UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Comstock Holding Companies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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COMSTOCK HOLDING COMPANIES, INC.
April 29, 2020
Dear Fellow Stockholders:
You are cordially invited to attend the annual meeting of stockholders of Comstock Holding Companies, Inc. (the “Company”) to be held at 9:00 a.m., local time, on June 17, 2020, in the Conference Center at Reston Station, located at 1900 Reston Metro Plaza, 2nd Floor, Reston, Virginia 20190. Like many public companies, the Company is actively monitoring COVID-19 impacts and guidance issued by public health authorities and the Commonwealth of Virginia in response to the COVID-19 global pandemic. In the event the Company determines that a change in the date, time or location of the meeting or implementation of a virtual-only meeting format is recommended or required, the Company will promptly announce any such decisions in advance through a press release and on our website at www.comstockcompanies.com/proxymaterial to include specific details on the participation process if the Company transitions to a virtual only format.
Despite the economic uncertainty caused by the temporary dislocation of global economies as a result of unprecedented governmental orders mandating temporary closure and/or limited operations of many types of businesses, as well as recommendations that many people stay at home to combat the COVID-19 global pandemic, our Company remains well positioned to survive the negative effects of the pandemic on our local economy, and to thrive when normalcy returns. This is because of several recent accomplishments and other factors:
Having completed the previously announced wind-down of our for-sale homebuilding operation in 2019, we are able to focus exclusively on generating fee-based revenue from commercial real estate development, asset management, and real estate related services.
The recapitalization of our balance sheet in April 2019, coupled with the wind-down of our for-sale homebuilding operation, enabled Comstock to eliminate substantially all its homebuilding related legacy debt obligations and positioned the Company to adopt a capital-light operating platform.
In 2019, we modified the asset management agreements covering our Anchor Portfolio, extending the term of the agreements through 2027 and increasing the fee-based revenue sources related to the development and management of the approximately 7 million square foot Anchor Portfolio, while adding incentive based revenue sources related to the performance of the Anchor Portfolio assets.
The Anchor Portfolio consists primarily of two large scale transit-oriented and mixed-use developments located in Northern Virginia, which has seen increased demand for this type of development as big tech companies including Google, Microsoft, Amazon and others, as well as federal contractors including Rolls-Royce, ICF Global, General Dynamics, and others have sought increased office facilities proximate to housing and transit stations.
In 2019, the Company secured more than 500,000 square feet of new office leases related to Anchor Portfolio buildings recently completed and currently under construction, including leases with Google, Rolls-Royce, ICF Global, Neustar, and others, providing increased fee-based revenue and stability for Comstock.
We have begun expanding our asset management operations beyond the Anchor Portfolio, recently acquiring a stabilized property in Arlington, Virginia on behalf of a venture we formed with institutional capital sources, further expanding Comstock’s revenue sources and its ability to generate investment related income.
I am pleased to report that Comstock’s new operating platform has significantly enhanced our financial stability and future prospects, even in these challenging times. The long-term, full-service asset management agreement covering the Anchor Portfolio provides a stable baseline source of revenue while also providing downside protection through its cost-plus fee structure, while we seek to continue building our portfolio of assets under management. In addition to the protected income stream from our Anchor Portfolio, our new operating platform positions us to also earn fees and receive co-investment related income on assets we acquire and manage for our institutional partnerships such as referenced above.
To support our new strategy, we have reshaped our executive management team and continue to recruit top tier talent that enhances Comstock’s commercial real estate asset management capabilities, while also creating new operating subsidiaries and strategic partnerships that provide additional revenue sources. For example, Comstock now generates revenue from multiple sources and across multiple asset classes, including; Asset Management, Commercial Property Management, Residential Property Management, Parking Management, Capital Markets Origination, Environmental Consulting, and Environmental Remediation which includes COVID-19 related services. While the Anchor Portfolio provides reliable and sustainable bottom line results (due to its cost-plus fee structure) over an extended time period, our additional fee-based services and co-investments are intended to enhance shareholder value as we continue to grow. I am confident that our new operating platform will enhance our ability to accomplish these objectives and I look forward to sharing details of our progress with you at our June 17th annual meeting. Additionally, an updated Investor Presentation is available at: https://ir.comstockcompanies.com/.
At the annual meeting, stockholders of record as of May 15, 2020 will be asked to: (i) elect three directors, each serving for a three-year term expiring at the 2023 annual meeting of stockholders, or until their successors are duly elected and qualified, or until their earlier resignation or removal; (ii) ratify the appointment of our independent registered public accounting firm for 2020; (iii) approve, on a non-binding, advisory basis, the 2019 compensation of our named executive officers (referred to as a “say-on-pay” vote); and (iv) transact any other business that may come before the stockholders of the Company that are participating in person. Details regarding the matters to be acted upon at the annual meeting appear in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. Our Board of Directors unanimously recommends that stockholders vote in favor of each of these proposals.
We urge you to complete, sign and date the accompanying proxy card and return it in the enclosed postage-prepaid envelope as soon as possible so that your shares will be represented at the annual meeting. If after submitting your proxy, you decide to attend the annual meeting in person or change your vote, you may withdraw your proxy and vote in accordance with the rules stipulated for voting. Voting by written proxy simply ensures your representation at the annual meeting if you do not participate in the meeting.
Thank you for your continued support of Comstock.
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Very truly yours, |
Christopher Clemente |
Chief Executive Officer and Chairman |
COMSTOCK HOLDING COMPANIES, INC.
1886 Metro Center Drive, 4th Floor
Reston, Virginia 20190
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 12, 2019JUNE 17, 2020
A SpecialThe Annual Meeting of Stockholders of Comstock Holding Companies, Inc. (the “Company”), a Delaware corporation, will be held at 10:9:00 a.m., local time, on February 12, 2019,June 17, 2020 at the second floor conference centerConference Center at Reston Station, located at 1900 Reston Metro Plaza, 2nd Floor, Reston, Virginia 20190,20190. The Company continues to actively monitor the ongoing impacts of the novel coronavirus disease of 2019 (“COVID-19”) pandemic and governmental mandates, including social distancing guidelines, stay-at-home orders and other travel restrictions. The Company is committed to ensuring the health and well-being of our employees and stockholders. The Company reserves the right to require that all stockholders attending the meeting comply with then-applicable social distancing guidelines, wear personal protective equipment, including masks and gloves, and comply with any additional reasonable rules and regulations that the Company implements in order to protect the health and safety of attendees. In the event the Company determines that a change in the date, time or location of the meeting or implementation of a virtual-only meeting format is recommended or required, the Company will promptly announce any such decisions in advance through a press release and on our website at www.comstockcompanies.com/proxymaterial to include specific details on the participation process if the Company transitions to a virtual-only format. We will update this website periodically and encourage you to check the website regularly for more information. If you have difficulty locating the Reston Station Conference Center, please call 703-230-1985.
The meeting is being held for the following purposes:
1. To approve an amendmentelect three directors to our Amendedeach serve for a three-year term expiring at the 2023 annual meeting of stockholders or until their successors are duly elected and Restated Certificate of Incorporation to increase the number of authorized shares of Class A common stock;qualified or until their earlier resignation or removal;
2. To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;
3. To cast a non-binding, advisory vote to approve the Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan;compensation of our named executive officers; and
3. 4.To transact any other business that may properly come before the meeting or any adjournment thereof.
These items of business are more fully described in the proxy statement accompanying this Notice. Only stockholders of record at the close of business on January 18, 2019May 15, 2020 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting and vote in person. To assure your representation at the meeting and comply with social distancing guidelines in response to COVID-19, however, you are urged to mark, sign, date, and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope enclosed for that purpose. You may vote in person atduring the meeting even if you have previously returned a proxy card.
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Reston, Virginia |
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| Jubal R. Thompson | ||
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COMSTOCK HOLDING COMPANIES, INC.
1886 Metro Center Drive, 4th Floor
Reston, Virginia 20190
PROXY STATEMENT
VOTING AND OTHER MATTERS
General
The enclosed proxy is solicited on behalf of Comstock Holding Companies, Inc., a Delaware corporation (the “Company” or “us”), by our Board of Directors (the “Board”) for use at a Specialour Annual Meeting of Stockholders to be held on February 12, 2019June 17, 2020 at 10:9:00 a.m., local time, or at any adjournment thereof, for the purposes set forth in this proxy statement and in the accompanying Notice of SpecialAnnual Meeting of Stockholders. TheThis year’s meeting will be held at the second floor conference centerConference Center at Reston Station, located at 1900 Reston Metro Plaza, 2nd Floor, Reston, Virginia 20190. If you need directions to the meeting, please contact Judy Whitaker at 703-883-1700.703-230-1985.
The Company continues to actively monitor the ongoing impacts of the novel coronavirus disease of 2019 (“COVID-19”) pandemic and governmental mandates, including social distancing guidelines, stay-at-home orders and other travel restrictions. The Company is committed to ensuring the health and well-being of our employees and stockholders. The Company reserves the right to require that all stockholders attending the meeting comply with then-applicable social distancing guidelines, wear personal protective equipment, including masks and gloves, and comply with any additional reasonable rules and regulations that the Company implements in order to protect the health and safety of attendees. In the event the Company determines that a change in the date, time or location of the meeting or implementation of a virtual-only meeting format is recommended or required, the Company will promptly announce any such decisions in advance through a press release and on our website at www.comstockcompanies.com/proxymaterial to include specific details on the participation process if the Company transitions to a virtual-only format.
This proxy statement and form of proxy are first being mailed on or about January 25, 2019May 21, 2020 to all stockholders entitled to vote at the meeting.
Voting Securities and Voting Rights
Stockholders of record at the close of business on January 18, 2019,May 15, 2020, which we have set as the record date, are entitled to notice of and to vote at the meeting. As of December 21, 2018,On April 29, 2020, there were issued and outstanding 3,617,9437,811,530 shares of our Class A common stock and 220,250 shares of our Class B common stock.stock and it is expected that the same number of shares will be outstanding on the record date. Each holder of our Class A common stock voting at the meeting, either in person or by proxy, may cast one vote per share of Class A common stock held on all matters to be voted on at the meeting. Each holder of our Class B common stock voting at the meeting, either in person or by proxy, may cast 15 votes per share of Class B common stock held on all matters to be voted on at the meeting.
The meeting will be held only if there is a quorum present. A quorum exists only if the holders of a majority of the voting power of the issued and outstanding stock of the Company and entitled to vote at the meeting are present in person or represented by proxy at the meeting. Votes cast by proxy or in person at the meeting will be tabulated by the inspector of elections appointed for the meeting and will determine whether a quorum is present. The inspector of elections will treat abstentions and broker non-votes as shares that are present and entitled to vote for purposes of determining the presence of a quorum.
Under the rules of the New York Stock Exchange, on certain routine matters, brokers may, at their discretion, vote shares they hold in “street name” on behalf of beneficial owners who have not returned voting instructions to the brokers, so- called “broker non-votes.” In instances where brokers are prohibited from exercising discretionary authority, the shares they hold are not included in the vote totals.
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At the meeting, only Proposal 2, the ratification of the appointment of our independent registered public accounting firm, is considered a routine matter. Brokers will be prohibited from exercising discretionary authority with respect to both Proposal 1, the election of directors, Proposal 3, and Proposal 2 (defined below).the non-binding, advisory vote to approve the 2019 compensation of our named executive officers. Therefore, if you hold your shares in the name of a bank, broker or other holder of record, for your vote to be counted in Proposals 1 and 23, you will need to communicate your voting decisions to your bank, broker or other holder of record before the date of the meeting. Because broker non-votes are not voted affirmatively or negatively, they will have no effect on the approval of any of the proposals, except where brokers may exercise their discretion on routine matters.
Voting Requirements
For Proposal 1, a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors will be required to elect each of the three director nominees to each serve for a three-year term expiring at the 2023 annual meeting of stockholders or until their successors are duly elected and qualified or until their earlier resignation or removal. Stockholders may vote “for” all of the director nominees, “withhold” authority to vote for all of the nominees or “withhold” authority to vote for any individual nominee but vote for another nominee.
ApprovalFor Proposal 2, the ratification of an amendment tothe appointment of BDO USA, LLP as our Amended and Restated Certificate of Incorporation to increaseindependent registered public accounting firm for the number of authorized shares of Class A common stock (“Proposal 1”) requiresfiscal year ending December 31, 2020, the affirmative vote of the holders of a majority of the common stockvoting power of the issued and outstanding andstock of the Company entitled to vote on the matter, present and voting, in person or represented by proxy at the Special Meeting. Approvalmeeting, will be required. Stockholders may vote “for,” “against” or “abstain” from voting on Proposal 2. An abstention will have the effect as a vote “against” this proposal.
For Proposal 3, the non-binding, advisory vote to approve the 2019 compensation of the Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan (“Proposal 2”) requiresour named executive officers, the affirmative vote of the holders of a majority of the commonvoting power of the issued and outstanding stock of the Company entitled to vote on the matter, present and voting, in person or represented by proxy and entitled to vote at the Special Meeting.
meeting, will be required. Voting for Proposal 3 is being conducted on a nonbinding, advisory basis and, therefore, the voting results will not be binding on the Company, our Board or our Compensation Committee although our Compensation Committee and Board will consider the results of the voting on this proposal for future executive compensation decisions. Stockholders may vote “for,” “against” or “abstain” from voting on Proposal 1 and Proposal 2. Abstentions and broker non-votes3. An abstention will have the same effect as a vote against Proposal 1. Abstentions will have the same effect as a vote against Proposal 2, and broker non-votes will have no effect on Proposal 2.“against” this proposal.
Whether or not a person plans to attend the meeting, such person may vote by completing, signing and dating the accompanying proxy card and returning it in the postage-prepaid envelope enclosed for that purpose. If a person attends the meeting, they may vote in person even if such person had previously returned a proxy card.
Voting of Proxies
When a proxy card is properly executed and returned, the shares it represents will be voted at the meeting as directed. If no specification is indicated, the shares will be voted (1) “for” the approvalelection of each of the amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Class A common stock anddirector nominees set forth in this proxy statement, (2) “for” the approvalratification of the Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan.
Atappointment of BDO USA, LLP as our independent registered public accounting firm for the time of printing this proxy, we do not know of any other matter that may come beforefiscal year ending December 31, 2020, and (3) “for” the Special Meeting and do not intend to present any other matter. However, if any other matters properly come before the meeting or any adjournment or postponement, the persons named as proxies will have discretionary authority to vote the shares represented by the proxies in accordance with their own judgment, including the authority tonon-binding, advisory vote to adjournapprove the meeting.2019 compensation of our named executive officers.
