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Long-term Equity and Equity Incentive Awards
We believe that our long-term equity and equity incentive compensation programs, using RSUs that vest after three years subject to satisfaction of market or performance-based conditions, and restricted stock awards with five-year cliff vesting, and RSUs with seven-year cliff vesting, isprovide an appropriate incentive for our executive officers and isare a beneficial retention tool. We are mindfulIn determining the awards to be granted to the named executive officers, the compensation committee took into account our performance in 2022, the responsibilities and performance of each named executive officer and the potential dilution andcommittee’s desire to continue to emphasize equity based awards as a significant component of total compensation cost associated with awarding shares offor our full-time named executive officers while minimizing stockholder dilution. The compensation committee used the Ferguson Report as a “market check” to confirm its belief that the restricted stock and RSUs and, therefore our policy is to minimize dilution. In 2015, we awarded 129,975 shares of restricted stock with an aggregate grant date fair value of $2.9 million—such shares represented 0.8% of our issued and outstanding shares at the grant date. In the five years ended December 31, 2015, we awarded an aggregate of (i) 544,965 restricted shares, representing an average of 0.74% per annum of our outstanding shares of common stock as of the respective grant dates and (ii) RSUsin early 2023 for 200,000 shares of common stock, representing 0.35% of our outstanding shares of common stock as of the grant date. performance in 2022 was not inappropriate.
We believe the cumulative effect of the
restricted stock awards
and RSUs is not overly dilutive and has created significant incentives for our officers and employees.
After reviewing the aggregate compensation received by our full-time named executive officers, our performance in 2015, and the performance and responsibilities of each named executive officer, and taking into account the compensation committee’s desire to emphasize equity based awards as a more significant component of total compensation for our full-time named executive officers while at the same time minimizing stockholder dilution, we awarded in 2016, for 2015 performance, 18,500 shares and 15,500 of restricted stock to Messrs. Callan and Ricketts, respectively, representing 84.4% and 87%, respectively, of the total of the performance/incentive based compensation awarded to them for 2015 performance. In addition, we awarded in 2016, for 2015 performance, 9,200 shares of restricted stock to each of David W. Kalish, Fredric H. Gould and Matthew J. Gould, representing a 7% increase from the awards they were granted in 2015, for 2014 performance. All of such shares vest in full, assuming continued employment, in 2021, subject to accelerated vesting upon the occurrence of specified events.
We intend to continue to award restricted stock and RSUs as we believe such awards (i) restricted stock awards align management’s interests and goals with stockholders’ interests and goals and (ii) officers and employees are more desirous of participating in a restricted stock award program and, therefore, it is an excellent motivator and employee retention tool. We have not made any determination
RSUs
In June 2022, we granted our named executive officers RSUs exchangeable for up to an aggregate of 44,500 shares of common stock, an increase of 3,000 shares, or 7.2%, from the number of RSUs granted to them in 2021. The increase was designed to further incentivize performance through equity based incentive awards. In evaluating the proposed awards, we placed greater emphasis on the quantity of shares granted rather than their grant date accounting value, because the quantity of shares subject to the awards is a significantly greater incentive than the grant date accounting value of such awards, which value may never be realized.
Restricted Stock Awards
In 2023, we awarded our named executive officers for their performance in 2022, the same number of shares of restricted stock that they were granted in 2022 for 2021 performance. Although the grant date market value of the 2023 awards was significantly less than the grant date market value of the 2022 awards, we placed greater emphasis on the quantity of shares awarded rather than their grant date accounting value because the (i) grant date accounting value may never be realized as these shares vest in five years and their value at such future time is currently unknowable and (ii) anticipated dividends payable with respect to whether we will award any RSUs or stock optionsthese awards are a more important retention feature than the unknown market value of the shares in five years.
Perquisites
Generally, the
future.Perquisites
The perquisites we provide to our full-time officers represent a small percentage of the compensation paid by us to these officers. We believe that such perquisites are competitive and appropriate.
Employment and Severance Agreements
We do not enter into employment agreements or severance agreements with any of our officers or employees as we believe such agreements are not beneficial to us, and that we can provide sufficient motivation to officers by using other types of compensation.
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Post-Employment Benefit Programs
The following table sets forth the value (based on our stock price of $21.46 per share as of December 31, 2015) of equity awards that would vest upon the occurrence of the specified events as of December 31, 2015:
| Upon Death or Disability(1) | Upon a Change of Control |
Name | Restricted Stock ($) | RSUs ($)(2) | Restricted Stock ($) | RSUs ($) |
Patrick J. Callan, Jr.(3) | | 1,414,214 | | | 843,461 | | | 1,414,214 | | | 1,073,000 | |
David W. Kalish | | 824,064 | | | 240,977 | | | 824,064 | | | 306,556 | |
Lawrence G. Ricketts, Jr.(3) | | 1,148,110 | | | 674,769 | | | 1,148,110 | | | 858,400 | |
Matthew J. Gould | | 824,064 | | | 240,994 | | | 824,064 | | | 306,578 | |
Fredric H. Gould | | 824,064 | | | 240,994 | | | 824,064 | | | 306,578 | |
Summary Compensation Table | (1) | Because they have reached the age of 65 and have satisfied the period of service requirements, only the RSUs (assuming satisfaction of performance and market conditions as of June 30, 2017) and restricted stock owned by Messrs. Kalish and Fredric H. Gould would vest upon their retirement as of December 31, 2015; the market value of such person’s restricted stock awards and RSUs are reflected in the applicable column. |
| (2) | Assumes that the maximum level of market and performance conditions would be achieved at June 30, 2017. See “Outstanding Equity Awards at Fiscal Year End.” |
| (3) | See “Summary Compensation Table” for information regarding the amount accumulated for this individual pursuant to our defined contribution plan. |
Equity Ownership Policy
We do not have any policy regarding specific stock ownership requirements for officers or directors. In view of the fact that our executive officers and directors as a group own approximately 4.0 million shares of common stock representing 23.3% of our outstanding shares, we do not believe there is a need to adopt a policy regarding ownership of shares of our common stock by our officers and directors.
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SUMMARY COMPENSATION TABLE
The following table lists the annual compensation for the periods indicated of our CEO, CFO, and our three other named executive officers in 2015:
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) |
Patrick J. Callan, Jr. | | 2015 | | | 742,000 | | | 74,250 | | | 442,800 | | | 215,109 | (6) | | 1,474,159 | |
President and Chief Executive
| | 2014 | | | 720,000 | | | 70,000 | | | 297,830 | | | 150,502 | | | 1,238,332 | |
Officer(4)
| | 2013 | | | 700,000 | | | 70,000 | | | 269,875 | | | 141,729 | | | 1,181,604 | |
David W. Kalish | | 2015 | | | — | | | — | | | 211,560 | | | 188,172 | (7) | | 399,732 | |
Senior Vice President and
| | 2014 | | | — | | | — | | | 176,644 | | | 154,924 | | | 331,568 | |
Chief Financial Officer(5)
| | 2013 | | | — | | | — | | | 185,674 | | | 141,713 | | | 327,387 | |
Lawrence G. Ricketts, Jr. | | 2015 | | | 388,000 | | | 52,500 | | | 369,000 | | | 131,842 | (8) | | 941,342 | |
Executive Vice President and
| | 2014 | | | 370,000 | | | 50,000 | | | 236,210 | | | 115,590 | | | 771,800 | |
Chief Operating Officer(4)
| | 2013 | | | 355,000 | | | 50,000 | | | 215,900 | | | 109,583 | | | 730,483 | |
Matthew J. Gould | | 2015 | | | 262,500 | | | — | | | 211,560 | | | 290,172 | (9) | | 764,232 | |
Chairman of the Board(5)
| | 2014 | | | 250,000 | | | — | | | 176,644 | | | 237,463 | | | 664,107 | |
| | 2013 | | | 175,000 | | | — | | | 185,674 | | | 203,049 | | | 563,723 | |
Fredric H. Gould | | 2015 | | | 105,000 | | | — | | | 211,560 | | | 60,672 | (10) | | 377,232 | |
Vice Chairman of the Board(5)
| | 2014 | | | 100,000 | | | — | | | 176,644 | | | 51,750 | | | 328,394 | |
| | 2013 | | | 175,000 | | | — | | | 185,674 | | | 76,292 | | | 436,966 | |
2022:
Patrick J. Callan, Jr
President and Chief Executive
Officer(4)
| | | 2022 | | | 916,890 | | | 91,690 | | | 971,731 | | | 132,498(7) | | | 2,112,809 |
| 2021 | | | 865,000 | | | 86,500 | | | 738,334 | | | 153,929 | | | 1,843,763 |
| 2020 | | | 865,000 | | | 73,100 | | | 768,980 | | | 124,150 | | | 1,831,230 |
David W. Kalish
Senior Vice President and
Chief Financial Officer(5)
| | | 2022 | | | — | | | — | | | 447,249 | | | 237,422(8) | | | 684,671 |
| 2021 | | | — | | | — | | | 319,061 | | | 239,521 | | | 558,582 |
| 2020 | | | — | | | — | | | 352,054 | | | 211,482 | | | 563,536 |
Lawrence G. Ricketts, Jr.
