SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE DEF14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) |
x | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
o | Soliciting Material Under Rule 14a-12 |
Winthrop Realty Trust
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant):
Payment of Filing Fee (Check the appropriate box):
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: N/A |
| (2) | Aggregate number of securities to which transaction applies: N/A |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): N/A |
| (4) | Proposed maximum aggregate value of transaction: N/A |
¨ | Fee paid previously with preliminary materials: |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
| (1) | Amount previously paid: N/A |
| (2) | Form, Schedule or Registration Statement No.: N/A |
| WINTHROP REALTY TRUST 7 Bulfinch Place Suite 500 Boston, Massachusetts 02114 (617) 570-4614 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 200910, 2011 |
You are cordially invited to attend the 20092011 Annual Meeting of Shareholders of Winthrop Realty Trust to be held Thursday,Tuesday, May 21, 2009,10, 2011, at 11:00 A.M., local time, at the 11th Floor Conference Center in the offices of Katten Muchin Rosenman LLP, 575 Madison Avenue, 15th Floor, New York, New York 10022, to consider and act upon the following:
| 1. | To elect seven Trustees to our Board of Trustees to serve for a term of one year and until their respective successors shall be elected and shall qualify; |
| 2. | To amend Section 1.3 of the Declaration of Trust to clarify the purpose of the Trust; |
| 3. | To amend Section 3.3 of the Declaration of Trust to modify the indemnification rights of Trustees, officers, employees and agents of the Trust; |
| 4. | To amend Section 4.1 of the Declaration of Trust to more clearly set forth the rights of the Trust to issue shares of beneficial interest; |
| 5. | To amend Section 7.1 of the Declaration of Trust to modify the timing of the Trust’s annual meeting and permit additional persons to call special meetings of holders of beneficial interests; |
| 6. | To amend Article VIII of the Declaration of Trust to modify, among other things, the voting requirement for election of Trustees; |
| 7. | To amend Section 10.1 of the Declaration of Trust to permit certain amendments to the Declaration of Trust to be made without the consent of holders of beneficial interests; |
| 8. | To amend Article XI of the Declaration of Trust to correct inconsistencies set forth therein and to clarify the rights of the Trust; |
| 9. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 20092011 fiscal year; |
| 10.3. | To approve, on a nonbinding, advisory basis, the narrative under Compensation Discussion and Analysis in the Proxy Statement; |
| 4. | To approve on a nonbinding, advisory basis, that the narrative under Compensation Discussion and Analysis in the Proxy Statement be voted on every three years; and |
| 5. | To consider and act upon such other matters as may properly come before the Annual Meeting or any adjournment thereof. |
The Proxy Statement accompanying this notice describes each of these items of business in more detail. Our board of trustees recommends a vote “FOR” each of proposals 1, 2 and 3 and for “Three Years” on proposal 4.
Only holders of common shares of beneficial interests of record at the close of business on April 1, 2009March 25, 2011 shall be entitled to receive notice of, and to vote at, the Annual Meeting, and at any adjournment or adjournments thereof.
By order of the Board of Trustees
Michael L. Ashner
Chairman and Chief Executive Officer
Boston, Massachusetts
March 30, 2011
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2011 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 10, 2011
The Company’s Annual Report, Notice of Annual Meeting and Proxy Statement
are available at www. edocumentview.com/FUR2011
All Shareholders are cordially invited to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please complete, date and sign the enclosed proxy, which is solicited by our Board of Trustees, and mail it promptly in the enclosed envelope to make sure that your shares are represented at the Annual Meeting. In the event you decide to attend the Annual Meeting in person, you may, if you desire, revoke your proxy and vote your shares in person.
By order of the Board of Trustees,
John Alba
Secretary
Boston, Massachusetts
April 17, 2009
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED OR AUTHORIZE YOUR PROXY BY INTERNET OR TELEPHONICALLY BY FOLLOWING THE PROCEDURES DESCRIBED ON THE ENCLOSED PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE 2009 ANNUAL MEETING. The Proxy may be revoked by you at any time by written notice to the Company prior to its exercise or by submitting a later dated or authorized proxy. Giving your proxy will not affect your right to vote in person if you attend the meeting and affirmatively indicate your intention to vote at such meeting.
|
WINTHROP REALTY TRUST
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 200910, 2011
TABLE OF CONTENTS
Page
GENERAL INFORMATIONCONCERNING VOTING AND SOLICITATION | 1 |
Record Date and Voting SecuritiesWhy did I receive this Proxy Statement? | 1 |
AttendingWhy did I receive a Notice of Internet Availability of Proxy Materials? | 1 |
Who is Soliciting my Vote? | 1 |
Who is entitled to vote at the Annual MeetingMeeting? | 1 |
What am I voting on? | 2 |
Solicitation of VotesHow many votes do I have? | 2 |
VotingHow do I vote my Common Shares that are held of record by me? | 2 |
Quorum; Method of TabulationWhat if I hold my Common Shares through my broker? | 2 |
Vote RequiredCan I Attend the Annual Meeting in Person? | 3 |
Annual ReportWill there be any other items of business on the agenda? | 3 |
What constitutes a Quorum? | 3 |
How many votes are required to act on the proposals? | 3 |
What happens if I authorize my proxy without voting on all proposals? | 3 |
Can I change my vote after I return my proxy? | 3 |
Will anyone contact me regarding this vote? | 4 |
Who has paid for this proxy solicitation? | 4 |
How do I submit a proposal for the 2012 Annual Meeting of Shareholders? | 4 |
What does it mean if I receive more than one proxy card? | 4 |
Can I find additional information on the Company’s web site? | 4 |
PROPOSAL NO. 1 – ELECTION OF TRUSTEES | 35 |
General | 35 |
Information as to Trustees | 45 |
Recommendation of the Board | 6 |
EXECUTIVE OFFICERS | 6 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 7 |
THE BOARD, ITS COMMITTEES AND OTHER CORPORATE GOVERNANCE INFORMATION | 9 |
Board Meetings | 9 |
Board Committees | 9 |
Audit Committee | 9 |
Compensation Committee | 10 |
Nominating and Corporate Governance Committee | 10 |
Conflicts Committee | 11 |
Independence of Trustees | 12 |
Meetings of Non-Management Trustees | 12 |
Communication with Trustees | 12 |
Compensation of Trustees | 13 |
CODE OF ETHICS | 13 |
COMPENSATION DISCUSSION AND ANALYSIS | 13 |
General | 13 |
Executive Compensation Principles | 13 |
Share Options/Grants | 14 |
COMPENSATION COMMITTEE REPORT | 14 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | 14 |
AUDIT COMMITTEE REPORT | 15 |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 16 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 16 |
AMENDMENTS TO THE DECLARATION OF TRUST | 18 |
PROPOSAL NO. 2 – AMENDMENT TO SECTION 1.3 OF THE DECLARATION OF TRUST | 18 |
PROPOSAL NO. 3 – AMENDMENT TO SECTION 3.3 OF THE DECLARATION OF TRUST | 19 |
PROPOSAL NO. 4 – AMENDMENT TO SECTION 4.1 OF THE DECLARATION OF TRUST | 21 |
PROPOSAL NO. 5 – AMENDMENT TO SECTION 7.1 OF THE DECLARATION OF TRUST | 22 |
PROPOSAL NO. 6 – AMENDMENTS TO ARTICLE VIII OF THE DECLARATION OF TRUST | 23 |
PROPOSAL NO. 7 – AMENDMENT TO SECTION 10.1 OF THE DECLARATION OF TRUST | 24 |
PROPOSAL NO. 8 – AMENDMENTS TO SECTIONS 11.10 THROUGH 11.27 OF THE DECLARATION OF TRUST
| 25
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PROPOSAL NO. 9 – SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 267 |
Recommendation of the Board | 277 |
Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accountant | 278 |
SHAREHOLDER PROPOSALSPROPOSAL NO. 3 – ADVISORY APPROVAL RELATING TO EXECUTIVE COMPENSATION | 278 |
ANNUAL REPORTRecommendation of the Board | 278 |
MISCELLANEOUSPROPOSAL NO. 4 – ADVISORY VOTE ON SELECTION OF FREQUENCY OF EXECUTIVE COMPENSATION VOTE | 288 |
Recommendation of the Board | 9 |
EXECUTIVE OFFICERS | 9 |
THE BOARD, ITS COMMITTEES AND OTHER CORPORATE GOVERNANCE INFORMATION | 9 |
Board Leadership Structure | 9 |
Lead Independent Trustee and Meetings of Independent Trustees | 10 |
Board’s Role in Risk Oversight | 10 |
Board Meetings | 11 |
Board Committees | 11 |
Audit Committee | 11 |
Compensation Committee | 12 |
Nominating and Corporate Governance Committee | 12 |
Conflicts Committee | 13 |
Independence of Trustees | 13 |
Trustee Nominating Process | 13 |
Communication with Trustees | 14 |
Compensation of Trustees | 15 |
CODE OF ETHICS | 15 |
AUDIT COMMITTEE REPORT | 15 |
COMPENSATION DISCUSSION AND ANALYSIS | 16 |
General | 16 |
Executive Compensation Principles | 16 |
Share Options/Grants | 17 |
COMPENSATION COMMITTEE REPORT | 17 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | 17 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 17 |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 19 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 19 |
SHAREHOLDER PROPOSALS | 21 |
MISCELLANEOUS | 21 |
WINTHROP REALTY TRUST
7 Bulfinch Place
Suite 500
Boston, Massachusetts 02114
(617) 570-4614
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 2009
10, 2011
______________
GENERAL INFORMATIONINFORMATON CONCERNING VOTING AND SOLICITATION
Why did I receive this Proxy Statement?
We are sendingfurnishing this Proxy Statement in connection with the solicitation of proxies by our Board of Trustees, which we refer to as the “Board”, for the 20092011 Annual Meeting of Shareholders to be held at the 11th Floor Conference Center in the offices of Katten Muchin Rosenman LLP, 575 Madison Avenue, 15th Floor, New York, New York 10022, on ThursdayTuesday May 21, 200910, 2011 at 11:00 A.M., local time, and at any adjournment or adjournments thereof, which we refer to as the “Annual Meeting”. We are first mailing this Proxy Statement and the accompanying form of proxy to Shareholders on or about April 21, 2009.
In this Proxy Statement, all references to the “Trust,” “we,” “our” and “us” mean Winthrop Realty Trust, an Ohio business trust. All references to “Shareholder” and “you” refer to a holder of record of our beneficial interests designated as common shares, par value $1.00 per share, which we refer to as Common Shares.
At the meeting you will be asked to consider and vote on the following matters:Why did I receive a Notice of Internet Availability of Proxy Materials?
| 1. | To elect seven Trustees to our Board of Trustees to serve for a term of one year and until their respective successors shall be elected and shall qualify; |
| 2. | To amend Section 1.3 of the Declaration of Trust to clarify the purpose of the Trust; |
| 3. | To amend Section 3.3 of the Declaration of Trust to modify the indemnification rights of Trustees, officers, employees and agents of the Trust; |
| 4. | To amend Section 4.1 of the Declaration of Trust to more clearly set forth the rights of the Trust to issue shares of beneficial interest; |
| 5. | To amend Section 7.1 of the Declaration of Trust to modify the timing of the Trust’s annual meeting and permit additional persons to call special meetings of holders of beneficial interests; |
| 6. | To amend Article VIII of the Declaration of Trust to modify, among other things, the voting requirement for election of Trustees; |
| 7. | To amend Section 10.1 of the Declaration of Trust to permit certain amendments to the Declaration of Trust to be made without the consent of holders of beneficial interests; |
| 8. | To amend Article XI of the Declaration of Trust to correct inconsistencies set forth therein and to clarify the rights of the Trust; |
| 9. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2009 fiscal year; |
| 10. | To consider and act upon such other matters as may properly come before the Annual Meeting or any adjournment thereof. |
Record DatePursuant to certain rules adopted by the U.S. Securities and Voting Securities
This Proxy Statement is being furnished to all holders of record of Common Shares as of the close of business on April 1, 2009,Exchange Commission, which we refer to as the “Record Date”.
