity compensation should be paid in the form of stock options or restricted stock. Prior to 2003,For approximately the past nine years, we have awarded stock options rather than restricted stock. In 2003 a determination was made to only award restricted stock. The compensation committee believes restricted stock awards are more effective in achieving our compensation objectives, as restricted stock has a greater retention value. In addition, because fewer shares are normally awarded, it is potentially less dilutive. Executive officers realize value upon the vesting of the restricted stock, with the value potentially increasing if our stock performance increases. Before vesting, cash dividends to shareholders, if any, are paid on all outstanding awards of restricted stock as an additional element of compensation.
All the outstanding restricted stock awards made to date provide for a five-year "cliff" vesting. The compensation committee believes that restricted stock awards with five-year "cliff" vesting provide a strong retention incentive for executives, and aligns the interests of our executive officers with our shareholders. We view our capital stock as a valuable asset that should be awarded judiciously. For that reason, it has been our policy that the aggregate equity incentivesrestricted stock awards granted each year to our executive officers, employees, trustees and consultants should benot exceed approximately 1% of our issued and outstanding common shares.
We do not have a formal policy on timing equity compensation grants in connection with the release of material non-public information. Generally, our compensation committee recommends and our board of trustees approves the granting of equity awards to be effectiveare granted in January of each
year. EffectiveIn January 15, 2011,2014, we awarded 138,200140,600 shares of restricted stock (including an aggregate of 21,70022,750 shares awarded to non-management trustees and an aggregate of 43,20056,075 shares to our named executive officers). The aggregate restricted stock authorized for awards by us on such date isrepresents approximately .99% shares0.99% of our issued and outstanding common shares.
Table Our compensation committee retained FPL Associates to assist with implementing a new performance-based long-term incentive program. Although the new program has not yet been finalized, it is currently contemplated that it will contain a five to seven-year performance period, with one or more interim measurement periods during the performance period. The performance measures may consist of Contentsan FFO-based metric, a total shareholder return and metrics relating to the achievement of objectives relating to our multi-family property activities. We contemplate that performance based awards will be granted in 2014. The maximum number of shares with respect to which any participant may be granted performance based awards in any calendar year is 60,000 shares.
Executive Benefits and Perquisites
We provide our executive officers and our employees with a competitive benefits and perquisites program. We review our executive benefits and perquisites program periodically to ensure it remains reasonable and supportable to our shareholders. For 2010,2013, the executive benefits and perquisites we provided to executive officers accounted for a small percentage of the compensation provided by, or allocated to, us for our executive officers. The executive benefits and perquisites we provided to certain of our full-time executive officers, in addition to the benefits and perquisites we provided to all our full-time employees, consisted of an automobile allowance orallowances (including payments for automobile maintenance and repairs,repairs), the payment of certain educational expenses and the payment of the premiums for additional disability insurance and payment of the premiums forand/or long-term care insurance. With respectThe cost of the executive benefits and perquisites provided to our part-time executive officers, the cost of theirwhich benefits are similar to those provided to our full-time executive benefits and perquisites, which also consisted of an automobile allowance or payments for automobile maintenance and repairs, the payment of certain educational expenses, the payment of the premiums for additional disability insurance and payment of premiums for long-term care insurance,officers, was allocated among us and other entities pursuant to the shared services agreement.
Employment and Severance andAgreements; Post-Employment Benefits; Change of Control Agreements
NeitherNone of our named executive officers nor our employees havehas employment or severance agreements with us. They are "at will" employees who serve at the pleasure of our board of trustees and management, respectively.trustees.
Except for provisions for accelerated vesting of awards of our restricted stock in a "change of control" transaction, weWe do not provide for any post-employment benefits to our named executive officers other than their right to the vested portion of the defined contribution plan in which they participate and accelerated vesting of our restricted stock awards.
Generally, in the event of death, disability (i.e., the inability to engage in gainful activity due to a life threatening or long lasting mental or physical impairment), retirement (having reached the age of 65 and worked for us for at least ten consecutive years) or a change of control protection for our executive officers, trustees or employees. Under(as described below), such person's shares of restricted stock vest fully. Subject to the specific terms and conditions of each restricted share awardsthe applicable plan and award agreement, accelerated vesting occurs with respecta change of control is generally deemed to each person who has been awarded sharesoccur if (i) any person, corporation or other entity purchases our shares of stock for cash, securities or other consideration pursuant to a tender offer or an exchange offer, without the prior consent of our board, or (ii) any person, corporation or other entity shall becomewith specified exceptions, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly of our securities representing 20% or more of the combined voting power of our then outstanding securities, ordinarily having the right to vote(ii) a business combination or sale of all or substantially all of our assets is completed or (iii) there is a change in the electioncomposition of a majority of our board of trustees, other than changes approved by incumbent trustees.
We provide for accelerated vesting upon a change in control (on a single trigger basis) because, depending on the structure of the transaction, continuing such awards may unnecessarily complicate a potentially beneficial transaction. Among other things, it may not be possible to replace these awards with comparable awards of the acquiring company's stock and it would not be fair to our executives to lose the benefit of these awards. In addition, the acceleration of vesting aligns the interests of executives in a potential change in control transaction approvedwith those of our shareholders, by motivating them to work towards the completion of the transaction.
