SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential For Use of
the Commission Only (as
Permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
SANTA FE FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(I)(1) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
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Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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SANTA FE FINANCIAL CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 27, 2003
To The Shareholders of Santa Fe Financial Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Santa Fe
Financial Corporation ("Santa Fe" or the "Company") will be held on February
27, 2003 at 2:30 P.M. at the Luxe Summit Hotel Bel Air located at 11461
Sunset Boulevard, Los Angeles, California 90049 for the purpose of
considering and acting on the following:
1. The election of three Directors to serve until the next Annual
Meeting or until successors have been duly elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal year ending June 30, 2003;
and
3. To transact such other business as may properly come before the
Meeting, or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 10, 2003 as
the record date for determining the shareholders having the right to vote at
the meeting or any adjournments thereof.
Your proxy is important to us whether you own a few or many shares. Please
complete, sign, date and promptly return the enclosed proxy in the self-
addressed, postage-paid envelope provided. Return the proxy even if you plan
to attend the meeting. You may always revoke your proxy and vote in person.
Dated: January 28, 2003
By Order of the Board of Directors,
/s/ Michael G. Zybala
Michael G. Zybala
Secretary
SANTA FE FINANCIAL CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 27, 2003
The Board of Directors of Santa Fe Financial Corporation (the "Company" or
"Santa Fe") is soliciting proxies in the form enclosed with this statement in
connection with the Annual Meeting of Shareholders to be held on February 28,
2003 or at any adjournment or adjournments thereof.
This Proxy Statement and the accompanying Proxy are first being sent to
Shareholders on or about January 31, 2003. Only shareholders of record at
the close of business on January 10, 2003 are entitled to notice of, and to
vote at, the Annual Meeting.
If you give us a proxy, you can revoke it at any time before it is used. To
revoke it, you may file a written notice revoking it with the Secretary of
the Company, execute a proxy with a later date or attend the meeting and vote
in person.
You may vote at the Annual Meeting only shares that you owned of record on
January 10, 2003. There were 1,178,210 shares of common stock and 63,600
shares of convertible voting preferred stock outstanding on that date. The
preferred shares are entitled to vote as if converted to common stock. Of
the total 1,241,810 voting shares outstanding, a majority, or 620,905 shares
will constitute a quorum for the transaction of business at the meeting.
Each share is entitled to one vote on each matter to be presented at the
meeting. Unless cumulative voting is elected as described under "Election of
Directors" below, the affirmative vote of the holders of the majority of the
shares of the Company's stock present or represented at the meeting and
entitled to vote is required to elect directors and ratify or approve the
other item being voted on at this time.
In addition to mailing this material to shareholders, the Company has asked
banks and brokers to forward copies to persons for whom they hold stock of
the Company and to request authority for execution of the proxies. The
Company will reimburse the banks and brokers for their reasonable out-of-
pocket expenses in doing so. Officers of the Company may, without being
additionally compensated, solicit proxies by mail, telephone, telegram or
personal contact. All proxy soliciting expenses will be paid by the Company.
The Company does not expect to employ anyone else to assist in the
solicitation of proxies.
1
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's bylaws set the number of directors at three. We propose to
elect three directors, each to hold office until the next Annual Meeting of
Shareholders and until his or her successor is elected and qualified. The
Board of Directors has nominated John V. Winfield, John C. Love and William
J. Nance. The persons named in the enclosed form of proxy will vote it for
the election of the nominees listed below unless you instruct otherwise, or
a nominee is unable or unwilling to serve. The Board of Directors has no
reason to believe that any nominee will be unavailable. However, in that
event, the proxy may vote for another candidate or candidates nominated by
the Board of Directors.
The California Corporations Code, as applicable to the Company, provides that
a shareholder may cumulate votes if a shareholder gives notice, prior to the
voting, of an intention to cumulate votes. If such a notice is given, every
shareholder may cumulate votes. Cumulating votes means that you can take the
total number of votes you have for all directors and distribute them among
one or more nominees as you see fit. For example, assume you have 100
shares. We have three directors so you have a total of 3 x 100 = 300 votes.