Only Shareholders of record as ofSEC, we are making this Proxy Statement, the close of businessenclosed proxy card, and our Annual Report on Form 10-K for the Record Date are entitled to notice of and to vote at the Annual Meeting. Shareholders as of the Record Date are entitled to one vote per Common Share on each matter properly submitted at the Annual Meeting. On the Record Date, there were issued and outstanding 15,815,876 Common Shares. There was no other class of voting securities outstanding at the Record Date. However, in accordance with the terms of the Certificate of Designations pursuant to which we issued our Series B-1 Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, which we refer to as “Series B-1 Shares”, so long as there are at least 1,000,000 Series B-1 Shares outstanding the holders of the Series B-1 Shares are entitled to elect one Trustee to our Board of Trustees,year ended December 31, 2010, which we refer to as the “Board”. The Trustee electedAnnual Report, available to our Shareholders electronically via the Internet. Accordingly, Shareholders received a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice, which was or will be sent to Shareholders on or about March 30, 2011 containing instructions on how to access this Proxy Statement and the Annual Report via the Internet and how to vote online. If you received the Notice by the holdersmail, you will not receive a printed copy of the Series B-1 Shares is not being voted upon atproxy materials in the Annual Meeting.
Attendingmail unless you request a copy in the Annual Meeting
manner described in the Notice. All Shareholders will be able to access the proxy materials on a web site referred to in the Notice and this Proxy Statement and will be able to request to receive a printed set of the proxy materials by mail or electronically, in either case, free of charge. If you would like to attendreceive a printed or electronic copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice. We elected to participate in the notice and access process in order to reduce the costs associated with printing and mailing documents to you and reduce the impact of the Annual Meeting in person, you will need to bring an account statement or other evidence acceptable to us of ownership of your Common Shares as of the close of business on the Record Date. If you hold Common Shares in “street name” (i.e., through a bank, broker or other nominee) and wish to vote at the Annual Meeting, you will need to contact your nominee and obtain a proxy from your nominee and bring it to the Annual Meeting.environment.
Solicitation of VotesWho is Soliciting my Vote?
The Board is soliciting a proxy in the form accompanying this Proxy Statement for use at the Annual Meeting, and will not vote the proxy at any other meeting. Mr. Michael L. Ashner and Ms. Carolyn Tiffany, or each acting individually, are the persons named as proxies on the proxy card accompanying this Proxy Statement, who have been selected by the Board to serve in such capacity. Both Mr. Ashner and Ms. Tiffany are members of the Board and executive officers of the Trust.
Who is entitled to vote at the Annual Meeting?
All Shareholders as of the close of business on March 25, 2011, which we refer to as the Record Date, are entitled to vote at the Annual Meeting. On the Record Date, there were issued and outstanding 27,088,347 Common Shares. There was no other class of securities outstanding at the Record Date entitled to vote on the matters to be voted on at the Annual Meeting. In addition to the Common Shares, at the Record Date there were outstanding 852,000 shares of our Series B-1 Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, which we refer to as “Series B-1 Preferred Shares”, and 144,000 shares of our Series C Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest which we refer to as “Series C Preferred Shares.”
What am I voting on?
At the meeting you will paybe asked to consider and vote on the costfollowing matters:
| 1. | To elect seven Trustees to our Board of Trustees to serve for a term of one year and until their respective successors shall be elected and shall qualify; |
| 2. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2011 fiscal year; |
| 3. | To approve, on a nonbinding, advisory basis, the narrative under “Compensation Discussion and Analysis” in the Proxy Statement; |
| 4. | To approve on a nonbinding, advisory basis, that the narrative under “Compensation Discussion and Analysis” in the Proxy Statement be voted on every three years; and |
| 5. | To consider and act upon such other matters as may properly come before the Annual Meeting or any adjournment thereof. |
How many votes do I have? Each Common Share outstanding on the Record Date is entitled to one vote on each item submitted for consideration.
How do I vote my Common Shares that are held of soliciting proxies. record by me?
By Mail: | Vote, sign, date your proxy card and mail it in the postage-paid envelope. |
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In Person: | Vote at the Annual Meeting. |
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By Telephone: | Call toll-free 1-800-652-8683 and follow the instructions. You will be prompted for certain information that can be found on your proxy card. |
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Via Internet: | Log on to www.envisionreports.com/FUR2011and follow the on-screen instructions. You will be prompted for certain information that can be found on your proxy card. |
What if I hold my Common Shares through my broker?
If you hold your Common Shares in “street name” through a broker or other nominee, you may instruct your broker to vote your Common Shares by following the instructions that the broker provides to you. Most brokers offer voting by mail, telephone and on the Internet. Please note that your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Under the rules that govern brokers who are voting with respect to Common Shares held in street name, brokers have the discretion to vote such Common Shares on discretionary matters, but not on non-discretionary matters. A broker “non-vote” occurs when a nominee holding Common Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.
Can I Attend the Annual Meeting in Person?
If you would like to attend the Annual Meeting in person, you will need to bring your admission ticket which is the upper half of the proxy card, an account statement or other evidence acceptable to us of ownership of your Common Shares as of the close of business on the Record Date. If you hold Common Shares in “street name” (i.e., through a bank, broker or other nominee) and wish to vote at the Annual Meeting, you will need to contact your nominee and obtain a proxy from your nominee and bring it to the Annual Meeting.
Will there be any other items of business on the agenda?
The Board is not presently aware of any other items of business to be presented for a vote at the Annual Meeting other than the proposals noted above. Nonetheless, in case there is an unforeseen need, your proxy gives discretionary authority to Michael L. Ashner and Carolyn Tiffany with respect to any other matters that might be brought before the meeting.
What constitutes a Quorum?
The holders of a majority of the outstanding Common Shares as of the close of business on the Record Date, present in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker “non-votes” are included in the determination of the number of Common Shares present at the Annual Meeting for quorum purposes.
How many votes are required to act on the proposals?
In general, a majority vote of the Common Shares permitted to be voted at the Annual Meeting are required for each Proposal. Abstentions and broker non-votes will not be counted in determining whether or not a matter has been approved by Shareholders other than with respect to Proposal No. 2, which is a routine proposal on which a broker or other nominee is generally empowered to vote.
Because the vote on Proposal No. 4 is advisory and not binding on us or our Board in any way, our Board may decide that it is in our and our Shareholders’ best interests to hold an advisory vote on the frequency of a vote on narrative under “Compensation Discussion and Analysis” in the Proxy Statement more or less frequently than the alternative approved by our Shareholders.
What happens if I authorize my proxy without voting on all proposals?
A proxy, in the accompanying form, which is properly executed, duly returned to us and not revoked, will be voted in accordance with the instructions contained therein and, in the absence of specific instructions, will be voted as recommended by the Board for each Proposal and in accordance with the judgment of the person or persons voting the proxies on any other matter that may be properly brought before the Annual Meeting.
Can I change my vote after I return my proxy?
You may revoke your proxy at any time before its exercise by (1) executing and submitting a later dated proxy card, (2) subsequently authorizing a proxy through the Internet or by telephone, (3) timely sending a written revocation of proxy to our Secretary at our principal executive office, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114, or (4) attending the Annual Meeting and voting in person.
Attendance at our Annual Meeting will not constitute a revocation of a proxy unless you affirmatively indicate at our Annual Meeting that you intend to vote your Common Shares in person by completing and delivering a written ballot.
Will anyone contact me regarding this vote?
We have hired Mackenzie Partners, Inc. to solicit proxies. In addition to solicitation by mail, by telephone and by e-mail or the Internet, arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to their principals and we may reimburse them for their expenses in so doing. If you hold sharesCommon Shares in “street name” (i.e., through a bank, broker or other nominee), you will receive instructions from your nominee which you must follow in order to have your proxy authorized or you may contact your nominee directly to request these instructions.
VotingWho has paid for this proxy solicitation?
We will bear the cost of preparing, printing, assembling and mailing the Notice, the proxy card, Proxy Statement and other materials that may be sent to Shareholders in connection with this solicitation. We may vote onalso reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses incurred in forwarding solicitation materials to the mattersbeneficial owners of Common Shares held of record by such persons.
How do I submit a proposal for the 2012 Annual Meeting of Shareholders?
In order to be voted upon ateligible for inclusion in our proxy materials for the 2012 Annual Meeting either in personof Shareholders, any Shareholder proposal to take action at the Annual Meeting or by proxy. If you choose to vote by proxy, you may do so in one of three ways, over the Internet, by telephone or by executing and returning the enclosed proxy card. Once you authorize a proxy, you may revoke that proxy by (1) executing and submitting a later dated proxy card, (2) subsequently authorizing a proxy through the Internet or by telephone, (3) sending a written revocation of proxy to our Secretarysuch meeting must be received at our principal executive office located at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114, or (4) attendingAttn: Secretary, no later than January 11, 2012. Any such proposals shall be subject to the Annual Meetingterms of our Declaration of Trust, Bylaws and voting in person. Attending the Annual Meeting without submitting a newrequirements of the proxy or voting in person will not automatically revoke your prior authorizationrules adopted by the SEC under the Securities Exchange Act of your proxy. Only1934, as amended, which we refer to as the last vote of a Shareholder will be counted.
Quorum; Method of TabulationExchange Act.
The holdersBoard will review any Shareholder proposals that are timely submitted and will determine whether such proposals meet the criteria for inclusion in the proxy solicitation materials or for consideration at the 2012 Annual Meeting of a majorityShareholders. In addition, the persons named in the proxies retain the discretion to vote proxies on matters of which we are not properly notified at our principal executive offices on or before 60 days prior to the outstanding2012 Annual Meeting of Shareholders, and also retain such authority under certain other circumstances.
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts at the transfer agent and/or with brokers. Please complete and return all proxy cards to ensure that all your Common Shares are voted.
Can I find additional information on the Company’s web site?
Yes. Our web site is located at www.winthropreit.com. Although the information contained on our web site is not part of this Proxy Statement, you can view additional information on the web site, such as of the closeour code of business onconduct and ethics, corporate governance guidelines, charters of board committees and reports that we file and furnish with the Record Date, present in person or by proxy, will constitute a quorum for the transactionSEC. Copies of our code of business at the Annual Meeting. Abstentionsconduct and broker “non-votes” are included in the determinationethics, corporate governance guidelines and charters of the number of shares present at the Annual Meeting for quorum purposes but broker “non-votes” are not counted in the tabulations of the votes cast on proposals presentedboard committees also may be obtained by written request addressed to Shareholders. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114, Attention: Investor Relations.
A proxy, in the accompanying form, which is properly executed, duly returned to us and not revoked, will be voted in accordance with the instructions contained therein and, in the absence of specific instructions, will be voted (i) FOR the election, as Trustees, of the seven persons who have been nominated by the Board, (ii) FOR the amendments to the Trust’s Declaration of Trust, which we refer to as the “Declaration of Trust”, set forth in Proposals 2 through 8, (iii) FOR the ratification of the selection of PricewaterhouseCoopers LLP, who we refer to as “PwC”, as the independent registered public accounting firm to audit and report upon the consolidated financial statements of the Trust for the 2009 fiscal year, and (iv) in accordance with the judgment of the person or persons voting the proxies on any other matter that may be properly brought before the Annual Meeting.
Vote Required
The seven nominees for election as Trustees who receive the greatest number of votes properly cast for the election of Trustees shall be elected Trustees. The affirmative vote of a majority of the votes permitted to be voted at the Annual Meeting (at which a quorum is present), present in person or represented by proxy, that are properly cast is necessary to (i) approve each of the amendments to the Declaration of Trust described in this proxy statement and (ii) to ratify PwC as the Trust’s independent registered public accounting firm to audit and report upon the consolidated financial statements of the Trust for the 2009 fiscal year.
Annual Report
Our Annual Report to Shareholders, which includes financial statements for the fiscal year ended December 31, 2008, is being mailed together with this Proxy Statement to Shareholders entitled to vote at the Annual Meeting. The Annual Report is not to be regarded as proxy soliciting material.
PROPOSAL NO. 1
ELECTION OF TRUSTEES
General
The Board currently consists of eightseven members, sevenall of whichwhom are elected by the holders of Common Shares and one of which is elected by the holders of the Series B-1 Shares. The Board has determined, in accordance with our By-laws, to increase the number of members of the Board to nine persons, one of which is elected by the holders of the Series B-1 Shares. Accordingly, the Board nominated eight persons for election to the Board. On April 16, 2009, Talton Embry informed the Nominating and Corporate Governance Committee of the Board of his decision to withdraw as a nominee for re-election as a Trustee. In light of the timing, the Board is not in a position to present a replacement nominee at the Annual Meeting. The Board will either fill this position once an appropriate candidate has been identified or reduce the number of Trustees to its current number of eight members.