Revocability of Proxies
Any person giving a proxy may revoke the proxy at any time before its use by delivering to us either a written notice of revocation or a duly executed proxy bearing a later date or by attending the meeting and voting in person.
Solicitation
This solicitation is being made by us and will be paid for by the Company. In addition, we may reimburse brokerage firms and other persons representing beneficial owners of shares for expenses incurred in forwarding
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solicitation materials to such beneficial owners. Proxies also may be solicited by certain of our directors and officers, personally or by telephone or e-mail, without compensation for the solicitation.
Deadline for Receipt of Stockholder Proposals for our 2019 Annual Meeting
Proposals of stockholders intended for inclusion in the proxy statement to be furnished to all stockholders entitled to vote at our 20192021 annual meeting of stockholders, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act, by the Securities and Exchange Commission (“SEC”) must be received at our principal executive offices not later than January 17, 2019,21, 2021, which is 120 days prior to the first anniversary of the mailing date of thethis proxy statement for the 2018 annual meeting of stockholders.statement. Any proposal must comply with the requirements as to form and substance established by the SEC for such proposal to be included in our proxy statement.
Under our bylaws, stockholders who wish to submit a proposal at the 20192021 annual meeting, other than one that will be included in our proxy statement, must deliver such proposal to the Secretary our principal executive offices between February 14, 201917, 2021 and March 16, 2019,19, 2021, unless the date of the 20192021 annual meeting of the stockholders is more than 30 days before or more than 60 days after the one-year anniversary of the 20182020 annual meeting. If a stockholder who wishes to present a proposal fails to notify us in the appropriate time frame and such proposal is brought before the 20192021 annual meeting, then under the SEC’s proxy rules, the proxies solicited by management with respect to the 20192021 annual meeting will confer discretionary voting authority with respect to the stockholder’s proposal on the persons selected by management to vote the proxies. If a stockholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC’s proxy rules. Stockholders should submit their proposals to Comstock Holding Companies, Inc., 1886 Metro Center Drive, 4th Floor, Reston, Virginia 20190, Attention: Corporate Secretary.
We will provide, without charge, additional copies of our annual report on Form 10-K for the year ended December 31, 2019 as filed with the SEC to each stockholder of record as of the record date that requests a copy in writing. Any exhibits listed in our Annual Report on Form 10-K will also be furnished upon request at the actual expense we incur in furnishing such exhibit. Any such requests should be directed to our Company’s Secretary at our principal executive office set forth in this proxy statement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE SPECIAL2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 12, 2019JUNE 17, 2020
This proxy statement isand our 2019 Annual Report on Form 10-K to stockholders are available
at www.comstockcompanies.com/proxymaterial.
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ELECTION OF DIRECTORS
Nominees
Our Amended and Restated Certificate of Incorporation and bylaws provide that the number of our directors shall be fixed from time to time by resolution of our Board. Presently, the number of directors is fixed at eight, and there is currently one vacancy on our Board. Our Board is divided into three classes, with one class standing for election each year for a three-year term. At each annual meeting of stockholders, directors of a particular class will be elected for three-year terms to succeed the directors of that class whose terms are expiring. David M. Guernsey, James A. MacCutcheon, and Robert P. Pincus are in the class of directors whose terms expire at the 2020 annual meeting of stockholders, and Messrs. Guernsey, MacCutcheon, and Pincus have each been nominated by our Board for re-election at the meeting each for a three-year term expiring at the 2023 annual meeting of stockholders. Norman D. Chirite and Socrates Verses are in the class of directors whose term expires at the 2021 annual meeting of stockholders. Christopher Clemente and Joseph M. Squeri are in the class of directors whose term expires at the 2022 annual meeting of stockholders.
Unless otherwise instructed, the proxy holders will vote the proxies received by them for each of the nominees named above. In the event that any nominee is unable or declines to serve as a director at the time of the meeting, the proxies will be voted for any nominee designated by the current Board to fill the vacancy. It is not expected that any nominee will be unable or will decline to serve as a director.
The Board recommends a vote “FOR” each of the nominees named in this proxy statement.
Cautionary Note Regarding Forward-looking StatementsNominees Standing for Election in 2020
David M. Guernsey, 72, has been a member of our Board since December 2004 and is a member of the Audit Committee and Compensation Committee. Mr. Guernsey is the founder and CEO of Guernsey, Incorporated (“Guernsey”), one of the largest independent suppliers of products for the workplace in the United States, including, without limitation, Healthcare, Industrial, Traditional Office, and Educational workplaces. Guernsey’s Interiors by Guernsey division offers furniture for every workplace, including, without limitation, design, assembly, delivery and installation services. Previously, Mr. Guernsey served as Vice-Chairman of Virginia Commerce Bank, which was acquired by United Bank in 2014, and is a former Chairman of the National Federation of Independent Business (NFIB). Mr. Guernsey currently serves as Chairman of the Independent Suppliers Group, the largest purchasing cooperative in its industry, on the Board of the Northern Virginia Chamber of Commerce and on the Board of the Northern Virginia Transportation Alliance. The Board believes that Mr. Guernsey’s extensive experience with public companies, broad management and market expertise and his success as an entrepreneur qualifies him to serve as a member of our Board and supports his re-election to our Board.
James A. MacCutcheon, 67, has been a member of our Board since December 2004 and is a member and Chairman of the Audit Committee. Mr. MacCutcheon is a private investor and advisor to public and private businesses. Mr. MacCutcheon served on the Board of Directors of SunBridge Capital Management, LLC from 2008 to April 2014 and served as the President and Chief Executive Officer of Sunburst Hospitality Corporation from September 2000 until July 2007. The Board believes that Mr. MacCutcheon’s executive management, financial and public accounting experience, across a variety of industries, adds significant value and diversity of experience to our Board and qualifies him to serve as a member of our Board and supports his re-election to our Board.
Robert P. Pincus, 73, has been a member of our Board since June 2005 and is a member of the Audit Committee. Mr. Pincus served as Vice Chairman of EagleBank and Eagle Bancorp, a community business bank located in Bethesda, Maryland, from 2008 through 2017. Prior to joining EagleBank in August 2008, upon the acquisition of Fidelity & Trust Financial Corporation and its wholly owned subsidiary, Fidelity & Trust Bank (“F&T Bank”), Mr. Pincus served as Chairman of F&T Bank from 2005. Mr. Pincus was President and Chief Executive Officer of Franklin National Bank of Washington, D.C. until its acquisition by BB&T after which Mr. Pincus continued with BB&T as a Regional President. Mr. Pincus was further a Regional President of the D.C. Metropolitan region of Sovran Bank until its acquisition by Bank of America for whom Mr. Pincus served as a Regional President following the acquisition. During his tenure as a Director on the Boards of twenty-five (25) non-
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profit institutions serving disadvantaged children in the greater D.C. Metropolitan region, through his numerous efforts Mr. Pincus helped to raise over $25 Million for these institutions and the children they serve. Mr. Pincus has further served on the Board of Directors of six (6) for-profit organizations, including the Company. Mr. Pincus was a Trustee of the University of Maryland Foundation, Inc. Mr. Pincus has previously been acknowledged by the business community in the D.C. Metropolitan region as Entrepreneur of the Year, Washingtonian of the Year and was elected to the Washington Business Hall of Fame. The Board believes that Mr. Pincus’ wealth of experience in commercial and investment banking qualifies him to serve as a member of our Board and supports his re-election to our Board.
Continuing Directors with Terms expiring in 2021
Norman D. Chirite, 58, has been a member of our Board since March 2006 and is a member of the Compensation Committee and serves as special independent director to the Company. Mr. Chirite is an adviser and counsel to a number of private companies and business interests in the U.S. and Canada. Mr. Chirite previously was a partner of Weil, Gotshal & Manges LLP in New York, where he practiced corporate law from 1987 until 2000. Mr. Chirite was Managing Director of Red Zone Capital Management Co. from 2006 until 2014, Chairman of the Johnny Rockets Group from 2009 until 2013, Corporate Development Adviser to inVentiv Health Inc. from 2003 until 2010, and General Counsel of Pro Football Inc. from 2002 until 2005. Mr. Chirite has served on numerous company boards. In addition to the Company, he currently is a director of Iogen Corporation and K2 Pure Inc. The Company believes that Mr. Chirite’s extensive background in business and in corporate and securities law qualifies him to serve as a member of our Board.
Socrates Verses, 59, has been a member of our Board since June 2005 and is a member and Chairman of the Compensation Committee. Since 2009, Mr. Verses has served as the Chief Executive Officer of Netcordant, Inc., formerly known as Codekko Software, a web application optimization company, and co-Chief Executive Officer of MDA360, a data analytics company. Mr. Verses was the President and Chief Executive Officer of Realeum, Inc., a property management and business integration software company, from 2001-2008. The Company believes Mr. Verses’ extensive executive- level experience in technology and business development qualifies him to serve as a member of our Board.
Continuing Directors with Terms expiring in 2022
Christopher Clemente, 60, has been a member of our Board since May 2004. He founded the Company in 1985 and since 1992 he has served as our Chairman and Chief Executive Officer. Mr. Clemente has over 30 years of experience in all aspects of residential and commercial real estate development and over 35 years of experience as an entrepreneur. The Board believes that Mr. Clemente’s position as our Chief Executive Officer, his success as an entrepreneur and his depth of skill and experience in residential and commercial real estate development qualifies him to serve as a member of our Board.
Joseph M. Squeri, 54, is our Executive Vice President of Strategy and Corporate Development since January 2017 and has been a member of our Board since October 2015. From November 2015 to December 2016 Mr. Squeri served as a Managing Director with SunBridge Capital Management, LLC, a private investment management firm. Mr. Squeri previously served as the Chief Financial Officer of the Company from August 2010 through November 2015. Mr. Squeri has previously served as the Executive Vice President-Chief Financial Officer and Treasurer of Federal Realty Investment Trust (NYSE: FRT) and as a senior executive with Choice Hotels International (NYSE:CHH) from 1997 through 2007. The Board believes that Mr. Squeri’s significant executive-level and corporate finance experience, together with his experience at the Company, qualifies him to serve as a member of our Board.
Information Relating to Corporate Governance and the Board
Our Board has determined, after considering all relevant facts and circumstances, that Messrs. Chirite, Guernsey, MacCutcheon, Pincus and Verses are independent under the Nasdaq listing standards and the rules and regulations promulgated by the SEC. Messrs. Clemente and Squeri do not qualify as independent because they are currently officers of the Company.
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Our bylaws authorize our Board to designate one or more committees, each consisting of one or more directors of the Company. Our Board has established two standing committees: an Audit Committee and a Compensation Committee. The Board does not have a standing nominating committee. It is the Board’s view, given its relatively small size and majority of independent directors, that it isappropriate for it to select or recommend director nominees itself. Each director has the opportunity to suggest a nominee and such suggestions are comprehensively reviewed by the independent directors. Director nominees are recommended for selection by the Board by a majority of the independent directors. Prospective members of the Board must be qualified individuals who, if added to the Board, would provide the mix of sound business judgment, business experience, corporate perspectives and skills appropriate for the Company. Criteria for selection of candidates include, but are not limited to: (i) business and financial acumen, as determined by the independent directors in their discretion, (ii) qualities reflecting a proven record of accomplishment and ability to work with others, (iii) knowledge of our industry, (iv) relevant experience with and knowledge of corporate governance practices, and (v) expertise in areas relevant to us. Although we do not have a formal diversity policy, the Board considers, among other attributes, diversity of gender, race, ethnicity and religion, professional experience and skills of the director candidates. Such persons should not have commitments that would conflict with the time commitments of being one of our directors.
The Board does not have a specific policy for consideration of nominees recommended by security holders because a significant degree of voting control relative to the Company’s outstanding equity securities is maintained by Mr. Clemente, a current executive officer and director. However, security holders can recommend a prospective nominee for the Board by writing to our corporate secretary at our executive offices and providing the information required by our bylaws, along with any additional supporting materials the security holder considers appropriate. The Board will consider and evaluate nominees suggested by security holders using the criteria described above. There have been no nominees recommended by our stockholders for the 2020 annual meeting.
In addition to the above procedure, our bylaws provide that a stockholder may propose a director candidate to be considered and voted on at an annual meeting of stockholders by providing notice thereof to our corporate secretary not less than 90 calendar days nor more than 120 calendar days before the first anniversary of the date of the previous years’ annual meeting. This notice provided by a stockholder to our corporate secretary must set forth certain information relating to the proposed nominee as required by our bylaws. The chairman of the meeting will determine whether a nomination set forth by such stockholder is in accordance with the procedures set forth in the bylaws and may determine that such nomination is defective and therefore should be disregarded.
We pay no fees to third parties for evaluating or identifying potential nominees.
Our Board has adopted charters for the Audit and Compensation Committees describing the authority and responsibilities delegated to each committee by the Board. Our Board has also adopted Corporate Governance Guidelines, a Code of Conduct, a Code of Ethics for the CEO and Senior Financial Officers, and a Whistleblower Policy. We post on our website, at www.comstockcompanies.com, the charters of our Audit and Compensation Committees, our Corporate Governance Guidelines, Code of Conduct, Code of Ethics for the CEO and Senior Financial Officers, and Whistleblower Policy, and any amendments or waivers thereto; and any other corporate governance materials contemplated by SEC regulations or the Nasdaq Market Rules. These documents are also available in print to any stockholder requesting a copy in writing from our corporate secretary at our executive offices set forth in this proxy statement includes forward-looking statements that are madestatement.
In 2019, the Company further engaged Mr. Chirite as a special independent director of the Company pursuant to a consulting agreement effective July 1, 2019 (the “Governance Consulting Agreement”). As a special independent director, Mr. Chirite is charged with coordinating the activities of the independent directors of the Board, including, without limitation, acting as the principal liaison between the independent directors of the Board and Company management, developing and collaborating on agendas for executive sessions and Board meetings, providing advice, recommendations and counsel on retention of advisors and consultants, dissemination of information between the Company’s management and the independent directors, and implementation of, and compliance with, the Company’s corporate governance guidelines. The term of the Governance Consulting Agreement is forty-eight (48) months from July 1, 2019, or until Mr. Chirite no longer serves as a member of the Board. Mr. Chirite’s compensation under the Consulting Agreement is 100,000 shares of restricted stock of the Company pursuant to the safe harbor provisionsCompany’s 2019 Incentive Plan, which restricted stock grant fully vests at the end of the Private Securities Litigation ReformGovernance Consulting Agreement.
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Interested parties may communicate with our Board or specific members of our Board, including our independent directors and the members of our various Board committees, by submitting a letter addressed to the Board of Comstock Holding Companies, Inc. c/o any specified individual director or directors at 1886 Metro Center Drive, 4th Floor, Reston, Virginia 20190. All letters received are then forwarded to the indicated directors, committees or full Board, as appropriate.