Chairman of the Board's Compensation
We pay our chairman of the board an annual fee of $200,000, payable in quarterly installments. Our chairman does not receive any additional direct compensation from us, other than any long-term equity awards granted to him by our board of trustees.trustees based upon our compensation committee's recommendation. Our chairman may also receive compensation from Majestic and its affiliates. Each of Messrs. Fredric H. Gould and Rosenzweig served as chairman for part of 2013 and received a pro-rata share of such fee based on their respective periods of service. For additional information regarding payments to our chairman, see "Certain Relationships and Related Transactions."
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a limitation on the deductibility of certain non-cash compensation in excess of $1 million earned by each of the chief executive officer and the four other most highly compensated officers of publicly held companies. In 2010,2013, all compensation paid to our full-time executives wasis deductible by us. The compensation committee generally intends to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable. The compensation committeepracticable but has not adopted a formal policy that requires all such compensation paid to the executive officers to be fully deductible.
Base Salary and Bonus
Full-Time Executive Officers
In accordance with the compensation setting process described above, base salary and cash bonuses for 20102013 were approved as follows for the named executive officers who are compensated directly by us:
| 2013 Base Salary($) | 2012 Base Salary ($) | 2013 Bonus ($)(1) | 2012 Bonus ($)(2) | Percentage Increase of Salary and Bonus Combined | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 488,677 | 471,718 | 40,000 | 35,000 | 4.3 | |||||||||||
President and Chief Executive Officer | ||||||||||||||||
Mitchell Gould | 390,893 | (3) | 362,629 | (3) | 42,000 | 40,000 | 7.5 | |||||||||
Executive Vice President | ||||||||||||||||
George Zweier | 228,849 | 212,765 | 28,000 | 27,500 | 6.9 | |||||||||||
Vice President and Chief Financial Officer |
| 2010 Base Salary($) | 2009 Base Salary ($) | 2010 Bonus ($)(1) | 2009 Bonus ($)(2) | Percentage % Increase of Salary and Bonus Combined | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 437,835 | 441,633 | 17,000 | 13,200 | — | |||||||||||
Mitchell Gould | 258,046 | (3) | 236,886 | (3) | 13,000 | 12,000 | 8.9 | |||||||||
George Zweier | 192,545 | 186,404 | 14,000 | 11,300 | 4.5 |
In setting Jeffrey A. Gould's base salary for 2013, the compensation committee took into account our profitability in 2012 and that his base salary for 2013 represented a 3.6% increase from his 2012 base salary. In determining his 2013 bonus, the compensation committee considered Mr. Gould's efforts with respect to our multi-family property activities (particularly, our acquisition of 15 properties with an aggregate of 4,168 units for an aggregate purchase price of $266.5 million) and the activities of the Newark Joint Venture (in particular, its construction on a timely basis of two buildings at the Teachers Village site and the commencement of construction of an additional three buildings at this site). The increases in 2013 base salary for Messrs. Mitchell Gould and George Zweier are attributable to our
profitability in 2012 and their individual performances. Mitchell Gould's 2013 bonus was based on his performance and in particular, his efforts with respect to our multi-family property activities. George Zweier's bonus for 2013 was based on his individual performance and in particular, his increased responsibilities with respect to financial and accounting matters relating to our multi-family property acquisitions and the Newark Joint Venture.
The base salary and bonus of Jeffrey A. Gould, our president and chief executive officer, has been maintained in 2010 at approximately the level fixed effective January 1, 2006. With respect2013 was equal to 1.22x Mitchell Gould's base salary and bonus and 2.06x George Zweier's base salary and bonus. We have not adopted a policy with regard to the 2010 bonus for our chiefrelationship of compensation among named executive officer, theofficers or other employees. The compensation committee considered both his handlingwas aware of the problems which were encountered by us as a result ofdifferential in compensation among these executive officers and concluded that the credit and real estate crisis and his activities in redirecting our focus to our basic lending business. The base salary ofdifferential was appropriate because, among other things, both Mitchell Gould in 2010, as comparedand George Zweier have responsibilities primarily related to 2009 (excluding commissions), was based on his overall performance as executive vice president,a specific activity, whereas Jeffrey A. Gould's responsibilities cover all our business activities including, administrative duties, loan workout negotiations and origination activities (which were at an increased level in 2010). The bonus of Mitchell Gould in 2010, including commissions, increased by 1.5% year-over-year due to increased commissions, based on increasedamong other things, property acquisitions, loan originations, in 2010. The base salary of George Zweier, our chief financial officer, as well as his bonus applicable to 2010, was increased to recognize his individual performance.negotiating joint venture agreements, property sales, capital raising and investor relations.
Part-Time Executive Officers
Mark H. Lundy serves as our senior vice president and general counsel. He is responsible forpresident. His responsibilities include legal matters relating to multi-family property acquisitions, our joint ventures (and in particular, our Newark Joint Venture) loan origination and lending documentation, foreclosure activities,litigation, bankruptcy claims, and issues, credit line documentation and other agreements entered into by us. In addition, he reviews, as necessary, our filings under the Securities Exchange Act of 1934, as amended, and our public disclosures. David W. Kalish serves as our senior vice president, finance. He has overall responsibility for implementation and enforcement of our internal controls, performs oversight and guidance in connection with our annual audit and our quarterly reports, performs oversight and guidance related to tax matters, is involved in banking relationships, chairs our disclosure controls and procedures committee and participates in the preparation and review of our disclosures under the Securities Exchange Act of 1934, as amended, and press releases. The compensation committee determined that based on the value of hissuch person's services on our behalf, the compensation of Messrs. Lundy and Kalish, which is allocated to us, was reasonable.