Shareholders will be voting at the Annual Meeting for seven persons, whichthat constitutes all of the members of the Board, who are elected by the holders of Common Shares, to serve for a term of one year and until their respective successors shall have been elected and shall qualify. The Board of Trustees has nominated Michael L. Ashner, Arthur Blasberg, Jr., Howard Goldberg, Thomas F. McWilliams, Lee Seidler, Carolyn Tiffany and Steven Zalkind for re-election as Trustees, and has nominated Lee SeidlerTrustees. No other persons have been proposed for electionnomination to the Board to fill the vacancy created by the increase in the number of members of the Board.serve as a Trustee.
Shareholders do not have cumulative voting rights with respect to the election of Trustees. It is the intention of the persons named in the enclosed Proxy Card to vote such proxy "FOR" the election of the named nominees for Trustee unless authorization is withheld on the Proxy Card. Should any nominee be unable or unwilling to serve as a Trustee, which is not anticipated, it is intended that the named proxies will vote for the election of such other person or persons as they, in their discretion, may choose. Each of the nominees has represented that they are willing to serve as a Trustee if elected.
Information as to Trustees
Set forth below isMichael L. Ashner, age 58, has been a Trustee since 2004. Mr. Ashner has been our Chief Executive Officer since December 31, 2003 and Chairman since April 2004. Mr. Ashner also served as the businessExecutive Chairman and a trustee of Lexington Realty Trust (“Lexington”), a New York Stock Exchange listed real estate investment trust, from December 31, 2006 when Newkirk Realty Trust, Inc. (“Newkirk”) was merged into Lexington to March 20, 2008. Mr. Ashner previously served as a director and the Chairman and Chief Executive Officer of Newkirk until it was merged into Lexington. Mr. Ashner also currently serves as the Chief Executive Officer of Winthrop Realty Partners, L.P., a real estate investment and management company, a position he has held since 1996. Mr. Ashner previously served as a director and Chief Executive Officer of Shelbourne Properties I, Inc., Shelbourne Properties II, Inc. and Shelbourne Properties III, Inc. (collectively, the “Shelbourne Entities”), three real estate investment trusts, from August 2002 until their liquidation in April 2004. During the past five years Mr. Ashner has served as a director of the following public companies that had a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15 of such Act: Lexington Realty Trust, NBTY, Inc., Newkirk Realty Trust, Inc., GB Holdings, Inc and Atlantic Entertainment Holdings, Inc. Mr. Ashner’s experience of, and certain other information regarding, the nominees for election as Trusteesin opportunistic real estate investing, as well as Mr. Bradley Scher who is a Trustee elected by the holdershis performance as our chief executive officer and chairman of the Series B-1 Shares. There are no family relationships among our TrusteesBoard and executive officers.his experience as a board member for other large and/or public companies, led the Board to conclude that he should again be nominated as a Trustee.
Name and year first appointed or
nominated asArthur Blasberg, Jr., age 83, has been a Trustee since 2003. Mr. Blasberg's activities for the past five years include serving as a receiver appointed by the Superior Court in Massachusetts and as a trustee of various businesses, including real estate investment firms and industrial companies. Mr. Blasberg was a director and chairman of the audit committee of each of the Shelbourne Entities from August 2002 to their liquidation in April 2004 and was Chairman of the Trust’s audit committee from January 2004 to the third quarter of 2010. Mr. Blasberg also has served as a director of several private companies. He is an attorney admitted to practice in the Supreme Court of the United States, various federal courts and state courts and served for five years in the general counsel's office of the SEC. Mr. Blasberg’s extensive management experience in various companies including real estate companies, his experience as an audit committee chairperson of several public companies during the past ten years, his performance as our audit committee chairperson, and his understanding of the Trust’s business, led the Board to conclude that the age limitation By-law be waived in order for Mr. Blasberg to again be nominated as a Trustee.
| | Age
| | Principal Occupation during the past Five Years
|
|
Michael L. Ashner
2004
| | 56 | | Mr. Ashner has been the Chief Executive Officer of the Trust since December 31, 2003 and Chairman since April 2004. Mr. Ashner also served as the Executive Chairman and a trustee of Lexington Realty Trust (“Lexington”), a New York Stock Exchange listed real estate investment trust, from December 31, 2006 when Newkirk Realty Trust, Inc. (“Newkirk”) was merged into Lexington to March 20, 2008. Mr. Ashner previously served as a director and the Chairman and Chief Executive Officer of Newkirk until it was merged into Lexington. Mr. Ashner also currently serves as the Chief Executive Officer of Winthrop Realty Partners, L.P., a real estate investment and management company, positions he has held since 1996. Mr. Ashner previously served as a director and Chief Executive Officer of Shelbourne Properties I, Inc., Shelbourne Properties II, Inc. and Shelbourne Properties III, Inc. (collectively, the “Shelbourne Entities”), three real estate investment trusts, from August 2002 until their liquidation in April 2004. Mr. Ashner serves on the Board of Directors of NBTY, Inc., a manufacturer and distributor of nutritional supplements. |
| | | | |
Arthur Blasberg, Jr.
2003
| | 81 | | Mr. Blasberg's activities for the past five years include serving as a receiver appointed by the Superior Court in Massachusetts and as a trustee of various businesses, including real estate investment firms and industrial companies. Mr. Blasberg was a director and chairman of the audit committee of each of the Shelbourne Entities from August 2002 to their liquidation in April 2004. Mr. Blasberg also has served as a director of several private companies. He is an attorney admitted to practice in the Supreme Court of the United States, various federal courts and state courts and served for five years in the general counsel's office of the Securities and Exchange Commission. |
| | | | |
Howard Goldberg
2003
| | 63 | | Mr. Goldberg has been a private investor in both real estate and start-up companies and has provided consulting services to start-up companies since 1999. From 1994 through 1998, Mr. Goldberg served as President, CEO, and Board member of Player’s International, a publicly-traded company in the gaming business prior to its sale to Harrah's Entertainment Inc. From 2003 through 2005, Mr. Goldberg served as a part-time consultant to Laser Lock Technologies, Inc., LLTI.OB, a publicly-traded development stage company, engaged in the development and marketing of technologies for the prevention of product and document counterfeiting and electronic article surveillance. From 1995 through 2000, Mr. Goldberg served on the board of directors and audit committee of Imall Inc., a publicly-traded company that provided on-line shopping prior to its sale to Excite-at-Home. Mr. Goldberg served as a member of the board of directors and the audit committees of the Shelbourne Entities from August 2002 until their liquidation in April 2004. Mr. Goldberg has a law degree from New York University and was previously the managing partner of a New Jersey law firm where he specialized in gaming regulatory law and real estate from 1970 through 1994. |
Name and year first appointed or
nominated as a Trustee
| | Age
| | Principal Occupation during the past Five Years
|
| | | | |
Thomas F. McWilliams
2008
| | 66 | | Mr. McWilliams is currently a managing partner and member of the investment committee of Court Square Capital Partners, a private equity company that manages approximately $6 billion in capital, a position he has held since 2006 when Court Square Capital Partners was formed. From 1983 to 2006, Mr. McWilliams held a similar position with Citigroup Venture Capital, the private equity arm of Citigroup. |
| | | | |
Bradley Scher
2009
| | 48 | | Mr. Scher is currently the Managing Member of Ocean Ridge Capital Advisors, LLC, a privately held consulting firm formed in 2002 to provide financial and operating consultative services to institutional investors, boards of directors of public and private companies and to managements of public and private companies. Prior to the formation of Ocean Ridge, Mr. Scher was a Managing Director for PPM America, Inc., managing in excess of $1 billion of investments for a special situations fund. Previously he was a Director with TIAA-CREF in the special loans unit of the investing arm of this insurance and pension company. Prior to TIAA-CREF, Mr. Scher was an Investment Manager in the Private Placements division of The Travelers and was a middle market lending officer with Chemical Bank, where he graduated from the bank’s highly acclaimed credit training program |
| | | | |
Lee Seidler
2009(nominated)
| | 74 | | Dr. Seidler is currently a private investor. Dr. Seidler serves frequently as an expert witness in accounting and finance cases for various plaintiffs and defendants as well as the U.S. Securities and Exchange Commission. He testified in 2002 before the Senate Committee on Banking, Housing and Urban Affairs on regulation of the accounting profession and consulted with staff drafting Sarbanes-Oxley which produced the Public Company Accounting Oversight Board (PCAOB). He was a member of the PCAOB’s Standing Advisory Group. Mr. Seidler served as a General Partner and Senior Managing Director of Bear, Stearns & Co. from 1981 to 1989. Dr. Seidler was elected to Institutional Investor’s” All Star" first team of financial analysts for 14 consecutive years (until his retirement) for his analysis of the impacts of accounting and financial reporting and taxes on the decisions of investors. He was also director of the firm’s 55 person internal audit staff for two years and represented Bear, Stearns in Washington D.C. on legislative issues. Dr. Seidler is a CPA and has been a member of the boards of directors of numerous public and private companies and has served as chair of the audit committees of these companies. Dr. Seidler was a professor of accounting and the Price Waterhouse professor of auditing at New York University Graduate School of Business Administration for 22 years.
|
Name and year first appointed or
nominated asHoward Goldberg, age 65, has been a Trustee since 2003. Mr. Goldberg has been a private investor in both real estate and start-up companies and has provided consulting services to start-up companies since 1999. From 1994 through 1998, Mr. Goldberg served as President, CEO, and board member of Player’s International, a publicly-traded company in the gaming business prior to its sale to Harrah's Entertainment Inc. From 2003 through 2005, Mr. Goldberg served as a part-time consultant to Laser Lock Technologies, Inc., LLTI.OB, a publicly-traded development stage company, engaged in the development and marketing of technologies for the prevention of product and document counterfeiting and electronic article surveillance. From 1995 through 2000, Mr. Goldberg served on the board of directors and audit committee of Imall Inc., a publicly-traded company that provided on-line shopping prior to its sale to Excite-at-Home. Mr. Goldberg served as a member of the board of directors and the audit committees of the Shelbourne Entities from August 2002 until their liquidation in April 2004. Mr. Goldberg has a law degree from New York University and was previously the managing partner of a New Jersey law firm where he specialized in gaming regulatory law and real estate from 1970 through 1994. Mr. Goldberg’s legal background as well as his experience in senior management of other companies and as a director of other public companies led the Board to conclude that he should again be nominated as a Trustee.
| | Age
| | Principal Occupation during the past Five Years
|
| | | | |
Carolyn Tiffany
2009
| | 42 | | Ms. Tiffany has been the Trust’s President since January 1, 2009 and served as the Trust’s Chief Operating Officer and Secretary from January 8, 2004 to January 31, 2007. From February 2007 through March 2008 Ms. Tiffany served as a principal and the Chief Operating Officer for High Street Equity Advisors, a private equity real estate firm. From April 2008 to December 31, 2008, Ms. Tiffany was a private investor. In addition, Ms. Tiffany served as the Chief Operating Officer and Secretary of Newkirk and its predecessor entities from 1996 to December 31, 2006 |
| | | | |
Steven Zalkind
2008
| | 67 | | Mr. Zalkind has been a principal of Resource Investments Limited, LLC (“Resource”), a real estate investment firm, since 1975 acting as either an officer of the General Partner or Managing Member in the acquisition of over 26,000 multi-family apartment units and 2,000,000 square feet of commercial shopping centers and office buildings. Mr. Zalkind currently serves as the Chairman and Chief Executive Officer of Resource. Mr. Zalkind was a director of each of the Shelbourne Entities from August 2002 to their liquidation in April 2004 and a director of Newkirk from November 2005 until its merger with Lexington in December 2006. |
Thomas F. McWilliams, age 68, has been Trustee since 2008. Mr. McWilliams is currently a managing partner and member of the investment committee of Court Square Capital Partners, a private equity company that manages approximately $6 billion in capital, a position he has held since 2006 when Court Square Capital Partners was formed. From 1983 to 2006, Mr. McWilliams held a similar position with Citigroup Venture Capital, the private equity arm of Citigroup. During the past five years, Mr. McWilliams served as a director of the following public companies that had a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15 of the Exchange Act: Euramax International, Inc.; MMI Products, Inc.; Remy International, Inc.; Royster-Clark, Inc.; and WCI Communities, Inc. Mr. McWilliams’ over 15 years of experience in the supervision of the management of numerous companies either as an investor or as a director together with his capital markets knowledge, led the Board to conclude that he should again be nominated as a Trustee.