The Audit Committee
The purpose of the Audit Committee is to oversee our accounting and financial reporting processes and the audits of our financial statements. The Audit Committee also provides assistance to our Board with respect to its oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, the qualifications and independence of our independent registered public accounting firm, and the performance of our independent registered public accounting firm and internal audit function, if any. The primary responsibilities of the Audit Committee are set forth in its charter and include various matters with respect to the oversight of our accounting and financial reporting processes and audits of our financial statements on behalf of our Board. The Audit Committee also selects the independent registered public accounting firm to conduct the annual audit of our financial statements; reviews the proposed scope of such audit; and reviews our accounting and financial controls with the independent registered public accounting firm and our financial accounting staff.
The Audit Committee currently consists of Messrs. MacCutcheon, Guernsey and Pincus, each of whom is independent under the Nasdaq listing standards and the rules and regulations promulgated by the SEC, including the heightened standards for Audit Committee members adopted by the SEC pursuant to the Sarbanes-Oxley Act of 1995. These forward-looking statements can be identified2002. The Board has determined that Mr. MacCutcheon (whose background is detailed above) qualifies as an “audit committee financial expert” in accordance with applicable rules and regulations of the SEC. Mr. MacCutcheon serves as the Chairman of the Audit Committee.
The Compensation Committee
The purpose of the Compensation Committee includes determining, or recommending to our Board for determination, the compensation of our Chief Executive Officer and other executive officers, and discharging the responsibilities of our Board relating to our compensation programs and compensation of our executives on an annual basis. The Compensation Committee also decides equity grants to executives under our equity incentive plans, and periodically reviews the operations of the Company’s executive compensation programs and policies. The Chief Executive Officer determines the compensation and equity grants in consultation with the Compensation Committee for all non-executive employees, but does not determine any compensation relating to the executive officers of the Company.
Under the Compensation Committee Charter, the Compensation Committee is required to have a minimum of two or more members, and currently consists of Messrs. Chirite, Guernsey, and Verses. Mr. Verses serves as Chairman of the Compensation Committee. All members of the Compensation Committee are independent under Nasdaq listing standards and the rules and regulations promulgated by the useSEC.
Board and Committee Meetings
Our Board held a total of words such as “anticipate,” “believe,” “estimate,” “may,” “likely,” “intend,” “expect,” “will,” “should,” “seeks” or other similar words or expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. Some factors which may affect the accuracy of the forward-looking statements apply generally to the real estate industry, while other factors apply specifically to us. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation: our ability to transition our business strategy and operating platform and secure any necessary funding for such transition and future growth; general economic and market conditions, including interest rate levels; our ability to service our debt; inherent risks in investment in real estate; our ability to compete in the markets in which we operate; economic risks in the markets in which we operate, including actions related to government spending; delays in governmental approvals and/or land development activity at our projects; regulatory actions; our ability to maintain compliance with stock market listing rules and standards; fluctuations in operating results; our anticipated growth strategies; shortages and increased costs of labor or building materials; the availability and cost of land in desirable areas; natural disasters; our ability to raise debt and equity capital or issue additional equity securities to retire existing debt and grow our operations on a profitable basis; and our continuing relationships with affiliates.
Additional information concerning these and other important risks and uncertainties can be found under the heading “Risk Factors” in our Annual Report on Form 10-K forfive meetings during the fiscal year ended December 31, 2017. Our actual results could differ materially from these projected or suggested by2019. During the forward-looking statements. The Company undertakes no obligationfiscal year ended December 31, 2019, the Audit Committee held four meetings and the Compensation Committee held one meeting. Each director serving on the Board in 2019 attended at least 75% of the meetings of the Board (and, as applicable, committees thereof) during the year. We do not have a formal policy regarding director attendance at our annual meeting of stockholders, but encourage each of our directors to update publicly or revise any forward-looking statementsattend. All members of our Board attended the 2019 annual meeting of stockholders.
Board Leadership Structure and Role in light of new information or future events, except as required by law.
APPROVAL OF THE AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON STOCK
Risk Oversight
On December 12, 2018,Our Board has the responsibility for selecting the appropriate leadership structure for the Company. In making leadership structure determinations, the Board approved, and is recommending to our stockholders for approval, an amendment to our Amended and Restated Certificate of Incorporation to increaseconsiders many factors, including the number of authorized shares of Class A common stock from 11,038,071 to 59,779,750 and a corresponding increase to the number of authorized shares of capital stock from 31,258,321 to 80,000,000. The proposed amendment would not increase the authorized number of shares of Class B common stock or preferred stock.
If approved, our proposed Amended and Restated Certificate of Incorporation would be amended by deleting the first part of Article IV that appears prior to section (A) of Article IV and inserting the following in lieu thereof:
“The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 80,000,000 shares, of which:
Fifty-Nine Million Seven Hundred Seventy-Nine Thousand Seven Hundred and Fifty (59,779,750) shares, par value $0.01 per share, shall be shares of Class A common stock (the “Class A Common Stock”);
Two Hundred Twenty Thousand and Two Hundred Fifty (220,250) shares, par value $0.01 per share, shall be shares of Class B common stock (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”); and
Twenty Million (20,000,000) shares, par value $0.01 per share, shall be shares of preferred stock (the “Preferred Stock”).”
Purposespecific needs of the Proposed Amendmentbusiness
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The principal purpose of this proposal is to authorize additional shares of Class A common stock for future issuance in order to raise additional capital for the Company that may be used to enhance the balance sheet of the Company (including for retiring existing debt) and/or for general corporate purposes to fund the future growth initiatives of the Company in accordance with our recent change in business strategy.
On April 2, 2018, the Company announced that it is transitioning its business strategy and operating platform from for-sale homebuilding to commercial development, asset management and real estate services. This transition is expected to be fully completed by the first half of 2019 and will allow the Company to explore additional investment activities consistent with its new strategic direction. In furtherance of the Company’s stated change in corporate
strategy, CDS Asset Management, L.C. (“CAM”), an entity wholly owned by the Company, entered into an asset management agreement (the “AMA”) with Comstock Development Services, LC (“CDS”), an entity wholly owned by Christopher Clemente, the Chief Executive Officer of the Company. Pursuant to the AMA, CDS has engaged CAM to manage the commercial real estate portfolio of CDS and its affiliates for an initial term expiring on December 21, 2022.
The additional shares authorized pursuant to this proposal, if and when issued, may be used as described above and for various other purposes. These additional purposes may include providing equity incentives to employees, officers and non-employee directors through our proposed 2019 Omnibus Plan (see Proposal 2 below), and for any other general corporate purposes deemed appropriate by the Company.
While the Company believes the increase in the authorization of our Class A common stock and potential future issuance of additional shares is an appropriate strategy for the purposes outlined above, the Company does not have any agreements concerning the issuance of any such additional shares as of the date of this proxy statement. However, the Company expects to enter into in the near future one or more transactions regarding the issuance of shares for the purpose of retiring the debt of the Company and/or or providing it with additional capital for continued growth. There can be no assurance that such transaction or transactions will be completed. The Board believes that the proposed increase in the number of authorized shares of Class A common stockwhat is in the best interests of the Company’s stockholders. Our current leadership structure is comprised of a combined Chairman of the Board and Chief Executive Officer and Board committees led by independent directors. The Board believes that this leadership structure is the most effective for the Company at this time. Combining the Chairman of the Board and Chief Executive Officer roles promotes decisive leadership, fosters clear accountability and enhances the Company’s ability to communicate its stockholders.
message and strategy clearly and consistently to its stockholders, employees and customers. The Board also believes there is a very well-functioning and effective balance between strong Company leadership and appropriate safeguards and oversight by independent directors, although the Company does not have a lead independent director.
The consequencesBoard believes that its current leadership structure allows the directors to provide effective oversight of the Company’s risk management strategies by receiving and approving recommendations prepared by our failureexecutive officers. The Audit Committee assists the Board in fulfilling its oversight responsibilities by periodically reviewing and making recommendations to increase the authorized numberBoard regarding the adequacy and effectiveness of sharesthe Company’s risk management and related programs and activities. Mr. Clemente, the Chairman of our Class A common stock maythe Board, attends Audit Committee meetings and is appropriately positioned to include our inabilityrisk management issues on the agenda for Board meetings as circumstances warrant. As appropriate, the Board receives recommendations from the Chairman of the Audit Committee regarding significant risks or exposures and the steps management has taken to satisfy the objectives outlined above on terms and conditions deemed acceptableminimize such risks to the Company.
Potential Effects In addition, the Audit Committee regularly communicates with the Chairman of the Proposed Amendment
Compensation Committee regarding the risks within that committee’s areas of responsibility. The additional sharesCompany believes that this leadership structure promotes effective Board oversight of Class A common stock, if and when issued, would haverisk management because, while the same rights and privileges asChief Executive Officer is ultimately accountable for the shares of Class A common stock currently authorized. As such, the amendment will not affect the rights, privileges or preferencesmanagement of the Company’s existing holders of Class A common stock. The issuance of additional sharesrisks, each of the newly authorized Class A common stock would decrease the percentage ownership ofBoard committees actively monitors the Company’s existing Class A stockholdersrisk management program and depending upon the price at which such shares are issued, could be dilutive to the Company’s existing stockholders. Existing stockholders do not have preemptive rights to acquire the Class A common stock authorized by this proposed amendment. We have not proposed the increase in the authorized number of shares of Class A common stockprovided with the intentioninformation necessary to evaluate the specific risks relevant to such committee’s area of using the additional shares for anti-takeover purposes, although an issuance of additional shares could make an attempt to acquire control of the Company more difficult.responsibility.
Compensation Risks
Timing of the Proposed Amendment
If the proposed amendment to increase the number of authorized shares of Class A common stock is approved by the Company’s stockholders, the increase will become effective immediately upon the filing of a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware, which we expect to file promptly after the Special Meeting. The form of proposed certificate
of amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the authorized shares of our Class A common stock is attached to this proxy statement as Annex A.
Vote Required and Board Recommendation
The approval of this proposal to amend our Amended and Restated Certificate of Incorporation requires the affirmative vote of the holders of a majority of the common stock issued and outstanding and entitled to vote at the Special Meeting.
The Board recommends a vote “FOR” the proposal to amend the Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Class A common stock.
APPROVAL OF THE COMSTOCK HOLDING COMPANIES, INC.
2019 Omnibus Incentive Plan
On December 12, 2018, the Board adopted the Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan (the “2019 Omnibus Plan”). The 2019 Omnibus Plan will become effective as of the date it is approved by our stockholders.
The 2019 Omnibus Plan is intended to serve as the successor to the Comstock Homebuilding Companies, Inc. AmendedManagement and Restated 2004 Long-Term Incentive Compensation Plan (the “Prior Plan”). As of December 31, 2018, there were approximately 555,932 shares of our common stock subject to outstanding awards under the Prior Plan. As of such date, there were approximately 62,283 shares of our common stock reserved and available for future awards under the Prior Plan. If our stockholders approve the 2019 Omnibus Plan, all future equity awards will be made from the 2019 Omnibus Plan, and we will not grant any additional awards under the Prior Plan.
A summary of the 2019 Omnibus Plan is set forth below. This summary is qualified in its entirety by the full text of the 2019 Omnibus Plan, which is attached to this proxy statement as Annex B.
Promotion of Sound Corporate Governance Practices
We have designed the 2019 Omnibus Plan to include a number of features that reinforce and promote alignment of equity compensation arrangements for employees, officers and non-employee directors with the interests of stockholders and the Company. These features include, but are not limited to, the following:
No Discounted Stock Options or Stock Appreciation Rights (SARs). Stock options and SARs may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.
Prohibition on Repricing. The exercise price of a stock option or SAR may not be reduced, directly or indirectly, without the prior approval of stockholders, including by a cash repurchase of “underwater” awards.
Minimum Vesting Requirements. Subject to certain limited exceptions, awards granted to employees under the 2019 Omnibus Plan will either (i) be subject to a minimum vesting period of one year, or (ii) be granted solely in exchange for foregone cash compensation.
No Dividends on Unearned Awards. The 2019 Omnibus Plan prohibits the current payment of dividends or dividend equivalent rights on unearned awards.
Awards Subject to Clawback Policy. Awards under the 2019 Omnibus Plan will be subject to any compensation recoupment policy that the Company may adopt from time to time.
No Tax Gross-Ups. The 2019 Omnibus Plan does not provide for any tax gross-ups.
Key Data Relating to Outstanding Equity Awards and Shares Available
The following table includes information regarding outstanding equity awards and shares available for future awards under the Prior Plan as of December 31, 2018 (and without giving effect to approval of the 2019 Omnibus Plan under this Proposal):
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Summary of the 2019 Omnibus Plan
Purpose. The purpose of the 2019 Omnibus Plan is to promote the interests of the Company and its stockholders by strengthening the ability of the Company to attract, motivate, reward, and retain qualified individuals upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend, and to provide an opportunity for such individuals to acquire stock ownership and other rights that promote and recognize the financial success and growth of the Company.
Administration. The 2019 Omnibus Plan will be administered by a committee (the “Committee”) of the Board. The Committee will have the authority to designate participants; determine the type or types of awards to be granted to each participant and the number, terms and conditions thereof; establish, adopt or revise any rules and regulations as it may deem advisable to administer the 2019 Omnibus Plan; interpret the terms and intent of the 2019 Omnibus Plan and any award certificate; and make all other decisions and determinations that may be required under the 2019 Omnibus Plan. Unless and until changed by the Board, the Compensation Committee is designated ashave considered and discussed risks inherent in our business and compensation arrangements and have concluded that the Committeerisks associated with our compensation practices and policies are not likely to administer the 2019 Omnibus Plan.
Eligibility. The 2019 Omnibus Plan permits the grant of incentive awards to employees, officers, non-employee directors, and consultants of the Company and its affiliates as selected by the Committee. As of December 31, 2018, approximately twenty employees and five non-employee directors would be eligible to participate in the 2019 Omnibus Plan.
Permissible Awards. The 2019 Omnibus Plan authorizes the granting of awards in any of the following forms:
market-priced stock options to purchase shares of our common stock (forhave a term not to exceed 10 years), which may be designated under the Internal Revenue Code of 1986, as amended (the “Code”) as nonstatutory stock options (which may be granted to all participants) or incentive stock options (which may be granted to officers and employees but not to consultants or non-employee directors);
SARs, which give the holder the right to receive the difference (payable in cash or stock, as specified in the award certificate) between the fair market value per share of our common stockmaterial adverse effect on the date of exercise over the base price of the award (which cannot be less than the fair market value of the underlying stock as of the grant date);Company.