The base salary and bonus of Jeffrey A. Gould, our president and chief executive officer, in 2010 is 68% greater than the compensation of Mitchell Gould, our executive vice president, and 120% greater than the compensation of George Zweier, our chief financial officer. We have not adopted a policy with regard to the relationship of compensation among named executive officers or other employees. The compensation committee was aware of the differential in compensation between Jeffrey A. Gould and Mitchell Gould and George Zweier and concluded that the differential was appropriate. Both Mitchell Gould and George Zweier have responsibilities primarily related to a specific activity, whereas Jeffrey A. Gould's responsibilities cover all our business activities including, among other things, loan originations and underwriting, negotiating joint venture agreements, loan enforcement, property sales, capital raising and investor relations.
Long-termLong-Term Equity Awards
We believe that our long-term equity compensation program, using restricted stock awards with five-year cliff vesting provides motivation for our executives and employees and is a beneficial retention tool. We are mindful of the potential dilution and compensation cost associated with awarding shares of restricted stock. Our policy remains to limit dilution and compensation costs. OnIn January 15, 20112014 and 2013 we issued 138,200140,100 and 138,525 restricted share awards, respectively, representing approximately 0.99% and 0.99% of our outstanding shares.shares, respectively. In the past five years, we have awarded an average of 80,531135,715 shares each year, representing an average of 0.67%0.97% per annum of our outstanding shares.
Our compensation committee has commenced the process for establishing performance goals for the grant of performance based awards to senior executives, including our president and chief executive officer. We anticipate that performance based awards will be granted in 2011, at the discretion of our compensation committee. Vesting of performance based awards will be contingent on the attainment, prior to the end of a performance cycle, of the performance goal(s) that our compensation committee establishes. The minimum period with respect to which performance goals are to be measured is one year, but our compensation committee intends to establish a minimum performance cycle of five years. The number of shares with respect to which any participant may be granted performance based awards in any calendar year is 40,000 shares.
Advisor Fees
Fees paid to We and our advisor, under theREIT Management Corp., are parties to an amended and restated advisory agreement, as amended, are based on a percentagepursuant to which our advisor performs the services described under "Executive Compensation—Compensation Discussion and Analysis—General" and for which we paid the advisor the fees described below. Our advisor in turn compensates certain of our assetsexecutive officers. See "Certain Relationships and a portion of our loan origination fees. Our main assets are real estate loans and real estate acquired in foreclosure proceedings, which generates interest and fee and rental income.Related Transactions." Fredric H. Gould, the former chairman of our board, is the sole shareholder of our advisor. The advisory
Pursuant to this agreement, was renegotiated betweenwe pay our advisor the independent trustees and management in November and December 2006 and amended effective January 1, 2007. At that time, there were four years remainingfollowing annual fees, which are paid on the terma quarterly basis:
The two basic changes madeagreement contemplates that in certain cases, we may own real estate assets or hold loans with another person or entity (a "co-venturer") pursuant to a joint venture, participation or other form of joint ownership arrangement. With respect to real estate assets held by us and a co-venturer, the agreement provides for the payment of the following fees:
With respect to loans held by us and a co-venturer, the agreement were (i) a reductionprovides for the payment of the following fees:
The agreement further provides: (i) that the minimum and maximum fees payable in a fiscal year to our advisor is based from 1% (in most instances)$750,000 and $4 million, respectively, subject to6/10 adjustment for any fiscal year of 1%less than twelve months; and (ii) a change in the origination fee payments to the advisor by our borrowers from 1% to1/2stated termination date of 1%, with the proviso that no origination fee is to be paid to the advisor unless we receive an origination fee of at least 1%. The advisory agreement, which was to terminate on December 31, 2010, has been extended to AprilJune 30, 2011. During this extension period, certain of our independent trustees will be discussing and examining various alternatives for compensating our full-tine and part-time executive officers and employees.2014.
Since the fee paid by us to the advisor under the advisory agreement is based on an agreement which was approved by our board of trustees, the compensation committee does not review the fee nor the determinations made by Fredric H. Gould as to the payment of compensation by the advisor to any of our senior executive officers.
Three of our named executive officers (Jeffrey A. Gould, David W. Kalish and Mark H. Lundy) receive compensation from our advisor. The compensation committee is advised of such payments. The compensation committee has determined that if the compensation paid by us to our executive officers is reasonable, then the amounts paid to them by the advisor should not be considered as a factor in the determination of compensation relating to such executive's performance for us as long as these persons are satisfactorily performing their duties on our behalf. The compensation committee has determined that all persons who receive compensation from us and also from our advisor satisfactorily performed their duties on our behalf.
Stock Ownership Policy
We do not have any policy regarding ownership requirements for officers or trustees. In view of the fact that all of our executive officers and trustees beneficially own somein the aggregate approximately 40% of our common shares, (and many of our officers hold a significant number of common shares), and none of the current trustees or named executive officers has sold any shares during more than the past five years, we do not have nor do we believe there is a need to adopt a policy regarding ownership of our common shares by executive officers and trustees.trustees since their extensive ownership interest aligns their interest with the interests of our shareholders.