Lee Seidler, age 76, has been a Trustee since 2009. Dr. Seidler is currently a private investor. Dr. Seidler serves frequently as an expert witness in accounting and finance cases for various plaintiffs and defendants as well as the SEC. He testified in 2002 before the Senate Committee on Banking, Housing and Urban Affairs on regulation of the accounting profession and consulted with staff drafting Sarbanes-Oxley which produced the Public Company Accounting Oversight Board (PCAOB). He was a member of the PCAOB’s Standing Advisory Group. Mr. Seidler served as a General Partner and Senior Managing Director of Bear, Stearns & Co. from 1981 to 1989. Dr. Seidler was elected to Institutional Investor’s All Star first team of financial analysts for 14 consecutive years (until his retirement) for his analysis of the impacts of accounting and financial reporting and taxes on the decisions of investors. He was also director of the firm’s 55 person internal audit staff for two years and represented Bear, Stearns in Washington D.C. on legislative issues. Dr. Seidler is a CPA and has been a member of the boards of directors of numerous public and private companies and has served as chair of the audit committees of these companies. Dr. Seidler was a professor of accounting and the Price Waterhouse professor of auditing at New York University Graduate School of Business Administration for 22 years. Dr. Seidler’s recognition as a pre-eminent authority on public accounting and his business experience led the Board to conclude that he should again be nominated as a Trustee.
Carolyn Tiffany, age 44, has been a Trustee since 2009. Ms. Tiffany has been our President since January 1, 2009 and served as our Chief Operating Officer and Secretary from January 8, 2004 to January 31, 2007. From February 2007 through March 2008 Ms. Tiffany served as a principal and the Chief Operating Officer for High Street Equity Advisors, a private equity real estate firm. From April 2008 to December 31, 2008, Ms. Tiffany was a private investor. In addition, Ms. Tiffany served as the Chief Operating Officer and Secretary of Newkirk and its predecessor entities from 1996 to December 31, 2006. Ms. Tiffany’s real estate experience and her performance as our President led the Board to conclude that she should again be nominated as a Trustee.
Steven Zalkind, age 69, has been a Trustee since 2008. Since 1975, Mr. Zalkind has been a principal of Resource Investments Limited, LLC (“Resource”), a real estate investment firm, acting as either an officer of the General Partner or Managing Member in the acquisition of over 26,000 multi-family apartment units and 2,000,000 square feet of commercial shopping centers and office buildings. Mr. Zalkind currently serves as the Chairman and Chief Executive Officer of Resource. Mr. Zalkind was a director of each of the Shelbourne Entities from August 2002 to their liquidation in April 2004 and a director of Newkirk from November 2005 until its merger with Lexington in December 2006. Mr. Zalkind’s experience in multi-family and commercial real estate investing since 1975 led the Board to conclude that he should again be nominated as a Trustee.
Recommendation of the Board
The Board unanimously recommends a vote in favor of“FOR” the election of Messrs. Ashner, Blasberg, Goldberg, McWilliams, Seidler and Zalkind and Ms. Tiffany to the Board. Unless otherwise indicated, the accompanying form of proxy will be voted for the nominees listed above.
PROPOSAL NO. 2
SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At the recommendation of the Audit Committee, the Board has selected PricewaterhouseCoopers LLP, which we refer to as PwC, to serve as the independent registered public accounting firm of the Trust for its fiscal year ending December 31, 2011.
During our past two fiscal years, there were: (i) no disagreements with PwC our independent registered public accounting firm for the years ended December 31, 2010 and 2009, on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to PwC’s satisfaction, would have caused them to make reference to the subject matter in connection with its report on the Trust’s financial statements for such year; and (ii) no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended. Further, PwC’s report on our consolidated financial statements as of and for the years ended December 31, 2010 and 2009 did not contain any adverse opinion or a disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
Although Shareholder ratification of the Board’s action in this respect is not required, the Board considers it desirable for Shareholders to pass upon the selection of the independent registered public accounting firm and, if the Shareholders disapprove of the selection, the Board would consider other firms for selection as the independent registered public accounting firm for the current fiscal year.
It is expected that representatives of PwC will be present either in person or by telephone conference at the Annual Meeting.
Aggregate fees billed to us for the year ended December 31, 2010 and 2009 represents fees billed by PwC for audit, audit related fees and tax matters.
Type of Fee | | Fiscal 2010 | | | Fiscal 2009 | |
Annual Audit and Quarterly Review Fee | | $ | 935,000 | | | $ | 1,096,000 | |
Audit Related Fees | | | 65,000 | | | | 32,000 | |
Tax Fees | | | 55,000 | | | | 82,000 | |
Total | | $ | 1,055,000 | | | $ | 1,210,000 | |
Audit fees for the years ended December 31, 2010 and 2009 were for professional services rendered in connection with the integrated audit of our consolidated financial statements, internal control over financial reporting, and quarterly reviews of our consolidated financial statements.
Audit Related fees for the year ended December 31, 2010 and 2009 were for services related to comfort letters and review of our Registration Statements on Form S-3 during such years.
Tax fees as of the years ended December 31, 2010 and 2009 were for services related to tax compliance, tax planning and strategies, and state and local tax advice.
Recommendation of the Board
The Board unanimously recommends a vote “FOR” the ratification of the election of PwC to serve as the independent registered public accounting firm of the Trust for its fiscal year ending December 31, 2011.
Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accountant
We have a policy of requiring that the Audit Committee pre-approve all audit and non-audit services provided to us by the independent registered public accounting firm. During 2010, the Audit Committee approved all of the fees paid by us to PwC.
PROPOSAL NO. 3
ADVISORY APPROVAL RELATING TO EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, we are including a proposal for our Shareholders to vote to approve, on a nonbinding advisory basis, the narrative under “Compensation Discussion and Analysis” beginning on page 16 in this Proxy Statement.
We do not have any employees. Our advisor, FUR Advisors LLC, which we refer to as FUR Advisors, conducts our day to day operations on our behalf and provides services to us that otherwise would be provided by employees. Each of our named executive officers is an employee of FUR Advisors and their services are provided to us by FUR Advisors. FUR Advisors compensates them directly and in its sole discretion in connection with their services rendered to FUR Advisors and to us. None of our named executive officers has an employment agreement with us and we do not pay them salaries or bonuses or provide them with other compensation, benefits or options.
As required by Section 14A of the Exchange Act, we are asking you to vote on the adoption of the following resolution:
RESOLVED: That the holders of Winthrop Realty Trust’s common shares of beneficial interest approve, on a nonbinding, advisory basis, the narrative under the “Compensation Discussion and Analysis” in the Proxy Statement.
The affirmative vote of a majority of the votes will be necessary to approve Proposal No. 3. The Shareholder vote on Proposal No. 3 is advisory and nonbinding and serves only as a recommendation to our Board.
Recommendation of the Board
The Board unanimously recommends a vote “FOR” Proposal 3.
PROPOSAL NO. 4
ADVISORY VOTE ON SELECTION OF FREQUENCY OF EXECUTIVE COMPENSATION VOTE
As required by Section 14A of the Exchange Act, we are including a proposal for our Shareholders to vote to approve, on a nonbinding advisory basis, the frequency with which they wish to have a nonbinding, advisory vote on a proposal similar to this year’s Proposal No. 3. The choices available under Section 14A of the Exchange Act are every year, every other year or every three years.
After consideration, our Board recommends that you select every three years as the frequency for such a nonbinding, advisory vote of Shareholders. We believe this frequency is appropriate because, as described above, we do not provide any compensation to our executive officers.
Please mark your proxy card to indicate your preferences on this proposal or your abstention if you wish to abstain. If you properly complete your proxy and fail to indicate your preference or abstention, your Common Shares will be voted to select every three years as the frequency with which our Shareholders will be asked to hold a nonbinding, advisory vote on our “Compensation Discussion and Analysis” narrative.
The affirmative vote of a majority of the votes cast will be necessary for nonbinding approval of the selection under Proposal No. 4 of every three years as the frequency with which our Shareholders will be asked to hold a nonbinding, advisory vote on our “Compensation Discussion and Analysis” narrative. The Shareholder vote on Proposal No. 4 is advisory and nonbinding and serves only as a recommendation to our Board. The Board has not yet determined the frequency with which we will hold the Shareholder advisory vote required by Section 14A of the Exchange Act. Whether or not a majority of votes is cast in favor of any of the options available in this Proposal No. 4, our Board will decide among these options in its discretion.
Recommendation of the Board
The Board recommends you vote for every “THREE YEARS” as the frequency with which a nonbinding Shareholder advisory vote on our “Compensation Discussion and Analysis” narrative will occur.
EXECUTIVE OFFICERS
All officers serve at the discretion of the Board. Set forth below is certain information regarding our executive officers at April 1, 2009March 15, 2011 (biographical information with respect to Mr. Ashner and Ms. Tiffany is set forth above under Information as to Trustees)on pages 5 and 6):
Name | | Age | | Current Position |
Michael L. Ashner | | 56 | 58 | Chairman and Chief Executive Officer |
Carolyn Tiffany | | 42 | 44 | President |
Peter Braverman | | 57 | 59 | Executive Vice ChairmanPresident |
Thomas Staples | | 53 | 55 | Chief Financial Officer |
John Alba | | 38 | 40 | Chief Investment Officer and Secretary |
Mr. Braverman currently serves as theour Executive Vice Chairman of the Trust.President. Mr. Braverman previously served as theour President and as Trustee of the Trust.a Trustee. Mr. Braverman also currently serves as the Executive Vice President of Winthrop Realty Partners, L.P., a real estate investment and management company, a position he has held since January 1996. Mr. Braverman served as a director and President of Newkirk until it was merged into Lexington and as a director and Executive Vice President of each Shelbourne Entity from August 2002 until their liquidation in April 2004.
Mr. Staples has been our Chief Financial Officer since January 8, 2004. Mr. Staples has been with Winthrop Realty Partners, L.P. since 1994 and has served as its Chief Financial Officer since January 1999. He also served as the Chief Financial Officer of Newkirk until December 31, 2006 when it was merged into Lexington. Mr. Staples also served as Assistant Treasurer of the Shelbourne Entities from August 2002 until their liquidation in April 2004. Mr. Staples is a certified public accountant.
Mr. Alba was appointed our Chief Investment Officer in October 2005 and Secretary in May 2007. He has served as a Vice President of Winthrop Realty Partners, L.P. since January 1998.1998 where his responsibilities included asset management and investment analysis.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSTHE BOARD, ITS COMMITTEES AND MANAGEMENTOTHER CORPORATE GOVERNANCE INFORMATION Board Leadership Structure
The following table sets forth certain information asAs described in our corporate governance guidelines, the Board is permitted to select its Chairman and our Chief Executive Officer in the manner it considers in our best interests at any given point in time. In this regard, the Board believes that the questions of March 16, 2009 (except as otherwise indicated) regardingwhether the ownership of our Common Shares by (i) each person who is known to us to be the beneficial owner of more than 5%Chairman of the outstanding sharesBoard and the Chief Executive Officer should be separate, and if separate, whether the Chairman of our Common Shares, (ii) eachthe Board should be an outside Trustee or an inside Trustee, should be addressed from time to time as circumstances require. At present, the Board believes that the combination of these two roles provides more consistent communication and nominee forcoordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy. During Mr. Ashner’s tenure, the Board has been satisfied with the Chief Executive Officer performing the functions of the Chairman of the Board because Mr. Ashner has been able to utilize his in-depth knowledge and perspective gained in running the company to effectively and efficiently recommend Board meeting agenda, lead Board discussions on critical issues and create a vital link among the Board, management and Shareholders. Mr. Ashner fulfills his Chairman responsibilities through close interaction with the Lead Independent Trustee, (iii) each executive officer named herein,Committee Chairs and (iv) all current executive officers and Trustees as a group. Except as otherwise indicated, each such Shareholder has sole voting and investment power with respect to the shares beneficially owned by such Shareholder.
Name and Address of Beneficial Owner | | Position with the Trust | | Amount and Nature of Beneficial Ownership | | | Percent of Class |
FUR Investors, LLC (1) FUR Holdings LLC WEM-FUR Investors LLC | | -- | | 2,442,000 | | | 15.4% |
John Alba (1) | | Chief Investment Officer | | -- | (4) | | (4) |
Michael L. Ashner(1) | | Chairman and CEO | | 2,532,256 | (2) | | 16.0% |
Arthur Blasberg, Jr. (3) | | Trustee | | 28,000 | | | * |
Peter Braverman(1) | | Executive Vice Chairman | | 6,166 | (4) | | (4) |
Talton Embry (5) | | Trustee | | 232,255 | (5) | | 1.5% |
Howard Goldberg (3) | | Trustee | | 48,619 | | | * |
Thomas F. McWilliams(3) | | Trustee | | -- | | | * |
Bradley E. Scher(3) | | Trustee | | -- | | | * |
Lee Seidler | | Trustee Nominee | | 2,000 | | | * |
Thomas Staples(3) | | Chief Financial Officer | | -- | (4) | | (4) |
other Board members.