Executive Vice President and
Chief Operating Officer(4)
| | | 2022 | | | 559,000 | | | 70,000 | | | 767,259 | | | 56,388(9) | | | 1,452,647 |
| 2021 | | | 520,000 | | | 65,000 | | | 582,515 | | | 52,789 | | | 1,220,304 |
| 2020 | | | 520,000 | | | 55,250 | | | 606,750 | | | 50,821 | | | 1,232,821 |
Matthew J. Gould
Chairman of the Board(5)
| | | 2022 | | | 312,992(6) | | | — | | | 463,111 | | | 448,806(8) | | | 1,224,909 |
| 2021 | | | 298,088 | | | — | | | 329,283 | | | 450,713 | | | 1,078,084 |
| 2020 | | | 298,088 | | | — | | | 354,342 | | | 397,950 | | | 1,050,380 |
Fredric H. Gould
Vice Chairman of the Board(5)
| | | 2022 | | | 125,197(6) | | | — | | | 447,249 | | | — | | | 572,446 |
| 2021 | | | 119,235 | | | — | | | 319,061 | | | — | | | 438,296 |
| 2020 | | | 119,235 | | | — | | | 354,342 | | | — | | | 473,577 |
| (1)
| Reflects bonuses paid in 2016, 20152023, 2022 and 20142021 for services rendered in 2015, 20142022, 2021 and 2013,2020, respectively. |
(2)
| (2) | Represents awards ofRSUs and restricted stock granted in 2015, 20142022, 2021 and 2013, respectively,2020 at the grant date fair value of such awards calculated in accordance with Item 402 of Regulation S-K and Accounting Standards Codification Topic 718—Stock Compensation, excluding the effect of estimated forfeitures.Compensation. These amounts do not correspond to the actual values that will be realized by the named executives. Grant date fair value assumptions are consistent with those disclosed in Note 11 — Stockholders’ Equity -– Stock Based Compensation, in the consolidated financial statements included in our 20152022 Annual Report on Form 10-K. InSee “ — Grant of Plan Based Awards During 2022” for additional information as to the grant date fair value of the RSUs. On January 2016,5, 2023, we granted 18,500granted: (a) 21,750 and 15,50017,100 shares of restricted stock to Messrs. Callan and Ricketts, respectively, with a grant date fair value of $402,190$480,458 and $336,970, respectively,$377,739, respectively; and 8,600(b) 10,670 shares of restricted stock to each of Messrs. Kalish, M. Gould and F. Gould, with a grant date fair value of $186,964$235,700 for each such award. |
(3)
| (3) | Majestic provided services to usExcludes dividends and to other affiliateddividend equivalents paid or payable on stock and non-affiliated entities. Majestic paid our executive officers an aggregate of $850,000 for services they provided on our behalf in 2015. We include in the “All Other Compensation” column for Messrs. Kalish, F. Gould and M. Gould the amounts, if any, Majestic paid them for services they performed on our behalf for each of the years presented. Amounts reflected for Messrs. Kalish, F. Gould and M. Gould, for 2014 and 2013 have been reclassified to conform to the 2015 presentation. See “Certain Relationships and Related Transactions” for additional information.similar awards. |
| (4)
| All compensation received by Messrs. Callan and Ricketts is paid solely and directly by us. |
| (5)
| Other than the restricted stock awarded to these individualsEquity Awards granted this person and the fees paid to Messrs. M. Gould and F. Gould for serving as Chairman and Vice Chairman, respectively: (a) we did not pay, nor were we allocated, any portion of such person’s base salary, bonus, defined contribution plan payments or perquisites in 2015, 20142022, 2021 and 2013;2020; and (b) the services of these individuals isare provided to us pursuant to the compensation and services agreement with Majestic.C&SA. |
(6)
| (6)These amounts were previously reported in this proxy statement as compensation for the Chairman and Vice Chairman of the Board of Directors under “Governance of the Company — Compensation of Directors.” |
(7)
| Includes a $39,750$45,750 contribution to our defined contribution plan dividends of $104,122 on unvested restricted stock and perquisites aggregating $71,237,$86,748, of which $42,718$61,681 represents an education benefit, $22,594$19,142 represents an automobile allowance and related insurance, maintenance, and repairs and $5,925 represents the annual premium for additional disability insurance. Includes a $56,980 education benefit paid in 2021 for 2022. Approximately $425,000$1.0 million has accumulated for this individual pursuant to our defined contribution plan. |
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(8)
| (7) | Includes dividends of $60,672 on unvested restricted stock and $127,500Represents the amounts Majestic paid himallocated to such person for the services he performed on our behalf.behalf and does not represent the amount paid to such person for such services. See note 3 above“Executive Compensation — Compensation Program” and “Certain“Certain Relationships and Related Transactions.Transactions.” |
| (8)(9)
| Includes dividends of $84,530 on unvested restricted stock, a contribution of $39,750$45,750 to our defined contribution plan and perquisites of $7,562,$10,638, representing an automobile allowance and related expenses. Approximately $566,000$1.3 million has accumulated for this individual pursuant to our defined contribution plan. |
25
| (9) | Includes dividends of $60,672 on unvested restricted stock and $229,500 Majestic paid him for the services he performed on our behalf. See note 3 above and “Certain Relationships and Related Transactions.” |
| (10) | Represents dividends of $60,672 on unvested restricted stock. See note 3 above and “Certain Relationships and Related Transactions.” |
GRANTTABLE OF PLAN BASED AWARDS DURING 2015CONTENTS
Grant Of Plan Based Awards During 2022 The following table summarizes information regarding
awards of restricted stock
awards granted in
20152022 pursuant to our
20122019 Incentive
Plan and RSUs granted pursuant to our 2022 Incentive Plan:
Name | Grant Date | All Other Stock Awards: Number of Shares of Stocks or Units (#)(1) | Grant Date Fair Value of Stock Awards ($)(2) |
Patrick J. Callan, Jr. | | 1/15/2015 | | | 18,000 | | | 442,800 | |
David W. Kalish | | 1/15/2015 | | | 8,600 | | | 211,560 | |
Lawrence G. Ricketts, Jr. | | 1/15/2015 | | | 15,000 | | | 369,000 | |
Matthew J. Gould | | 1/15/2015 | | | 8,600 | | | 211,560 | |
Fredric H. Gould | | 1/15/2015 | | | 8,600 | | | 211,560 | |
Patrick J. Callan, Jr. | | | 1/12/22 | | | RS(3) | | | — | | | 21,750 | | | 734,063 |
| 6/21/22 | | | RSU-TSR(5) | | | 7,500 | | | — | | | 113,400 |
| 6/21/22 | | | RSU-ROC(6) | | | 7,500 | | | — | | | 124,268 |
David W. Kalish | | | 1/12/22 | | | RS(3) | | | — | | | 10,670 | | | 360,113 |
| 6/21/22 | | | RSU-TSR(5) | | | 2,750 | | | — | | | 41,580 |
| 6/21/22 | | | RSU-ROC(6) | | | 2,750 | | | — | | | 45,556 |
Lawrence G. Ricketts, Jr. | | | 1/12/22 | | | RS(3) | | | — | | | 17,100 | | | 577,125 |
| 6/21/22 | | | RSU-TSR(5) | | | 6,000 | | | — | | | 90,720 |
| 6/21/22 | | | RSU-ROC(6) | | | 6,000 | | | — | | | 99,414 |
Matthew J. Gould | | | 1/12/22 | | | RS(3) | | | — | | | 10,670 | | | 360,113 |
| 6/21/22 | | | RSU-TSR(5) | | | 3,250 | | | — | | | 49,140 |
| 6/21/22 | | | RSU-ROC(6) | | | 3,250 | | | — | | | 53,858 |
Fredric H. Gould | | | 1/12/22 | | | RS(3) | | | — | | | 10,670 | | | 360,113 |
| 6/21/22 | | | RSU-TSR(5) | | | 2,750 | | | — | | | 41,580 |
| 6/21/22 | | | RSU-ROC(6) | | | 2,750 | | | — | | | 45,556 |
(1)
| (1)The awards granted by the compensation committee on June 21, 2022 are deemed to have been granted on July 1, 2022 for financial statement reporting purposes. |
(2)
| Represents the maximum number of shares underlying RSUs that will be issued if all the applicable market and performance conditions are met. There are no voting rights associated with these RSUs. Upon vesting, the recipients are entitled to the dividends that would have been paid on the shares underlying the RSUs had such shares been outstanding during the measurement period. |
(3)
| Reflects restricted stock awards. These shares generally vest, on a cliff vesting basis, five years from the grant date, subject to such persons continued employment. Dividends are paidrelationship with respectus. The holder is entitled to vote such shares regardlessand retain the dividends paid thereon unless such shares are forfeited, in which case the right to vote and receive dividends in the future terminates. |
(4)
| The grant date fair value, as determined pursuant to ASC Topic 718, of the restricted stock, RSU – TSR and RSU – ROC awards are $33.75, $15.12 and $16.57, respectively, per share. These amounts do not correspond to the actual values that will be realized by the executives. The aggregate grant date fair value for the RSU-ROC awards give effect to management’s assessment of the probable outcome as to whether, and the extent to which, the RSU-ROCs will vest. |
(5)
| Represents shares underlying RSUs that are earned as of June 30, 2025 if, and to the extent, a market condition (i.e., average of annual total stockholder return, as calculated pursuant to the award agreement) is satisfied. If the average of our annual total stockholder return on our common stock from July 1, 2022 through June 30, 2025, equals or exceeds 11.0%, all the shares underlying such RSUs vest; is less than 6.0%, no shares vest; and equals or is more than 6.0% and less than 11.0%, a pro rata portion of the shares underlying such RSUs vest. |
(6)
| (2) | BasedRepresents shares underlying RSUs that are earned as of June 30, 2025 if, and to the extent, a performance condition (i.e., average annual return on capital, as calculated pursuant to the closing priceaward agreement) is satisfied. If the average of $24.60 per shareour annual return on capital (as described below) from July 1, 2022 through June 30, 2025 equals or is more than 8.75%, all the grant date.shares underlying such RSUs vests; is less than 6.0%, no shares vest; and equals or is more than 6.0% but is less than 8.75%, a pro rata portion of the shares underlying such RSUs vest. Return on capital means adjusted funds from operations, as described below, divided by average capital, as described below. Adjusted funds from operations is determined by using funds from operations as determined in accordance with the NAREIT definition, adjusted for straight-line rent accruals and amortization of lease intangibles, and adding and deducting gains and losses on sales of properties. Average capital is stockholders’ equity, plus depreciation and amortization, adjusted for intangibles, as measured over the applicable periods. |