Perquisites
The perquisites we provide to our executive officers, which are in addition to the benefits we provide to all our employees, account for a small percentage of the compensation paid by us to or allocated to us for our executive officers. We believe that such perquisites are competitive and appropriate.
Severance and Change of Control AgreementsPost-Employment Benefits Program
Except for provisions for accelerated vesting of awards of our restricted stock in a "change of control" transaction, we do not provide for any severance, termination or change of control payment or protection to our officers, trustees or employees. Accordingly, upon a change of control, the restricted stock issued to our officers, trustees, employees and consultants would automatically vest. This is the only automatic compensation benefit our officers would receive in a change of control transaction. In the event that a change of control occurred as of September 30, 2010, the restricted stock held by our named executives officers would have automatically vested andThe following table sets forth the value of each such officer's restricted stock, based(based on the closing price of our stock on September 30, 20102013 of $6.39$7.17 per share,share) and the number of shares subject to restricted stock awards held by our named executive officers that would have beenvest upon death, disability or a change in control as follows:of September 30, 2013:
Name | Number of Shares of Unvested Restricted Stock Held as of September 30, 2010 | Value of Outstanding Shares of Unvested Restricted Stock Upon a Change of Control at September 30, 2010 ($) | Number of Shares of Unvested Restricted Stock Held as of September 30, 2013 | Value of Outstanding Shares of Unvested Restricted Stock at September 30, 2013 ($) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 25,600 | 163,584 | 48,600 | 348,462 | ||||||||||
George Zweier | 12,900 | 82,431 | 23,100 | 165,627 | ||||||||||
Mitchell Gould | 24,500 | 156,555 | 45,000 | 322,650 | ||||||||||
David W. Kalish | 25,600 | 163,584 | 45,425 | 325,697 | ||||||||||
Mark H. Lundy | 25,600 | 163,584 | 48,600 | 348,462 |
The following summary compensation table discloses the compensation paid and accrued for services rendered in all capacities to us during the 2010, 2009 and 2008 fiscal years indicated for our chiefnamed executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer:officers:
Name and Principal Position | Year | Salary ($)(1)(2) | Bonus ($)(1)(3) | Stock Awards ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 2013 | 488,677 | 40,000 | 86,468 | 459,135 | (6) | 1,074,280 | |||||||||||
President and Chief Executive Officer | 2012 | 471,718 | 35,000 | 58,400 | 219,280 | 784,398 | ||||||||||||
2011 | 458,416 | 30,000 | 70,298 | 326,430 | 885,144 | |||||||||||||
George Zweier, | 2013 | 228,849 | 28,000 | 37,800 | 43,345 | (7) | 337,994 | |||||||||||
Vice President and Chief Financial | 2012 | 212,765 | 27,500 | 28,800 | 41,266 | 310,331 | ||||||||||||
Officer | 2011 | 201,585 | 16,500 | 30,282 | 38,682 | 287,049 | ||||||||||||
Mitchell Gould | 2013 | 390,893 | 42,000 | 63,788 | 49,079 | (8) | 545,760 | |||||||||||
Executive Vice President | 2012 | 362,629 | 40,000 | 58,400 | 46,502 | 507,531 | ||||||||||||
2011 | 339,353 | 27,500 | 70,298 | 47,292 | 484,443 | |||||||||||||
David W. Kalish, | 2013 | 170,657 | — | 66,465 | 229,969 | (9) | 466,691 | |||||||||||
Senior Vice President, Finance | 2012 | 160,094 | — | 58,400 | 117,496 | 335,990 | ||||||||||||
2011 | 153,303 | — | 70,298 | 170,479 | 394,080 | |||||||||||||
Mark H. Lundy, | 2013 | 122,507 | — | 86,468 | 300,866 | (10) | 509,841 | |||||||||||
Senior Vice President | 2012 | 196,389 | — | 58,400 | 170,734 | 425,523 | ||||||||||||
2011 | 199,088 | — | 70,298 | 239,275 | 508,661 |
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(1)(2) | Stock Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 2010 | 437,835 | 17,000 | 35,520 | 224,762 | (5) | 715,117 | ||||||||||||
President and Chief Executive | 2009 | 441,633 | 13,200 | 32,400 | 207,471 | (5) | 694,704 | ||||||||||||
Officer | 2008 | 442,890 | 60,000 | 62,760 | 390,098 | (5) | 955,748 | ||||||||||||
George Zweier, | 2010 | 192,545 | 14,000 | 18,648 | 39,909 | (6) | 265,102 | ||||||||||||
Vice President and Chief Financial | 2009 | 186,404 | 11,300 | 17,010 | 50,708 | (6) | 265,422 | ||||||||||||
Officer | 2008 | 175,134 | 20,000 | 31,380 | 52,482 | (6) | 278,996 | ||||||||||||
Mitchell Gould | 2010 | 258,046 | 13,000 | 35,520 | 46,574 | (7) | 353,140 | ||||||||||||
Executive Vice President | 2009 | 236,886 | 12,000 | 32,400 | 66,578 | (7) | 347,864 | ||||||||||||
2008 | 247,360 | 22,000 | 54,915 | 77,023 | (7) | 401,298 | |||||||||||||
David W. Kalish, | 2010 | 148,012 | — | 35,520 | 77,655 | (8) | 261,187 | ||||||||||||
Senior Vice President, Finance | 2009 | 176,695 | — | 32,400 | 117,456 | (8) | 326,551 | ||||||||||||
2008 | 163,678 | — | 62,760 | 229,889 | (8) | 456,327 | |||||||||||||
Mark H. Lundy, | 2010 | 163,141 | — | 35,520 | 107,701 | (9) | 306,362 | ||||||||||||
Senior Vice President | 2009 | 180,810 | — | 32,400 | 148,915 | (9) | 362,125 | ||||||||||||
2008 | 181,020 | — | 62,760 | 296,442 | (9) | 540,222 |
to its plan for each of its officers and employees) equal to 15% of such person's annual earnings, not to exceed $36,750 in 2010, $36,750 in 2009 and $34,500 in 2008$38,063 for any person. With respectperson in 2013. The estimated amount payable as of September 30, 2013 to Jeffrey A.Messrs. J. Gould, David W. KalishZweier and Mark H. Lundy, the total amount set forth in the column "All Other Compensation" also includes compensation paid to them in fiscal 2010, 2009 and 2008 by our advisor, REIT Management Corp. See footnotes (5), (8) and (9) below. REIT Management Corp. is wholly owned by Fredric H.M. Gould the chairman of our board.