RSUs (including performance units), which represent the right to receive shares of common stock (or an equivalent value in cash, as specified in the award certificate) at a designated time in the future, subject to time-based and/or performance-based vesting conditions set by the Committee;
non-employee director awards, including DSUs, which represent a vested right to receive shares of common stock at a designated time in the future;
other stock-based awards that are denominated in, or valued by reference to, shares of our common stock; and
cash-based awards, including performance-based annual bonus awards.
Shares Available for Awards. If this Proposal 2 is approved (and if Proposal 1 is also approved), subject to adjustment in the event of stock splits and similar events, the aggregate number of shares of common stock reserved and available for issuance pursuant to awards granted under the 2019 Omnibus Plan will be 2,500,000.
Share Counting. Shares of common stock reserved and available for issuance pursuant to awards granted under the 2019 Omnibus Plan shall be counted against the 2019 Omnibus Plan reserve as follows:
To the extent an award granted under the 2019 Omnibus Plan is canceled, terminates, expires, is forfeited or lapses for any reason, including by reason of failure to achieve maximum performance goals, any unissued or forfeited shares will be added back to the 2019 Omnibus Plan share reserve and again be available for issuance under the 2019 Omnibus Plan.
Shares subject to awards settled in cash will be added back to the 2019 Omnibus Plan share reserve and again be available for issuance under the 2019 Omnibus Plan.
Shares withheld or repurchased from an award or delivered by a participant to satisfy tax withholding requirements will be added back to the plan share reserve and again be available for issuance pursuant to awards granted under the 2019 Omnibus Plan.
If the exercise price of a stock option is satisfied in whole or in part by delivering shares to the Company, the number of shares so tendered shall be added to the plan share reserve and will be available for issuance pursuant to awards granted under the 2019 Omnibus Plan.
To the extent that the full number of shares subject to a stock option or SAR is not issued upon exercise of the award for any reason, including by reason of net-settlement of the award, the unissued shares originally subject to the award will be added back to the plan share reserve and again be available for issuance pursuant to other awards granted under the 2019 Omnibus Plan.
Minimum Vesting Requirements. Except in the case of substitute awards granted in a business combination as described above, awards granted to employees under the 2019 Omnibus Plan will either (i) be subject to a minimum vesting period of one year, or (ii) be granted solely in exchange for foregone cash compensation. Notwithstanding the foregoing, the Committee may (i) permit acceleration of vesting of full-value awards in the event of a participant’s termination of service, or (ii) grant awards without the minimum vesting requirements described above with respect to awards covering 10% or fewer of the total number of shares authorized under the 2019 Omnibus Plan.
Treatment of Awards upon a Participant’s Termination of Service. Unless otherwise determined by the Committee, if a participant’s service terminates by reason of death or disability:
all of such participant’s outstanding options and stock appreciation rights will become fully exercisable;
the time-based vesting restrictions with respect to the participant’s awards will lapse as of the date of termination of service; and
the payout opportunities attainable under all of that participant’s outstanding performance-based awards will be deemed to have been fully earned as of the date of termination based upon (A) an assumed achievement of all relevant performance goals at the “target” level if the date of termination occurs during the first half of the applicable performance period, or (B) the actual level of achievement of all relevant performance goals against target, if the date of termination occurs during the second half of the applicable performance period, and, in either such case, there shall be a pro rata payout to the Participant.
Treatment of Awards upon a Change in Control. Unless otherwise provided in an award agreement or any special plan document governing an award:
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all of that participant’s outstanding options and stock appreciation rights will become fully vested and exercisable, and all time-based vesting restrictions on that participant’s outstanding awards will lapse; and
the target payout opportunities attainable under outstanding performance-based awards will be deemed to have been fully earned as of the change in control based upon (A) an assumed achievement of all relevant performance goals at the “target” level if the change in control occurs during the first half of the applicable performance period, or (B) the actual level of achievement of all relevant performance goals against target measured as of the date of the change in control, if the change in control occurs during the second half of the applicable performance period, and, in either such case, there will be a pro rata payout to the Participant within 60 days following the change in control.
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all of that participant’s outstanding options and stock appreciation rights will become fully vested and exercisable, and all time-based vesting restrictions on that participant’s outstanding awards will lapse; and
the target payout opportunities attainable under outstanding performance-based awards will be deemed to have been fully earned as of the change in control based upon (A) an assumed achievement of all relevant performance goals at the “target” level if the change in control occurs during the first half of the applicable performance period, or (B) the actual level of achievement of all relevant performance goals against target measured as of the date of the change in control, if the change in control occurs during the second half of the applicable performance period, and, in either such case, there will be a pro rata payout to the Participant within 60 days following the change in control.
In addition, subject to limitations applicable to certain qualified performance-based awards, the Committee
may, in its discretion accelerate awards upon the termination of service of a participant or the occurrence of a change in control. The Committee may discriminate among participants or among awards in exercising such discretion.
Limitations on Transfer; Beneficiaries. A participant may not assign or transfer an award other than by will or the laws of descent and distribution; provided, however, that the Committee may permit other transfers (other than transfers for value). A participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant’s death.
Adjustments. In the event of a transaction between the Company and its stockholders that causes the per-share value of the Company’s common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the share authorization limits under the 2019 Omnibus Plan will be adjusted proportionately, and the Committee must make such adjustments to the 2019 Omnibus Plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of any corporate event or transaction involving the Company, such as a merger, consolidation, reorganization, recapitalization, stock split, a stock dividend, spin-off, or a combination or exchange of shares, dividend in kind or other like change in capital structure, the Committee may, in its sole discretion, make such other appropriate adjustments to the terms of any outstanding awards to reflect such changes or distributions and to modify any other terms of outstanding awards.
Termination and Amendment. The Board may, at any time and from time to time, terminate or amend the 2019 Omnibus Plan, but if an amendment would constitute a material amendment requiring stockholder approval under applicable listing requirements, laws, policies or regulations, then such amendment will be subject to stockholder approval. No termination or amendment of the 2019 Omnibus Plan may, without the written consent of the participant, reduce or diminish the value of an outstanding award. Unless sooner terminated, the 2019 Omnibus Plan will terminate on the tenth anniversary of its adoption by the Board or, if the stockholders approve an amendment to the 2019 Omnibus Plan that increases the number of shares subject to the 2019 Omnibus Plan, the tenth anniversary of the date of such approval.
The Committee may amend or terminate outstanding awards. However, such amendments may require the consent of the participant and, unless approved by the stockholders, the exercise price of an outstanding option may not be reduced, directly or indirectly, and the original term of an option may not be extended.
Prohibition on Repricing. As indicated above under “Termination and Amendment,” outstanding stock options and SARs cannot be repriced, directly or indirectly, without stockholder approval. The exchange of an “underwater” stock option or SAR (i.e., an award having an exercise price in excess of the current market value of the underlying stock) for another award or for a cash payment would be considered an indirect repricing and would, therefore, require stockholder approval.
Clawback Policy. Awards under the 2019 Omnibus Plan will be subject to any compensation recoupment policy (sometimes referred to as a “clawback policy”) of the Company as adopted from time to time.
Certain U.S. Federal Income Tax Effects
The U.S. federal income tax discussion set forth below is intended for general information only and does not purport to be a complete analysis of all of the potential tax effects of the 2019 Omnibus Plan. It is based upon
laws, regulations, rulings and decisions now in effect, all of which are subject to change. State and local income tax consequences are not discussed, and may vary from locality to locality.
Nonstatutory Stock Options. There will be no federal income tax consequences to the optionee or to the Company upon the grant of a nonstatutory stock option under the 2019 Omnibus Plan. When the optionee exercises a nonstatutory option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the stock received upon exercise of the option at the time of exercise over the exercise price, and the Company will be allowed a corresponding federal income tax deduction. Any gain that the optionee realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.
Incentive Stock Options. There will be no federal income tax consequences to the optionee or to the Company upon the grant or exercise of an incentive stock option. If the optionee holds the option shares for the required holding period of at least two years after the date the option was granted and one year after exercise, the difference between the exercise price and the amount realized upon sale or disposition of the option shares will be long-term capital gain or loss, and the Company will not be entitled to a federal income tax deduction. If the optionee disposes of the option shares in a sale, exchange, or other disqualifying disposition before the required holding period ends, he or she will recognize taxable ordinary income in an amount equal to the excess of the fair market value of the option shares at the time of exercise over the exercise price, and the Company will be allowed a federal income tax deduction equal to such amount. While the exercise of an incentive stock option does not result in current taxable income, the excess of the fair market value of the option shares at the time of exercise over the exercise price will be an item of adjustment for purposes of determining the optionee’s alternative minimum taxable income.
SARs. A participant receiving a SAR under the 2019 Omnibus Plan will not recognize income, and the Company will not be allowed a tax deduction, at the time the award is granted. When the participant exercises the SAR, the amount of cash and the fair market value of any shares of stock received will be ordinary income to the participant and the Company will be allowed a corresponding federal income tax deduction at that time.
Restricted Stock. Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, a participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a restricted stock award is granted, provided that the award is nontransferable and is subject to a substantial risk of forfeiture. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the stock as of that date (less any amount he or she paid for the stock), and the Company will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Code Section 162(m). If the participant files an election under Code Section 83(b) within 30 days after the date of grant of the restricted stock, he or she will recognize ordinary income as of the date of grant equal to the fair market value of the stock as of that date (less any amount paid for the stock), and the Company will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Code Section 162(m). Any future appreciation in the stock will be taxable to the participant at capital gains rates. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Code Section 83(b) election.
Restricted or Deferred Stock Units. A participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a stock unit award is granted. Upon receipt of shares of stock (or the
equivalent value in cash) in settlement of a stock unit award, a participant will recognize ordinary income equal to the fair market value of the stock or other property as of that date (less any amount he or she paid for the stock or property), and the Company will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Code Section 162(m).
Cash-Based Awards. A participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a cash-based award is granted (for example, when the performance goals are established). Upon receipt of cash in settlement of the award, a participant will recognize ordinary income equal to the cash received, and the Company will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Code Section 162(m).
Tax Withholding. The Company has the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including employment taxes) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the 2019 Omnibus Plan.
Benefits to Named Executive Officers and Others
As of December 31, 2018, no awards had been granted under the 2019 Omnibus Plan. Awards will be made at the discretion of the Committee or pursuant to delegated authority. Therefore, it is not presently possible to determine the benefits or amounts that will be received by such persons or groups pursuant to the 2019 Omnibus Plan in the future.
Vote Required and Board Recommendation
The approval of this proposal to approve the 2019 Omnibus Plan requires the affirmative vote of the holders of a majority of the common stock present in person or represented by proxy, and entitled to vote at the Special Meeting.
The Board recommends a vote “FOR” the proposal to approve the Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan.
Director Compensation
In 2018,2019, we compensated our non-employee directors with an annual retainer fee of $40,000.$48,000. Our non-employee directors earned an additional $6,000 to serve on the Audit Committee and $4,000 to serve on the Compensation Committee. In addition, the chairman of the Compensation Committee, the chairman of the Audit Committee and the Audit Committee designated financial expert each earned an additional $4,000 fee. We offered our non-employee directors the option to elect to receive up to 50% of their 20182019 director compensation in the form of fully-vested shares of our Class A common stock. Other than pursuant to such election and except with respect to Mr. Chirite under the Governance Consulting Agreement (as noted above), we did not grant any equity awards to our directors during 2018.2019. Employees who also serve as directors receive no additional compensation for their services as a director.
8
The following table details the compensation earned by our non-employee directors in 2019:
Name |
| Fees Earned or Paid in Cash ($) (1) |
|
| Total ($) |
|
| Fees Earned or Paid in Cash ($) |
|
| Fees Earned or Paid in Equity ($) (1) |
|
| Total ($) |
| |||||
James A. MacCutcheon |
|
| 50,000 |
|
|
| 50,000 |
|
|
| 31,000 |
|
|
| 31,000 |
|
|
| 62,000 |
|
David M. Guernsey (2)(3) |
|
| 29,000 |
|
|
| 29,000 |
|
|
| 58,000 |
| ||||||||
Socrates Verses (3)(4) |
|
| 48,000 |
|
|
| 48,000 |
|
|
| 28,000 |
|
|
| 28,000 |
|
|
| 56,000 |
|
David M. Guernsey (3) |
|
| 47,000 |
|
|
| 47,000 |
| ||||||||||||
Robert P. Pincus (2) |
|
| 46,000 |
|
|
| 46,000 |
|
|
| 27,000 |
|
|
| 27,000 |
|
|
| 54,000 |
|
Norman D. Chirite |
|
| 44,000 |
|
|
| 44,000 |
|
|
| 26,000 |
|
|
| 221,000 |
|
|
| 247,000 |
|
A. Clayton Perfall (2)(5)(7) |
|
| 27,000 |
|
|
| 27,000 |
| ||||||||||||
Joseph M. Squeri (6) |
|
| — |
|
|
| — |
|
(1) Includes annual retainer, chairman and committee participation fees earned in 2018. To compensate our directors for their 2018
(1) | Includes annual retainer, chairman and committee participation fees earned in 2019. To compensate our directors for their 2019 services, we made cash payments and/or issued them the equivalent value in shares of our Class A common stock, based on the 20-day average market closing price of the stock, on each quarterly date of election. Messrs. MacCutcheon, Guernsey, Verses, Pincus, and Chirite elected to receive 50% of the fees earned in the form of cash payments and 50% of their fees earned in the form of fully-vested shares of our Class A common stock, in the following amounts of shares: 13,763, 12,875, 12,432, 11,988, and 11,543, respectively. |
(2) | Messrs. MacCutcheon, Guernsey, and Pincus served on the Audit Committee. |
(3) | Messrs. Guernsey, Verses, and Chirite served on the Compensation Committee. |
(4) | Mr. Versus served as the chairman of the Compensation Committee. |
(5) | Mr. MacCutcheon
|
(6) | Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of the restricted stock granted pursuant to the Governance Consulting Agreement. |
9
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of BDO USA, LLP (“BDO”), an independent registered public accounting firm, audited our consolidated financial statements for the fiscal years ended December 31, 2019 and December 31, 2018.
Our organizational documents do not require that our stockholders ratify the appointment of BDO as our independent registered public accounting firm. However, we are submitting the appointment of BDO to our stockholders for ratification because we believe it is a matter of good corporate practice. In the event of a negative vote on such ratification, the Audit Committee will reconsider its selection, but may still retain BDO. We anticipate that representatives of BDO will be present at the meeting, will have the opportunity to make a statement if they desire, and will be available to respond to appropriate questions.
The Board recommends a vote “FOR” the ratification of the appointment of BDO USA, LLP as our independent
registered public accounting firm for the fiscal year ended December 31, 2020.