You could give all 300 votes to one person or 150 votes to each of two
nominees, or 100 votes to each of three nominees. You can use this power
only under the circumstances described herein. If cumulative voting is
elected, the enclosed form of proxy gives the proxy discretion to cumulate
votes so that he can elect the maximum possible number of the nominees
identified below.
Any shareholder executing the enclosed form of proxy may withhold authority
to vote for any one or more nominee by so indicating in the manner described
in the form of proxy. However, the number of votes authorized by the form of
proxy will not be affected and the named proxies could probably offset any
such action by using cumulative voting if they thought it necessary. Under
the California Corporations Code any shareholder or any person who claims to
have been denied the right to vote may apply to a state superior court for a
determination of the validity of any election or appointment of any director.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company. There is no relationship by
blood, marriage or adoption among the Directors and Officers. All Directors
serve one-year terms with their terms expiring at the Annual Meeting. All
Officers of the Company are elected or appointed by the Board of Directors
and hold office until the Annual Meeting or until replaced at the discretion
of the Board.
Shares of
Common Stock
Beneficially
Present Owned on Percent
Position Director January 10, of
Name Age With the Company Since 2003 Class(1)
- --------------------------------------------------------------------------------------------
John V. Winfield 56 Chairman, President 1995 709,996(2) 57.2%
and Chief Executive
Officer
William J. Nance 58 Director 1996 0(3) 0.0%
John C. Love 62 Director 1998 0 0.0%
Michael G. Zybala 50 Vice President,
Secretary, Treasurer
and General Counsel N/A 0 0.0%
All of the above as a group 709,996 57.2%
- ---------------------------
(1) Based on 1,241,810 voting shares issued and outstanding, which consist of
1,178,210 shares of common stock and 63,600 shares of convertible voting
preferred stock.
(2) John V. Winfield is the sole beneficial owner of 49,400 shares of common
stock. The InterGroup Corporation ("InterGroup") is the beneficial owner
of 596,996 shares of common stock and 63,600 shares of preferred stock.
As the President, Chairman of the Board and a 54.9% shareholder of
InterGroup, Mr. Winfield has voting and dispositive power with respect to
the shares of Santa Fe owned of record and beneficially by InterGroup.
2
Security Ownership of Management in Subsidiary
As of January 10, 2003, Santa Fe was the record and beneficial owner of
505,207 shares of the common stock of its 68.8%-owned subsidiary, Portsmouth
Square, Inc. The President and Chairman of the Board of Santa Fe has voting
power with respect to common shares of Portsmouth owned by Santa Fe. No
other director or executive officer of Santa Fe has a beneficial interest in
Portsmouth's shares.
BUSINESS EXPERIENCE:
Business Experience:
The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as
follows:
John V. Winfield -- Mr. Winfield was first elected to the Board in May of
1995 and currently serves as the Company's Chairman of the Board, President
and Chief Executive Officer, having been appointed as such in April 1996.
Mr. Winfield is also the Chairman of the Board, President and Chief Executive
Officer of the Company's subsidiary Portsmouth, having held those positions
since May of 1996. Mr. Winfield is Chairman of the Board, President and
Chief Executive Officer of The InterGroup Corporation ("InterGroup"), a
public company, and has held those positions since 1987. Mr. Winfield is
also a director of Healthy Planet Products, Inc. ("HPP"), a public company.
Mr. Winfield also serves as Chairman of the Board of Etz Lavud, Ltd., a
public company.
William J. Nance -- Mr. Nance was first elected to the Board in May of 1996.
Mr. Nance is also a director of Portsmouth. Mr. Nance is the President and
CEO of Century Plaza Printers, Inc., a company he founded in 1979. He has
also served as a consultant in the acquisition and disposition of multi-
family and commercial real estate. Mr. Nance is a Certified Public
Accountant and, from 1970 to 1976, was employed by Kenneth Leventhol &
Company where he was a Senior Accountant specializing in the area of REITS
and restructuring of real estate companies, mergers and acquisitions, and all
phases of real estate development and financing. Mr. Nance is a Director of
InterGroup and has held such position since 1984. Mr. Nance also serves as a
Director of HPP, having first been elected on August 5, 1998.
