SCHEDULE 14A
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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
----------
NEUBERGER BERMAN REALTY INCOME FUND INC.
(Name of Registrant as Specified in its Charter)
----------
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.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A Lehman Brothers Company
NEUBERGER BERMAN REALTY INCOME FUND INC.
605 Third Avenue
New York, New York 10158-0180
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
____________________
Dear Stockholder:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of Neuberger Berman Realty Income Fund Inc. (the "Fund"), will be held on
Wednesday, May 2, 2007, at 11:30 a.m. Eastern time at the offices of Neuberger
Berman, LLC, 605 Third Avenue, 41st Floor, New York, New York 10158-3698 for
the following purposes:
(1) To elect five Class II Directors to serve until the annual meeting of
stockholders in 2010, or until their successors are elected and
qualified; and
(2) To consider and act upon any other business that may properly come
before the Meeting or any adjournments thereof.
You are entitled to vote at the Meeting of the Fund and any adjournments
thereof if you owned Fund shares at the close of business on February 21, 2007
("Record Date"). If you attend the Meeting, you may vote your shares in person.
If you do not expect to attend the Meeting, please review the enclosed materials
and follow the instructions that appear on the enclosed proxy card(s). If you
have any questions about the proposals or the voting instructions, please call
us at 877-461-1899. Any proposal submitted to a vote at the Meeting by anyone
other than the officers or directors of the Fund may be voted only in person or
by written proxy.
We will admit to the Meeting (1) all stockholders of record of the Fund as
of the Record Date, (2) persons holding proof of beneficial ownership at the
Record Date such as a letter or account statement from a broker, (3) persons who
have been granted proxies, and (4) such other persons that we, in our sole
discretion, may elect
to admit. All persons wishing to be admitted to the Meeting must present photo
identification. If you plan to attend the Meeting, please contact us at
877-461-1899.
Unless proxy cards submitted by corporations and partnerships are signed by
the appropriate persons as indicated in the voting instructions on the proxy
cards, they will not be voted.
By order of the Board of Directors,
/s/ Claudia A. Brandon
Claudia A. Brandon
Secretary
Dated: April 19, 2007
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Fund involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Any party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the
proxy card.
3. Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration.
For example:
Registration Valid Signature
_______________________________________________________________________________
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith,
Cust. f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor
_______________________________________________________________________________
_______________________________________________________________________________
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY
SHARES OF STOCK YOU OWN.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
If you own shares of both common stock and preferred stock of the Fund,
there will be more than one proxy card enclosed. Please fill out and return each
proxy card.
Stockholders are invited to attend the Meeting in person. Any stockholder
who does not expect to attend the Meeting is urged to review the enclosed
materials and follow the instructions that appear on the enclosed proxy card(s).
To avoid the additional expense to the Fund of further solicitation, we ask
your cooperation in voting your proxy promptly, no matter how large or small
your holdings may be.
_______________________________________________________________________________
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A Lehman Brothers Company
NEUBERGER BERMAN REALTY INCOME FUND INC.
605 Third Avenue
New York, New York 10158-0180
____________________
PROXY STATEMENT
____________________
Annual Meeting of Stockholders
May 2, 2007
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Neuberger Berman
Realty Income Fund Inc. (the "Fund"), by the Board of Directors of the Fund in
connection with the solicitation of stockholder votes by proxy to be voted at
the Annual Meeting of Stockholders ("Meeting") or any adjournments thereof to be
held on Wednesday, May 2, 2007, at 11:30 a.m. Eastern time at the offices of
Neuberger Berman, LLC ("Neuberger Berman"), 605 Third Avenue, 41st Floor, New
York, New York 10158-3698. The matters to be acted upon at the Meeting are set
forth in the accompanying Notice of Annual Meeting of Stockholders. It is
expected that the Notice of Annual Meeting of Stockholders, this Proxy Statement
and form of proxy first will be mailed to stockholders on or about April 20,
2007.