The aggregate fees billed for the fiscal years ended December 31, 2019 and 2018 are as follows:
|
| 2019 |
|
| 2018 |
| ||
Audit Fees (1) |
| $ | 363,200 |
|
| $ | 379,495 |
|
Total |
| $ | 363,200 |
|
| $ | 379,495 |
|
(1) | Fees incurred for annual audit and quarterly reviews. |
The charter of the Audit Committee through Julyprovides that the duties and responsibilities of the Audit Committee include the pre-approval of all audit, audit-related, tax, and other services permitted by law or applicable SEC regulations (including fee and cost ranges) to be performed by our independent registered public accounting firm. All pre-approved services that will involve fees or costs exceeding pre-approved levels will also require specific pre-approval by the Audit Committee. Unless otherwise specified by the Audit Committee in pre-approving a service, the pre-approval will be effective for the 12-month period following pre-approval. The Audit Committee will not approve any non-audit services prohibited by applicable SEC regulations or any services in connection with a transaction initially recommended by the independent registered public accounting firm, the purpose of which may be tax avoidance and the tax treatment of which may not be supported by the Internal Revenue Code and related regulations. To the extent deemed appropriate, the Audit Committee may delegate pre- approval authority to the Chairman of the Audit Committee or any one or more other members of the Audit Committee provided that any member of the Audit Committee who has exercised any such delegation must report any such pre-approval decision to the Audit Committee at its next scheduled meeting. The Audit Committee will not delegate to management the pre-approval of services to be performed by the independent registered public accounting firm.
Our Audit Committee requires that our independent registered public accounting firm, in conjunction with our Chief Financial Officer, be responsible for seeking pre-approval for providing services to us and that any request for pre-approval must inform the Audit Committee about each service to be provided and must provide the details associated with the particular service to be provided.
All of the services provided by BDO described above under the captions “Audit Fees” and “Audit Related Fees” were approved by our Audit Committee.
10
The Audit Committee oversees the Company’s accounting and financial reporting processes and the audit of its financial statements, including the performance and compensation of the Company’s independent auditor. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls and the certification of the integrity and reliability of the Company’s internal controls procedures.
In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal years December 31, 2019, and 2018 with management. The Audit Committee also reviewed with BDO USA, LLP, the Company’s independent registered public accounting firm, the results of its audits. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) (including Auditing Standard No. 1301 (Communications with Audit Committees)). This discussion included, among other things, a review with the independent registered public accounting firm of the quality of the Company’s accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosure in the Company’s financial statements, including the disclosures related to critical accounting policies and practices used by the Company. The Audit Committee has reviewed permitted services under rules of the Securities and Exchange Commission as currently in effect and discussed with BDO USA, LLP its independence from management and the Company. The Audit Committee received from the independent registered public accounting firm the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee also has discussed with the independent registered public accounting firm its independence from the Company and has considered whether the provision of any non-audit services to the Company is compatible with the independence of the registered public accounting firm. In addition, the Audit Committee discussed the rules of the Securities and Exchange Commission that pertain to the Audit Committee and the roles and responsibilities of Audit Committee members.
Based on its review of the financial statements and the aforementioned discussions, the Audit Committee concluded that it would be reasonable to recommend, and on that basis did recommend, to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The Audit Committee also approved the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020.
Respectfully submitted by the Audit Committee, |
James A. MacCutcheon, Chair |
David M. Guernsey |
Robert P. Pincus |
11
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Section 14A of the Exchange Act requires that we provide our stockholders a non-binding, advisory vote to approve the compensation of our named executive officers.
The Compensation Committee will review and consider the results of the vote carefully. Depending upon the results of that review, the Compensation Committee will take such action, if any, as it deems appropriate. Because this vote is advisory, it is not binding on the Company, the Compensation Committee or the Board of Directors.
Before you vote on the resolution below, please read the “Summary Compensation Table” together with the related narrative disclosure and footnotes in this proxy statement. Our Board is asking stockholders to cast a non-binding, advisory vote FOR the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables, is hereby APPROVED.”
Our executive compensation program is comprised principally of salary and, from time to time, equity and cash bonus, designed to align compensation of our executives with stockholder value and financial performance and to achieve a balanced package that would attract and retain highly qualified senior officers and appropriately reflect each such officer’s individual performance and contributions. The Company regularly reviews its compensation programs and the overall compensation package paid to each of its executive officers to assess risk and to ensure that the program is structured appropriately in order to attain the Company’s strategic goals.
For the above reasons, the Board of Directors is asking stockholders to support this proposal. Although the vote we are asking you to cast is non-binding, the Compensation Committee and the Board value the views of our stockholders and will consider the outcome of the vote, among other factors, when determining future compensation arrangements for our executive officers. Following the vote at the 2020 annual meeting, the next advisory vote on executive compensation will take place in 2021.
The Board recommends a vote “FOR” this proposal.
12
Executive Officers of the Company
Set forth below is information regarding the current executive officers of the Company who are not also directors (information about Mr. Christopher Clemente and Mr. Joseph M. Squeri can be found above under Proposal 1 Election of Directors):
Jubal R. Thompson, 50, has served as our General Counsel since October 1998 and our General Counsel and Secretary since December 2004. Mr. Thompson has significant experience in areas of real estate acquisitions and dispositions, real estate and corporate finance, corporate governance, mergers and acquisitions and risk management.
Christopher M. Guthrie, 41, was named our Chief Financial Officer effective June 12, 2018. Mr MacCutcheon nowPrior to that, Mr. Guthrie served as Chief Financial Officer of Comstock Partners, the private company owned by Mr. Clemente. Mr. Guthrie joined the Company in 2014 and prior to joining the Company, served as Principal at Red Zone Capital where his responsibilities included management of the accounting and finance functions.
Timothy J. Steffan, 54, has served as the chairman and the designated financial expert of the Audit Committee since July 2018.
(6) Mr. Squeri has served asExecutive Vice President of CDS CapitalAsset Management, LC, an entity wholly owned byLeasing and Development since April 2018. Mr. Steffan has over 30 years of experience in asset management, leasing and real estate development for a variety of asset types and large-scale portfolios, including, without limitation, retail, office, multi-family, mixed use and hotel properties throughout the United States. Prior to joining the Company, Mr. Steffan served in various senior executive and as an employee who also serves as a director, did not receive additional compensation for his services as a director in 2018.management level positions with publicly traded, commercial real estate companies, including, without limitation, JMB Realty, Macerich [NYSE: MAC], and RPAI [NYSE: RPAI].
(7) Mr. Perfall is no longer on the Board as of July 2018.13
Summary Compensation Table
Because the Company qualifies as a “smaller reporting company,” under SEC rules, only our chief executive officer and next two highest paid executive officers who were serving as executive officers at the end of the last completed fiscal year are considered “named executive officers” for purposes of this proxy statement. The following table sets forth the compensation paid to the Company’s named executive officers for the fiscal years ended December 31, 20182019 and 2017.2018.
| Year |
| Salary ($) |
|
| Bonus ($)(1) |
|
| Stock Awards ($)(2) |
|
| Total ($) |
|
| Year |
| Salary ($) |
|
| Bonus ($)(2) |
|
| Stock Awards ($)(1) |
|
| Total ($) |
| |||||||||
Christopher Clemente |
| 2018 |
|
| 400,000 |
|
|
| 400,000 |
|
|
| — |
|
|
| 800,000 |
|
| 2019 |
|
| 500,000 |
|
|
| 500,000 |
|
|
| — |
|
|
| 1,000,000 |
|
Chairman of the Board and Chief Executive Officer (CEO) |
| 2017 |
|
| 400,000 |
|
|
| — |
|
|
| — |
|
|
| 400,000 |
|
| 2018 |
|
| 400,000 |
|
|
| 400,000 |
|
|
| — |
|
|
| 800,000 |
|
Jubal R. Thompson |
| 2018 |
|
| 300,000 |
|
|
| 222,000 |
|
|
| — |
|
|
| 522,000 |
| ||||||||||||||||||
General Counsel |
| 2017 |
|
| 300,000 |
|
|
| — |
|
|
| 191,100 |
|
|
| 491,100 |
| ||||||||||||||||||
Timothy Steffan |
| 2019 |
|
| 350,000 |
|
|
| 590,880 |
|
|
| 204,000 |
|
|
| 1,144,880 |
| ||||||||||||||||||
Executive Vice President, Asset Management |
| 2018 |
|
| 221,731 |
|
|
| 150,000 |
|
|
| 94,375 |
|
|
| 466,106 |
| ||||||||||||||||||
Christopher M. Guthrie |
| 2018 |
|
| 175,000 |
|
|
| 150,000 |
|
|
| — |
|
|
| 325,000 |
|
| 2019 |
|
| 350,000 |
|
|
| 218,750 |
|
|
| 204,000 |
|
|
| 757,550 |
|
Chief Financial Officer |
| 2017 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
| 2018 |
|
| 175,000 |
|
|
| 150,000 |
|
|
| — |
|
|
| 325,000 |
|
(1)No discretionary cash awards were made by the Board in the fiscal year ended December 31, 2017.
(2)Mr. Thompson was granted 32,500 options in 2017 at an exercise price per share of $2.14. Mr. Thompson was granted 65,000 shares of restricted stock in 2017. This column reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 (excluding forfeiture estimates) for such grants of options and restricted stock. The methodologies and assumptions utilized in the valuation of these options and restricted stock grants is set forth in Note 13 to our Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
(3)On June 12, 2018 Mr. Conover resigned as Chief Financial Officer of the Company and was replaced by Mr. Guthrie.
| (1) | Mr. Steffan was granted 50,000 stock options in 2018 and 80,000 shares of restricted stock in 2019. Mr. Guthrie was granted 80,000 shares of restricted stock in 2019. This column reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for such grants of stock options and restricted stock. The methodologies and assumptions utilized in the valuation of these stock options and restricted stock grants is set forth in Note 12 to our Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. |
(2) | Cash bonuses for 2019 were based upon the Company’s overall performance and each respective named executive officer’s satisfaction of applicable corporate, department and individual performance goals for the year ended December 31, 2019 and were further reviewed and approved by the Compensation Committee. |
Employment Arrangements with Executive Officers
In December 2004, we entered into an employment agreement with Christopher Clemente (the “2004 Employment Agreement”), which had an initial term of five years, with automatic one-year renewals, unless either party notifies the other that the term will not be extended. Under the agreement,2004 Employment Agreement, Mr. Clemente’s minimum annual salary was $550,000, subject to potential increase by our Board from time to time, and Mr. Clemente iswas eligible for a cash bonus of not less than 200% of his then-current salary, based upon the satisfaction of financial performance criteria. Mr. Clemente iswas eligible for awards under our equity incentive plan and any similar executive compensation plans we may adopt from time to time. In 2006, our Board increased the minimumMr. Clemente’s annual base salary payable towas $400,000, and Mr. Clemente to $700,000. To assistreceived a cash bonus of $400,000 for the Company with meeting its obligations, beginning January 1, 2009,year ending December 31, 2018. For the year ending December 31, 2019, Mr. Clemente’s annual base salary was $500,000, and Mr. Clemente volunteered to have his base salary reduced to $548,000. On January 1, 2015, our Board increased the minimum annual salary payable toreceived a cash bonus of $500,000. Mr. Clemente to $598,000. To assist the Company with meeting its obligations, beginning December 1, 2015, Mr. Clemente volunteered to have his base salary reduced to $400,000.did not receive any equity awards in 2019 or 2018. Mr. Clemente’s compensation is further detailed in the “Summary Compensation Table” set forth above.
On April 27, 2020, Mr. Clemente has agreed not to compete with us during the term of his employment and for two years after the termination of his employment. Mr. Clemente’s employment agreement and non-competition agreement allows him to engage in the following permitted business activities: (i) development of commercial or for-rent residential (such as apartment buildings) real estate investment properties; (ii) development of speculative land holdings as residential lots intended for construction of for-sale residential dwellings, provided, however, that any such development by any entity in which Mr. Clemente has a controlling interest or decision-making power, must first be offered to the Company at a fair market value price; and (iii) secured real estate lending to unrelated third parties. In addition, Mr. Clemente has agreed not to (x) engage in any for-sale residential construction activities in any of our then existing markets or in any market that we then plan to enter within six months; or (y) solicit our employees or certain other third parties for 24 months.
In August 2006, we entered into an amended and restated employment agreement (the “2020 Employment Agreement”) and a confidentiality and non-compete agreement (“2020 Confidentiality Agreement”, and collectively with Jubal R. Thompson, our General Counselthe 2020 Employment Agreement, the “2020 Agreements”). The 2020 Employment Agreement amends and Secretary, which agreement hadsupersedes the 2004 Employment Agreement and has an initial term of threefive years, with automatic one-year renewals, unless either party notifies the other that the term will not be extended. Under the agreement,2020 Employment Agreement, Mr. Thompson’sClemente’s minimum annual base salary was originally $200,000,is $500,000, subject to potential increase by theour Board from time to time. Pursuant to the original employment agreement, Mr. Thompson wasClemente is further eligible to receive afor an annual cash bonus of not less than 75%100% of his then-current annual base salary, based upon the satisfaction of certain performance criteria. In 2010, our Board increased the minimum annual salary payable to Mr. Thompson to $250,000. Mr. Thompson is entitled to receive an annual cash bonus of up to fifty percent (50%) of his minimum annual salary based upon the satisfaction of certainfinancial performance criteria also subject to potential increase byand the Board from time to time.Company’s goals. Mr. ThompsonClemente is also eligible to receivefor awards under
our equity incentive plan, employer stock purchase, and any similar executive compensation plans we may adopt from time to time. Effective January 1, 2015, our Board increased
The 2020 Agreements allow Mr. Clemente to engage in certain permitted business activities related to his private company but prohibit him from competing with us in the minimum annual salary payable tosame lines of business during the term of his
14
employment and for two years after the termination of his employment. Mr. Thompson to $300,000. Mr. Thompson’sClemente’s compensation is further detailed in the “Summary Compensation Table” set forth above.
We do not have an employment agreement with Christopher M. Guthrie, our Chief Financial Officer since JuneOfficer.
We do not have an employment agreement with Timothy J. Steffan, our Executive Vice President of Asset Management, Leasing and Development.