John C. Love -- Mr. Love was appointed a Director of the Company on March 5,
1998. Mr. Love is an international hospitality and tourism consultant based
in Orinda, California. He was formerly a partner in the national CPA and
consulting firm of Pannel Kerr and Forster. Mr. Love has extensive
experience in hotel development, acquisition and development. He is chairman
emeritus of Golden Gate University in San Francisco. Mr. Love is also a
Director of Portsmouth, having first been appointed in March 1998, and a
Director of InterGroup, having first been appointed in January 1998.
Michael G. Zybala -- Mr. Zybala was appointed as Vice President and Secretary
of the Company on February 20, 1998 and Treasurer on May 16, 2000. He is also
Vice President, Secretary, Treasurer and General Counsel of Portsmouth. Mr.
Zybala has served as the Company's General Counsel since 1995 and has
represented the Company as its corporate counsel since August 1993. Mr.
Zybala is a Director of HPP and serves as the company's Secretary. He was
appointed as a Director of HPP on June 17, 1998 and elected as Secretary on
August 5, 1998. Mr. Zybala also serves as Assistant Secretary and counsel to
InterGroup and served as InterGroup's Vice President Operations from January
1999 to July 15, 2002.
Board Meetings
For the fiscal year ended June 30, 2002, the Board of Directors held six
meetings, with no incumbent director attending (whether in person,
telephonically or by written consent) fewer than 75 percent of the meetings
held during the period he or she has been a director.
Committees
The Company has established two standing committees, a Securities Investment
Committee and an Audit Committee. The Company does not have any standing
nominating or compensation committees of the Board of Directors.
On March 17, 1998, the Company established a Securities Investment Committee
to establish guidelines and to review the Company's investment policies. The
Committee consists of all the members of the Board, with Mr. Winfield serving
3
as Chairperson. During fiscal 2002, the Securities Investment Committee held
ten meetings, in person, telephonically or by written consent with, all
members attending each meeting.
The Company is a Small Business Filer under SEC rules. The Company's Audit
Committee is comprised of Messrs. Nance (Chairperson) and Love, each of who
are independent directors as independence is defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' ("NASD") listing standards,
as applicable, and as may be modified or supplemented. Each of these
directors also meets the financial management expertise test. The primary
function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing: the financial reports
provided by the Company to any governmental body or the public; the Company's
system of internal controls regarding finance, accounting, legal compliance
and ethics that management and the Board have established; and the Company's
auditing, accounting and financial processes generally. The Audit Committee
held five meetings during the 2002 Fiscal Year. On June 8, 2000, the
Company's Board of Directors adopted a written charter for the Audit
Committee, which was amended in January 2003. A copy of that written
charter, as amended, is attached as Appendix A to this proxy statement.
AUDIT COMMITTEE REPORT
The Audit Committee's responsibilities are described in a written charter
adopted by the Board of Directors, which is attached as Appendix A to this
Proxy Statement. The Audit Committee primary duties and responsibilities are
to: serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; appoint and approve
the compensation of the Company's independent accountants; review and
appraise the audit efforts of the Company's independent accountants; and
provide an open avenue of communications among the independent accountants,
financial and senior management, and the Board of Directors. During fiscal
year ended June 30, 2002, the Company retained its independent accountants,
PricewaterhouseCoopers LLP, to provide audit and audit related services.
During the fiscal year ended June 30, 2002, the Company paid
PricewaterhouseCoopers a total of $33,635 related to such audit services.
There were no fees paid for non-audit services.
The Audit Committee reviewed and discussed the audited financial statements
with management and PricewaterhouseCoopers LLP and management represented to
the Audit Committee that the consolidated financial statements were prepared
in accordance with generally accepted accounting principals. The discussions
with PricewaterhouseCoopers LLP also included the matters required by
Statement on Auditing Standards No. 61 (Communication with Audit Committees),
as amended by FAS No. 90 with respect to quarterly financial statements. The
Audit Committee has also received the written disclosures and the letter from
PricewaterhouseCoopers LLP regarding its independence as required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), which was discussed with PricewaterhouseCoopers LLP.