If an enclosed proxy card is executed properly and returned, shares
represented thereby will be voted at the Meeting in accordance with the
instructions on the proxy card. A proxy may nevertheless be revoked at any time
prior to its use by written notification received by the Secretary of the Fund,
by the execution of a subsequently dated proxy card or by attending the Meeting
and voting in person. However, if no instructions are specified on a proxy card,
shares will be voted "FOR" the election of each nominee for Director and "FOR",
"ABSTAIN" or "AGAINST" any other matters acted upon at the Meeting in the
discretion of the persons named as proxies.
The close of business on February 21, 2007, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting ("Record Date"). On that date, the Fund had 27,372,139 shares of
common stock ("Common Shares") and 9,120 shares of preferred stock ("Preferred
Shares") outstanding and entitled to vote.
Holders of the Fund's outstanding Common Shares and Preferred Shares will
vote together as a single class to elect four Class II Directors. As described
herein under the section entitled "Election of Directors - Proposal," holders of
the Fund's Preferred Shares will vote separately from holders of the Common
Shares to elect one additional
Class II Director. As to any other business that may properly come before the
Meeting, holders of Common Shares and Preferred Shares may vote together as a
single class or separately, depending on the requirements of the Investment
Company Act of 1940, as amended ("1940 Act"), the Maryland General Corporation
Law ("MGCL") and the Fund's charter with respect to said item of business. Each
full share of the Fund's Common Shares or Preferred Shares is entitled to one
vote and each fractional share of the Fund's Common Shares or Preferred Shares
is entitled to a proportionate share of one vote.
Solicitation is made primarily by the mailing of this Proxy Statement and
the accompanying proxy card(s). Supplementary solicitations may be made by mail,
telephone, and electronic transmission or in person by regular employees of
Neuberger Berman Management Inc. ("NB Management"), affiliates of NB Management
or other representatives of the Fund. NB Management serves as the Fund's
investment manager and administrator. In addition, the Fund has engaged
Georgeson Inc., a proxy solicitation firm, to assist in the solicitation of
proxies. The aggregate cost of retaining Georgeson Inc. is expected to be about
$25,000 plus expenses in connection with the solicitation of proxies; this cost
could increase if there is a contested election. All expenses in connection with
preparing this Proxy Statement and its enclosures, and additional solicitation
expenses including reimbursement of brokerage firms and others for their
expenses in forwarding proxy solicitation material to the beneficial owners of
shares, will be borne by the Fund.
With respect to the Fund, the presence at the Meeting, in person or by
proxy, of stockholders entitled to vote 33 1/3% of the shares outstanding and
entitled to vote at the Meeting is required for a quorum. The affirmative vote
of the holders of a majority of the Fund's outstanding Common Shares and
Preferred Shares, voting as a single class, is required to elect four of the
Fund's Class II Directors. The affirmative vote of the holders of a majority of
the Fund's outstanding Preferred Shares, voting separate from the Common Shares,
is required to elect one additional Class II Director. With respect to other
items of business, the necessary affirmative vote will depend on the
requirements of the 1940 Act, the MGCL and the Fund's charter with respect to
said items of business. If a quorum is not present at the Meeting or a quorum is
present but sufficient votes to approve a proposed item are not received, or for
any other reason, the persons named as proxies may propose one or more
adjournments of such Meeting to permit further solicitation of proxies. Subject
to the rules established by the Chairman of the Meeting, the holders of a
majority of the shares entitled to vote at the Meeting and present in person or
by proxy may vote to adjourn, or, if no stockholder entitled to vote is present
in person or by proxy, any officer present entitled to preside or act as
secretary of the Meeting may adjourn the Meeting. In the former case, the
persons named as proxies will vote those proxies that they are entitled to vote
"FOR" or "AGAINST" any proposal in their discretion. A stockholder vote may be
taken on the nominations in this Proxy Statement prior to any such adjournment
if sufficient votes have been received and it is otherwise appropriate.
2
The Fund expects that broker-dealer firms holding shares of the Fund in "street
name" for the benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their shares on each
proposal at the Meeting. The Fund understands that, under the rules of the New
York Stock Exchange ("NYSE") and the American Stock Exchange ("AMEX"), such
broker-dealers may grant authority to the proxies designated by the Fund to vote
on the election of Directors for the Fund if no instructions have been received
prior to the date specified in the broker-dealer firm's request for voting
instructions. Certain broker-dealer firms may exercise discretion over shares
held in their names for which no instructions are received by voting such shares
in the same proportion as they have voted shares for which they have received
instructions.