Material Terms of Restricted Stock Grants
On February 12, 2018.2019, the Company approved the 2019 Omnibus Incentive Plan (the “2019 Plan”), which replaced and superseded the Company’s 2004 Long-Term Compensation Plan. The 2019 Plan provides for the issuance of, among other things, restricted stock awards to employees in the form of time-based restricted stock unit awards (“Time-Based Grants”) and performance-based restricted stock unit awards (“Performance-Based Grants”). Time-Based Grants issued pursuant to the 2019 Plan are based upon a vesting schedule determined by our Compensation Committee, typically vesting equally over a four year period. Performance-Based Grants are issued based upon pre-determined performance objectives determined by our Compensation Committee from time to time, most recently tied to the Company’s cumulative EBITDA calculated over a three-year rolling period with an employee being able to vest between 60% to 120% of the target award measured on a pro-rata basis to determine the final vesting award at the end of the three year period. The specific terms and conditions of the Time-Based Grants and Performance-Based Grants are reviewed and approved by the Compensation Committee. The 2019 Plan, the Form of Time-Based Restricted Stock Unit Agreement and Form of Performance Based Restricted Stock Unit Agreement are Exhibits to the Annual Report filed on Form 10-K for the year ended December 31, 2019.
15
OUTSTANDING EQUITY AWARDS AT 20182019 FISCAL YEAR END
The following table sets forth the equity awards held by the named executive officers as of December 31, 2018.2019.
|
| Option Awards |
|
| Stock Awards |
| |||||||||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
|
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of shares or units of stock that have not vested (#) |
|
|
| Market value of shares or units of stock that have not vested ($)(6) |
| ||||||
Christopher Clemente |
|
| 3,571 |
|
|
|
| 0 |
|
|
|
| 7.63 |
|
| 12/11/24 |
|
|
| — |
|
|
|
| — |
| |
|
|
| 2,857 |
| (1) |
|
| — |
|
|
|
| 12.67 |
|
| 3/31/22 |
|
|
| — |
|
|
|
| — |
| |
|
|
| 9,000 |
|
|
|
| 3,000 |
| (1) (2) |
|
| 2.14 |
|
| 3/6/27 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 3,000 |
| (1) (3) |
|
| 5,880 |
|
Timothy Steffan |
|
| 12,500 |
|
|
|
| 37,500 |
| (4) |
|
| 3.30 |
|
| 6/27/2028 |
|
|
| — |
|
|
|
| — |
| |
|
|
| — |
|
|
|
| — |
|
|
|
| — |
|
| 0 |
|
|
| 80,000 |
| (5) |
|
| 156,800 |
| |
Christopher M. Guthrie |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
| 0 |
|
|
| 80,000 |
| (5) |
|
| 156,800 |
|
|
| Option Awards |
|
| Stock Awards |
|
| |||||||||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
|
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of shares or units of stock that have not vested (#) |
|
|
| Market value of shares or units of stock that have not vested ($)(4) |
|
| ||||||
Christopher Clemente |
|
| 3,571 |
|
|
|
| — |
|
|
|
| 7.63 |
|
| 12/11/24 |
|
|
| — |
|
|
|
| — |
|
| |
|
|
| 2,857 |
| (1) |
|
| — |
|
|
|
| 12.67 |
|
| 3/31/22 |
|
|
| — |
|
|
|
| — |
|
| |
|
|
| 3,000 |
|
|
|
| 9,000 |
| (1) (2) |
|
| 2.14 |
|
| 3/6/27 |
|
|
| — |
|
|
|
| — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 9,000 |
| (1) (3) |
|
| 15,120 |
|
|
Jubal R. Thompson |
|
| 35,714 |
|
|
|
| — |
|
|
|
| 4.97 |
|
| 2/12/20 |
|
|
| — |
|
|
|
| — |
|
| |
|
|
| 10,714 |
|
|
|
| — |
|
|
|
| 13.23 |
|
| 12/13/23 |
|
|
| — |
|
|
|
| — |
|
| |
|
|
| 3,571 |
|
|
|
| — |
|
|
|
| 7.63 |
|
| 12/11/24 |
|
|
| — |
|
|
|
| — |
|
| |
|
| 8125 |
|
|
|
| 24,375 |
| (2) |
|
| 2.14 |
|
| 3/6/27 |
|
|
| — |
|
|
|
| — |
|
| ||
|
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 65,000 |
| (3) |
|
| 81,900 |
|
|
Christopher M. Guthrie |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — | �� |
|
|
| — |
|
|
(1) | Reflects stock options and awards issued to Tracy Schar, Mr. Clemente’s wife, an employee of the Company. |
(3) | Reflects shares of restricted stock that vest 25% on March 6 of each of 2018, 2019, 2020 and 2021. |
(4) | Options vest 25% on June 27 of each of 2019, 2020, 2021 and 2022. |
(5) | Reflects shares of restricted stock that vest 25% on April 29 of each of 2020, 2021, 2022 and 2023. |
(6) | Based on the closing price per share of our Class A common stock on December 31, 2019 ($1.96), the last trading day of the 2019 fiscal year. |
(1)Reflects stock options and awards issued to Tracy Schar, Mr. Clemente’s wife, an employeeSummary of the Company.
(2)Options vest 25%Potential Payments on March 6 of each of 2018, 2019, 2020 and 2021.
(3)Reflects shares of restricted stock that vest 25% on March 6 of each of 2018, 2019, 2020 and 2021.
(4)Based on the closing price per share of our Class A common stock on December 31, 2018 ($1.68), the last trading day of the 2018 fiscal year.
POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
Termination or Change in Control
Pursuant to Messrs. Clemente and Thompson’s employment agreements,Mr. Clemente’s 2004 Employment Agreement, if such executive’shis employment is terminated by us without cause or if such executivehe resigns for good reason, as such terms are defined in the agreements,his agreement, then such executivehe is entitled to continue to receive his then-current salary for 24 and 12 months, respectively. Messrs.months. Mr. Clemente and Thompson will also be entitled to receive a cash payment equal to a multiple of 100% oftwo (2) times the bonus eachthat he would have been entitled to had he remained our employee until the end of our fiscal year (Mr. Clemente, 2x; Mr. Thompson, 1x).year. This cash payment will be due and payable on the earlier of (i) 90 days after our last payment of such executive’shis then-current salary, or (ii) the end of the fiscal year in which the termination occurs. In the event we terminate such executiveMr. Clemente without cause or such executivehe resigns for good reason within the six calendar month period prior to the effective date of a change in control (as defined in the agreement) or within the 12 calendar month period following the effective date of a change in control, the cash payment will be due and payable in full within 30 days of the effective date of the change in control. In addition, Messrs.Mr. Clemente and Thompson will be entitled to continue to participate in employee benefit plans, programs and arrangements for a period of 12 months in the case of Mr. Clemente, or 6 months, in the case of Mr. Thompson, following theirhis termination of employment.
If Mr. Clemente’s employment is terminated by reason of death or disability, then he is entitled to receive his then-current salary for 12 months. If Mr. Thompson’s employment is terminated by reason of death or disability, then he is entitled to receive his then-current salary for a period of 12 months or 6 months, respectively. The executivesClemente will also be entitled to any earned but unpaid bonus with respect to the fiscal year in which his death or disability occurred.
The following table describesOther than the potential payments and benefitstransactions described below, from January 1, 2018 through December 31, 2019, there have not been any transaction or series of similar transactions to which our current executive officers would be entitled uponwe were a participant in which the happeningamount involved exceeded $120,000 or 1% of the following events: (i) a termination without cause or resignation for good reason and (ii) death or disability. Calculations for this table are based onaverage of the assumption that the triggering event took place onCompany’s total assets as of December 31, 2018 and December 31, 2019, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had a direct or indirect material interest.
We believe that all of these transactions are on terms that are comparable to or not less favorable than terms that would or could have been obtainable from unaffiliated third parties. All proposed future related party transactions will be submitted to our Board for review and will require a majority vote of the independent directors
16
for approval. Ongoing transactions are reviewed annually to ensure that they are still comparable to or not less favorable than terms that would have or could have been obtainable from unaffiliated third parties. Our Chief Financial Officer and/or our General Counsel, assuming they are not party to the proposed transaction, coordinates with the independent directors in evaluating the fairness to us of the proposed transactions.
On December 31, 2009, the Company, through an eventaffiliate, Comstock Property Management, L.C. (“CPM”), entered into a three-year lease for approximately 7,620 square feet of office space for its corporate headquarters at 1886 Metro Center Drive, Reston, Virginia from Comstock Asset Management, L.C. (“Comstock AM”), an affiliate wholly-owned by Mr. Clemente. On September 19, 2012, the Company increased the leased premises to 10,056 square feet and extended the lease term for five years. On October 1, 2016, the Company amended the lease reducing the leased space to 6,398 square feet, and extended the lease term for up to three years. On September 30, 2018, CPM assigned the lease to CDS Asset Management, LC (“CAM”), an entity wholly owned by the Company. On October 1, 2018, the Company amended the lease to increase the leased premises to 10,048 square feet and on October 1, 2019, the Company amended the lease to extend the term for one year, and the lease now expires on September 30, 2020. For the years ended December 31, 2019 and 2018, total payments made under this lease agreement were $600,000 and $400,000, respectively.
On February 23, 2009, Comstock Homes of Washington, L.C., a changewholly-owned subsidiary of control, the Board hasCompany, entered into a Services Agreement with Comstock AM, to provide services related to real estate development and improvements, legal, accounting, marketing, information technology and additional support services. Pursuant to the Services Agreement, the Company shall not exercised its discretion to acceleratebe responsible for any out-of-pocket or third-party costs associated with the stock awards.services provided. For the year ended December 31, 2018, the Company billed Comstock AM $0.12 million for services and out-of-pocket expenses incurred. Revenues from this arrangement are included within ‘Revenue – asset management’ within the consolidated statement of operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2018. As of December 31, 2019 and 2018, the Company was not owed under this contract.
Name |
| Termination without Cause or Resignation for Good Reason (in connection with a Change of Control) ($) |
|
|
| Termination without Cause or Resignation for Good Reason (not in connection with a Change of Control) ($) |
|
|
| Death or Disability ($)(3) |
|
| |||
Christopher Clemente |
|
| 1,600,000 |
|
|
|
| 1,600,000 |
|
|
|
| 400,000 |
|
|
Jubal R. Thompson |
|
| 450,000 |
|
|
|
| 450,000 |
|
|
|
| 300,000 |
| (1) |
Christopher M. Guthrie (2) |
|
| — |
|
|
|
| — |
|
|
|
| — |
|
|
(1)ReflectsOn October 17, 2014, the amount Mr. Thompson’s estate would receiveCompany entered into a promissory note with Comstock Growth Fund, L.C. (“CGF”) whereby CGF made a loan to the Company in the eventinitial principal amount of his death. If$10.0 million and a maximum capacity of up to $20.0 million (the “Loan”). On December 18, 2014, the unsecured promissory note was amended and restated to provide for a maximum capacity of $25.0 million. All of the other terms of the unsecured promissory note remained the same. The Company borrowed additional principal loan amount of $6.2 million under the Amended and Restated CGF promissory note bringing the total aggregate principal amount borrowed to $16.2 million. The CGF loan had a three-year term carrying a floating interest rate of LIBOR plus 9.75% with a 10% floor. On May 23, 2018, the Company entered into a Membership Interest Exchange and Subscription Agreement (the “Membership Exchange Agreement”), together with a revised promissory note agreement, in which a note (“CGF Note”) with an outstanding principal and accrued interest balance of $7.7 million was exchanged for 1,482,300 shares of the Company’s Series C Non-Convertible Preferred Stock, par value $0.01 per share and a stated liquidation value of $5.00 per share (the “Series C Preferred Stock”), issued by the Company to Comstock Development Services, LC (“CDS”), a company wholly owned by Mr. Thompson’s employment is terminated by reasonClemente. The Company exchanged the preferred equity for 91.5% of disability, then he isCDS membership interest in the CGF Note. Concurrently, the face amount of the CGF Note was reduced to $5.7 million, bearing interest at a fixed rate of 10% per annum, made monthly in arrears. The Company had approximately $5.7 million of outstanding borrowings and accrued interest under the CGF loan, net of discounts, as of December 31, 2019 and 2018, respectively. During the years ended December 31, 2019 and 2018, the Company made interest payments of $0.6 million, respectively, and did not make principal payments to CGF. The maturity date for the CGF Note was April 16, 2020. On April 13, 2020 the Company retired the CGF Note.
In order to fund the Loan, CGF obtained commitments and entered into subscription agreements with certain accredited investors (the “CGF Members”), pursuant to which the CGF Members purchased membership interests in CGF for an aggregate purchase price of $16.2 million (the “CGF Private Placement”). In connection with the CGF Private Placement, the Company issued warrants to purchase shares of our Class A common stock to CGF, which, pursuant to the terms of the governing documents of CGF, were distributed to the CGF Members other than CDS. The warrants represented the right to purchase an aggregate amount of 76,244 shares of our Class A common stock, having an aggregate fair value of $432,500. Additionally, the CGF Members were entitled to receive his then-current salarya distribution of shares of our Class A common stock, purchased by such CGF Member (including to CGF Members that are affiliates or insiders). On May 12, 2015, the Company issued and distributed 226,857 shares of our Class A common stock to CGF. Following CGF’s acquisition of shares of our Class A common stock, CGF distributed the shares to the CGF Members.
17
The CGF Members included unrelated third-party investors along with certain related parties, who contributed the following amounts to CGF: $125,000 by Robert P. Pincus, director of the Company; $100,000 by A. Clayton Perfall, a then-director of the Company; $300,000 by James A. MacCutcheon, director of the Company; $500,000 by Joseph M. Squeri, current officer and director of the Company; $350,000 by Tracy Schar, wife of Mr. Clemente; $150,000 by Thomas Squeri, brother of the former Chief Financial Officer of the Company; $250,000 by David M. Guernsey, director of the Company; $250,000 by Norman D. Chirite, director of the Company; and $250,000 by Stephen Squeri, brother of the former Chief Financial Officer of the Company. In addition, CDS contributed $10 million to CGF. The Company is the manager of CGF but does not own any membership interests in CGF.
On February 20, 2015, the Company entered into an acquisition and construction loan for 6$7,250,000 with Cardinal Bank in connection with its Stone Ridge project in Loudoun County, Virginia (the “Stone Ridge I Loan”). The Stone Ridge I Loan provided for a variable interest rate of Prime plus one half percent, with an interest rate floor of 4.5% per annum. The Stone Ridge I Loan was fully guaranteed by the Company, with a limited, step-down guaranty by Mr. Clemente. The Stone Ridge I Loan was paid in full and the guarantee has been released in connection with the completion of sales at the project in 2018.
On April 29, 2015, the Company entered into an acquisition and construction loan for $2,250,000 with United Bank in connection with its Estates at Leeland project in Stafford County, Virginia (the “Leeland Loan”). The Leeland Loan provided for a variable interest rate of LIBOR plus three and one half percent, with an interest rate floor of 4.25% per annum. The Leeland Loan was fully guaranteed by the Company, and on December 8, 2017, the lender also received a payment guaranty from Mr. Clemente for the full amount of the Leeland Loan. The Leeland Loan was paid in full and the guarantee has been released as of May 31, 2018.