Based on the Audit Committee's review of the audited financial statements,
and the review and discussions with management and PricewaterhouseCoopers LLP
referred to above, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2002 for
filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE:
WILLIAM J. NANCE, CHAIRPERSON
JOHN C. LOVE
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and each beneficial owner of more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based upon a review of the copies of such reports received by it,
or written representations from certain reporting persons that no Form 5's
were required for those persons, the Company believes that during fiscal 2002
all filing requirements applicable to its officers, directors, and greater
than ten-percent beneficial owners were complied with.
4
EXECUTIVE COMPENSATION
As a small business issuer, Santa Fe has no compensation committee. Executive
officer compensation is set by disinterested members of the Board of
Directors. Set forth below is a summary compensation table concerning
compensation awarded to, earned by, or paid to the Chief Executive Officer
("CEO"), and any qualifying Executive Officers or employees, for all services
to the Company and its subsidiaries for fiscal years ended June 30, 2002,
2001 and 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------------------------
Name and Principal Other Annual
Position Year Salary Bonus Compensation
- ------------------ ---- ------ ----- -------------
John V. Winfield 2002 $230,000(1) $ 0 $12,000(2)
Chairman, President and 2001 $240,000(1) $ 0 $12,000(2)
Chief Executive Officer 2000 $240,000(1) $ 0 $12,000(2)
Michael G. Zybala 2002 $ 88,125(3) - -
Vice President, Secretary, 2001 $ 98,271(3) $11,250 -
Treasurer and General Counsel 2000 $ 97,466(3) $15,000 -
- -----------------------------
(1) Includes salary received from the Company's subsidiary, Portsmouth, in
the amounts of $88,125, $90,000 and $90,000 and for the fiscal years 2002,
2001 and 2000, respectively. Does not include total compensation received
from Santa Fe's parent corporation, InterGroup, of $339,109, $339322 and
$331,800 for fiscal years ended June 30, 2002, 2001 and 2000, respectively.
(2) Amounts shown reflect regular annual director's fees paid by Santa Fe and
Portsmouth, each in the amount of $6,000. During fiscal 2002, 2001 and 2000,
the Company and Portsmouth also paid annual premiums of $25,500 and $17,000,
respectively, for split dollar whole life insurance policies, owned by, and
the beneficiary of which is, a trust for the benefit of Mr. Winfield's
family. The Company has a secured right to receive, from any proceeds of
the policies, reimbursement of all premiums paid prior to any payments to the
beneficiary.
(3) Approximately $70,500, $87,500 and $84,000 of Mr. Zybala's salary and
bonus was allocated to Portsmouth in fiscal years 2002, 2001 and 2000,
respectively. Does not include total compensation received from Santa Fe's
parent corporation, InterGroup, of $33,375, $35,677, and $34,999 for fiscal
years ended June 30, 2002, 2001 and 2000, respectively.
Santa Fe has no stock option plan or stock appreciation rights for its
executive officers. The Company has no pension or long-term incentive plans.
There are no employment contracts between Santa Fe and any executive officer,
nor are there any termination-of-employment or change-in-control
arrangements.
DIRECTOR COMPENSATION
The bylaws of Santa Fe permit directors to be paid a fixed sum for attendance
at each meeting of the Board or a stated salary as director. Each director
is paid a fee of $1,500 per quarter for a total annual compensation of
$6,000. This policy has been in effect since July 1, 1985.
5
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of January 10, 2003, Santa Fe owned 68.8% of the common stock of
Portsmouth, and InterGroup and John V. Winfield, in the aggregate, owned
approximately 57.2% of the voting stock of Santa Fe. All of the Company's
Directors serve as directors of InterGroup and all three of the Company's
Directors serve on the Board of Portsmouth.
Certain costs and expenses, primarily salaries, rent and insurance, are
allocated between the Company, its subsidiary, Portsmouth, and InterGroup
based on management's estimate of the utilization of resources. Effective
June 30, 1998, certain accounting and administrative functions of the Company
and its subsidiaries, were transferred to the Los Angeles, California offices
of InterGroup. During the fiscal years ended June 30, 2002 and 2001, the
Company and Portsmouth made payments to InterGroup in the total amount of
approximately $222,900 and $223,000, respectively, for administrative costs
and reimbursement of direct and indirect costs associated with the management
of the Companies and their investments, including the partnership asset.