Carolyn Tiffany(3) | | President and Trustee | | 9,410 | | | * |
Steven Zalkind(3) | | Trustee | | 10,613 | | | * |
All Trustees, Trustee nominees and executive officers as a group | | | | 2,870,319 | | | 18.1% |
Fairholme Capital Management, LLC(6) Bruce R. Berkowitz | | -- | | 1,699,160 | (6) | | 10.4%(6) |
Abrams Capital, LLC (7) Pamet Capital Management, LLC Pamet Capital Management, L.P. David Abrams | | -- | | 1,499,998 | (7) | | 9.5% |
The Vangaurd Group Inc.(8) | | -- | | 947,114 | (8) | | 6.0% |
Barclays Global Investors, NA(9) | | -- | | 820,393 | (9) | | 5.2% |
Lead Independent Trustee and Meetings of Independent Trustees*Less than 1%
To further ensure balance, the Board determined in 2010 that the Trust should have a Lead Independent Trustee who is elected annually by the independent members of the Board. The duties of the Lead Independent Trustee include:
(1) | The address· | Calling and chairing meetings of independent Trustees; |
| · | Liaising with the Chairman regarding board-wide issues between independent Trustees and management; |
| · | Reviewing and providing input on Board meeting agenda; |
| · | Serving as the primary recipient for each of FUR Investors LLC, FUR Holdings LLC, WEM-FUR Investors LLC, Mr. Alba, Mr. Ashnerall Shareholder communications and Mr. Braverman is Two Jericho Plaza, Wing A, Suite 111, Jericho, NY 11753be available, if necessary, for direct communication with Shareholders; and |
| · | Overseeing the annual Board review. |
(2) | Comprised of 2,442,000 shares owned by FUR Investors LLC, 60,256 shares held directly by Mr. Ashner and 30,000 shares held by The Ashner Family Evergreen Foundation, a New York not for profit corporation (the “Foundation”). Mr. Ashner is the managing member of WEM-FUR Investors LLC, the managing member of FUR Holdings, LLC, the sole member of FUR Investors LLC. As such, Mr. Ashner may be deemed to beneficially own all shares owned by Investors. Mr. Ashner is a director of the Foundation and, as such, may be deemed to beneficially own all shares owned by the Foundation. |
Mr. Goldberg has been elected by the independent Trustees to serve as Lead Independent Trustee.
(3) | The address for each of Messrs. Blasberg, Goldberg, McWilliams, Scher, Staples and Zalkind and Ms. Tiffany is c/o of Winthrop Realty Trust, 7 Bulfinch Place, Suite 500, Boston, MA 02114. |
As noted previously, five of the seven current Trustees and five of the seven nominees for election as Trustee are independent and all members of the Audit Committee, Compensation Committee, Conflicts Committee, and Nominating and Governance Committee are independent Trustees. In addition, our current policy regarding the receipt and dissemination of Shareholder communications allows our Shareholders to communicate directly with any or all of our Trustees. Further, in addition to formal Board meetings, management holds monthly informal informational calls with the Board at which updates on company matters are provided.
(4) | Messrs. Alba, Braverman, and Staples are members of WEM-FUR Investors LLC, the managing member of FUR Holdings, LLC, the sole member of FUR Investors LLC. Accordingly, Messrs. Alba, Braverman and Staples have an indirect pecuniary interest in approximately 25,396.8, 60,073.2 and 29,304, respectively, of the Common Shares owned by FUR Investors LLC. However, Messrs. Alba, Braverman and Staples do not exercise investment control over the shares held by FUR Investors LLC. Accordingly, Messrs. Alba, Braverman and Staples are not deemed to beneficially own any of such shares under Section 13 or Section 16 of the Securities Exchange Act of 1934, as amended. |
Based on the foregoing, the Board believes that its existing leadership structure provides for an appropriate balance that best serves us and our Shareholders. The Board will periodically review its leadership structure to ensure that it remains the optimal structure for us and our shareholders.
(5) | The address for Mr. Embry is c/o Magten Asset Management Corp., 7 East 89th Street, New York, New York 10128. The number of shares reported consists of (i) 192,698 shares held in an IRA for the benefit of Mr. Embry, (ii) 20,687 shares held in an IRA for the benefit of Mr. Embry’s spouse, (iii) 11,880 shares held by Mr. Embry’s son who shares a residence with Mr. Embry, and (iv) 7,960 shares held by Mr. Embry’s daughter who shares a residence with Mr. Embry. Amount excludes 31,652 shares owned in discretionary accounts in which Mr. Embry has no pecuniary interest.
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Board’s Role in Risk Oversight
(6) | The address for Fairholme Capital Management, LLC (“Fairholme”) and Mr. Berkowitz is c/o Fairholme Capital Management, LLC, 4400 Biscayne Boulevard, 9th Floor, Miami, FL 33137. Number of shares includes 444,444.48 Common Shares issuable upon the conversion of the 400,000 Series B-1 Shares held by Fairholme. Percentage based on outstanding Common Shares at March 16, 2009 plus 444,444 Common Shares issuable upon conversion of the 400,000 Series B-1 Shares held by Fairholme. Information is derived from the 13-G/A filing by Fairholme and Mr. Berkowitz with the SEC on February 13, 2009. |
The Board acknowledges its responsibility for reviewing the process for assessing the major risks facing us and the options for their mitigation. Trustees are entitled to rely on management and the advice of our outside advisors and auditors, but must at all times have a reasonable basis for such reliance. This responsibility is addressed in a number of ways. First, our Audit Committee on a quarterly basis reviews and discusses with management, our internal auditor and our independent registered public accounting firm our major risk exposures and the policies management has implemented to monitor such exposures, including our financial risk exposures and risk management policies. Second, we have adopted a Corporate Compliance and Business Ethics Compliance Program which established an Ethics and Compliance Committee, consisting of our President, Chief Financial Officer, Internal Auditor, Human Resources Director, and general counsel, or such persons who effectively serve in such capacities or perform the roles attendant thereto. The Ethics and Compliance Committee conducts an annual compliance risk assessment to include consideration of compliance risk-related information otherwise identified through operation of the Corporate Compliance and Business Ethics Compliance Program (such as information from internal audit reports; reports of possible violations; and issues raised in connection with training sessions). The Ethics and Compliance Committee also incorporates information about the changing nature of our business (such as the development of new services, the acquisition of new business, the entry into a new venture, the imposition of new requirements, or the entry into new geographical markets) into the risk assessments. The results of these reviews are reported directly to Audit Committee and the Board. Third, our Board further oversees risk through provisions of our Declaration of Trust, By-laws and general corporate governance policies which provide that (i) each of our Board Committees consist solely of Trustees who qualify as “independent” under the requirements of the New York Stock Exchange, (ii) a majority of our Trustees qualify as independent, (iii) Board approval is required for any acquisition or disposition in excess of $10,000,000 and (iv) approval of our Conflicts Committee is required for approval of any transactions involving a conflict of interest, or potential thereof.
(7) | The address for Abrams Capital, LLC, Pamet Capital Management, LLC, Pamet Capital Management, L.P. and David Abrams (collectively, “Abrams”) is c/o Pamet Capital Management, L.P., 222 Berkeley Street, 22nd Floor, Boston, MA 02116. Information is derived from the 13-G/A filing by Abrams with the SEC on February 13, 2009. |
(8) | The address for The Vanguard Group Inc. (“Vanguard”) is 100 Vanguard Avenue, Malvern, Pennsylvania 19355. Information is derived from the 13-G filing by Vanguard with the SEC on February 13, 2009. |
(9) | The address for Barclays Global Investors, NA. (“Barclays”) is 400 Howard Street, San Francisco, California 94105. Information is derived from the 13-G filing by Vanguard with the SEC on February 2, 2009. |
THE BOARD, ITS COMMITTEES AND
OTHER CORPORATE GOVERNANCE INFORMATION
Board Meetings
During 2008,2010, the Board met or acted through written consent 2416 times. Each of the Trustees attended either in person or telephonically 75% or more of the aggregate number of meetings of the Board and Board committees on which thesuch Trustee served in 2008.2010. It is the policy of the Board to have all members of the Board in attendance at the Annual Meeting, or if unavailable to attend in person, to make arrangement, if possible, to participate by telephone or video conference. All members of the Board attended either in person or by telephone conference call, the 20082010 Annual Meeting of Shareholders.
Board Committees
TheOur Declaration of Trust and our By-laws give the Board the authority to delegate its powers to a committee appointed by the Board. All committees are required to conduct meetings and take action in accordance with the directions of the Board and the provisions of our By-laws. The Board has appointed four standing committees: an audit committee, a compensation committee, a nominating and corporate governance committee, and a conflicts committee. Certain of the committees' principal functions are described below.
Audit Committee
The Audit Committee:
| · | reviews annual and quarterly consolidated financial statements with our management and independent registered public accounting firm; |
| · | recommends the appointment and reviews the performance, independence, and fees of our independent registered public accounting firm and the professional services they provide; |
| · | oversees our system of internal accounting controls and the internal audit function; and |
| · | discharges such other responsibilities specified in the listing standards of the New York Stock Exchange for audit committees. |
The Board has adopted a written charter for the Audit Committee, which is available at our website www.winthropreit.com, under the link “Corporate Governance”. A printed copy of the charter is also available to any Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114.
From January 1, 2008 through March 14, 2008,The current members of the Audit Committee consisted of Arthurare Messrs. Blasberg, Jr. (Chairman), Bruce BerkowitzGoldberg and Howard Goldberg. FollowingSeidler. Mr. Berkowitz’ resignationSeidler serves as a Trustee effective March 14, 2008, and Mr. Zalkind’s election as Trustee on March 17, 2008, Mr. Zalkind was appointed to the Audit Committee.Committee Chairman. The Audit Committee meets periodically throughout the year both through formal meetings and written consents as well as through informal discussions as necessary. During the 20082010 fiscal year, the Audit Committee met or acted through unanimous written consent sixfour times. All members of the Audit Committee attended either in person or by telephone conference call all meetings of the Audit Committee other than one meeting which Mr. Berkowitz did not attend.Committee. Representatives of PwC, our independent registered public accounting firm for the year ended December 31, 2008,2010, attended all meetings of the Audit Committee. The Audit Committee met on February 24, February 26 and March 3, 20091, 2011 with representatives of PwC to discuss our 20082010 consolidated financial statements.
The Board has concluded that each member of the Audit Committee is “financially literate” as such term is defined in the listing standards of the New York Stock Exchange and that Mr. Blasberg,Seidler, the chairman of the Audit Committee, meetsand Mr. Blasberg meet the Securities and Exchange CommissionSEC definition of "audit committee financial expert".expert." We are currently in compliance with the listing requirements of the New York Stock Exchange relating to audit committee qualification, and the Board has determined that its Audit Committee possesses sufficient financial expertise to effectively discharge its obligations.
For further information with respect to the Audit Committee, see “AUDIT COMMITTEE REPORT” which begins on page 15 of this Proxy Statement.
Compensation Committee
The Compensation Committee:
| · | recommends to the Board the compensation policies and arrangements for our officers, Trustees, advisors and affiliates; |
| · | discharges such other responsibilities specified in the listing standards of the New York Stock Exchange for compensation committees; and |
| · | reviews the “Compensation Discussion and Analysis” section of this Proxy Statement set forthcommencing on page 1316 of this Proxy Statement and issues its report which can be found on page 1417 of this Proxy Statement. |
The Board has adopted a written charter for the Compensation Committee, which is available at our website www.winthropreit.com, under the link “Corporate Governance”. A printed copy of the charter is also available to any Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114.