The following table discloses the grants of plan-based awards during the 2010 fiscal year for our chief executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer:
Name | Grant Date | Board Action Date | All Other Stock Awards: Number of Shares of Stocks or Units (#)(1) | Grant Date Fair Value of Stock Awards $(2) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 1/29/10 | 1/14/10 | 8,000 | 35,520 | |||||||||
George Zweier | 1/29/10 | 1/14/10 | 4,200 | 18,648 | |||||||||
Mitchell Gould | 1/29/10 | 1/14/10 | 8,000 | 35,520 | |||||||||
David W. Kalish | 1/29/10 | 1/14/10 | 8,000 | 35,520 | |||||||||
Mark H. Lundy | 1/29/10 | 1/14/10 | 8,000 | 35,520 |
Outstanding Equity Awards at Fiscal Year-End
The following table discloses the outstanding equity awards at September 30, 2010 for our chief executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer:
| Option Awards | Stock Awards | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||||||||||
Jeffrey A. Gould | — | — | — | — | 25,600 | (1) | 163,584 | ||||||||||||
George Zweier | 2,500 | — | 6.40 | (4) | 12/10/10 | 12,900 | (2) | 82,431 | |||||||||||
5,000 | — | 8.63 | (4) | 12/9/11 | |||||||||||||||
Mitchell Gould | — | — | — | — | 24,500 | (3) | 156,555 | ||||||||||||
David W. Kalish | — | — | — | — | 25,600 | (1) | 163,584 | ||||||||||||
Mark H. Lundy | — | — | — | — | 25,600 | (1) | 163,584 |
Option Exercises and Stock Vested
The following table discloses options exercised and stock vested during the 2010 fiscal year for our chief executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer:
| Option Awards | Stock Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized On Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||||
Jeffrey A. Gould | — | — | 2,900 | 12,876 | |||||||||
George Zweier | — | — | 600 | 2,664 | |||||||||
Mitchell Gould | — | — | 1,100 | 4,884 | |||||||||
David W. Kalish | — | — | 2,900 | 12,876 | |||||||||
Mark H. Lundy | — | — | 2,900 | 12,876 |
Since the only pension benefit plan we maintain is a tax qualified defined contribution plan, a Pension Benefits Table is not provided. Contributions to the defined contribution plan for each of Jeffrey A. Gould, George Zweier and Mitchell Gould is included in the Summary Compensation Table and the amount allocated to us pursuant to the shared services agreement for the amounts contributed for the benefit of David W. Kalish and Mark H. Lundy to the Gould Investors L.P. defined contribution plan is also included in the Summary Compensation Table.
We have adopted a tax qualified defined contribution plan covering all our employees. The plan is administered by Fredric H. Gould, Simeon Brinberg and David W. Kalish (Messrs. Brinberg and Kalish are non-trustee officers of ours). Annual contributions are based on 15% of an employee's annual earnings (including any cash bonus), not to exceed $36,750 per employee in fiscal 2010. Partial vesting commences two years after employment, increasing annually until full vesting is achieved at the completion of six years of employment. The method of payment upon termination of benefits to participants upon retirementemployment is determined solely by the participant who may elect a lump sum payment, the purchase of an annuity or a rollover into an individual retirement account, the amountaccount.
ForGould Investors L.P. defined contribution plan, and perquisites of $15,561, of which $1,086, $687, $10,367 and $3,421 represents amounts incurred by Gould Investors for additional disability insurance, long-term care insurance, an education benefit and an automobile allowance, respectively. The amounts reflected as contributions to the year ended September 30, 2010, $36,750 was contributed fordefined contribution plan and as perquisites are allocated to us pursuant to the benefit of Jeffrey A. Gould, with 23 years of credited service, $35,053 was contributed for the benefit of George Zweier, with 12 years of credited service and $36,750 was contributed for the benefit of Mitchell Gould, with 12 years of credited service. The aggregate amount accumulated to date for Jeffrey A. Gould, George Zweier and Mitchell Gould is approximately $1,142,000, $310,000 and $398,000, respectively.