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR ENDOutstanding Equity Awards At Fiscal Year End
The following table provides information as of December 31,
20152022 about the outstanding equity awards held by our named executive officers:
| Stock Awards |
Name | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)(7) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)(7)(8) |
Patrick J. Callan, Jr. | | 65,900 | (4) | | 1,414,214 | | | 50,000 | | | 1,073,000 | |
David W. Kalish | | 38,400 | (5) | | 824,064 | | | 14,285 | | | 306,556 | |
Lawrence G. Ricketts, Jr. | | 53,500 | (6) | | 1,148,110 | | | 40,000 | | | 858,400 | |
Matthew J. Gould | | 38,400 | (5) | | 824,064 | | | 14,286 | | | 306,578 | |
Fredric H. Gould | | 38,400 | (5) | | 824,064 | | | 14,286 | | | 306,578 | |
Patrick J. Callan, Jr(4). | | | 106,750 | | | 2,371,985 | | | 43,250 | | | 961,015 |
David W. Kalish(5) | | | 52,290 | | | 1,161,884 | | | 15,050 | | | 334,411 |
Lawrence G. Ricketts, Jr(6). | | | 84,000 | | | 1,866,480 | | | 34,500 | | | 766,590 |
Matthew J. Gould(7) | | | 52,290 | | | 1,161,884 | | | 16,750 | | | 372,185 |
Fredric H. Gould(8) | | | 52,290 | | | 1,161,884 | | | 15,250 | | | 338,855 |
(1)
| (1) | Reflects the number of shares of restricted stock that have not vested. |
| (2) | The market value represents the product of the closing price of our common stock as of December 31, 2015, which was $21.46, multiplied by30, 2022 (i.e., $22.22) and the number of shares subject to or underlying such award. |
| (3) | Reflects the number of RSUs that have not vested. |
| (4) | With respect to this individual, 8,400 shares vest in January 2016, 12,500 shares vest in each of January 2017 and 2018, 14,500 shares vest in January 2019 and 18,000 shares vest in January 2020. |
| (5) | With respect to this individual, 5,200 shares vest in January 2016, 7,400 shares vest in January 2017, and 8,600 shares vest in each of January 2018, 2019 and 2020. |
| (6) | With respect to this individual, 7,000 shares vest in January 2016, 10,000 shares vest in each of January 2017 and 2018, 11,500 shares vest in January 2019 and 15,000 shares vest in 2020. |
| (7)(2)
| Assumes that all of the RSUs vest. The underlying shares vest on June 30, 2017 if, and to the extent, the applicable market (i.e., average total stockholder return) or performance (i.e., average annual return on capital) conditions are satisfied. If the average of our annual total stockholder return (including dividends) on our common stock from July 1, 2010 through June 30, 2017 equals or exceeds 13%, 50% of such award and the underlying shares subject to such award vest and if it equals or is less than 10.25%, no shares vest. If the average of our annual total stockholder return is more than 10.25% and less than 13%, a pro rata portion of 50% of the underlying shares subject to such award vest. If our average annual return on capital (as explained below) from July 1, 2010 through June 30, 2017 exceeds 10%, 50% of the shares subject to such award vests and if it is equal to or less than 8%, no shares vest. If our average annual return on capital exceeds 8% but is less than 10%, a pro rata portion of 50% of the underlying shares subject to such award vest. Return on capital is based upon adjusted funds from operations (“AFFO”). AFFO means funds from operations determined in accordance with the National Association of Real Estate Investment Trusts definition, adjusted for straight-line rent accruals and amortization of lease intangibles. Capital is defined as stockholders’ equity, plus depreciation and amortization, adjusted for intangibles. |
(3)
| (8) | Assuming thatIf the measurement and vesting dates were December 31, 2015 and giving effect to related adjustments, 54% of the RSUs (i.e., RSUs that vest on the attainment at the highest level of average annual total stockholder return) would have vested and the balance2022, 64.5% of the RSUs would have been forfeited.vested. |
(4)
| With respect to this individual, 20,250, 21,250, 21,750, 21,750 and 21,750 shares of restricted stock vest in January 2023, 2024, 2025, 2026 and 2027, respectively, and upon satisfaction of specified conditions, up to 13,750, 14,500 and 15,000 shares subject to RSUs vest in June 2023, 2024 and 2025, respectively. |
(5)
| With respect to this individual, 9,950, 10,330, 10,670, 10,670 and 10,670 shares of restricted stock vest in each of January 2023, 2024, 2025, 2026 and 2027, respectively, and upon satisfaction of specified conditions, up to 4,550, 5,000 and 5,500 shares subject to RSUs vest in June 2023, 2024 and 2025, respectively. |
(6)
| With respect to this individual, 16,100, 16,600, 17,100, 17,100 and 17,100 shares of restricted stock vest in January 2023, 2024, 2025, 2026 and 2027, respectively, and upon satisfaction of specified conditions, up to 11,000, 11,500 and 12,000 shares subject to RSUs vest in June 2023, 2024 and 2025, respectively. |
(7)
| With respect to this individual, 9,950, 10,330, 10,670, 10,670 and 10,670 shares of restricted stock vest in each of January 2023, 2024, 2025, 2026 and 2027, respectively, and upon satisfaction of specified conditions, up to 4,750, 5,500 and 6,500 shares subject to RSUs vest in June 2023, 2024 and 2025, respectively. |
(8)
| With respect to this individual, 9,950, 10,330, 10,670, 10,670 and 10,670 shares of restricted stock vest in each of January 2023, 2024, 2025, 2026 and 2027, respectively, and upon satisfaction of specified conditions, up to 4,750, 5,000 and 5,500 shares subject to RSUs vest in June 2023, 2024 and 2025, respectively. |
None of the named executive officers hold any stock options and none were granted to any of the named executive officers during the year.
Option Exercises And Stock VestedTABLE OF CONTENTS
OPTION EXERCISES AND STOCK VESTED
The following table sets forth information regarding the shares of restricted stock and shares underlying RSUs that vested in 2015:
| Stock Awards |
Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) |
Patrick J. Callan, Jr. | | 8,400 | | | 200,508 | |
David W. Kalish | | 4,700 | | | 112,189 | |
Lawrence G. Ricketts, Jr. | | 7,000 | | | 167,090 | |
Matthew J. Gould | | 4,700 | | | 112,189 | |
Fredric H. Gould | | 4,700 | | | 112,189 | |
2022:
Patrick J. Callan, Jr. | | | 31,319 | | | $988,973 |
David W. Kalish | | | 13,511 | | | 437,320 |
Lawrence G. Ricketts, Jr. | | | 24,955 | | | 787,676 |
Matthew J. Gould | | | 13,683 | | | 441,788 |
Fredric H. Gould | | | 13,683 | | | 441,788 |
(1)
| (1) | These restrictedIncludes 11,819, 3,911, 9,455, 4,083 and 4,083 shares were awarded in 2010.underlying RSUs for Messrs. Callan, Kalish, Ricketts, M. Gould and F. Gould, respectively, that vested upon achieving specified levels of average annual total stockholder return and return of capital. |
(2)
| (2) | This column representsReflects the aggregate market value realized onof the shares that vested as of the applicable vesting as calculated by multiplying thedate. The closing market price of a share of our common stock of $20.86 on the vesting date of the (a) restricted stock awards (i.e., February 25, 2015) by the number of shares that vested.January 7, 2022) was $34.97 and (b) RSUs (i.e., June 30, 2022) was $25.98. |
COMPENSATION COMMITTEE REPORT
The compensation committee of the board of directors has reviewed the Compensation Discussion and Analysis set forth herein, and discussed it with management, and based on such review and discussions, recommends to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Respectfully submitted,
Eugene I. Zuriff
J. Robert Lovejoy
Charles Biederman
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Potential Payments Upon Termination or Change-in-Control We do not provide for any post-employment benefits to our named executive officers other than their entitlement to the benefits payable pursuant to our defined contribution pension plan and the accelerated vesting of our restricted stock awards and RSUs as a result of death, disability, retirement or a change of control. See “—Components of Executive Compensation — Employment and Severance Agreements; Post Employment Benefits; Change of Control.” The following table sets forth the value (based on our closing stock price of $22.22 per share as of December 30, 2022) of equity awards that would vest upon the occurrence of the specified events as of December 31, 2022:
Patrick J. Callan, Jr.(3) | | | 2,371,985 | | | 472,367 | | | 2,371,985 | | | 738,633 |
David W. Kalish | | | 1,161,884 | | | 160,558 | | | 1,161,884 | | | 252,884 |
Lawrence G. Ricketts, Jr.(3) | | | 1,866,480 | | | 376,781 | | | 1,866,480 | | | 588,689 |
Matthew J. Gould | | | 1,161,884 | | | 173,563 | | | 1,161,884 | | | 275,851 |
Fredric H. Gould | | | 1,161,884 | | | 164,267 | | | 1,161,884 | | | 257,328 |
(1)
| Because they have reached the age of 65 and have satisfied the period of service requirements, upon their retirement, a pro rata portion of the RSUs vest (assuming satisfaction of performance and market conditions as of the end of applicable performance cycle) and all of the restricted stock owned by Messrs. Kalish and Fredric H. Gould would vest upon their retirement as of December 31, 2022; the market value of such person’s restricted stock awards and RSUs are reflected in the applicable column. |
(2)
| Assumes that the maximum level of market and performance conditions is achieved at the end of the applicable performance cycle. See “— Outstanding Equity Awards at Fiscal Year End.” |
(3)
| See “— Summary Compensation Table” for information regarding the amount accumulated for this individual pursuant to our defined contribution plan. |
Our 2022 Incentive Plan generally provides, among other things, that if any payment or benefit that a participant in such plan would otherwise receive from us pursuant thereto constitutes a “parachute payment” within the meaning of Section 280G of the Code and as a result be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such payment will be reduced to an amount equal to (1) the largest portion of such payment that would result in no portion of such payment (after reduction) being subject to the Excise Tax or (2) the entire payment, whichever amount after taking into account all applicable taxes (including the Excise Tax), results in such participant’s receipt, on an after-tax basis, of the greatest amount of such payment.