From January 1, 2008 through March 14, 2008,The current members of the Compensation Committee consisted of Talton Embry (Chairman), Bruce Berkowitz, Arthur Blasberg, Jr., Howard Goldbergare Messrs. McWilliams, Seidler and Steven Mandis. From March 17, 2008 through November 11, 2008, the Compensation Committee consisted of Talton Embry (Chairman), Arthur Blasberg, Jr., Howard Goldberg, Steven Mandis and Steven Zalkind. Effective November 11, 2008, the Compensation Committee was reconstituted and Messrs. Embry (Chairman), McWilliams andMr. Zalkind were appointedserves as the only memberschairman of the Compensation Committee. The Compensation Committee acted through unanimous written consentmet twice during the 20082010 fiscal year.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee:
| · | reviews the qualifications of current and potential Trustees including determining whether they are “independent” under the listing standards of the New York Stock Exchange; |
| · | reviews each Trustee's continued service on the Board; |
| · | reviews outside activities of Board members and resolves, to the extent not referred to the Conflicts Committee, any issue of possible conflict of interest related thereto; |
| · | considers nominees for Trustees submitted in writing to the Chairman of the Nominating Committee (along with other information submitted in accordance with our By-laws and the Declaration of Trust), which are submitted by our executive officers, current Trustees, search firms engaged by the Nominating Committee, if any, by others in its discretion and, nominees for Trustee proposed by a Shareholder in accordance with the terms of our By-laws and the Declaration of Trust; |
| · | considers proposals submitted by Shareholders for inclusion in the proxy statementProxy Statement for our Annual Meeting of Shareholders if they are submitted in writing to the Chairman of the Nominating Committee at our principal address in accordance with the provisions of our By-laws and the Declaration of Trust and so long as the submitting Shareholder meets the qualifications and complies with the procedures provided in the proxy rules of the Securities and Exchange Commission.SEC. All such proposals shall be accompanied by information with respect to the submitting Shareholder sufficient for the committee to determine whether such qualifications are met; |
| · | reviews any other Shareholder communications intended for our management unless such communication is directed to a specific Trustee or Trustees; |
| · | recommends nominations for members of the Board; |
| · | reviews and assesses the adequacy of the charters of the Audit Committee, Compensation Committee and Conflicts Committee; and |
| · | discharges such other responsibilities specified in the listing standards of the New York Stock Exchange for nominating and corporate governance committees. |
The Board has adopted a written charter for the Corporate Governance and Nominating Committee, which is available at our website www.winthropreit.com, under the link “Corporate Governance”. The Board has also adopted Corporate Governance Guidelines which is also available at our website www.winthropreit.com, under the link “Corporate Governance.” A printed copy of the charter and the guidelines are also available to any Shareholder who requests itthem in writing to the Trust’s Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114.
From January 1, 2008 through March 14, 2008,The current members of the Nominating and Corporate Governance Committee consisted of Bruce Berkowitz (Chairman), Arthur Blasberg, Jr., Talton EmbryMessrs. Goldberg, McWilliams and Howard Goldberg. Following Mr. Berkowitz’ resignation as a Trustee effective March 14, 2008,Zalkind. Mr. Goldberg was appointed the Chairman of the Nominating and Corporate Governance Committee. Effective November 11, 2008, the Nominating and Corporate Governance Committee was reconstituted and Messrs. Goldberg (Chairman), Blasberg, Embry and McWilliams were appointedserves as the only memberschairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee met or acted through unanimous written consent two timesonce during the 20082010 fiscal year. All members of the Nominating and Corporate Governance Committee attended either in person or by telephone conference call all meetings of the Nominating and Corporate Governance Committee.
Conflicts Committee
In November 2005, the Board determined to establish a Conflicts Committee. The Conflicts Committee:
| · | considers and approves, on behalf of the Trust, all material transactions that relate to conflicts of interests between us and our affiliates, on the one hand, and certain named parties including (i) FUR Advisors LLC, which we refer to as “FUR Advisors”, our external advisor (and any successor advisor), Michael Ashner, and any of their affiliates, (ii) Lexington Realty Trust, The Lexington Master Limited Partnership, or Apollo Real Estate Investment Fund III, L.P. or any of their respective affiliates, (iii) a beneficial owner of more than 4.9% of the issued and outstanding Common Shares, either directly or upon the conversion of any of our preferred shares of beneficial interest, or (iv)(iii) a beneficial owner of more than 4.9% of any other entity in which we hold a 10% or greater interest; and |
| · | advises the Board on actions to be taken by us or matters related to us upon request of the Board or the Nominating or Corporate Governance Committee, which may include conflicts of interest. |
The Board has adopted a written charter for the Conflicts Committee, which is available at our website www.winthropreit.com, under the link “Corporate Governance”. A printed copy of the charter is also available to any Shareholder who requests it in writing to the Trust’s Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114.
The Conflicts Committee consists of all non-management Trustees of the Board. At each meeting,Mr. McWilliams serves as the memberschairman of the Conflicts Committee choose a presiding member for such meeting, based upon the topics to be discussed.Committee. The Conflicts Committee held three meetingsacted through unanimous written consent once during the 20082010 fiscal year which was attended either in person or by telephone conference call by all members of the Conflicts Committee.year.
Independence of Trustees
Pursuant to the Nominating and Corporate Governance Committee’s Charter, the Committee undertook its annual review of Trustee independence in March 2009.2011. During this review, the Committee considered transactions and relationships between each Trustee or any member of his or her immediate family and the Trust and its subsidiaries and affiliates, including those reported under “Certain Relationships and Related Transactions” below. The Committee also examined transactions and relationships between Trustees or their affiliates and members of our senior management or their affiliates. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the Trustee is independent in accordance with Section 303A.02(a) and (b) of the listing standards of the New York Stock Exchange. In particular, the Committee reviewed with counsel responses given by the Trustees in their Trustee Questionnaires, asked counsel if ithe was aware of any relationships between the Trustees and us or our affiliates and reviewed the bright-line independence tests set forth in Section 303A.02(b).
As a result of this review, the Board affirmatively determined that each of Messrs. Blasberg, Embry, Goldberg, McWilliams, Scher, Seidler and Zalkind are independent of the Trust and its management in accordance with Section 303A.02(a) and (b) of the listing standards of the New York Stock Exchange. Mr. Ashner and Ms. Tiffany are not considered independent because of their actingthey serve as our executive officers as well as their ownership interest in FUR Advisors. See “Certain Relationships and Related Transactions” below.
Meetings of Non-Management TrusteesTrustee Nominating Process
The non-management Trustees meet without management presentNominating and Corporate Governance Committee will consider written recommendations from timeShareholders for nominees to the Board. A Shareholder who wishes to recommend a person to the Nominating and time as they deem appropriate including, without limitation, priorCorporate Governance Committee for nomination by the Trust must submit a written notice by mail to or following every regular quarterlythe Nominating and Corporate Governance Committee c/o the Trust’s Secretary, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114. Such a written recommendation must be received no later than 120 days in advance of the annual meeting of Shareholders and should include the Board. There is notinformation required by ARTICLE I, Section 7 of the Trust’s Bylaws including (i) the candidate’s name, business address and other contact information, (ii) a predetermined non-management Trustee who presides over all such meetings. At each meeting,complete description of the non-management Trustees choose a presiding member for such meeting, based uponcandidate’s qualifications, experience, background and compensation (if any) from the topicsTrust, as would be required to be discussed. "Non-management"disclosed in the Proxy Statement pursuant to Regulation 14A of the Exchange Act, and (iii) a signed statement by the candidate in which he or she consents to being named in the Proxy Statement as a nominee and to serve as a Trustee if elected.
The Nominating and Corporate Governance Committee recommends nominees for election to the Board based on a number of criteria including:
| · | Personal qualities and characteristics, accomplishments and reputation in the business community; |
| · | Current knowledge of, and contacts in, the Trust's industry or other industries relevant to the Trust's business or the geographic locations of the Trust’s assets; |
| · | Ability and willingness to commit adequate time to Board and committee matters; |
| · | The fit of the individual's skills and personality with those of other Trustees and potential Trustees in building a Board that is effective, collegial and responsive to the needs of the Trust; and |
| · | Diversity of viewpoints, experience and other demographics. |
There are all those Trusteesno differences in the manner in which the Nominating and Corporate Governance Committee evaluate a candidate who areis recommended for nomination for membership on the Board by a Shareholder. The Nominating and Corporate Governance Committee has not received any recommended nominations from Shareholders in connection with the Annual Meeting.
The Nominating and Corporate Governance Committee identifies potential nominees for Trustee through a variety of business contacts, including current executive officers, Trustees and Shareholders. The Nominating and Corporate Governance Committee may, include Trustees who are not considered to be independent under regulations issuedthe extent it deems appropriate, retain a professional search firm and other advisors to help identify potential nominees for Trustee.
The Nominating and Corporate Governance Committee evaluates candidates to the Board by reviewing their biographical information and qualifications. If the Nominating and Corporate Governance Committee determines that a candidate is qualified to serve on the Board, such candidate is interviewed by the Lead Independent Trustee, at least one member of the Nominating and Corporate Governance Committee and the Chief Executive Officer. Members of the Board also have an opportunity to interview qualified candidates. As described above, the Nominating and Corporate Governance Committee will also consider candidates recommended by Shareholders. The Nominating and Corporate Governance Committee then determines, based on the background information and the information obtained in the interviews, whether to recommend to the Board that the Trust nominate a candidate for approval by the Shareholders to fill a Board position. With respect to an incumbent Trustee whom the Nominating and Corporate Governance Committee is considering as a potential nominee for re-election, the Nominating and Corporate Governance Committee reviews and considers the incumbent Trustee’s service to the Trust during his or her term, including the number of meetings attended, level of participation, and overall contribution to the Trust in addition to such person’s biographical information and qualifications. The Nominating and Governance Committee gives consideration to a wide range of diversity factors as a matter of practice when evaluating candidates to the Board and incumbent Trustees, but the Committee does not have a formal policy regarding Board diversity.
In evaluating candidates to the Board, the Nominating and Corporate Governance Committee also takes into account the skill sets that are needed to balance and complement the skill sets of other candidates and members of the Board, and the skills and expertise of a candidate that facilitate the Trust’s compliance with the rules of the SEC or theand New York Stock Exchange.
Communication with Trustees
Shareholders and any other interested party wishing to communicate with the Board may do so in one of four ways: in person at our annual Shareholders meeting,meeting: by mail,mail: by telephonetelephone: or via the internet. Any Shareholder can mail correspondence to any Trustee, or the Board as a whole, by addressing it to our outside general counsel, Post Heymann & Koffler, LLP, Two Jericho Plaza, Wing A, Suite 211, Jericho, New York 11753, Attention: David J. Heymann. After the mail is opened and screened for security purposes, it will be logged in, and (other than mail that Mr. Heymann determines to be trivial or obscene) then forwarded to the particular Trustee identified, or the Board as a whole, as requested in the Shareholder's correspondence. Trivial items will be delivered to the Trustees at the next scheduled Board meeting. Obscene items will not be forwarded.
Shareholders and any other interested party wishing to communicate only with non-management Trustees may do so in the manner described above or by calling toll free at 866-241-4955 or via the internet through the Investor RelationsGovernance page on our website, www.winthropreit.com. All communications through the toll-free number or our website are forwarded solely to Mr. Heymann and will be handled in the same manner as written correspondence described above.
Compensation of Trustees
The following table sets forth a summary of the compensation received by our non-officer Trustees during 2008:2010:
Name | | Fees Earned or Paid in Cash | | Stock Awards | | Option Awards | | All Other Compensation | | Total |
| | | | | | | | | | |
Bruce Berkowitz(1) | | $11,750 | | - | | - | | - | | $11,750 |
Arthur Blasberg, Jr. | | $79,000 | | - | | - | | - | | $79,000 |
Talton Embry | | $30,000 | | - | | - | | - | | $30,000 |
Howard Goldberg | | $49,000 | | - | | - | | - | | $49,000 |
Steven Mandis(2) | | $30,000 | | - | | - | | - | | $30,000 |
Thomas McWilliams(3) | | $22,500 | | | | | | | | $22,500 |
Bradley Scher(4) | | - | | - | | - | | - | | - |
Steven Zalkind(5) | | $35,750 | | - | | - | | - | | $35,750 |
(1) Resigned as a Trustee effective March 14, 2008.