John V. Winfield, the Company's Chairman and President, and Michael G.
Zybala, the Company's Vice President, Secretary and Treasurer, also serve as
officers of InterGroup and Portsmouth. Santa Fe and Portsmouth share
corporate office space with Santa Fe's parent company, InterGroup. Since all
three companies share the same office space, Mr. Winfield and Mr. Zybala can
allocate their time between the different companies more efficiently on an as
needed basis. Mr. Winfield' time and salary is primarily allocated according
to the asset base of the three companies that he oversees. The Company
believes that such an allocation is a fair estimate of the actual time Mr.
Winfield spends managing the respective companies. Mr. Zybala's time and
salary is allocated based on the amount of time he spends on each company
according to their needs. Such an arrangement also results in savings in
corporate overhead. For example, Mr. Zybala serves as legal counsel for all
three companies and assists with all of their corporate functions including
governmental compliance. Mr. Zybala also helps oversee the operations of
Santa Fe and Portsmouth, with a primary emphasis on the operations of
Portsmouth's hotel asset. By sharing the costs of Mr. Zybala's salary, the
companies obtain the full benefit of his services at a fraction of the cost
that it would incur by engaging separate counsel or hiring additional
personnel.
In September 1999, the Company's subsidiary, Woodland Village, obtained a 5-
year interest only note in the amount of $162,563 from InterGroup. The note
carries a 7.75% interest rate and matures on September 29, 2004.
During fiscal 2002, the Company paid $51,516 in preferred stock dividends to
InterGroup.
As Chairman of the Securities Investment Committee, the Company's President
and Chief Executive officer, John V. Winfield, directs the investment
activity of the Company in public and private markets pursuant to authority
granted by the Board of Directors. Mr. Winfield also oversees the investment
activity of Santa Fe and Portsmouth. Depending on certain market conditions
and various risk factors, the Chief Executive Officer, his family, Portsmouth
and InterGroup may, at times, invest in the same companies in which the
Company invests. The Company encourages such investments because it places
personal resources of the Chief Executive Officer and his family members, and
the resources of Portsmouth and InterGroup, at risk in connection with
investment decisions made on behalf of the Company.
In December 1998, Board of Directors authorized the Company to obtain whole
life insurance and split dollar insurance policies covering the Company's
President and Chief Executive Officer, Mr. Winfield. During fiscal years
2002 and 2001, the Company paid annual premiums of $25,500 for the split
dollar whole life insurance policy, owned by, and the beneficiary of which
is, a trust for the benefit of Mr. Winfield's family. The Company has a
secured right to receive, from any proceeds of the policy, reimbursement of
all premiums paid prior to any payments to the beneficiary. During fiscal
2002 and 2001, Portsmouth paid annual premiums of $17,000 for a split dollar
policy also covering Mr. Winfield.
There are no other relationships or related transactions between the Company
and any of its officers, directors, five-percent security holders or their
families that require disclosure.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF JOHN V.
WINFIELD, JOHN C. LOVE AND WILLIAM J. NANCE AS DIRECTORS OF THE COMPANY
6
PRINCIPAL HOLDERS OF EQUITY SECURITIES
The following table shows, as of January 10, 2003, the Common Stock owned by
every person owning of record (other than securities depositories), or known
by the Company to own beneficially, more than 5% of its outstanding common
shares. Any voting securities owned by directors or director nominees are
also disclosed under Election of Directors herein.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class(2)
- ------------------- ---------------------- ------------------
Guinness Peat Group plc ("GPG") 89,858(3) 7.6%
Allied Mutual Insurance
Services ("AMI")
Second Floor, 21-26 Garlick Hill
London ECHV 2AU, England
The InterGroup Corporation 660,596(4) 53.2%
820 Moraga Drive
Los Angeles, CA 90049
John V. Winfield 49,400 4.2%
820 Moraga Drive
Los Angeles, CA 90049
The InterGroup Corporation and 709,996(5) 57.2%
John V. Winfield as a group
- ------------------------------
(1) Unless otherwise indicated, and subject to applicable community property
laws, each person has sole voting and investment power with respect to the
shares beneficially owned.