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As required by and in accordance with the Dodd-Frank Act and the regulations promulgated thereunder, we provide below a reasonable estimate of the relationship of the annual total compensation of Mr. Patrick J. Callan, Jr., our Chief Executive Officer and President, to the median annual total compensation of our employees (other than the CEO). For 2022:
the annual total compensation of our CEO, as reported in the Summary Compensation Table, was $2,112,809;
the median annual total compensation of all our employees (other than our CEO) was $348,690; and
our CEO’s annual total compensation was approximately 6.1 times that of the median of the annual total compensation of all our employees (other than our CEO).
In calculating this estimate, we included as our employees as of the December 31, 2022 measurement date, all those individuals to whom we are required by the Internal Revenue Code of 1986, as amended, to issue a W-2. We identified our median employee by calculating our employees’ total annual compensation in the same manner that the CEO’s total annual compensation is calculated for the Summary Compensation Table.
SEC rules allow companies to adopt a variety of methodologies and apply various assumptions in presenting this ratio. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio we report.
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The following table sets forth information concerning the compensation of Patrick J. Callan, Jr., our principal executive officer (“PEO”), and our other named executive officers (i.e., Lawrence G. Ricketts, Jr., David W. Kalish, Matthew J. Gould and Fredric H. Gould, referred to collectively as the “NEOs”) for each of 2022 and 2021, and our financial and market performance for each such year:
2022 | | | 2,112,809 | | | 125,072 | | | 983,668 | | | (73,996) | | | 127.04 | | | 42.2 |
2021 | | | 1,843,763 | | | 4,473,940 | | | 823,817 | | | 2,195,079 | | | 187.34 | | | 38.9 |
(1)
| Represents the “compensation actually paid” to Mr. Callan as computed in accordance with SEC requirements. Such amounts do not reflect the actual amount of compensation earned by or paid to Mr. Callan. See table immediately below for a reconciliation showing how “compensation actually paid” was calculated. |
(2)
| Represents the average amount of “compensation actually paid” to the NEOs as a group as computed in accordance with SEC requirements. Such amounts do not reflect the actual average amount of compensation earned by or paid to these NEOs as a group. See “– Compensation of NEOs.” |
(3)
| Represents net income attributable to One Liberty Properties, Inc. |
In accordance with SEC requirements, the following adjustments were made to Mr. Callan’s total compensation for the applicable year to determine his “compensation actually paid”:
2022 | | | 2,112,809 | | | (971,731) | | | (1,016,006) | | | 125,072 |
2021 | | | 1,843,763 | | | (738,334) | | | 3,368,511 | | | 4,473,940 |
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The table below sets forth the manner in which Equity Award Adjustments in the immediately preceding table were calculated (see footnotes (1) – (6) above for the assumptions made in the valuations that differ materially from those disclosed as of the grant date of such equity awards:
2022 | | | 675,599(1) | | | (1,486,618)(2) | | | (204,987)(3) | | | (1,016,006) |
2021 | | | 1,194,371(4) | | | 1,905,106(5) | | | 269,034(6) | | | 3,368,511 |
(1)
| With respect to the 2022 RSU-ROCs, assumes that as of (i) the grant date, 63% of such awards would vest and (ii) year-end, 69% of such awards would vest. |
(2)
| With respect to the (A) 2021 RSU-ROCs, assumes that as of (i) year-end 2022, 100% of such awards would vest and (ii) year-end 2021, 97% of such awards would vest and (B) 2020 RSU-ROCs, assumes that as of (i) year-end 2022, 100% of such awards would vest and (ii) year-end 2021, 100% of such awards would vest. |
(3)
| With respect to the 2019 RSU-ROCs which vested in 2022, assumes that as of year-end 2021, 100% of such awards would vest which is the amount that actually vested. |
(4)
| With respect to the 2021 RSU-ROCs, assumes that as of (i) the grant date, 84% of such awards would vest and (ii) year-end 2021, 97% of such awards would vest. |
(5)
| With respect to the (A) 2020 RSU-ROCs, assumes that as of (i) year-end 2021, 100% of such awards would vest and (ii) year-end 2020, 83% of such awards would vest and (B) 2019 RSU-ROCs, assumes that as of (i) year-end 2021, 100% of such awards would vest and (ii) year-end 2020, 67% of such awards would vest. |
(6)
| With respect to the 2018 RSU-ROCs which vested in 2021, assumes that as of year-end 2020, 73% of such awards would vest as compared to 100% which actually vested. |
Compensation of NEO’s
In accordance with SEC requirements, the following adjustments were made to average total compensation for the NEOs for each year to determine the “compensation actually paid” to this group.
2022 | | | 983,668 | | | (531,216) | | | (526,448) | | | (73,996) |
2021 | | | 823,817 | | | (387,481) | | | 1,758,743 | | | 2,195,079 |
The table below sets forth the manner in which Average Equity Award Adjustments in the immediately preceding table were calculated (see footnotes (1) – (6) above for the assumptions made in the valuations that differ materially from those disclosed as of the grant date of such equity awards):
2022 | | | 367,364 | | | (799,769) | | | (94,043) | | | (526,448) |
2021 | | | 631,952 | | | 1,005,318 | | | 121,473 | | | 1,758,743 |
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Relationship to Compensation Actually Paid
The following charts show the relationship of the compensation actually paid to our PEO and the average compensation actually paid to our NEOs to our cumulative total stockholder return and net income for the periods indicated (TSR amounts in the graph assume an initial fixed investment of $100 and that all dividends, if any, are reinvested):
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 2015,2021 and 2022,
Matthew J. Gould, Chairman of our Board of Directors, served as a Senior Vice President and director of BRT Realty Trust, a real estate investment trust focused on multi-family properties and listed on the New York Stock Exchange, andApartments Corp., as Chairman of the Board and Chief Executive Officer of the managing general partner of Gould Investors (which ownsas of April 3, 2023 owned approximately 10.4%9.6% of our outstanding shares of common stock), and as a Vice President of Majestic;
Fredric H. Gould, Vice Chairman of our Board of Directors, served as a member of the Board of Trusteesdirector of BRT Realty Trust andApartments, as Chairman of the Board of Directors and sole stockholder of both Majestic and, through December 31, 2021, as a director and sole stockholder of the managing general partner of Gould Investors; and
Jeffrey A. Gould, a Director and Senior Vice President of our company, served as a Director, President and Chief Executive Officer of BRT Realty Trust,Apartments, and as a Senior Vice President and Director of the managing general partner of Gould Investors and as a Vice President of Majestic.Investors.
Matthew J. Gould and Jeffrey A. Gould are brothers and the sons of Fredric H. Gould. In addition, David W. Kalish, Mark H. Lundy, Simeon Brinberg, Israel Rosenzweig and Isaac Kalish, each of whom is an executive officer of our company, are officers of BRT Realty TrustApartments and of the corporate managing general partner of Gould Investors. Mark H. Lundy is Simeon Brinberg’s son-in-law and Isaac Kalish, is David Kalish’s son.son, and Steven Rosenzweig, and Alon Rosenzweig, sons of Israel Rosenzweig,Rosenzweig’s son, are employed by our affiliates.
Related Party Transactions
Pursuant to the
compensation and services agreement, we pay an annual fee to Majestic andC&SA, Majestic provides
to us
with the
services of all affiliated executive, administrative, legal, accounting, clerical and property management personnel, as well as property acquisition, sale and lease consulting and brokerage services, consulting services in respect to mortgage financings and construction supervisory services.Services. In accordance with
the compensation and servicessuch agreement, we paid
a fee of $2,339,000 to Majestic,
$3,111,000 and $3,067,000 in
2015,2021 and 2022, respectively, which included
$892,500$1,365,000 and $1,346,000 for property management
services.services, respectively. In
2016,2023, we will pay Majestic
$1,446,500$1,806,000 and in addition, for its property management services, will pay
it 1.5% and 2.0% of the rental payments (including tenant
reimbursements)reimbursements and deferred rent) actually received by us from net lease tenants and operating lease tenants, respectively. We will not pay Majestic property management fees with respect to properties managed by third
parties for the provision of these services.parties. Based on our property portfolio at December 31,
2015 (excluding a portfolio of eight properties sold in February 2016),2022, we estimate that the property management fee in
20162023 will be approximately
$1.0$1.4 million.
Majestic may earn a profit from payments made to it under such agreement. In addition, under this agreement, we also paid Majestic $295,000 and $317,000 in 2021 and 2022, respectively, and will pay Majestic $317,000 in 2023, as reimbursement for our share of direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. Majestic is wholly owned by the vice chairman of our board, and certain of our part-time officers, including our part-time named executive officers, are officers of, and receive compensation from, Majestic.
Pursuant to the compensation and services agreement we also paid Majestic $196,000 in 2015 (and will pay $196,000 in 2016) as reimbursement for our share of direct office expenses, including rent, telephone, postage, computer services, internet usage and supplies. In 2015, our
Our part-time officers
and employees occupy space in an office building that through February 2015, was owned by a subsidiary of Gould Investors. The rent expensealso receive compensation from other companies affiliated with us for
this space is included in the $196,000 expenditure.In additionservices unrelated to its share of rent included in the $196,000 payment to us.
Majestic
in 2015, we paid a subsidiary of Gould Investors rent of $7,000 through February 2015.Majestic paidallocated an aggregate of $850,000$1,717,000 and $1,713,000 to the following executive officers (some of whom are also officers of Majestic and other affiliated companies) for the services they performed on our behalf in 2015: Matthew J. Gould, $229,500; David W. Kalish, $127,500;2021 and 2022, respectively: Jeffrey A. Gould, $229,500; Simeon Brinberg, $8,500;$451,000 and $449,000; Mark H. Lundy, $165,750;$294,000 and $290,000; Israel Rosenzweig, $55,250$63,000 and $62,000; Isaac Kalish, $34,000.$137,000 and $141,000; and Steven Rosenzweig, $81,000 and $85,000. See “Executive Compensation - Summary Compensation Table” for amounts allocated to Messrs. M. Gould and D. Kalish. The allocated amounts do not represent the amounts paid to such individuals which may be greater or less than the allocated amounts. These individuals also received compensation in 20152021 and 2022 from our other affiliates, including BRT Realty TrustApartments and Gould Investors, as well as other entities wholly owned by Fredric H. Gould and/or members of his family, none of which provided services to us in 2015.