(2) Resigned as a Trustee effective November 11, 2008
(3) Elected as a Trustee effective May 21, 2008
(4) Elected as a Trustee effective February 12, 2009
(5) Elected as a Trustee effective March 17, 2008. Name | | Fees Earned or Paid in Cash | | Stock Awards | | Option Awards | | All Other Compensation | | Total |
| | | | | | | | | | |
Arthur Blasberg, Jr. | | $80,250 | | - | | - | | - | | $80,250 |
Howard Goldberg | | $63,250 | | - | | - | | - | | $63,250 |
Thomas F. McWilliams | | $51,750 | | - | | - | | - | | $51,750 |
Lee Seidler | | $70,750 | | - | | - | | - | | $70,750 |
Steven Zalkind | | $52,250 | | - | | - | | - | | $52,250 |
The current non-officer Trustees, Messrs. Blasberg, Embry, Goldberg, McWilliams,, Scher Seidler and Zalkind, each receive $30,000$45,000 annually for their services as Trustees.Trustees, $500 for each Board or committee meeting they attend in person, and $250 for each Board or committee meeting they attend telephonically. In addition, each member of the audit committee received $15,000Audit Committee (other than the chairman) receives $10,000 annually for serving on the Audit Committee in 2008, $500 for each committee meeting they attend and the chairman of the Audit Committee receives an additional $30,000 annually. For serving as Lead Independent Trustee, Mr. Goldberg receives $25,000 annually. Trustees who are also our officers receive no compensation for serving on the Board. However, all Trustees are reimbursed for travel expenses and other out-of-pocket expenses incurred in connection with their service on the Board.Board and its committees.
CODE OF ETHICS
We have adopted a Code of Ethics, which is applicable to all Trustees and our executive officers, including the principal executive officer, the principal financial officer and the principal accounting officer, as well as FUR Advisors and its employees. The Code of Ethics can be obtained upon request from our Secretary and at our website www.winthropreit.com in the Governance section under the link “Corporate Governance”“Charters”.
COMPENSATION DISCUSSION AND ANALYSIS
General
As described above under “Board of Trustees-Board Committees-Compensation Committee” on page 10 of this Proxy Statement, the Compensation Committee is responsible for recommending to the Board the compensation policies and arrangements for the Trust's officers, Trustees, advisors and affiliates. The Compensation Committee acts pursuant to the Compensation Committee Charter and is comprised of three members who were independent within the meaning of Section 303A.02 of the listing standards of the New York Stock Exchange. A copy of the Compensation Committee Charter is available upon request from the Trust’s Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114 and at our website www.winthropreit.com.
Executive Compensation Principles
We do not provide any remuneration to our executive officers and do not have any direct employees. We retain FUR Advisors to provide substantially all of our asset management, accounting and investor services.
At present, the Compensation Committee reviews annually the terms of the advisory agreement with FUR Advisors to determine their consistency with market terms and whether the retention of an outside advisor is more favorable to us than retaining direct employees. The Compensation Committee reviews the fees payable to FUR Advisors in comparison to the general and administration costs of other public real estate investment trusts. Based on its review, the Compensation Committee recommended to the Board that the advisory agreement with FUR Advisors be renewed.
In light of the recent market downturn and resulting decline in value to our shareholders equity, FUR Advisors made a proposal to the Compensation Committee during the first quarter of 2009 to reduce the base management fee. The proposal was approved by the Compensation Committee, the result of which will be to reduce the fees payable to FUR Advisors in 2009 by approximately $2,445,000.
If we were to retain our executive officers directly, the Compensation Committee would, in making its compensation recommendations to the Board likely consider (1) the potential holding periods of our assets, (2) the number of individual investments held by us, (3) the amount of asset management required with respect to our assets, (4) our overall investment prospects and our short and long-term business plan, and (5) with respect to a specific executive officer, such officer's responsibilities, experience and overall performance. The Compensation Committee would further seek to attract and retain highly qualified executives and to motivate them to work together as a team to maximize our financial performance on an annual and long-term basis thereby resulting in increased shareholder value.
Share Options/Grants
From March 2005 to May 2007, we did not maintain any share option or share grant plans in effect pursuant to which we could issue options. In May 2007, our Shareholders approved the Winthrop Realty Trust 2007 Long Term Incentive Plan pursuant to which share options or share grants can be granted. No such share options or share grants were granted during the year ended December 31, 2008.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised entirely of independent directors. The Compensation Committee has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Members of the Compensation Committee
Talton Embry (Chairman)
Thomas McWilliams
Steven Zalkind
The preceding “Compensation Committee Report” shall not be deemed soliciting material or to be filed with the Securities and Exchange Commission, nor shall any information in this report be incorporated by reference into any past or future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate it by reference into such filing.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no relationships among members of the Compensation Committee, members of the Board or our executive officers who served during our 2008 fiscal year that require disclosure under Item 407(e)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended. All current members of the Compensation Committee are considered independent under our Corporate Governance Guidelines.
AUDIT COMMITTEE REPORT
The Audit Committee acts pursuant tois responsible for providing independent, objective oversight of the Trust’s accounting functions and internal controls. The Audit Committee Charter and is comprised of three members who are independent withinTrustees, each of whom is “independent” as defined by the meaning of Section 303A.02 of the listing standards of theexisting New York Stock Exchange. A copyExchange listing rules and SEC rules. Members of the Audit Committee Charter can be obtained upon request from our Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114 and atmust also satisfy the Trust’s website www.winthropreit.com.independence requirements of Section 10A(m)(3) of the Exchange Act.
The Audit Committee is responsible for the appointment, compensation, retention and oversight of the accounting firm engaged as the Trust's independent registered public accounting firm. Management is responsible for the Trust'sTrust’s internal controls and financial reporting process. The Trust’s independent registered public accounting firm is responsible for performing an independent audit of the Trust'sTrust’s consolidated financial statements in accordance with generally accepted auditingthe standards of the Public Company Accounting Oversight Board (PCAOB) and for issuingto issue a report thereon and expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting.thereon. The Audit Committee'sCommittee’s responsibility is to monitor and oversee these processes.
In carrying out these responsibilities, the Audit Committee meets each quarter and several other times during the year to, among other things:
monitor preparation of, and reviews, the quarterly and annual financial reports by the Trust’s management;
supervise the relationship between the Trust and its independent registered public accounting firm, including having direct responsibility for their appointment, compensation and retention; reviewing the scope of their audit services; approving non-audit services; and confirming the independence of the independent registered public accounting firm;
review and discuss the Trust’s policies with respect to risk assessment and risk management; and
oversee management’s implementation and maintenance of effective systems of internal and disclosure controls, including review of the Trust’s policies relating to legal and regulatory compliance, ethics and conflicts of interest and review of the Trust’s internal auditing program.
In this context, the Audit Committee has met and held discussions with management and PricewaterhouseCoopers LLP, the Trust’s independent registered public accounting firm for 2008, regarding the fair and complete presentation of the Trust’s financial results and the assessment of the Trust’s internal control over financial reporting. The Audit Committee has discussed significant accounting policies applied by the Trust in its consolidated financial statements, as well as alternative treatments. Management represented to the Audit Committee that the Trust’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm.
The Audit Committee met, discussed and reviewed with PricewaterhouseCoopers LLP all matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees). The Audit Committee also discussed with PricewaterhouseCoopers LLP matters relating to its independence, including a review of audit and non-audit fees and the written disclosures and letter from Pricewaterhouse Coopers LLP to the Audit Committee pursuant to Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), "Communication with Audit Committees". The Audit Committee also has considered whether PricewaterhouseCoopers LLP’s provision of non-audit services to the Trust is compatible with its independence. The Audit Committee has concluded that PricewaterhouseCoopers LLP is independent from the Trust and its management.
The Audit Committee discussed with the Trust’s internal auditor and the independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee met with the internal auditor and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations of the Trust’s consolidated financial statements for the year ended December 31, 2008, the evaluations of the Trust’s internal controls, and the overall quality of the Trust’s financial reporting.
In reliance uponThe Audit Committee has reviewed and discussed the Trust’s audited consolidated financial statements for the fiscal year ended December 31, 2010, with the Trust’s management, and also has discussed with PwC, the matters required to be discussed by Statement on Auditing Standards No. 61 (AICPA, Professional Standards, Vol. 1, AU Section 380) as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has received both the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee's reviewsCommittee concerning independence, and discussions referred to above andhas discussed with PwC that firm’s independence.
Based on the Audit Committee's review ofCommittee’s discussions with management, the representations of management,Trust’s internal auditor and the report of the independent registered public accounting firm,PwC, the Audit Committee recommended thatto the Trust’s Board of Trustees includethat the Trust’s audited consolidated financial statements for the fiscal year ended December 31, 2010 be included in the Trust'sTrust’s Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission. The Audit Committee believes that it has satisfied its responsibilities under its charter.SEC in March 2011.
Members of the Audit Committee
Lee Seidler (Chairman)
Arthur Blasberg, Jr. (Chairman)
Howard Goldberg
Steven Zalkind
The preceding “Audit Committee Report” shall not be deemed soliciting material orNotwithstanding anything to be filed withthe contrary set forth in any of our filings under the Securities andAct of 1933 or the Exchange Commission, nor shall any informationAct that might incorporate SEC filings, in this reportwhole or in part, the foregoing Audit Committee Report will not be incorporated by reference into any pastsuch filings.
COMPENSATION DISCUSSION AND ANALYSIS
General
As described above under “Compensation Committee” on page 12 of this Proxy Statement, the Compensation Committee is responsible for recommending to the Board the compensation policies and arrangements for the Trust's officers, Trustees, advisors and affiliates. The Compensation Committee acts pursuant to the Compensation Committee Charter and is comprised of three members who are independent within the meaning of Section 303A.02 of the listing standards of the New York Stock Exchange. A copy of the Compensation Committee Charter is available upon request from the Trust’s Secretary at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114 and at our website www.winthropreit.com.
Executive Compensation Principles
We do not provide any remuneration to our executive officers and do not have any direct employees. We retain FUR Advisors to provide substantially all of our asset management, accounting and investor services. Information relating to fees paid to FUR Advisors is set forth under “Certain Relationships and Related Transactions” below.
At present, the Compensation Committee reviews annually the terms of the advisory agreement with FUR Advisors to determine their consistency with market terms and whether the retention of an outside advisor is more favorable to us than retaining direct employees. The Compensation Committee reviews the fees payable to FUR Advisors in comparison to the general and administration costs of other public real estate investment trusts. Based on its review, the Compensation Committee recommended to the Board that the advisory agreement with FUR Advisors be renewed.
If we were to retain our executive officers directly, the Compensation Committee would, in making its compensation recommendations to the Board likely consider (1) the potential holding periods of our assets, (2) the number of individual investments held by us, (3) the amount of asset management required with respect to our assets, (4) our overall investment prospects and our short and long-term business plan, and (5) with respect to a specific executive officer, such officer's responsibilities, experience and overall performance. The Compensation Committee would further seek to attract and retain highly qualified executives and to motivate them to work together as a team to maximize our financial performance on an annual and long-term basis thereby resulting in increase shareholder value.
Share Options/Grants
From March 2005 to May 2007, no share option or future filingshare grant plans were in effect pursuant to which we could issue options. In May 2007, our Shareholders approved the Winthrop Realty Trust 2007 Long Term Incentive Plan pursuant to which share options or share grants can be granted. No such share options or share grants have been granted under the plan.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised entirely of independent Trustees. The Compensation Committee has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Members of the Compensation Committee
Steven Zalkind (Chairman)
Thomas F. McWilliams
Lee Seidler
Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933 as amended, or the Exchange Act that might incorporate SEC filings, in whole or in part, the foregoing Audit Committee Report will not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no relationships among members of the Compensation Committee, members of the Board or our executive officers who served during our 2010 fiscal year that require disclosure under Item 407(e)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, exceptamended. All current members of the Compensation Committee are considered independent under our Corporate Governance Guidelines.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 15, 2011 (except as otherwise indicated) regarding the ownership of our Common Shares by (i) each person who is known to us to be the beneficial owner of more than 5% of the outstanding Common Shares, (ii) each Trustee, (iii) each executive officer named herein, and (iv) all current executive officers and Trustees as a group. Except as otherwise indicated, each such Shareholder has sole voting and investment power with respect to the extent the Trust specifically incorporates itCommon Shares beneficially owned by reference into such filing.Shareholder. As of March 15, 2011, there were 27,088,347 Common Shares outstanding.