In tallying stockholder votes, abstentions and "broker non-votes" (i.e.,
shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or the persons entitled to vote and either
(i) the broker or nominee does not have discretionary voting power or (ii) the
broker or nominee returns the proxy but expressly declines to vote on a
particular matter) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. Accordingly,
abstentions and broker non-votes effectively will be a vote against any
adjournment and against the election of the Directors.
As of February 21, 2007, the Fund knows of no person who owns beneficially
more than 5% of its outstanding Common Shares or Preferred Shares other than
those listed below.
Amount of
Class of Beneficial Percent of
Stock Name and Address of Beneficial Owner Ownership Class
_______________________________________________________________________________
Common Western Investment LLC* 2,254,021 8.23%
Shares 7050 S. Union Park Center, Suite 590
Midvale, UT 84047
_______________________________________________________________________________
Common Deutsche Bank AG** 1,887,806 6.90%
Shares Taunusanlage 12
D-60325 Frankfurt am Main
Federal Republic of Germany
_______________________________________________________________________________
Common QVT Finanical LP*** 2,084,695 7.62%
Shares 1177 Avenue of the Americas, 9th Fl.
New York, NY 10036
_______________________________________________________________________________
* Based upon information obtained from an amended Schedule 13D filed by
Western Investment LLC with the Securities and Exchange Commission ("SEC")
on December 4, 2006; includes beneficial ownership of shares owned by
Arthur D. Lipson, Western Investment Hedged Partners LP, Western Investment
Activism Partners LLC, Benchmark Plus Institutional Partners, L.L.C.,
Benchmark Plus Partners, L.L.C., Benchmark Plus Management, L.L.C., Robert
Ferguson, Scott Franzblau, Robert Wood, D. James Daras and Matthew Crouse.
** Based on an amended Schedule 13G filed by Deutsche Bank AG with the SEC on
January 30, 2007; includes beneficial ownership of shares owned by Deutsche
Bank AG, London Branch.
*** Based on an amended Schedule 13D filed by QVT Financial LP with the SEC on
February 12, 2007; includes beneficial ownership of shares owned by QVT
Financial GP LLC.
3
In addition, the Directors and officers of the Fund, in the aggregate,
owned less than 1% of each class of the Fund's outstanding shares as of February
21, 2007.
NB Management serves as the investment manager and administrator to the
Fund. NB Management provides investment management and advisory services to
private accounts of institutional and individual clients and to mutual funds. NB
Management is located at 605 Third Avenue, New York, New York 10158-0180. NB
Management retains Neuberger Berman, 605 Third Avenue, New York, New York
10158-3698, as sub-adviser with respect to the Fund. As of December 31, 2006,
Neuberger Berman affiliates had approximately $126.9 billion in assets under
management. Neuberger Berman and NB Management are indirect wholly owned
subsidiaries of Lehman Brothers Holdings Inc., a publicly held company.
Stockholders of record or beneficial owners as of the Record Date may
obtain a free copy of the annual report for the fiscal year ended October 31,
2006, which includes audited financial statements for the Fund, by writing NB
Management at 605 Third Avenue, 2nd Floor, New York, New York 10158-0180, or by
calling toll free 877-461-1899.
Stockholders may send communications that they would like to direct to the
Board of Directors or to an individual director of the Fund to the attention of
Chamaine Williams, Chief Compliance Officer of the Fund, Neuberger Berman Funds,
605 Third Avenue, 21st Floor, New York, NY, 10158-0180. The Board has directed
Ms. Williams to send such communications to the chairperson of the Fund's Ethics
and Compliance Committee. Nominee recommendations and stockholder proposals
should be directed to the attention of Claudia A. Brandon, Secretary of the
Fund, Neuberger Berman Funds, 605 Third Avenue, 21st Floor, New York, NY,
10158-0180 as described in this Proxy Statement under "Information Regarding the
Fund's Process for Nominating Director Candidates" and "Stockholder Proposals."