2021 or 2022. See “Executive Compensation - Compensation of Part-Time Named Executive Officers” for information regarding the determination of amounts paid by Majestic to these officers.TABLE OF CONTENTS
We obtain our property insurance in conjunction with Gould Investors and its affiliates and in 2015,2021 and 2022, we reimbursed Gould $520,000$1,402,000 and $586,000, respectively, for our proportionate share of the insurance premiums. We believe that we secure more favorable rates by obtaining property insurance on such basis.
During 2015, $1,245,0002021 and 2022, $2,590,000 and $2,572,000, respectively, of non-cash compensation expense (relatingrelating to the restricted stock and RSUs held by our part-time executive officers and employees who are(who may also be
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compensated by Majestic or its affiliates), was charged to our operations. See
“Executive“Executive Compensation-Compensation Discussion and Analysis-Background”Program — Background”. The grant date fair value of the shares of restricted stock
and RSUs awarded in
20152021 and
20162022 to persons performing services for us pursuant to the
compensationC&SA is $2,224,000 and
services agreement is $1,683,000 and $1,554,000,$3,011,000, respectively. The grant date fair value of
the shares of restricted stock awardedsuch awards in
20152021 and
2016,2022, respectively, to these individuals is as follows:
Simeon Brinberg, $118,080Jeffrey A. Gould, $329,000 and
$104,352;$463,000; Mark H. Lundy,
$211,560$319,000 and
$200,008;$447,000; Israel Rosenzweig,
$118,080$125,000 and
$104,352;$125,000; Isaac Kalish,
$118,080$178,000 and
$104,352;$224,000; and Steven Rosenzweig,
$12,300$125,000 and
$21,740.Policies$125,000.
We anticipate that beginning in May 2023, we will employ Michael B. Shenfeld, the grandson of Mr. F. Gould and
ProceduresAny transaction with affiliated entities raises the potentialnephew of Messrs. J. Gould and M. Gould, at an annual base salary of $150,000 and that he will be afforded such benefits as customarily offered to our other employees.
ADVISORY APPROVAL OF THE COMPENSATION OF EXECUTIVES
Section 14A of the Exchange Act (“Section 14A”) requires that we seek a non-binding advisory vote from our stockholders to approve the compensation awarded to our named executive officers as disclosed in this proxy statement. Although the advisory vote is non-binding, the compensation committee and the Board will review the results of the vote and will consider our stockholders' concerns and take them into account in future determinations concerning our executive compensation program. The Board of Directors recommends that you indicate your support for our compensation policies and procedures for our named executive officers, as outlined in the resolution below. Accordingly, the following resolution will be submitted for a stockholder vote at the Annual Meeting:
RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the proxy statement for the Company’s 2023 annual meeting of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF THIS RESOLUTION.
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ADVISORY VOTE ON THE FREQUENCY AT WHICH WE WILL SEEK STOCKHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
Section 14A requires that (i) once every six years, we seek stockholder approval of the frequency with which we will seek advisory approval of executive compensation and (ii) we present every one, two or three years, or abstain as alternatives for stockholders.
The Board has determined that an advisory vote on executive compensation every three years is the best approach for our company based on a number of considerations, including the following:
the elements of our executive compensation program generally do not change in a significant manner from year to year;
stockholders have various methods of providing feedback on executive compensation matters even in years in which there is no advisory vote on executive compensation — for example, by communicating directly with the Board, as discussed under “Governance of our Company — Communications with Directors”;
a three-year vote cycle gives the Board sufficient time to thoughtfully consider the results of the advisory vote and to implement any desired changes to our executive compensation policies and procedures; and
a three-year cycle will provide investors sufficient time to evaluate the effectiveness of our short- and long-term compensation programs.
Although the vote on this proposal is advisory and non-binding, the compensation committee and the Board will carefully consider the voting results. The proxy card provides stockholders with the opportunity to choose among four options (holding the vote every one, two or three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the recommendation of the Board. The alternative (i.e., one year, two years, or three years) that receives the most votes will be deemed approved by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF EVERY THREE YEARS FOR THE FREQUENCY AT WHICH WE WILL PRESENT TO STOCKHOLDERS AN ADVISORY VOTE ON COMPENSATION OF EXECUTIVES.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee and the board of directors is seeking ratification of the appointment of E&Y as our independent registered public accounting firm for 2023. A representative of E&Y is expected to be present at our annual meeting and will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.
We are not required to have our stockholders ratify the selection of E&Y as our independent registered public accounting firm. We are doing so because we believe it is good corporate practice. If the stockholders do not ratify the selection, the audit committee will reconsider whether or not to retain E&Y, but may, not receive terms as favorable as those that we would receivein its discretion, decide to retain such independent registered public accounting firm. Even if the transactions were entered intoselection is ratified, the audit committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our and our stockholders’ interests.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2023.
The following table presents E&Y’s fees for the services and years indicated:
Audit fees(1) | | | $839,615 | | | $811,000 |
Audit-related fees | | | — | | | — |
Tax fees(2) | | | 17,600 | | | 17,000 |
All other fees | | | — | | | — |
Total fees | | | $857,215 | | | $828,000 |
(1)
| Includes fees for audit services and related expenses associated with the annual audit of our consolidated financial statements, including reviews of our quarterly reports, comfort letters, consents, review of documents filed with the SEC. |
(2)
| Tax fees consist of fees for certain tax compliance services and tax advice. |
The audit committee has concluded that the provision of non-audit services listed above is compatible with unaffiliated entities ormaintaining the independence of E&Y.
Pre-Approval Policy for Audit and Non-Audit Services The audit committee must pre-approve all audit and non-audit services involving our independent registered public accounting firm.
In addition to the audit work necessary for us to file required reports under the Exchange Act (i.e., quarterly reports on Form 10-Q and annual reports on Form 10-K), our independent registered public accounting firm may perform non-audit services, other than those prohibited by the Sarbanes-Oxley Act of 2002, provided they are approved in advance by the audit committee. The audit committee approved all audit and non-audit services performed by our independent registered public accounting firm in 2022 and 2021.
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REPORT OF THE AUDIT COMMITTEE The role of the audit committee is to select and engage our independent registered public accounting firm and to oversee and monitor, among other things, our financial reporting process and the independence and performance of the independent registered public accounting firm. It is the responsibility of management to prepare financial statements in accordance with generally accepted accounting principles and of the independent registered public accounting firm to perform an independent audit of the financial statements and to express an opinion on the conformity of those financial statements with generally accepted accounting principles.
In performing its duties, the audit committee:
reviewed and discussed the Company’s audited consolidated financial statements for the year ended December 31, 2022 (the “Audited Financial Statements”) with management and the independent registered public accounting firm;
discussed with the independent registered public accounting firm the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”);
received from E&Y the written disclosures and the letter from E&Y regarding E&Y’s independence required by the applicable requirements of the PCAOB, and discussed with such firm its independence; and
based on the reviews and discussions referred to above, the audit committee recommended that the Audited Financial Statements be included in our officers might otherwise seek benefitsAnnual Report on Form 10-K for affiliated entities at our expense. Our code of business conduct and ethics contains specific requirementsthe year ended December 31, 2022 for filing with the SEC.
Respectfully submitted,
Leor Siri, Chair
J. Robert Lovejoy
Karen A. Till
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DELINQUENT SECTION 16(a) REPORTS In 2022, Mr. Joseph A. DeLuca, a former director, filed one report late with respect to
the approval of these transactions. Generally, a contract or transaction with an affiliated entity must be approved by our audit committee and a majority of our independent directors after consideration of all relevant factors.one transaction.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Securities Exchange Act of 1934, as amended, requires that our executive officers and directors, and persons who beneficially own more than 10% of our issued and outstanding capital stock, file certain reports with the Securities and Exchange Commission. Executive officers, directors and greater than 10% beneficial owners are required by the rules and regulations promulgated by the SEC to furnish us with copies of all Section 16(a) forms they file.
Based on a review of information supplied to us by our executive officers and directors, and public filings made by any 10% beneficial owners, we believe that in 2015 all Section 16(a) filing requirements applicable to our executive officers, directors and 10% beneficial owners were met on a timely basis.
ADDITIONAL INFORMATION AND NOTICE OF INTERNET AVAILABILITY
As of the date of this proxy statement, we do not know of any business that
willmay properly be presented for consideration at the meeting other than the items referred to in the Notice of the Meeting. Subject to applicable law, if any other matter is properly brought before the meeting for action by stockholders, the holders of the proxies will vote and act with respect to the business in accordance with their best judgment and discretionary authority to do so is conferred by the enclosed proxy.
Our corporate governance guidelines, code of business conduct and ethics and the charter for each of our audit, compensation and nominating committees are available at the corporate governance section of our website at: www.onelibertyproperties.com/corporate_governance. https://1liberty.com/investor-relations/corporate-governance.
Copies of such documents may be obtained without charge by writing to us at 60 Cutter Mill Road, Suite 303, Great Neck, NY 11021,
Att:Attn: Office of the Corporate Secretary.
This proxy statement (including the notice of meeting), the proxy card and our 20152022 annual report to stockholders are available at http://1liberty.com/annualmeetingmaterials.pdf.
Great Neck, NY April 18, 2016 | | | By order of the Board of Directors
Mark H. Lundy, |
April 21, 2023 | | | |
| | | |
| | | S. Asher Gaffney, Vice President and
Corporate Secretary |
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Annex A
ONE LIBERTY PROPERTIES, INC.
2016 INCENTIVE PLAN
SECTION 1
EFFECTIVE DATE AND PURPOSE
1.1 Effective Date. This Plan (as defined) shall become effective upon approval by the stockholders of the Company (as defined), as and to the extent required by the listing requirements of the New York Stock Exchange and Section 162(m) of the Code (as defined).
1.2 Purpose of the Plan. The Plan is designed to motivate, retain and attract Participants (as defined) of experience and ability and to further the financial success of the Company by aligning the interests of Participants through the ownership of Shares (as defined) with the interests of the Company’s stockholders.