(2) Percentages are calculated on the basis of 1,178,210 shares of Common
Stock issued and outstanding as of January 10, 2003, plus any securities that
the person has aright to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights.
(3) Based on their Statement on Schedule 13D (Amendment No. 6) dated June 13,
2001, GPG and its wholly-owned subsidiary AMI claim shared power to vote, or
to direct the vote, and to dispose of, or to direct the disposition of,
89,858 shares (post stock split) of Santa Fe's Common Stock owned
beneficially and of record by GPG and through AMI. Of that amount, 52,858
shares are beneficially owned by GPG and 37,000 by AMI.
(4) InterGroup is the beneficial owner of 596,996 shares of Common Stock and
63,600 shares of convertible, voting preferred stock, which shares are
entitled to vote as if converted to Common Stock.
(5) Pursuant to a Voting Trust Agreement dated June 30, 1998, InterGroup has
the power to vote the 49,400 shares of Common Stock owned by Mr. Winfield.
As President, Chairman of the Board and a 54.9% shareholder of InterGroup,
Mr. Winfield has voting and dispositive power over the shares owned of record
and beneficially by InterGroup.
As of January 10, 2003, there were 1,178,210 shares of the Company's Common
Stock outstanding, which were held by approximately 492 shareholders of
record and approximately 800 beneficial owners.
Securities Authorized for Issuance Under Equity Compensation Plans.
Santa Fe has no securities authorized for issuance under equity compensation
plans.
7
PROPOSAL II
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors has selected the firm of
PricewaterhouseCoopers LLP, certified public accountants, as the Company's
independent accountants for the fiscal year ending June 30, 2003 and
recommends to shareholders that they vote for the ratification of this
selection. PricewaterhouseCoopers LLP has served as the Company's independent
accountants commencing with the audit for the year ended December 31, 1997.
Ratification requires the affirmative vote of a majority of the shares
represented and voted at the Annual Meeting. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting to
make a statement, if desired, and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY.
OTHER BUSINESS
As of the date of this statement, management knows of no business to be
presented at the meeting that is not referred to in the accompanying notice,
other than the approval of the minutes of the last shareholders' meeting,
which action will not amount to ratification of the actions taken at that
meeting. As to other business that may properly come before the meeting, it
is intended that the proxies properly executed and returned will be voted in
respect thereof at the discretion of the person voting the proxies in
accordance with the best judgment of the person voting the proxies.
SHAREHOLDER PROPOSALS
It is presently anticipated that the fiscal 2003 Annual Meeting of
Shareholders will be held on or around January 39, 2004. Any shareholder
proposals intended to be considered for inclusion in the proxy statement for
presentation at the fiscal 2003 Annual Meeting must be received by the
Company no later than September 30, 2003. The proposal must be in accordance
with the provisions of Rule 14a-8 promulgated by the Securities and Exchange
Commission under the Securities Act of 1934. It is suggested that the
proposal be submitted by certified mail - return receipt requested.
FORM 10-KSB and ANNUAL REPORT
The Annual Report to Shareholders for the 2002 fiscal year accompanies this
proxy statement, but is not deemed a part of the proxy solicitation material.
A copy of the Company's Form 10-KSB for the fiscal year ended June 30, 2002,
as required to be filed with the Securities and Exchange Commission,
excluding exhibits, will be mailed to shareholders without charge upon
written request to: Michael G. Zybala, Secretary, Santa Fe Financial
Corporation, 820 Moraga Drive, Los Angeles, CA 90049. Such request must set
forth a good-faith representation that the requesting party was either a
holder of record or a beneficial owner of the common stock of the company on
January 10, 2003. The Company's Form 10-KSB and other reports are also
available through the Securities and Exchange Commission's world-wide-web
site (http://www.sec.gov).
By Order of the Board of Directors
SANTA FE FINANCIAL CORPORATION
Michael G. Zybala
Secretary
Dated: Los Angeles, California
January 28, 2003
8
APPENDIX A
SANTA FE FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
Purpose:
- -------
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its responsibility of overseeing management's conduct
of the Company's financial reporting process, the Company's systems of
internal accounting and financial controls, and the annual independent audit
of the Company's financial statements.