On December 29, 2015, Comstock Growth Fund II, L.C. (“CGF II”), an administrative entity managed by the Company, was created for the purpose of extending loans to the Company. CGF II entered into a subscription agreement with CDS pursuant to which CDS purchased membership interests in CGF II for an initial aggregate principal amount of $5,000,0000 (the “CGF II Private Placement”). Also, on December 29, 2015, the Company entered into a revolving line of credit promissory note with CGF II whereby CGF II made a loan to the Company in the initial principal amount of $5,000,000 and a maximum amount available for borrowing of up to $10,000,000 with up to a three year term. The interest rate was 10% per annum, and interest payments accrued and paid in kind monthly for the first year, and then paid current monthly in arrears beginning in December 31, 2016. On December 29, 2017, the CGF II loan was extended one year to December 31, 2018. On May 23, 2018, the Company entered into a Note Exchange and Subscription Agreement (the “Note Exchange Agreement”) in which the CGF II note with an outstanding principal and accrued interest balance of $3,700,000 was exchanged for 738,390 shares of the Company’s Series C Preferred Stock, issued by the Company to CGF II. The CGF II note was cancelled in its entirety effective as of the date of the Note Exchange Agreement. As a result of the conversion of CGF Note & CGF II note, the Company recognized a gain of $3.7 million, which was recorded in ‘Additional paid-in capital’ in the consolidated balance sheet and an income tax benefit of $500,000, which was recorded in the consolidated statement of operations for the three and nine months ended September 30, 2018.
On August 15, 2016, Comstock Investors X, L.C. (“Investors X”) entered into a subscription agreement with an accredited investor (“Investors X Class B Member”), pursuant to which the Investors X Class B Member purchased membership interests in Investors X for an initial amount of $5.0 million, which is part of an aggregate capital raise of $14.5 million (the “Investors X Private Placement”). The Investors X Class B Member is CDS. In October 2016, the Investors X Class B Member purchased additional interests in the Investors X Private Placement in an amount of $9,500,000 resulting in an aggregate subscription amount of $14,500,000. In connection with the Investors X Private Placement, the Company issued a total of 150 warrants for the purchase of shares of the Company’s Class A common stock, having an aggregate fair value of $258,000. The Investors X Member was entitled to a cumulative, preferred return of 6% per annum, compounded annually on the capital account balance. The Company has the right to repurchase the interest of the Investors X Class B Member at any time, provided that (i) all of the Investors X Class B Members’ interest is acquired, (ii) the purchase is made in cash and (iii) the purchase price equals the Investors X Class B Members’ capital account plus accrued priority return. On October 13, 2017, the Operating Agreement for Investors X was amended to increase the maximum capital raise to $19,500,000 that may be drawn as needed at the request of the Company. Additionally, in October 2017, Investors X received
18
proceeds of $5.0 million under the amended Operating Agreement to be used for the planned construction of the Company’s Totten Mews, Towns at 1333, Richmond Station, and Marwood East projects (collectively, the “Investors X Projects”). As part of this additional contribution, 50,000 warrants for the purchase of the Company’s Class A common stock, having an aggregate fair value of $258,000 were granted to the Investors X Class B Member. Proceeds of the Investors X Private Placement were utilized (A) to provide capital needed to complete the Investors X Projects, (B) to reimburse the Company for prior expenditures incurred on behalf of the Investors X Projects, and (C) for general corporate purposes of the Company. On April 30, 2019, the Company entered into a Master Transfer Agreement (the “MTA”) with CDS and FR54, LC (“FR54”), an entity also controlled by Mr. Clemente. Pursuant to the MTA, CHCI transferred to CDS the management of and its Class A membership interests (“Class A Units”) in Investors X, in exchange for the transfer of CDS’ Class B membership interests in Investors X, which entitled CHCI to priority distribution of all distributable cash flow from Investor X’s projects (“Class B Units”). As additional consideration for the transfer of the Class B Units, CHCI issued to CDS (i) 1,220,000 shares of the Company’s Series C Preferred Stock, and (ii) 3,100,000 shares of the Company’s Class A common stock, par value $0.01 per share, valued at an above market price of $4.00 per share for purposes of the transaction. Additionally, pursuant to the MTA, FR54 transferred to CHCI 579,158 shares of Series C Preferred Stock, which were immediately cancelled by CHCI, in exchange for the issuance of 723,947 newly issued shares of the Company’s Class A common stock valued at an above market price of $4.00 per share for purposes of the transaction.
On September 27, 2016, Dresden, LLC, Comstock Emerald Farm, L.C., the Company, and Mr. Clemente, entered into an acquisition and construction loan for the Company’s Emerald Farm and Woods at Spring Ridge project in Frederick, Maryland with Cardinal Bank for $4,625,250, at an interest rate of Prime, plus one half percent, with a rate of no less than 4.5% (the “Acquisition Loan”). The Acquisition Loan maturity is eighteen months, with a potential six (6) month extension if certain sales criteria are met. The Acquisition Loan is fully guaranteed by the Company and Mr. Clemente provided a maximum guarantee of up to $2,000,000. As part of the MTA, the Company was released from all liability associated with the Acquisition Loan.
On February 15, 2017, the Company entered into a secured construction loan for $4.9 million with EagleBank in connection with its Totten Mews townhome project in Washington, D.C. (the “Totten Loan”). The Totten Loan provided for a variable interest rate of LIBOR plus 3.5% per annum, with an interest rate floor of 4.75% per annum. The Totten Loan was fully guaranteed by Mr. Clemente and CDS. In January 2018, the Totten Loan was paid in full and the guarantee has been released.
On March 31, 2017, the Company entered into an acquisition and construction loan for $3.0 million with Cardinal Bank in connection with its Solomons Choice project in Anne Arundel County, Maryland (the “Solomons Loan”). The Solomons Loan provided for a variable interest rate of Prime plus one half percent, with an interest rate floor of 4.5% per annum. The Solomons Loan was fully guaranteed by the Company, with a limited guaranty by Mr. Clemente who has provided a maximum guarantee of up to $1,000,000. The Solomons Loan was paid in full and the guarantee has been released in connection with the completion of sales at the project in 2018.
On July 17, 2017, the Company entered into an acquisition loan for $1,100,000 with Mainstreet Bank in connection with the purchase of the assets of an environmental services company known as JK Environmental, in Conshohocken, Pennsylvania (the “JK Loan”). The JK Loan provides for a flat interest rate of 6.5% per annum. The JK Loan is fully guaranteed by Mr. Clemente.
On August 16, 2017, the Company entered into a second acquisition and construction loan for $7,730,000 with Firstrust Bank in connection with its Stone Ridge project in Loudoun County, Virginia (the “Stone Ridge II Loan”). The Stone Ridge II Loan provided for a variable interest rate of LIBOR plus four percent, with an interest rate floor of 4.50% per annum. The Stone Ridge II Loan was guaranteed by the Company and Mr. Clemente for the full amount of the Stone Ridge II Loan. The Stone Ridge II Loan was paid in full and the guarantee was released in connection with the completion of sales at the project in 2018.
On January 10, 2018, the Company entered into a second acquisition and construction loan for $9,822,000 with Firstrust Bank in connection with its Totten Mews project in Washington, DC (the “Totten II Loan”). The Totten II Loan provided for a variable interest rate of LIBOR plus three percent, with an interest rate floor of 4.25% per annum. The Totten II Loan was fully guaranteed by the Company, with a limited guaranty by Mr.
19
Clemente who provided a maximum guarantee of up to 50% of the principal amount of the Totten II Loan. As part of the MTA, the Company was released from all liability associated with the Totten II Loan.
On March 30, 2018, CAM entered into a master asset management agreement effective January 2, 2018 (the “AMA”) with CDS. On April 30, 2019, CAM entered into an amended and restated master asset management agreement effective January 2, 2019 (“2019 AMA”). Pursuant to the 2019 AMA, CDS has engaged CAM to manage and administer the CDS’ commercial real estate portfolio and the day to-day operations of CDS and each property-owning subsidiary of CDS. Pursuant to the terms of the 2019 AMA, CAM will provide investment advisory, development and asset management services necessary to build out, stabilize and manage certain assets.
Under the 2019 AMA, CDS will pay CAM annual fees equal to $150,000.the greater of either (i) an aggregate amount equal to the sum of (a) an asset management fee equal to 2.5% of revenues generated by certain anchor properties in CDS’ commercial real estate portfolio (“Anchor Portfolio”); (b) a construction management fee equal to 4% of all costs associated with Anchor Portfolio projects in development; (c) a property management fee equal to 1% of the Anchor Portfolio revenues, (d) an acquisition fee equal to up to 0.5% of the purchase price of acquired assets; and (f) a disposition fee equal to 0.5% of the sales price of an asset on disposition; or (ii) an aggregate amount equal to the sum of (x) the employment expenses of personnel dedicated to providing services to the Anchor Portfolio, (y) the costs and expenses of the Company related to maintaining the public listing of its shares and complying with related regulatory and reporting obligations, and (z) a fixed annual payment of $1,000,000. CAM is further entitled to certain additional fees, including (A) an incentive fee equal to 10% of the free cash flow of each of the real estate assets comprising the Anchor Portfolio after calculating a compounding preferred return of 8% on CDS invested capital (B) an investment origination fee equal to 1% of raised capital, (C) a leasing fee equal to $1.00/sf for new leases and $0.50/sf for renewals; and (D) mutually agreeable loan origination fees related to the Anchor Portfolio. During the year ended December 31, 2019, the Company recorded revenue of $15.1 million which is included in ‘Revenue-asset management’ in the consolidated statement of operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2019.
(2)On December 14, 2018, Dresden, LLC entered into a construction loan for the remaining lots of the Company’s Woods at Spring Ridge project in Frederick, Maryland with John Marshall Bank for $2,700,000, at an interest rate of Prime, plus one half percent, with a rate of no less than 5.5% (the “Dresden Loan”). The Dresden Loan was fully guaranteed by Mr. Guthrie does not haveClemente. As part of the MTA, the Company was released from all liability associated with the Dresden Loan.
On April 30, 2019, CAM entered into a Business Management Agreement (the “Management Agreement”) with Investors X, whereby CAM provides Investors X with asset and professional services related to the wind down of the Company’s divested homebuilding operations and the continuation of services related to the Company’s divested land development activities. The aggregate fee payable to CAM from Investors X under the Management Agreement is $937,500, payable in fifteen quarterly installments of $62,500 each.
On July 1, 2019, CAM entered into a Business Management Agreement (the “BC Management Agreement”) with CDS, whereby CAM provides CDS with professional management and consultation services, including, without limitation, consultation on land development and real estate transactions, for a residential community located in Monteverde, Florida. The initial term of the BC Management Agreement expires on December 31, 2020, subject to automatic, successive one (1) year extensions, unless sooner terminated in accordance with the terms of the BC Management Agreement. The BC Management Agreement provides that CDS will pay CAM an employment or severanceannual management fee equal to $337,500, payable in equal monthly installments during the term commencing on July 1, 2019, and will reimburse CAM for certain expenses.
On December 30, 2019, the Company made an investment related to the purchase of the Hartford, a stabilized commercial office building located at 3101 Wilson Boulevard in the Clarendon area of Arlington County, Virginia (the “Hartford”). The Company’s maximum amount of investment related to the purchase of the Hartford is $1.2 million. In conjunction with the investment, the Company entered into an operating agreement with Comstock Partners, LC, an entity that is controlled by Mr. Clemente, to form Comstock 3101 Wilson, LC, to purchase the Hartford. Pursuant to the operating agreement, the Company held a minority membership interest of the Hartford and the remaining membership interests of the Hartford where held by Partners. At the closing of the acquisition of the Hartford, the Company received an acquisition fee of $500 thousand.
20
On March 19, 2020, the Company and CDS entered into a revolving line of credit agreement (the “CDS Line of Credit”) whereby CDS made a loan to the Company in the maximum amount of $10 million with any disbursement under the CDS Line of Credit maturing and becoming fully due and payable twelve (12) months from the effective date of the disbursement (“Maturity Date”), subject to automatic extensions of the Maturity Date for twelve (12) month intervals unless the CDS Line of Credit is sooner terminated. The CDS Line of Credit matures on March 19, 2025 and further provides that the Company and CDS may enter into a separate note evidencing a disbursement reasonably expected to have a term in excess of twelve (12) months. Disbursements under the CDS Line of Credit bear interest at the sum of (i) the Prime rate as reported by the Wall Street Journal, and (ii) 1%.
On March 27, 2020, the Company entered into a promissory note with CDS whereby CDS made a loan to the Company in the initial principal amount of $5.5 million (the “CDS Note”) with a maturity date of April 30, 2023. The proceeds of the CDS Note were issued pursuant to the CDS Line of Credit and are subject to the terms of CDS Line of Credit. The proceeds of the CDS Note were used to retire the CGF Note on April 13, 2020.
Procedures for Approval of Related Person Transactions
Our policy for the review and approval of transactions between us and related persons is set forth in our Corporate Governance Guidelines. The independent directors will meet to review and approve or reject all related party transactions (as specified in Item 404 of Regulation S-K) and review and make recommendations to the full Board regarding approval or rejection of any contracts or other transactions with current or former executive officers of the Company, including consulting arrangements, employment agreements, change-in-control agreements, severance agreements, termination agreements, and loans to employees made or guaranteed by the Company.
(3)The potential payments from Death or Disability calculation does not include any applicable earned but unpaid bonus that would be payable on a pro-rated basis.
OTHER INFORMATION
Beneficial Ownership of Principal Stockholders, Directors and Officers.
The following table sets forth certain information regarding the beneficial ownership of our common stock on September 30, 2018,March 31, 2020, by (1) each director and named executive officer of the Company, (2) all directors and executive officers of the Company as a group, and (3) each person known by us to own more than 5% of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our Class A common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after September 30, 2018,March 31, 2020, are deemed outstanding, while the shares are not deemed outstanding for purposes of computing percentage ownership of any other person. Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting or investment power with respect to all shares beneficially owned, subject to community property laws where applicable.