SECTION 2
DEFINITIONS
The following terms shall have the following meanings (whether used in the singular or plural) unless a different meaning is plainly required by the context:
“1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or a regulation thereunder shall include any regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
“Affiliate” or “Affiliates” has the meaning ascribed to such term by Rule 501 promulgated under the Securities Act of 1933, as amended.
“Award” means, individually or collectively, a grant under the Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Restricted Stock Units, Dividend Equivalent Rights and Performance Share Awards.
“Award Agreement” means either (1) the written agreement setting forth the terms and provisions applicable to each Award granted under the Plan or (2) a statement (including an electronic communication) issued by the Company to a Participant describing the terms and provisions of such Award.
“Board” or “Board of Directors” means the Board of Directors of the Company, or any analogous governing body of any successor to the Company.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations thereunder.
“Committee” means the Compensation Committee of the Board or the committee of the Board appointed to administer the Plan.
“Dividend Equivalent Right” means an Award granted pursuant to Section 9, entitling the Participant to receive an amount of cash equal to the cash distributions that would have been paid on the Shares specified in the Award to which such Dividend Equivalent Right relates, as if such Shares had been issued to and held by the Participant holding such Dividend Equivalent Right during the period beginning with the grant date (or if otherwise determined by the committee, the beginning of the Performance Cycle) of the Award to which the Dividend Equivalent Right relates through the vesting date of such award.
“Disability” or “Disabled” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
“Exercise Price” means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option.
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“Fair Market Value” means, as of any given date: (i) the closing sales price of the Shares on any national securities exchange on which the Shares are listed; (ii) the closing sales price if the Shares are listed on the OTCBB or other over the counter market; or (iii) if there is no regular public trading market for such Shares, the fair market value of the Shares as determined by the Committee.
“Grant Date” means, with respect to an Award, the effective date that such Award is granted to a Participant.
“Incentive Stock Option” means an Option to purchase Shares which is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code.
“Non-management Director” means a director who, in the applicable calendar year, was not compensated, directly or indirectly, by the Company, any Subsidiary or any of their Affiliates, other than compensation for service as a director or as a member of any committee of the Board.
“Nonqualified Stock Option” means an Option to purchase Shares which is not an Incentive Stock Option.
“Option” means an Incentive Stock Option or a Nonqualified Stock Option.
“Participant” means an officer, employee, director or consultant of the Company or any of its Subsidiaries who has been granted an Award under the Plan.
“Performance-Based Award” means any Restricted Stock Award, Restricted Stock Unit, Option or Performance Share Award granted to a Participant that qualifies as “performance based compensation” under Section 162(m) of the Code.
“Performance Criteria” shall mean any, a combination of, or all of the following: (i) pre-tax income, (ii) after-tax income, (iii) net income (meaning net income as reflected in the Company’s financial reports for the applicable period), (iv) operating income (including net operating income), (v) cash flow, cash flow from operations, free cash flow and any one or more of the foregoing, (vi) return on any one or more of equity, invested capital and assets, (vii) funds available for distribution, (viii) occupancy rate at any one or more of the Company’s or its Subsidiaries’ properties, (ix) total stockholder return, (x) funds from operations (“FFO”), as computed in accordance with standards established by the National Association of Real Estate Trusts (“NAREIT”), (xi) adjusted FFO (i.e., adjusting FFO to give effect to any one or more of the following: property acquisition costs, straight-line rent, amortization of lease intangibles, lease termination fee income, amortization of restricted stock or other non-cash compensation expense, amortization and/or write-off of deferred financing costs and debt prepayment costs),(xii) stock appreciation (meaning an increase in the price or value of the Shares after the date of grant of an award and during the applicable period), (xiii) revenues, (xiv) assets, (xv) earnings before any one or more of the following items: interest, taxes, impairment charges, depreciation or amortization for the applicable period, as reflected in the Company’s financial reports for the applicable period, (xvi) reduction in expense levels, (xvii) operating cost management and employee productivity, (xviii) strategic business criteria consisting of one or more objectives based on meeting specified revenue, market share, market penetration, geographic business expansion goals, objectively identified project milestones, cost targets and goals relating to acquisition or divestitures; and (xix) achievement of business or operational goals such as market share and/or business development. Performance Criteria need not be the same with respect to all Participants and may be established on an aggregate or per share basis (diluted or undiluted), may be based on performance compared to performance by businesses or indices specified by the Committee, may be compared to any prior period, may be based on a company-wide basis or in respect of any one or more business units, may be measured on an absolute or relative basis, may be adjusted for non-controlling interests, and any one or more of the foregoing. All calculations and financial accounting matters relevant to this Plan shall be determined in accordance with GAAP, except as otherwise directed by the Committee.
“Performance Cycle” means one or more periods of time which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participants right to and the payment of a Restricted Stock Award, Restricted Stock Unit, Option or Performance Share Award. Each such period shall not be less then twelve months.
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“Performance Goals” means for a Performance Cycle, the specific goals established by the Committee for a Performance Cycle based upon the Performance Criteria.
“Period of Restriction” means the period during which an Award granted hereunder is subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of Performance Goals or the occurrence of other events as determined by the Committee.
“Plan” means the One Liberty Properties, Inc. 2016 Incentive Plan, as set forth in this instrument, and as hereafter amended from time to time.
“Restricted Stock” means an Award of Shares, the grant, issuance, retention and/or vesting of which is subject to such conditions as are expressed in the Award Agreement and as contemplated herein.
“Restricted Stock Unit” or “RSU” means an Award of a right to receive one Share, the grant, issuance, retention and/or vesting of which is subject to such conditions as are expressed in the Award Agreement and as contemplated herein.
“Retirement” means (i) a director who has attained the age of 65 years who resigns or retires from the Board or does not stand for re-election to the Board and has served continuously as a director of the Company for not less than six consecutive years, and (ii) an officer or employee of, or consultant to, the Company who has attained the age of 65 years who resigns or retires from the Company or one of its Subsidiaries and has served in any such capacity with the Company or one of its Subsidiaries for not less than ten consecutive years at the time of retirement or resignation, provided that such Participant has not acted in a manner during the period of his relationship with the Company or any of its Subsidiaries which has been harmful to the business or reputation of the Company. A determination as to whether a “retiree” acted in a manner which has been harmful to the business or reputation of the Company shall be made by the Committee, whose determination shall be conclusive and binding in all respects on the Participant and the Company.
“Shares” means the shares of common stock, $1.00 par value, of the Company, or any other security of the Company determined by the Committee pursuant to Section 5.3.
“Subsidiary” means (i) a corporation, association or other business entity of which 50% or more of the total combined voting power of all classes of capital stock is owned, directly or indirectly, by the Company or by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries of the Company, (ii) any partnership or limited liability company of which 50% or more of the capital and profit interests is owned, directly or indirectly, by the Company or by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries of the Company, or (iii) any other entity not described in clauses (i) or (ii) above of which 50% or more of the ownership and the power, pursuant to a written contract or agreement, to direct the policies and management or the financial and the other affairs thereof, are owned or controlled by the Company or by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries of the Company.
“Company” means One Liberty Properties, Inc., a Maryland corporation, or any successor thereto (including any entity that is a successor issuer in accordance with Rule 12g-3 under the 1934 Act and Rule 414 under the Securities Act of 1933, as amended).
SECTION 3
ELIGIBILITY
3.1 Participants. Awards may be granted in the discretion of the Committee to officers, employees, directors and consultants of the Company and its Subsidiaries.
3.2 Non-Uniformity. Awards granted hereunder need not be uniform among eligible Participants and may reflect distinctions based on title, compensation, responsibility or any other factor the Committee deems appropriate.
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SECTION 4
ADMINISTRATION
4.1 The Committee. The Plan will be administered by the Committee, which, to the extent deemed necessary by the Board, will consist of two or more persons who satisfy the requirements for a “non-employee director” under Rule 16b-3 promulgated under the 1934 Act and/or the requirements for an “outside director” under section 162(m) of the Code. The members of the Committee shall be appointed from time to time by, and shall serve at the pleasure of, the Board of Directors. In the absence of such appointment, the Board of Directors shall serve as the Committee and shall have all of the responsibilities, duties, and authority of the Committee set forth herein.
4.2 Authority of the Committee. Subject to applicable law, the Committee shall have the exclusive authority to administer and construe the Plan in accordance with its provisions. The Committee’s authority shall include, without limitation, the power to (a) determine persons eligible for Awards, (b) prescribe the terms and conditions of the Awards, (c) construe and interpret the Plan, the Awards and any Award Agreement, (d) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith and (e) establish, interpret, amend or revoke any such rules. With respect to any Award that is intended to qualify as “performance-based compensation” within the meaning of section 162(m) of the Code, the Committee shall have no discretion to increase the amount of compensation that otherwise would be due upon attainment of a Performance Goal, although the Committee may have discretion to deny an Award or to adjust downward the compensation payable pursuant to an Award, as the Committee determines in its sole judgment. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more officers of the Company to the extent permitted by law.
4.3 Decisions Binding. All determinations and decisions made by the Committee and any of its delegatees pursuant to Section 4.2 shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law.
4.4 Limitation on Awards Granted to Non-Management Directors. The maximum number of Shares issuable pursuant to Awards that may be granted to a Non-management Director in any calendar year shall not exceed 10,000 Shares.
SECTION 5
SHARES SUBJECT TO THE PLAN
5.1 Number of Shares. Subject to adjustment as provided in Section 5.3, the total number of Shares available for grant under the Plan shall not exceed 750,000 Shares. The Shares available for issuance under the Plan shall be authorized but unissued Shares of the Company.
5.2 Lapsed Awards. Unless determined otherwise by the Committee, Shares related to Awards that are forfeited, cancelled, terminated or expire unexercised, shall be available for grant under the Plan. Shares that are tendered by a Participant to the Company in connection with the exercise of an Award, withheld from issuance in connection with a Participant’s payment of tax withholding liability, or settled in such other manner so that a portion or all of the Shares included in an Award are not issued to a Participant shall not be available for grant under the Plan.