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention and shall have full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and
the Committee are in place to represent the Company's shareholders, and the
outside auditor is ultimately accountable to the Board and the Committee as
such representatives of shareholders. It is the responsibility of the
Committee to maintain free and open means of communication between the Board,
the outside auditor and the financial management and internal auditors of the
Company.
The Committee shall review the adequacy of this Charter on an annual basis.
Membership:
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The Committee shall be comprised of not less than two members of the Board,
and the Committee's composition will meet the requirements of (i) the Audit
Committee policy of the Nasdaq Stock Market as set forth in Rule 4460(d) of
the NASD Manual as modified or supplemented from time to time and (ii) meet
the independence requirements of Section 10A(m)(3) of the Securities and
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of
the Commission. Accordingly, all of the members of the Committee will be
directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company;
2. Are not affiliates of the Company;
3. Do not receive any compensation from the Company other than in the
capacity as director; and
4. Who are financially literate or who become financially literate
within a reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will be a financial expert
as defined by the Securities and Exchange Commission.
The members of the Committee shall be elected by the Board at the annual
meeting of the Board and shall serve until their successors shall be duly
elected and qualified. Unless a Chairman of the Committee is elected by the
full Board, the members of the Committee may designate a Chairman of the
Committee by majority vote of the full Committee Membership.
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Meetings:
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The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. Minutes of each meeting
of the Committee should be recorded by the Secretary to the Committee.
Approval by a majority of the members present at a meeting at which a quorum
is present shall constitute approval by the Committee. The Committee may also
act by unanimous written consent without a meeting. As part of its job to
foster open communication, the Committee should meet at least annually with
management and the independent accountants in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should
be discussed privately. In addition, the Committee or at least its Chairman
should meet with the independent accountants and management quarterly to
review the Company's financials consistent with #2 below. The Committee may
request any officer or employee of the Company or the Company's outside
counsel or independent auditor to attend a meeting of the Committee or to
meet with any members of, or consultants to, the Committee.
Key Responsibilities:
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The Committee's job is one of oversight, and it recognizes that the Company's
management is responsible for preparing the Company's financial statements
and that the outside auditor is responsible for auditing those financial
statements pursuant to professional standards. Additionally, the Committee
recognizes that financial management has more time, knowledge and detailed
information about the Company than do Committee members. Consequently, in
carrying out its oversight responsibilities, the Committee is not providing
any expert or special assurance as to the Company's financial statements or
any professional certification as to the outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set
forth as a guide with the understanding that the Committee may diverge from
this guide as appropriate given the circumstances.
1. The Committee shall review with management and the outside auditor
the audited financial statements to be included in the Company's Annual
Report on Form 10-KSB (or the Annual Report to Shareholders if distributed
prior to the filing of the Form 10-KSB) prior to the filing of the Form 10-
KSB or, if deemed appropriate, prior to any year-end earnings release. The
Committee shall review and consider with the outside auditors all matters
required to be discussed by Statement of Auditing Standards ("SAS") No. 61,
as amended by FAS No.90, by auditors with audit committees.
2. As a whole, or through the Committee chair, the Committee shall
review with the outside auditor the Company's interim financial results to be
included in the Company's quarterly reports to be filed with Securities and
Exchange Commission and the matters required to be discussed by SAS No. 61,
as amended by SAS No. 90 with respect to quarterly financial statements. Such
review will occur prior to the Company's filing of the Form 10-QSB or, if
deemed appropriate, prior to any quarterly earnings releases.
3. Review disclosures made to the Committee by the Company's CEO and
CFO during their certification process for the Form 10-KSB and Form 10-QSB
about any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving management or
other employees who have a significant role in the Company's internal
controls.
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4. The Committee shall:
(a) request from the outside auditor annually a formal
written statement delineating all relationships between the
auditor and the Company consistent with Independence Standards
Board Standard No. 1;
(b) discuss with the outside auditor any disclosed
relationships or services which may impact the outside
auditor's objectivity or independence; and
(c) recommend that the Board take appropriate action in
response to the outside auditor's report to satisfy itself of
the auditor's independence.