Non-Qualified Deferred CompensationGrants of Plan-Based Awards
We do not provide any non-qualified deferred compensationThe following table discloses the grants of plan-based awards during 2013 to our named executive officers.officers:
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | Grant Date Fair Value of Stock Awards ($) | ||||||
---|---|---|---|---|---|---|---|---|---|
Jeffrey A. Gould | 1/10/13 | 13,725 | 86,468 | ||||||
George Zweier | 1/10/13 | 6,000 | 37,800 | ||||||
Mitchell Gould | 1/10/13 | 10,125 | 63,788 | ||||||
David W. Kalish | 1/10/13 | 10,550 | 66,465 | ||||||
Mark H. Lundy | 1/10/13 | 13,725 | 86,468 |
REPORT OF THE Outstanding Equity Awards at Fiscal Year-End
The following table discloses the outstanding equity awards at September 30, 2013 for our named executive officers:
| Stock Awards | ||||||
---|---|---|---|---|---|---|---|
Name | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||
Jeffrey A. Gould(1)(3) | 48,600 | 348,462 | |||||
George Zweier(2) | 23,100 | 165,627 | |||||
Mitchell Gould(1)(4) | 45,000 | 322,650 | |||||
David W. Kalish(1)(4) | 45,425 | 325,697 | |||||
Mark H. Lundy(1)(3) | 48,600 | 348,462 |
Option Exercises and Stock Vested
The following table discloses stock vested during 2013 for our named executive officers:
| Stock Awards | ||||||
---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||
Jeffrey A. Gould | 4,000 | 25,760 | |||||
George Zweier | 2,000 | 12,880 | |||||
Mitchell Gould | 3,500 | 22,540 | |||||
David W. Kalish | 4,000 | 25,760 | |||||
Mark H. Lundy | 4,000 | 25,760 |
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussions with management, we recommended to the Board of Trustees that the Compensation Discussion and Analysis be included in this proxy statement.
The Compensation Committee | ||
Jeffrey Rubin (Chairman) Alan Ginsburg Jonathan H. Simon |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fredric H. Gould, a trustee and former chairman of our board of trustees, is vice chairman of the board of directors of One Liberty Properties, Inc., a real estate investment trust listed on the New York Stock Exchange that is engaged in the ownership of a diversified portfolio of income-producing real properties that are net leased to tenants, generally under long-term leases. He is also chairman of the board of directorsa director and sole stockholder of the managing general partner of Gould Investors, L.P.,and the sole member of a limited liability company which is the other general partner of Gould Investors. Gould Investors, a limited partnership that owns and operates a diversified portfolio of real estate and invests in other companies active in the real estate and finance industries, and the sole member of a limited liability company which is the other general partner of Gould Investors L.P. Gould Investors L.P. owns approximately 19.9%19.6% of our outstanding common shares. In addition, Mr. Gould is an officer and sole shareholder of REIT Management, Corp., our advisor.
Jeffrey A. Gould, a trustee and our president and chief executive officer, is a senior vice president and a director of One Liberty Properties Inc. and a vice president and director of the managing general partner of Gould Investors L.P.Investors. Matthew J. Gould, a trustee and one of our senior vice presidents, is a senior vice president and a directorthe Chairman of the Board of Directors of One Liberty Properties, Inc., and presidentChairman of the Board of the managing general partner of Gould Investors L.P.Investors. He is also an executive officer of REIT Management Corp. and of Majestic Property Management Corp. In addition, David W. Kalish, Isaac Kalish, Simeon Brinberg, Mark H. Lundy and Israel Rosenzweig, each of whom is an executive officer of our company, are executive officers of One Liberty Properties Inc. and of the corporate managing general partner of Gould Investors L.P.Investors. Messrs. D. Kalish and Lundy are also officers of Majestic Property Management Corp.Management.
We and certain related entities, including Gould Investors, L.P., One Liberty Properties, Inc., Majestic Property Management Corp. and REIT Management, Corp., occupy common office space and share certain services and personnel in common. In fiscal 2010,2013, we reimbursed Gould Investors L.P. $822,000$633,000 for common general and administrative expenses, including rent, telecommunication services, computer services, bookkeeping, secretarial and other clerical services and legal and accounting services. The reimbursement amountThis sum includes $79,000 contributed to the annual rent of $495,000 paid by Gould Investors L.P., One Liberty Properties, Inc. and related entities to a subsidiary of Gould Investors L.P. which owns the building in which the offices of these entities are located, and an aggregate of $590,000amounts allocated to us for services performed by certain executive officers who are engaged by us on a part-time basis, including the amounts allocated for the salary and benefits of David W. Kalish and Mark H. Lundy as set forth in the "Summary Compensation Table" and $124,901$117,000, $47,000 and $63,000 allocated for the salary of Simeon Brinberg.Brinberg, Israel Rosenzweig and Isaac Kalish, respectively. The allocation of general and administrative expenses is computed in accordance with a shared services agreement, and is based on the estimated time devoted by executive, administrative and clerical personnel to the affairs of each participating entity to the shared services agreement. The services of secretarial personnel generally is allocated on the same basis as that of the executive to whom each secretary is assigned. The amount of general and administrative expenses allocated to us represents approximately 24.8%25% of the total expenses allocated to all entities which are parties to the shared services agreement. WeIn addition, we also lease under a direct lease withfrom a subsidiary of Gould Investors, L.P. approximately 1,8004,300 square feet of office space at an annual rental of $60,000,$146,000 (plus real estate tax increases) which is a competitive rent for comparable office space in the area in which the building is located.