5.3 Adjustments in Awards and Authorized Shares. In the event of a stock dividend or stock split, the number of Shares subject to the Plan, outstanding Awards and the numerical amounts set forth in Sections 5.1, 6.1, 7.1 and 8.1 shall automatically be adjusted proportionally to prevent the dilution or diminution of such Awards, except to the extent directed otherwise by the Committee. In the event of a merger, reorganization, consolidation, recapitalization, separation, liquidation, combination or other similar change in the structure of the Company affecting the Shares, the Committee shall adjust the number and class of Shares which may be delivered under the Plan, the number, class and price of Shares subject to outstanding Awards, and the numerical limits of Sections 5.1, 6.1, 7.1 and 8.1 in such manner as the Committee shall determine to be advisable or appropriate to prevent the dilution or diminution of such Awards. Any such numerical limitations shall be subject to adjustment under this Section only to the extent such adjustment will not affect the status of any Award intended to qualify as “performance-based compensation” under section 162(m) of the Code or the ability to grant or the qualification of Incentive Stock Options under the Plan.
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5.4 Restrictions on Transferability. The Committee may impose such restrictions on any Award, Award of Shares or Shares acquired pursuant to an Award as it deems advisable or appropriate, including, but not limited to, restrictions related to applicable Federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, and any blue sky or state securities laws.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Participants at any time and from time to time as determined by the Committee. The Committee shall determine the number of Shares subject to each Option. The Committee may grant Incentive Stock Options, Nonqualified Stock Options, or any combination thereof. Except to the extent such Awards are intended to qualify as Performance Based Awards, the maximum aggregate number of Shares underlying Options granted in any one calendar year to an individual Participant shall be 50,000.
6.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify the Exercise Price, the expiration date of the Option, the number of Shares to which the Option pertains, whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option, any conditions on exercise of the Option and such other terms and conditions as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of termination of employment by the Participant.
6.3 Exercise Price. The Exercise Price for each Option shall be determined by the Committee and shall be provided in each Award Agreement; provided, however, the Exercise Price for each Option may not be less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date. In the case of an Incentive Stock Option, the Exercise Price shall be not less than one hundred ten percent (110%) of the Fair Market Value of a Share if the Participant (together with persons whose stock ownership is attributed to the Participant pursuant to section 424(d) of the Code) owns on the Grant Date stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries.
6.4 Expiration of Options. Except as provided in Section 6.7(c) regarding Incentive Stock Options, each Option shall terminate upon the earliest to occur of (i) the date(s) for termination of the Option set forth in the Award Agreement or (ii) the expiration of ten (10) years from the Grant Date. Subject to such limits, the Committee shall provide in each Award Agreement when each Option expires and becomes un-exercisable. The Committee may not, after an Option is granted, extend the maximum term of the Option.
6.5 Exercisability of Options. Options granted under the Plan shall be exercisable, in whole or in part, at such times and be subject to such restrictions and conditions as the Committee shall determine. After an Option is granted, the Committee may accelerate or waive any condition constituting a substantial risk of forfeiture applicable to the Option. Notwithstanding the foregoing, the Committee shall not act in a manner that would cause a grant that is intended to be “performance-based compensation” under Code Section 162(m) to fail to be performance-based.
6.6 Payment. Options shall be exercised by a Participant’s delivery of a written notice of exercise to the Secretary of the Company (or his or her designee), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. Upon the exercise of an Option, the Exercise Price shall be payable to the Company in full in cash or its equivalent. The Committee may permit exercise (a) by the Participant tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, (b) the Participant tendering a combination of cash and previously acquired Shares equal to total Exercise Price (the Shares tendered being valued at Fair Market Value at the time of exercise), or (c) by any other means which the Committee determines to provide legal consideration for the Shares, and to be consistent with the purposes of the Plan. As soon as practicable after receipt of a written notification of exercise and full payment for the Shares purchased, the Company shall deliver, or cause to be delivered, to the Participant, evidence of such Participant’s ownership of such Shares. No right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the
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Shares as to which the Option has been exercised until the records of the Company or its transfer agent reflect the issuance of such Shares. No adjustment will be made for a dividend or other rights for which a record date is established prior to the date the records of the Company or its transfer agent reflect the issuance of the Shares upon exercise of the Options.
6.7 Certain Additional Provisions for Incentive Stock Options.
(a) Exercisability. The aggregate Fair Market Value (determined on the Grant Date(s)) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company, any parent and its Subsidiaries) shall not exceed $100,000. The portion of the Option which is in excess of the $100,000 limitation shall be treated as a Non-Qualified Option pursuant to Section 422(d)(1) of the Code.
(b) Company and Subsidiaries Only. Incentive Stock Options may be granted only to Participants who are officers or employees of the Company or a Subsidiary on the Grant Date.
(c) Expiration. No Incentive Stock Option may be exercised after the expiration of ten (10) years from the Grant Date. In the case of an Incentive Stock Option that is granted to a Participant who (together with persons whose stock ownership is attributed to the Participant pursuant to Section 424(d) of the Code) owns on the Grant Date stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the term of such Incentive Stock Option shall be no more than five years from the Grant Date.
6.8 Restriction on Transfer. Except as otherwise determined by the Committee, no Option may be transferred, gifted, pledged, assigned, or otherwise alienated or hypothecated, voluntarily or involuntarily. Upon the death or Disability of a Participant, an Option may be exercised by the duly appointed personal representative of the deceased Participant or in the event of a Disability by the Participant or the duly appointed committee of the Disabled Participant to the extent the Option was exercisable on the date of death or the date of Disability and shall be exercisable for a period of six months from the date of death or the date of Disability. Upon Retirement of a Participant an Option may be exercised to the extent it was exercisable on the effective date of the Retirement and shall be exercisable for a period of six months from the effective date of such Retirement.
6.9 Repricing of Options. Without stockholder approval, (i) the Company will not reprice, replace or regrant an outstanding Option either in connection with the cancellation of such Option or by amending an Award Agreement to lower the exercise price of such Option, and (ii) the Company will not cancel outstanding Options in exchange for cash or other Awards.
6.10 Voting Rights. A Participant shall have no voting rights with respect to any Options granted hereunder.
SECTION 7
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
7.1 Grant of Restricted Stock and Restricted Stock Units. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall determine. The Committee shall determine the number of Shares of Restricted Stock and/or RSU’s to be granted to each Participant and the time when each Award shall be granted. Except to the extent such Awards are intended to qualify as Performance Based Awards, no more than 100,000 Shares of each of Restricted Stock and Shares underlying Restricted Stock Units may be granted to any individual Participant in any one calendar year.
7.2 Restricted Stock and RSU Agreements. Each Award of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares of Restricted Stock granted, the number of Shares subject to a Restricted Stock Unit, any applicable Performance Goals and Performance Cycle, and such other terms and conditions as the Committee shall determine, including terms regarding forfeiture of Awards in the event of termination of employment by the Participant or termination of the Participant’s relationship with the Company as a director or consultant.
7.3 Transferability. Except as otherwise determined by the Committee, Shares of Restricted Stock and Restricted Stock Units (including Shares underlying RSU’s) may not be sold, transferred, gifted, bequeathed,
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pledged, assigned, or otherwise alienated or hypothecated, voluntarily or involuntarily, until the end of the applicable Period of Restriction and the satisfaction, in whole or in part, of any applicable Performance Goals within the applicable Performance Cycle. Except as otherwise determined by the Committee, in the event of the death, Disability or Retirement of a Participant, all unvested Restricted Stock and unvested RSU’s shall not vest on the date of death or Disability or the effective date of Retirement. Without stockholder approval, the Company will not, except as otherwise provided for in the Plan, repurchase outstanding unvested Restricted Stock or unvested RSU’s in exchange for cash or accelerate the vesting of outstanding unvested Shares of Restricted Stock or RSU’s.
7.4 Other Restrictions. The Committee may impose such other restrictions on Shares of Restricted Stock and Restricted Stock Units (including Shares underlying RSU’s) as it may deem advisable or appropriate in accordance with this Section 7.4.
(a) General Restrictions. The Committee may set one or more restrictions based upon (a) the achievement of specific Performance Goals, (b) applicable Federal or state securities laws, (c) time-based restrictions, or (d) any other restrictions determined by the Committee.
(b) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock and/or RSUs as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its sole discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Restricted Stock and/or RSUs to qualify as “performance-based compensation” under section 162(m) of the Code. In granting Restricted Stock and/or RSUs that are intended to qualify under section 162(m) of the Code, the Committee shall follow any procedures determined by it in its sole discretion from time to time to be necessary, advisable or appropriate to ensure qualification of the Restricted Stock and/or RSUs under section 162(m) of the Code.
(c) Methods of Implementing Restrictions. The Committee may take such action as it, in its sole discretion, deems appropriate to give notice to the Participant of, and implement, the restrictions imposed pursuant to Section 7.
7.5 Removal of Restrictions. After the end of the Period of Restriction, the Shares shall be freely transferable by the Participant, subject to any other restrictions on transfer (including without limitation, limitations imposed pursuant to the Company’s organizational documents) which may apply to such Shares. Notwithstanding the foregoing, the Committee shall not act in a manner that would cause a grant that is intended to be “performance-based compensation” under Code Section 162(m) to fail to be performance-based.
7.6 Voting Rights. Except as otherwise determined by the Committee and set forth in the Award Agreement, Participants holding (a) Shares of Restricted Stock shall have voting rights during the Period of Restriction and (b) Restricted Stock Units shall not have voting rights during the Period of Restriction.
7.7 Dividends and Other Distributions. Except as otherwise determined by the Committee and set forth in the Award Agreement, Participants holding (a) Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to the Shares during the Period of Restriction and (b) except to the extent a Dividend Equivalent Right is granted in tandem with an RSU, RSUs shall not be entitled to receive any dividends or other distributions paid with respect to the underlying Shares during the Period of Restriction.