5. The Committee shall have the sole authority to appoint or replace
the independent auditor (subject, if applicable, to shareholder
ratification). The Committee shall be directly responsible for the
compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an
audit report or related work. The independent auditor shall report directly
to the Committee.
6. The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the company by its independent auditor, subject to the de minimus exceptions
for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act
which are approved by the Committee prior to the completion of the audit. The
Committee may form and delegate authority to subcommittees consisting of one
or more members when appropriate, including the authority to grant
preapprovals of audit and permitted nonaudit services, provided that
decisions of such subcommittee to grant preapprovals shall be presented to
the full Committee at its next scheduled meeting.
7. Review and discuss quarterly reports from the independent auditors
on:
(a) All critical accounting policies and practices to be
used.
(b) All alternative treatments of financial information
within generally accepted accounting principles that have
been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the
treatment preferred by the independent auditor.
(c) Other material written communications between the
independent auditor and management, such as any management
letter or schedule of unadjusted differences.
8. Periodically consult with the independent accountants, out of the
presence of management, about internal controls and the fullness and accuracy
of the organization's financial statements.
9. Ensure the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law. Consider whether, in order to
assure continuing auditor independence, it is appropriate to adopt a policy
of rotating the independent auditing firm itself on a regular basis.
10. Recommend to the Board policies for the Company's hiring of
employees or former employees of the independent auditor who participated in
any capacity in the audit of the Company.
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11. Discuss with management the Company's use of "pro forma" or
"adjusted" non-GAAP information, as well as financial information and
earnings guidance provided to analysts and rating agencies. Such discussion
may be done generally (consisting of discussing the types of information to
be disclosed and the types of presentations to be made).
12. Establish regular and separate systems of reporting to the
Committee by each of management, the independent accountants, and the
internal accountants regarding any significant judgments made in management's
preparation of the financial statements, and the view of each as to
appropriateness of such judgments.
13. Following completion of the annual audit, review separately with
each of management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
14. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
15. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
16. Establish, review, and update periodically a Code of Ethical
Conduct, and ensure that management has established a system to enforce this
Code.
17. Review and approve any transactions between the Company and its
officers, directors or 5% shareholders.
18. The Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding, as determined by
the Committee, for payment of compensation to the independent auditor for the
purpose of rendering or issuing an audit report and to any advisors employed
by the Committee.
Reporting Responsibilities:
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The Committee shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the Company's annual
proxy statement.
The Committee shall prepare such other reports for the full Board of
Directors and others as it shall deem necessary to discharge its
responsibilities under this Charter.
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PROXY PROXY
SANTA FE FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 27, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John V. Winfield and Michael G. Zybala, or
either of them, as proxies, with power of substitution to each proxy and
substitute, to vote the Common Stock of the undersigned at the 2002 Annual
Meeting of Shareholders of Santa Fe Financial Corporation and at any
adjournments thereof, as indicated on the reverse hereof and the proposals
for Election of Directors, Ratification of Appointment of Independent
Accountants and as said proxies may determine in the exercise of their best
judgment on any other matters which may properly come before the meeting.
IF PROPERLY EXECUTED AND RETURNED, THIS PROXY WILL BE VOTED AS SPECIFIED OR,
IF NOT SPECIFIED, WILL BE VOTED FOR ELECTING ALL NOMINEES AND FOR THE
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS.
PLEASE SIGN ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE
-----------
SEE REVERSE
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1. Election of Directors: NOMINEES: John V. Winfield, John C. Love and
William J. Nance.
CHECK ONE: [ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] ---------------------------------------------------
FOR, EXCEPT VOTE WITHHELD FROM THE ABOVE NOMINEE(S)
2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent
accountants for the Company for the fiscal year ending June 30, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. IF ACTING IN A REPRESENTATIVE
CAPACITY, SIGN NAME AND TITLE. IF JOINT TENANTS, BOTH SHAREHOLDERS SHOULD
SIGN.
Dated: _______________, 2003
____________________________
Signature
____________________________
Signature if held jointly