We are partyIn 2013, pursuant to an advisory agreementthe Advisory Agreement between us and REIT Management, Corp., a company wholly-owned by Fredric H. Gould. Pursuant to the advisory agreement,Gould, we paid REIT Management Corp. furnishes advisoryfees of $1,802,000. See "Executive Compensation—Compensation Disclosure and administrative services with respect to our business, including, without limitation, arranging credit lines, interfacing with lending banks, participatingAnalysis—Advisor Fees." The total compensation received in our loan analyses and approvals, providing investment advice, providing assistance with building inspections, construction supervision,
and workout and litigation and foreclosure action support. Pursuant to the advisory agreement,2013 from REIT Management Corp. receives an annual fee of6/10 of 1% of our invested assets and our borrowers pay a fee to REIT Management Corp., upon funding a loan commitment, of1/2 of 1% of the total commitment amount, provided that we have received at least a loan commitment fee of 1% from the borrower in any such transaction and any loan commitment fee in excess of 11/2% is to be paid to us. The annual fee to REIT Management Corp. includes non-accruing mortgages receivable. Borrowers may also pay an inspection fee to REIT Management Corp. for building inspections relating to loan originations and to construction loan fundings. The advisory agreement, as extended, will expire on April 30, 2011. In fiscal 2010, we paid a fee under the advisory agreement to REIT Management Corp. of $785,000 and our borrowers paid fees to REIT Management Corp. of $84,000.
All of the outstanding shares of REIT Management Corp. are owned by Fredric H. Gould.Messrs. Fredric H. Gould and Matthew J. Gould, areeach an executive officersofficer of REIT Management, Corp. The total compensation they each received from REIT Management Corp. in fiscal 2010 is $93,524$101,203 and $96,781,$455,875, respectively. The compensation received in fiscal 20102013 by Jeffrey A. Gould, David W. Kalish and Mark H. Lundy from REIT Management Corp. is set forth in the Summary Compensation Table and the notes to the table.thereto. Simeon Brinberg, and Israel Rosenzweig also executive officers of ours,and Isaac Kalish received compensation from REIT Management Corp. in fiscal 20102013 of $16,000$30,800, $32,025 and $49,485,$26,300, respectively.
Majestic Property Management, Corp., a company which is wholly-owned by Fredric H. Gould, provides real property management services and construction supervisory fees, real estate brokerage, mortgage brokerage and construction supervision services for affiliated entities, as well as companies that are non-affiliated entities. In fiscal 2010,2013, we paid Majestic Property Management Corp. fees for management and construction supervisory services totaling $54,000,$69,000, representing, in the aggregate, less than 2.0%3% of the fiscal 20102013 revenues of Majestic Property Management Corp.Property. In addition, in fiscal 2010,2013, two unconsolidated joint ventures, in which we owned a 50% joint venture interest, paid Majestic Property Management Corp. for management services and brokerage commissions, a total $11,500,$11,566, representing less than 1% of the fiscal 20102013 revenues of Majestic Property Management Corp.Property. The following individuals, all of whom, other than Fredric H. Gould, are our executive officers, received compensation from Majestic Property Management Corp. of $0 in fiscal 2010, and the following executive officers of ours (some of whom are officers of Majestic Property Management Corp.) received compensation from Majestic Property Management Corp. in fiscal 20102013 as follows: Simeon Brinberg, $17,000;$14,375; Jeffrey A. Gould, $176,323;$127,925; Matthew J. Gould, $115,385;$178,325; David W. Kalish, $68,323;$88,100; Isaac Kalish, $8,150; Mark H. Lundy, $98,380;$115,275; Fredric H. Gould, $30,000 and Israel Rosenzweig, $59,516.$44,125. None of this compensation is included in the compensation set forth in our Summary Compensation Table. The real property management services provided by Majestic Property Management Corp. to us and our joint ventures include, among other things, rent billing and collection, leasing (including compliance with regulatory statutes and rules; i.e., New York City rent control and rent stabilization rules) and construction supervision of property improvements, and maintenance and repairs related to foreclosedvarious properties.
The fees paid by us to REIT Management Corp. and Majestic Property Management Corp. and the expenses reimbursed to Gould Investors L.P. under the shared services agreement were reviewed by our audit committee. The fees paid to REIT Management Corp. arewere paid pursuant to the advisory agreement, which was revised and amended effective January 1, 2007, after review by our independent trustees.agreement. The expenses reimbursed to Gould Investors L.P. are reimbursed pursuant to the shared services agreement. The fees to Majestic Property Management Corp. are based on fees which would have been charged by unaffiliated persons for comparable services. Simeon Brinberg, Fredric H. Gould, Jeffrey A. Gould, Matthew J. Gould, David W. Kalish, Mark H. Lundy, and Israel Rosenzweig and Isaac Kalish also receive compensation from other entities wholly-owned by Fredric H. Gould and parties to the shared services agreement, none of which provided services to us or received compensation from us in fiscal 2010.