SECTION 8
PERFORMANCE-BASED AWARDS
8.1 Performance-Based Awards. Participants selected by the Committee may be granted one or more Performance Awards in the form of Options, Restricted Stock, Restricted Stock Units, Dividend Equivalent Rights or Performance Share Awards payable upon the attainment of Performance Goals that are established by the Committee and related to one or more of the Performance Criteria, in each case on a specified date or dates or over a Performance Cycle determined by the Committee. A Performance Cycle shall be at least one year. The Committee in its sole discretion shall determine whether an Award is to qualify as “performance based compensation” under Section 162(m) of the Code. The Committee in its sole discretion shall determine Awards that are based on Performance Goals but are not intended to quality as “performance based compensation” under Section 162(m). The Committee shall define the manner of calculating the
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Performance Criteria it selects to use for any Performance Cycle. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of an individual. The Committee, in its discretion, may adjust or modify the calculation of Performance Goals for such Performance Cycle in order to prevent the dilution or enlargement of the rights of an individual (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development, (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or (iii) in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions; provided however, that the Committee may not exercise such discretion in a manner that would increase the Performance-Based Award granted to a Participant. Each Performance-Based Award shall comply with the provisions set forth below. Performance Awards, other than Dividend Equivalent Rights, shall be paid in Shares.
(a) Grant of Performance-Based Awards. With respect to each Performance-Based Award granted to a Participant, if intended by the Committee to qualify as “performance based compensation” under Section 162(m) of the Code, the Committee shall select, within the first 90 days of a Performance Cycle, the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award). Each Performance-Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets. The Performance Criteria established by the Committee may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Participants.
(b) Payment of Performance-Based Awards. Following the completion of a Performance Cycle, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle. The Committee shall then determine the actual size of each Participant’s Performance-Based Award, and, in doing so, may reduce or eliminate the amount of the Performance-Based Award for a Participant if, in its sole judgment, such reduction or elimination is appropriate.
(c) Maximum Award Payable. The maximum Performance-Based Award payable to any one Participant under the Plan for a Performance Cycle is 100,000 Shares (subject to adjustment as provided in Section 5.3 hereof).
SECTION 9
DIVIDEND EQUIVALENT RIGHTS
A Dividend Equivalent Right may be granted hereunder to any Participant only in tandem with an Award of RSU’s or a Performance Based Award (other than an Award of Restricted Stock or Options). The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Agreement which shall provide that such Dividend Equivalent Right, except to the extent otherwise provided in the related Award Agreement, shall (i) not be sold, transferred, gifted, bequeathed, pledged, assigned, or otherwise alienated or hypothecated, voluntarily or involuntarily, until the end of the applicable Period of Restriction and the satisfaction, in whole or in part, of any applicable Performance Goals within the applicable Performance Cycle, and (ii) be settled upon settlement or payment of, or lapse of restrictions on, the Award to which it relates, and such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such Award.
SECTION 10
AMENDMENT, TERMINATION, AND DURATION
10.1 Amendment, Suspension, or Termination. The Board, in its sole discretion, may amend, suspend or terminate the Plan, or any part thereof, at any time and for any reason; provided, however, that if and to the extent required by law or to maintain the Plan’s compliance with the Code, the rules of any national securities exchange (if applicable), or any other applicable law, any such amendment shall be subject to stockholder
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approval. The amendment, suspension or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Award theretofore granted to such Participant. No Award may be granted during any period of suspension or after termination of the Plan.
10.2 Duration of the Plan. The Plan shall become effective in accordance with Section 1.1, and subject to Section 10.1, shall remain in effect until the tenth anniversary of the effective date of the Plan.
SECTION 11
TAX WITHHOLDING
11.1 Withholding Requirements. Prior to the delivery of any Shares pursuant to an Award (or the exercise thereof), the Company shall have the power and the right to deduct or withhold from any amounts due to the Participant from the Company, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Participant’s FICA obligation) required or appropriate to be withheld with respect to such Award (or the exercise or vesting thereof).
11.2 Withholding Arrangements. The Company, pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part, by (a) electing to have the Company withhold otherwise deliverable Shares, or (b) delivering to the Company, Shares then owned by the Participant. The amount of the withholding requirement shall be deemed to include any amount that the Company agrees may be withheld at the time any such election is made, not to exceed the amount determined by using the maximum federal, state and local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the taxes are required to be withheld.
SECTION 12
CHANGE IN CONTROL
12.1 Change in Control. For purposes of the Plan, a Change in Control means any of the following:
(a) the acquisition (other than from the Company) in one or more transactions by any person (as such term is used in Section 13(d) of the 1934 Act) of the beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 25% or more of (i) the then outstanding Shares or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Company Voting Stock”); provided, however, the provision of this Section 11.1(a) is not applicable to acquisitions made individually, or as a group, by Fredric H. Gould, Matthew J. Gould and Jeffrey A. Gould, and their respective spouses, lineal descendants and Affiliates;
(b) individuals who, as of the date of the Award, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date of such Award whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Regulation 14A promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) the closing of a sale or other conveyance of all or substantially all of the assets of the Company; or
(d) the effective time of any merger, share exchange, consolidation, or other business combination involving the Company if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior to such transaction, held the Company’s voting Shares.
12.2 Effect of Change of Control. On the effective date of any Change in Control, unless the applicable Award Agreement provides otherwise: (i) in the case of an Option, each such outstanding Option shall become exercisable in full in respect of the aggregate number of Shares covered thereby; and (ii) in the case
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of Restricted Stock, Restricted Stock Units, Dividend Equivalent Rights and Performance Share Awards, the Period of Restriction applicable to each such Award shall be deemed to have expired. Notwithstanding the foregoing, unless otherwise provided in the applicable Award Agreement, the Committee may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not become exercisable on an accelerated basis nor will the Restriction Period expire in connection with a Change of Control if effective provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and appropriate to substitute a new Award for such Award or for the assumption of such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award (before giving effect to any acceleration of the exercisability or the expiration of the Restriction Period), taking into account, to the extent applicable, the kind and amount of securities, cash, or other assets into or for which the Shares may be changed, converted, or exchanged in connection with such Change of Control.
SECTION 13
MISCELLANEOUS
13.1 Deferrals. To the extent consistent with the requirements of section 409A of the Code, the Committee may provide in an Award Agreement or another document that a Participant is permitted or required to defer receipt of the delivery of Shares that would otherwise be due to such Participant under an Award. Any such deferral shall be subject to such rules and procedures as shall be determined by the Committee.
13.2 Termination for Cause. If a Participant’s employment or relationship with the Company or a Subsidiary shall be terminated for cause by the Company or such Subsidiary during the Restriction Period or prior to the exercise of any Option (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement or Award Agreement to which such Participant is a party or, in the absence thereof, shall include, but not be limited to, insubordination, dishonesty, incompetence, moral turpitude, the refusal to perform his duties and responsibilities for any reason (other than illness or incapacity) and other misconduct of any kind, as determined by the Committee, then, (i) all Options shall immediately terminate and (ii) such Participant’s rights to all Restricted Stock, RSU’s, Dividend Equivalent Rights and Performance Share Awards shall be forfeited immediately.
13.3 Section 162(m). Notwithstanding anything to the contrary herein or in an Award Agreement, an Award that is intended to qualify as “performance based compensation” under Section 162(m) of the Code, shall not vest in whole or in part in the event of the Participant’s Retirement, involuntary termination or if the Participant terminates his or her relationship with the Company, except to the extent (a) the Performance Goal’s shall be achieved within the Performance Cycle or (b) otherwise permitted under Section 162(m) of the Code.
13.4 No Effect on Employment or Service. Nothing in the Plan, any Award or any Award Agreement, and no action of the Committee, shall confer or be construed to confer on any Participant any right to continue in the employ or service of the Company or any Subsidiary or shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment or service at any time, with or without cause. Employment with the Company or any Subsidiary is on an at-will basis only, unless otherwise provided by an applicable employment or service agreement between the Participant and the Company or any Subsidiary, as the case may be.
13.5 Successors. All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation or otherwise, or the purchase of all or substantially all of the business or assets of the Company.
13.6 No Rights as Stockholder. Except to the limited extent provided in Sections 7.6 and 7.7, no Participant (nor any beneficiary thereof) shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable pursuant to an Award (or the exercise or vesting thereof), unless and until the issuance of such Shares shall have been recorded on the records of the Company or its transfer agents or registrars.
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13.7 Uncertificated Shares. Notwithstanding any provision of the Plan to the contrary, the ownership of Shares issued under the Plan may be evidenced in such a manner as the Company, in its sole discretion, deems appropriate, including by book-entry or direct registration (including transaction advices) or the issuance of one or more share certificates, and to the extent that the Plan, applicable law or the Company’s organizational documents, require or contemplate the imposition of a legend or other notation on one or more certificates evidencing Shares or an Award, the Company shall have the sole discretion to determine the manner in which such legend or notation is implemented.
13.8 Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, or Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
13.9 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
13.10 Requirements of Law; Claw-Back Policies. The grant of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required from time to time, and shall be subject to the applicable provisions of any claw-back policy implemented by the Company, whether implemented prior to or after the grant of such Award, including without limitation, any claw-back policy adopted to comply with the requirements of applicable law (including the requirements of a national securities exchange).
13.11 Securities Law Compliance. To the extent any provision of the Plan, Award Agreement or action by the Committee fails to comply with any applicable federal or state securities law, it shall be deemed null and void, to the extent permitted by law and deemed advisable or appropriate by the Committee.
13.12 Real Estate Investment Trust. No Award shall be granted or awarded and, with respect to any Award granted under the Plan, such Award shall not vest, be exercisable or be settled, to the extent that the grant, vesting, exercise or settlement of such Award could cause the Participant or any other person to be in violation of any restrictions on ownership and transfer of the Company’s securities set forth in its articles of incorporation or other governing instrument or organizational documents, as amended, and in effect from time to time, or if, in the discretion of the Committee, the grant, vesting, exercise or settlement of such award could otherwise impair the Company’s status as a real estate investment trust under the Code.
13.13 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Maryland.
13.14 Captions. Captions are provided herein for convenience of reference only, and shall not serve as a basis for interpretation or construction of the Plan.