21
| Class A Common Stock (1) |
|
| Class B Common Stock |
|
| Beneficial Ownership of Class A and Class B Common Stock Combined |
|
| Class A Common Stock (1) |
|
| Class B Common Stock |
|
| Beneficial Ownership of Class A and Class B Common Stock Combined |
| |||||||||||||||||||||||||||||||
Name of Beneficial Owner |
| Number |
|
| Percent of Class |
|
| Number |
|
| Percent of Class |
|
| Economic (%) |
|
| Voting (%)(1) |
|
| Number |
|
| Percent of Class |
|
| Number |
|
| Percent of Class |
|
| Economic (%) |
|
| Voting (%)(1) |
| ||||||||||||
Named Executive Officers and Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher Clemente (2) |
|
| 986,394 |
|
|
| 26.55 | % |
|
| 220,250 |
|
|
| 100.00 | % |
|
| 30.66 | % |
|
| 61.12 | % |
|
| 4,823,037 |
|
|
| 60.48 | % |
|
| 220,250 |
|
|
| 100.00 | % |
|
| 61.54 | % |
|
| 72.06 | % |
Jubal R. Thompson |
|
| 153,687 |
|
|
| 4.14 | % |
|
| — |
|
|
| — |
|
|
| 3.91 | % |
|
| 2.19 | % |
|
| 190,355 |
|
|
| 2.39 | % |
|
| — |
|
|
| — |
|
|
| 2.32 | % |
|
| 1.69 | % |
Joseph M. Squeri |
|
| 165,299 |
|
|
| 4.45 | % |
|
| — |
|
|
| — |
|
|
| 4.20 | % |
|
| 2.36 | % |
|
| 176,681 |
|
|
| 2.22 | % |
|
| — |
|
|
| — |
|
|
| 2.16 | % |
|
| 1.57 | % |
A. Clayton Perfall |
|
| 75,354 |
|
|
| 2.03 | % |
|
| — |
|
|
| — |
|
|
| 1.91 | % |
|
| 1.07 | % | ||||||||||||||||||||||||
James A. MacCutcheon |
|
| 134,155 |
|
|
| 3.61 | % |
|
| — |
|
|
| — |
|
|
| 3.41 | % |
|
| 1.91 | % |
|
| 151,671 |
|
|
| 1.90 | % |
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| — |
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| — |
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| 1.85 | % |
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| 1.34 | % |
Norman D. Chirite |
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| 100,259 |
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| 1.26 | % |
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| — |
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| — |
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| 1.22 | % |
| * |
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Socrates Verses (3) |
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| 99,981 |
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| 1.25 | % |
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| — |
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| — |
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| 1.22 | % |
| * |
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David M. Guernsey |
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| 79,235 |
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| * |
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| — |
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| — |
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| * |
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| * |
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Robert Pincus (4) |
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| 68,181 |
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| * |
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| — |
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| — |
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| * |
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| * |
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Timothy Steffan |
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| 25,000 |
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| * |
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| — |
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| — |
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| * |
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| * |
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Christopher Guthrie |
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| — |
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| — |
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| — |
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| — |
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| — |
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| — |
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All directors and executive officers as a group (10 persons) |
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| 5,714,400 |
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| 71.66 | % |
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| 220,250 |
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| 100.00 | % |
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| 72.42 | % |
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| 79.96 | % |
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| Class A Common Stock (1) |
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| Class B Common Stock |
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| Beneficial Ownership of Class A and Class B Common Stock Combined |
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Name of Beneficial Owner |
| Number |
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| Percent of Class |
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| Number |
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| Percent of Class |
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| Economic (%) |
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| Voting (%)(1) |
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Norman D. Chirite |
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| 82,047 |
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| 2.21 | % |
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| — |
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| — |
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| 2.08 | % |
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| 1.17 | % |
Socrates Verses (3) |
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| 80,325 |
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| 2.16 | % |
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| — |
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| — |
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| 2.04 | % |
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| 1.14 | % |
David M. Guernsey |
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| 72,885 |
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| 1.96 | % |
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| — |
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| — |
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| 1.85 | % |
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| 1.04 | % |
Robert Pincus (4) |
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| 49,246 |
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| 1.33 | % |
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| — |
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| — |
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| 1.25 | % |
| * |
| |
Christopher Guthrie |
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| — |
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| — |
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| — |
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| — |
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| — |
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| * |
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All directors and executive officers as a group (10 persons) |
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| 1,799,392 |
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| 48.43 | % |
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| 220,250 |
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| 100.00 | % |
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| 51.32 | % |
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| 72.70 | % |
* | Less than 1% of the outstanding shares of common stock |
* Less than 1% of the outstanding shares of common stock
(1)
| Does not include shares of our Class A common stock issuable upon conversion of our Class B common stock. Percentage total voting power represents voting power with respect to all shares of our Class A and Class B common stock, as a single class. Each holder of our Class B common stock is entitled to fifteen votes per share of Class B common stock and each holder of our Class A common stock is entitled to one vote per share of Class A common stock on all matters submitted to our stockholders for a vote. The Class A common stock and the Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be provided in our certificate of incorporation or as required by law. The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis. |
(2) | Includes the following held by Mr. Clemente’s wife, Tracy Schar: 49,841 shares of our Class A common stock including exercisable stock options to purchase 11,857 shares and warrants of 5,000 to purchase shares of our Class A common stock. Includes 3,571 shares of Class A Common Stock subject to exercisable stock options held by Mr. Clemente. 9,904 shares of our Class A common stock and 195,250 shares of our Class B common stock are held by FR54, LLC, an entity that is owned by Mr. Clemente and his wife. 12,852 shares of our Class A common stock are held in various trusts for the benefit Mr. Clemente’s children. Mr. Clemente is the custodian for each trust. 124,465 shares of our Class A common stock are held by Stonehenge Funding, LC, an entity wholly owned by Mr. Clemente. 3,660,235 shares of our Class A common stock are held by Comstock Development Services, LC, an entity wholly owned by Mr. Clemente. |
(3) | Includes 285 shares of Class A common stock, with respect to which Mr. Verses disclaims beneficial ownership. The shares are held in trust for the benefit of Mr. Verses’ children. Mr. Verses’ wife is the custodian of these trusts. |
(4) | 1,382 shares are held by RLR Investment Management, LLC, an entity that is owned by Mr. Pincus. |
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information as of December 31, 2018,2019, regarding compensation plans under which the Company’s equity securities are authorized for issuance:issuance.
22
| Number of Securities to Be Issued Upon Exercise of Outstanding Options (a)(2) |
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| Weighted-Average Exercise Price of Outstanding Options (b) |
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| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) |
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| Number of Securities to Be Issued Upon Exercise of Outstanding Options and Rights (a)(2) |
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| Weighted-Average Exercise Price of Outstanding Options and Rights (b) |
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| Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) (c) |
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Equity Compensation Plans Approved by Stockholders (1) |
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| 417,557 |
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| $ | 3.42 |
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| 138,375 |
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| 515,577 |
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| $ | 2.96 |
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| 2,041,233 |
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Equity Compensation Plans Not Approved by Stockholders (3) |
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| — |
|
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| — |
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| — |
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| — |
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| — |
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|
| — |
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Total |
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| 417,557 |
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| $ | 3.42 |
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| 138,375 |
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| 515,577 |
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| $ | 2.96 |
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| 2,041,233 |
|
(1) | Includes the Company’s historical 2014 long term incentive plan and the current |
(2) | Includes shares issuable pursuant to the exercise of stock options, but does not include outstanding shares of restricted stock. |
(3) | The Company does not have any equity compensation plans that have not been approved by the stockholders. |
Compensation Committee Interlocks and Insider Participation
Annex A: Proposed CertificateAs noted above, during 2019, our Compensation Committee consisted of AmendmentMessrs. Chirite, Guernsey and Verses. None of these individuals had any contractual or other relationships with us during the fiscal year except as directors (including Mr. Chirite as a special independent director), and none are or formerly were officers of the Company. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our Board or Compensation Committee.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, officers, and persons that own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon our review of the copies of such forms received by us during the fiscal year ended December 31, 2019, and written representations that no other reports were required, we believe that each person who, at any time during such fiscal year, was a director, officer, or beneficial owner of more than 10% of our common stock complied with all Section 16(a) filing requirements during such fiscal year, with the exception of a late Form 4 filing on April 29, 2020 by Director Chirite containing 1 transaction.
Incorporated by Reference
To the extent that this proxy statement is incorporated by reference into any other filing by us under the Securities Act of 1933 or the Exchange Act, the section of this proxy statement entitled “Report of the Audit Committee” (to the extent permitted by the rules of the Securities and Exchange Commission) will not be deemed incorporated unless specifically provided otherwise in such filing. The information contained in this section shall not be deemed “filed” with the SEC, or subject to Regulations 14A or 14C or to the Company’s Amended and Restated Certificateliabilities of Incorporation
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COMSTOCK HOLDING COMPANIES, INC.
Comstock Holding Companies, Inc., a corporation organized and existing under the General Corporation LawSection 18 of the StateExchange Act.
Other Matters
We know of Delaware, does hereby certify:
1.The nameno other matters to be submitted to the meeting. If any other matters properly come before the meeting, it is the intention of the corporation is Comstock Holding Companies, Inc. (the “Corporation”).persons named in the enclosed proxy card to vote the shares they represent as our Board may recommend.
2.The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 24, 2004 and the Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on December 17, 2004, as amended by that Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on June 28, 2011, as amended by that Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on June 22, 2012, as amended by that Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on June 18, 2015, as amended by that Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on September 23, 2015 (as amended, the “Amended and Restated Certificate of Incorporation).
3.The Amended and Restated Certificate of Incorporation is amended by deleting the first part of Article IV that appears prior to section (A) of Article IV in its entirety and inserting the following:
“ The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is Eighty Million (80,000,000) shares, of which:
Fifty-Nine Million Seven Hundred and Seventy-Nine Thousand Seven Hundred and Fifty (59,779,750) shares, par value $0.01 per share, shall be shares of Class A common stock (the “Class A Common Stock”);
Two Hundred Twenty Thousand Two Hundred and Fifty (220,250) shares, par value $0.01 per share, shall be shares of Class B common stock (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”); and
Twenty Million (20,000,000) shares, par value $0.01 per share, shall be shares of preferred stock (the “Preferred Stock”).”
4. The foregoing Certificate of Amendment of Amended and Restated Certificate of Incorporation has been duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Sections 222 and 242 of the General Corporation Law of the State of Delaware.
5.All other provisions of the Amended and Restated Certificate of Incorporation shall remain in full force and effect.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment of Amended and Restated Certificate of Incorporation to be signed by a duly authorized officer this [__] day of February, 2019.
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COMSTOCK HOLDING COMPANIES, INC.
2019 Omnibus Incentive Plan
Article 1
BACKGROUND AND PURPOSE
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Article 3
EFFECTIVE DATE AND TERM OF PLAN
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Article 5
SHARES SUBJECT TO THE PLAN
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Article 8
STOCK APPRECIATION RIGHTS
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Article 9
RESTRICTED STOCK AND STOCK UNITS
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Article 11
DIVIDEND EQUIVALENTS
Article 12STOCK OR OTHER STOCK-BASED AWARDS
Article 13
PROVISIONS APPLICABLE TO AWARDS
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Article 14
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Article 15
AMENDMENT, MODIFICATION AND TERMINATION
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**********
The foregoing is hereby acknowledged as being Comstock Holding Companies, Inc. 2019 Omnibus Incentive Plan as adopted by the Board on December 12, 2018 and by the shareholders on February __, 2019.
COMSTOCK HOLDING COMPANIES, INC.Dated: April 29, 2020
Christopher Clemente, Chief Executive Officer23
COMSTOCK HOLDING COMPANIES, INC.
SPECIAL2020 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Comstock Holding Companies, Inc., a Delaware corporation, hereby acknowledges receipt of the notice of specialannual meeting of stockholders and proxy statement, each dated ___________, 2019,April 29, 2020, and hereby appoints Jubal R. Thompson, proxy and attorney-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the Special2020 Annual Meeting of Stockholders of Comstock Holding Companies, Inc. to be held on February 12, 2019,June 17, 2020, at 10:9:00 a.m., local time, at the second floor conference centerConference Center at Reston Station, located at 1900 Reston Metro Plaza, 2nd floor, Floor, Reston, Virginia 20190, and at any adjournment or adjournments thereof, and to vote all shares of common stock which the undersigned would be entitled to vote if then and there personally present on the matters set forth on the reverse side of this proxy card. If you need directions to the meeting, please contact Judy Whitaker at (703) 883-1700.703-230-1985.
The Company continues to actively monitor the ongoing impacts of the novel coronavirus disease of 2019 (“COVID-19”) pandemic and governmental mandates, including social distancing guidelines, stay-at-home orders and other travel restrictions. The Company is committed to ensuring the health and well-being of our employees and stockholders. The Company reserves the right to require that all stockholders attending the meeting comply with then-applicable social distancing guidelines, wear personal protective equipment, including masks and gloves, and comply with any additional reasonable rules and regulations that the Company implements in order to protect the health and safety of attendees. In the event the Company determines that a change in the date, time or location of the meeting or implementation of a virtual-only meeting format is recommended or required, the Company will promptly announce any such decisions in advance through a press release and on our website at www.comstockcompanies.com/proxymaterial to include specific details on the participation process if the Company transitions to a virtual-only format.
(Continued and to be signed on the reverse side.)
SPECIALANNUAL MEETING OF STOCKHOLDERS OF
COMSTOCK HOLDING COMPANIES, INC.
FEBRUARY 12, 2019
June 17, 2020
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card
are available at www.comstockcompanies.com/proxymaterial
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
FOR EACH OF THE MATTERS SET FORTH BELOW, THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE MATTER SUBMITTED.
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1. |
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☐ FOR ALL NOMINEES | O David M. Guernsey | |||
☐ WITHHOLD AUTHORITY FOR ALL NOMINEES | O James A. MacCutcheon O Robert P. Pincus | |||
☐ FOR ALL EXCEPT | ||||
(See instructions below) |
INSTRUCTIONS : | To withhold authority to vote for any individual nominee(s), mark “ FOR ALL EXCEPT ” and fill in the box next to each nominee you wish to withhold, as shown here: |
2. | Ratify the appointment of BDO USA, LLP as the independent registered public accounting firm for our fiscal year ending December 31, 2020. | ☐ For |
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| ☐ Abstain | ||
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the Company’s named executive officers. |
☐ For |
| ☐ Against |
| ☐ Abstain | ||||
☐ | Please check this box if you plan to attend the |
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, “FOR” THE AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATEELECTION OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON STOCK,DIRECTORS, “FOR” THE RATIFICATION OF THE APPOINTMENT OF BDO USA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020, AND “FOR” THE ADVISORY VOTE TO APPROVE THE 2019 OMNIBUS INCENTIVE PLANCOMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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Dated: , |
2020 |
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Signature of Stockholder |
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Signature of Other Stockholder (if held jointly) |
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Title
To change the address on your account, please check the box at right and indicate your new address in the space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. ☐
2