Effective January 1, 2007, we, Gould Investors L.P., One Liberty Properties and Fredric H. Gould (personally) purchased from Citation Shares Sales, Inc., a fractional 6.25% interest in an airplane. We
purchased our fractional interest in order to facilitate property site inspections by our officers, employees and loan underwriters. We purchased 40% of the 6.25% of interest for $172,000 (depreciable over five years), representing our pro rata share of the total purchase price and agreed to pay our pro rata share of the operating costs. The management agreement for the airplane with Citation Sales Shares Inc. is for a period of five years and provides for the monthly operating costs to be adjusted annually, based upon a fixed schedule set forth in the agreement. Georgetown Partners, Inc., managing general partner of Gould Investors L.P., acting as nominee for the purchasers executed the purchase agreement and "management agreement." We are allotted our pro rata share of 250 hours of usage under the purchase agreement for the five years of the agreement. The airplane (or any substitute airplane used pursuant to the terms of the agreement) is used by us for business purposes only. All payments made by us in this transaction are made directly to the seller of the aircraft and the manager, both unrelated parties. At the conclusion of each year, the parties which purchased the fractional interest and pay a pro rata share of operating expenses, "true up" operating expenses, if any participant uses hours in excess of those allotted to it. The purchasers of the 6.25% fractional interest, as a group, have the right to reconvey the interest to the seller at any time, twelve months subsequent to the date that title to the aircraft was acquired, at a price equal to the fair market value of the interest, determined by negotiation and if the parties cannot agree on a price, then independent third party appraisals are to be performed. In fiscal 2010, we incurred net maintenance charges of $89,000 and expensed depreciation of $36,000 with respect to the fractional interest.2013.
Our code of business conduct and ethics provides in the "Conflicts of Interest" section that our board of trustees is aware of certain transactions between us and affiliated entities, including the sharing of services pursuant to the terms of a shared services agreement and the provision of services by affiliated entities to us. The provision states that the board has determined that the services provided by affiliated entities to us are beneficial and that we may enter into a contract or transaction with an affiliated entity provided that any such transaction is approved by the audit committee which is satisfied that the fees, charges and other payments made to the affiliated entities are at no greater cost or expense to us then would be incurred if we were to obtain substantially the same services from unrelated and unaffiliated entities. The term "affiliated entities" is defined in the code of business conduct and ethics as all parties to the shared services agreement and other entities in which our officers and trustees have an interest.
Our audit committee is advised of related party transactions which occurred in the prior quarter at each quarterly meeting, reviews the facts oftransactions and, except to the transactions andextent such transaction is effectuated pursuant to an agreement previously approved by such committee, either approves/ratifies or disapproves the transactions. If a transaction relates to a member of our audit committee, such member does not participate in the audit committee's deliberations. Our audit committee presents the facts of allreports our related party transactions to our board of trustees on at least an annual basis. A majority
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, trustees and persons who beneficially own more than 10% of our common shares to file Initial Reports of Ownership and Reports of Changes in Ownership with the Securities and Exchange Commission and the New York Stock Exchange.SEC. Executive officers, trustees and greater than 10% beneficial owners are required by the rules and regulations promulgated pursuant to the Securities Exchange Act of 1934, as amended, to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of copies of these reports filed with the SEC, we believe that none of our trustees, executive officers and greater than 10% beneficial owners have failed to file on a timely basis reports required by Section 16(a) during fiscal 2010.
SUBMISSION OF SHAREHOLDER PROPOSALS
Our annual meeting of shareholders for the year ending September 30, 2011 is scheduled to be held in March 2012. In order to have any proposal presented by a shareholder at the meeting included in the proxy statement and form of proxy relating to the 2012 meeting, the proposal must be received by us no later than September 30, 2011.
For any proposal that is not submitted for inclusion in next year's proxy statement, but is instead intended to be presented directly at the 2012 annual meeting of shareholders, rules and regulations promulgated pursuant to the Securities Exchange Act of 1934, as amended, permit us to exercise discretionary authority to the extent conferred by proxy if we:
Beneficial owners of our common shares who share a single address may receive only one copy of the proxy materials unless their broker, bank or nominee has received contrary instructions from any beneficial owner at that address. This practice, known as "householding," is designed to reduce printing and mailing costs. If any beneficial shareowner(s) at such an address wish to discontinue householding and receive a separate copy of the proxy materials, they may (1) if their shares are held in street name, notify their broker, or (2) if they are shareholders of record, direct a written request to: BRT Realty Trust, 60 Cutter Mill Road, Suite 303, Great Neck, NY 11021, Attn: Corporate Secretary.2013.
As of the date of this proxy statement, we do not know of any matter other than those stated in this proxy statement which are to be presented at the annual meeting of shareholders. If any other matter should properly come before the meeting, the persons named in the proxy card will vote the common shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is included in the proxy.
By order of the Board of Trustees | ||
0 14475 BRT REALTY TRUST PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS March |
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Signature of Shareholder Date: Signature of Shareholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. 1. Election of Trustees |