Name and Address of Beneficial Owner | Position with the Trust | Amount and Nature of Beneficial Ownership | | | Percent of Class |
FUR Investors, LLC (1) FUR Holdings LLC WEM-FUR Investors LLC | -- | 3,242,032 | | | 12.0% |
| | | | | |
John Alba (1) | Chief Investment Officer | 3,950 | (4) | | (4) |
| | | | | |
Michael L. Ashner(1) | Chairman and CEO | 3,342,950 | (2) | | 12.3% |
| | | | | |
Arthur Blasberg, Jr. (3) | Trustee | 28,000 | | | * |
Name and Address of Beneficial Owner | Position with the Trust | Amount and Nature of | | | Percent of Class |
Peter Braverman(1) | Executive Vice President | 6,166 | (4) | | (4) |
| | | | | |
Howard Goldberg (3) | Trustee | 64,193 | | | * |
| | | | | |
Thomas F. McWilliams(3) | Trustee | -- | | | * |
| | | | | |
Lee Seidler | Trustee | 7,071 | | | * |
| | | | | |
Thomas Staples(3) | Chief Financial Officer | -- | (4) | | (4) |
| | | | | |
Carolyn Tiffany(3) | President and Trustee | 9,410 | (4) | | (4) |
| | | | | |
Steven Zalkind(3) | Trustee | 15,774 | | | * |
| | | | | |
All Trustees, Trustee nominees and executive officers as a group | | 3,477,514 | | | 12.8% |
| | | | | |
Blackrock, Inc.(5) | -- | 1,942,922 | (5) | | 7.2% |
| | | | | |
Fairholme Capital Management, LLC(6) Fairholme Funds, Inc. Bruce R. Berkowitz | -- | 2,491,848 | (6) | | 9.2% |
| | | | | |
The Vangaurd Group Inc.(7) | -- | 2,367,844 | (7) | | 8.7% |
*Less than 1%
(1) | The address for each of FUR Investors LLC, FUR Holdings LLC, WEM-FUR Investors LLC, Mr. Alba, Mr. Ashner and Mr. Braverman is Two Jericho Plaza, Wing A, Suite 111, Jericho, NY 11753. |
(2) | Comprised of 3,242,032 Common Shares owned by FUR Investors LLC, 60,256 Common Shares held directly by Mr. Ashner and 40,662 Common Shares held by The Ashner Family Evergreen Foundation, a New York not for profit corporation (the “Foundation”). Mr. Ashner is the managing member of WEM-FUR Investors LLC, the managing member of FUR Holdings, LLC, the sole member of FUR Investors LLC. As such, Mr. Ashner may be deemed to beneficially own all Common Shares owned by FUR Investors. Mr. Ashner is a director of the Foundation and, as such, may be deemed to beneficially own all Common Shares owned by the Foundation. |
(3) | The address for each of Messrs. Blasberg, Goldberg, McWilliams, Seidler, Staples and Zalkind and Ms. Tiffany is c/o of Winthrop Realty Trust, 7 Bulfinch Place, Suite 500, Boston, MA 02114. |
(4) | Messrs. Alba, Braverman, and Staples and Ms. Tiffany are members of WEM-FUR Investors LLC, the managing member of FUR Holdings, LLC, the sole member of FUR Investors LLC. Accordingly, Messrs. Alba, Braverman and Staples and Ms. Tiffany have an indirect pecuniary interest in approximately 25,694, 60,778, 44,698 and 50,000, respectively, of the Common Shares owned by FUR Investors LLC. However, Messrs. Alba, Braverman and Staples and Ms. Tiffany do not exercise investment control over the Common Shares held by FUR Investors LLC. Accordingly, Messrs. Alba, Braverman and Staples and Ms. Tiffany are not deemed to beneficially own any of such Common Shares under Section 13 or Section 16 of the Securities Exchange Act of 1934, as amended. |
(5) | The address for Blackrock, Inc. (“Blackrock”) is 40 East 52nd Street, New York, New York 10022. Information is derived from the 13-G filing by Blackrock with the SEC on February 9, 2011. |
(6) | The address for Fairholme Capital Management, LLC (“Fairholme”) , Fairholme Funds, Inc. and Mr. Berkowitz is c/o Fairholme Capital Management, LLC, 4400 Biscayne Boulevard, 9th Floor, Miami, FL 33137. Information is derived from the 13-G/A filing by Fairholme, Fairholme Funds, Inc. and Mr. Berkowitz with the SEC on February 14, 2011. |
(7) | The address for The Vanguard Group Inc. (“Vanguard”) is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. Information is derived from the 13-G/A filing by Vanguard with the SEC on February 10, 2011. |
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 greater than 10% of a registered class of our equity securities to file certain reports which we refer to as “Section 16 Reports” with the Securities and Exchange CommissionSEC with respect to ownership and changes in ownership of our Common Shares and other equity securities. Based solely on our review of the Section 16 Reports furnished to us as well as written representations from certain reporting persons, our officers, Trustees and greater than 10% beneficial owners, such persons have complied with all Section 16(a) requirements applicable to them.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FUR Advisors administers our business pursuant to the terms of an advisory agreement. FUR Advisors is controlled by and partially owned by our executive officers. Pursuant to the terms of the advisory agreement, FUR Advisors is responsible for providing asset management services to us and coordinating with our Shareholder transfer agent and property managers. During 2008, the quarterlyFor providing these services, FUR Advisors is entitled to receive a base management fee payableand, if upon the return to FUR Advisors for providing such services equaled the lesserShareholders of threshold amount, an asset based fee or an equity based fee as determined in accordance with the terms of the advisory agreement which are calculated as follows:incentive fee.
| · | Asset based fee equals 1%Effective January 1, 2009 the calculation of our gross asset value up to $100,000,000, 0.75% of our gross asset value between $100,000,000 and $250,000,000, 0.625% of our gross asset value between $250,000,000 and $500,000,000 and 0.50% of our gross asset value in excess of $500,000,000 (in light of the net lease nature of our 16 net lease properties, FUR Advisors agreed to reduce its fee for these properties to 0.25% of the gross asset value for the portion of that portfolio that is subject to leverage). |
| · | Equity based fee equals (i) 1.5% of our issued and outstanding equity securities plus (ii) .25% of any equity contribution by a third party to a joint venture managed by us. For purposes of the equity based calculation, the 6,211,783 Common Shares outstanding at January 1, 2005 are to be valued as follows: $11.50 (FUR Investors LLC’s tender offer price in its December 2003 tender offer) with respect to 5,211,783 Common Shares and $13.00 (the purchase price paid by FUR Investors LLC) with respect to the 1,000,000 Common Shares acquired on December 31, 2003. Our Common Shares issued upon the conversion of our Series A Preferred Shares were valued at $25.4125 per Common Share, the conversion price. 1
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In March 2009 the base management fee was modified effective as of January 1, 2009. As modified, the asset based fee calculation has been eliminatedamended to provide that (i) all Common Shares and the equity based fee is based onSeries B-1 Preferred Shares then issued and outstanding would be valued at a price of $11.00 per Common Share outstanding at December 31, 2008 and $25.00 per Series B-1 Preferred Share, with respect to the 1,496,000 Series B-1 Shares outstanding after giving effect to the repurchases of Series B-1 Shares during the fourth quarter of 2008 and the first quarter of 2009. Any(ii) any additional future conversions, redemptions or repurchases of the Series B-1 Preferred Shares willwould not reduce the base equity for purposes of the base management fee calculation. The fee with respect tocalculation and (iii) any future issuances of Common Sharescommon shares or preferred shares will increase the equity as per the existing agreement for purposes of beneficial interestthe base management fee calculation. Effective January 1, 2010, the Advisory Agreement was amended so that the determination of the issuance price of Common Shares reverted back to the pre 2009 definition such that the fee is to be calculated on the actual issuance price of Common Shares instead of a fixed price for Common Shares issued prior to January 1, 2009. This change resulted in an increase without giving effect to any additional shares issuances, to the annual advisory fee payable to FUR Advisors of approximately $2,100,000 over what would have been paid without the amendment, which increase was phased in with 54% of the increase being paid during 2010. The full impact of the increase will be based on the issuance price.recognized in 2011.
FUR Advisors is also entitled to receive (i) property and construction management fees at commercially reasonable rates as determined by the independent Trustees and (ii) an incentive fee. The incentive fee entitles FUR Advisors to receive (a) an amount equal to 20% of all distributions paid on our Common Shares after December 31, 2003 in excess of the Threshold Amount, hereinafter defined, and, (b) upon the termination of the advisory agreement, an amount equal to 20% of our “liquidation value” in excess of the Threshold Amount at the termination date. As defined in the advisory agreement, the Threshold Amount is equal to (x) $71,300,000, increased by the net issuance price of all of our Common Shares, with an adjustment for preferred shares converted, issued after December 31, 2003, and decreased by the redemption price of all our Common Shares redeemed after December 31, 2003, plus (y) a return on the amount, as adjusted, set forth in (x) equal to 7% per annum compounded annually. As December 31, 2010, the Threshold Amount was approximately $468,193,000, which was equivalent to $16.58 for each of our Common Shares on a fully diluted basis. The incentive fee is reduced by any direct damages to us if the advisory agreement is terminated by us for cause. No incentive fee was payable during the year ended December 31, 2008.2010. If the Advisory Agreement were terminated, the actual incentive fee payable would be based on an appraised valuation or the liquidation proceeds received for our assets, which may be substantially in excess of the amount calculated based on the market price of the Common Shares.
FUR Advisors is also entitled to receive property and construction management fees at commercially reasonable rates as determined by the Compensation Committee and independent Trustees.
Winthrop Management L.P., an affiliate of FUR Advisors and our executive officers, provides property management responsibilities for certain of our properties. Pursuant to the terms of the property management agreement, Winthrop Management L.P. receives a fee equal to 3% of the monthly revenues of such properties.
The following table sets forth the fees and reimbursements paid by us for the years ended December 31, 2008, 20072010, 2009 and 20062008 to FUR Advisors and Winthrop Management L.P. (in thousands):
| | 2008 | | | 2007 | | 2006 | | | 2010 | | | 2009 | | | 2008 | |
Asset Management (1) | | $5,616,000 | (3) | | $5,263,000 | (4) | | $3,681,000 | (5) | |
Base Asset Management Fee (1) | | | 5,225,000 | (3) | | $3,233,000 | (4) | | $5,616,000 | (5) |
Property Management (2) | | 264,000 | | | 269,000 | | 217,000 | | | 248,000 | | | 262,000 | | | 264,000 | |
Construction Management (2) | | 23,000 | | | 9,000 | | - | | | 24,000 | | | 38,000 | | | 23,000 | |
(2) Payable to Winthrop Management L.P.
In connection with the resignation by Michael L. Ashner, the Trust’s Chairman and Chief Executive Officer, as an officer and Trusteetrustee of Lexington which was effective March 20, 2008, the Trust consented to FUR Advisors entering into a consulting agreement with Lexington pursuant to which FUR Advisors was to provide consulting services to Lexington through December 31, 2008. For providing these services, FUR Advisors was entitled to a fee of $1,500,000, which we refer to as the “Consulting Fee”, which was to be paid in monthly installments of approximately $167,000, and the Trust received a credit against the base management fee payable by the Trust to FUR Advisors equal to the Consulting Fee. Accordingly, the Trust received a credit of $1,500,000 for the year ended December 31, 2008.
WRP Sub-Management LLC, which we refer to as “WRP Sub-Management”, an affiliate of FUR Advisors, has been retained to provide accounting, collateral management and loan brokerage services to Lex-Win Concord LLC, which we refer to as Concord, and its subsidiaries. WRP Sub-Management received reimbursement of direct and indirect expenses totaling $1,402,000$716,000, $1,108,000 and $2,571,000$1,402,000 for the years ended December 31, 20082010, 2009 and 2007,2008, respectively, in accordance with the terms of the agreement. Of these amounts, $526,000$259,000, $511,000, and $378,000$526,000 were paid to reimburse it for costs associated with providing accounting and other “back-office” services for the benefit of Concord, which we refer to as the “Affiliate Amount”. Because the Trust pays an advisory fee to FUR Advisors whereas the other member in Concord does not, the advisory fee payable to FUR Advisors by the Trust is reduced by 50% of the Affiliate Amount to ensure equal treatment of the Trust with respect to the reimbursements paid by Concord. For the years ended December 31, 20082010, 2009 and 2007,2008, the Trust received and utilized a credit of $263,000$129,000, $255,000 and $189,000,$263,000, respectively, against the base management fee.
As of the date of this Proxy Statement, the Board does not know of any other matter to be brought before the Annual Meeting. However, if any other matters not mentioned in the Proxy Statement are brought before the Annual Meeting or any adjournments thereof, the persons named in the enclosed Proxy or their substitutes will have discretionary authority to vote proxies given in said form or otherwise act, in respect of such matters, in accordance with their best judgment.