ELECTION OF DIRECTORS
Proposal
The Board of Directors of the Fund is divided into three classes (Class I,
Class II and Class III). At the February 2007 Board meeting, the Fund's Board of
Directors expanded the size of the Board from thirteen (1) to fifteen and
appointed Michael M. Knetter as a Class I Director and George W. Morriss as a
Class II Director to fill the vacancies created by the expansion. The terms of
office of Class I, Class II and Class III Directors will expire at the annual
meeting of stockholders held in 2009, 2007 and 2008, respectively, and at each
third annual meeting of stockholders thereafter. Each Director shall hold office
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal. The classification of Directors helps
(1) Following the death of Barry Hirsch, a Class II Director, the Board of the
Fund determined to reduce the number of Directors on the Board from 14 to
13 and to reclassify C. Anne Harvey, a Class I Director, as a Class II
Director. Ms. Harvey was reclassified as a Class II Director of the Board
so that each class of the Board would have as close to the same number of
Directors as possible.
4
to promote the continuity and stability of the Fund's management and policies
because the majority of the Directors at any given time will have prior
experience as Directors of the Fund. At least two stockholder meetings, instead
of one, are required to effect a change in a majority of the Directors, except
in the event of vacancies resulting from removal for cause or other reasons, in
which case the remaining Directors may fill the vacancies so created, to the
extent permitted by the 1940 Act.
Holders of the Fund's Preferred Shares are entitled, as a class, to the
exclusion of the holders of all other classes of stock of the Fund, to elect two
Directors of the Fund (regardless of the total number of Directors serving on
the Fund's Board of Directors). One of those two Directors, John Cannon, is a
Class II Director currently up for election. The other is a Class III Director
up for election in 2008. The Class III Director is not a nominee to be
considered at the Meeting.
The term of each current Class II Director expires in 2007, but each
expressed his or her willingness to serve another term as Director of the Fund
if nominated by the Board of Directors. In addition to these incumbents,
Western Investments LLC ("Western")
stockholder put forward for consideration four candidates ("Western
candidates") for election as Directors at the Fund's 2007 meeting of
stockholders and stated its intention to nominate the Western candidates at
the meeting if they were not nominated by the Board. The Governance and
Nominating Committee of the Fund reviewed the qualifications, experience and
background of each incumbent Director and the Western candidates. Based upon
this review, the Committee determined that nominating the incumbents would be
in the best interests of Fund stockholders. The Fund's Board believes that the
incumbents are well suited for service on the Board due to their familiarity
with the Fund as a result of their prior service as Directors, their knowledge
of the financial services sector, and their substantial experience in serving as
directors or trustees, officers or advisers of public companies and business
organizations, including other investment companies.
At a meeting in December 2006, the Board of Directors received the
recommendations of the Governance and Nominating Committee. After discussion and
consideration of, among other things, the backgrounds of the incumbents and the
Western candidates, the Board voted to nominate John Cannon, Tom D. Seip,
Jack Rivkin, and C. Anne Harvey for election as Class II Directors with a term
expiring in 2010. Mr. Morriss was not a Director in December 2006. Upon
recommendation of board members, at the February 2007 Board meeting, the Fund's
Board voted to nominate Mr. Morriss for election as a Class II Director with a
term expiring in 2010. On April 13, 2007, Western filed a preliminary proxy
statement naming five nominees for election.
The Fund has a policy that at least three-fourths of all
Directors be Independent Fund Directors. Independent Fund Directors are those
who are not associated with the Fund's investment adviser or sub-adviser or
their affiliates, or with any broker-dealer used by the Fund, the investment
adviser or the sub-adviser in the past six months.
It is the intention of the persons named as proxies on the enclosed proxy
card(s) to vote in favor of the election of each nominee named in this Proxy
Statement. Each nominee has consented to be named in this Proxy Statement and to
serve as Director if elected. The Fund's Board of Directors has no reason to
believe that any nominee
5
will become unavailable for election as a Director, but if that should occur
before the Meeting, the proxies will be voted for such other nominees as the
Board of Directors may recommend.
None of the Directors is related to any other. The following tables set
forth certain information regarding each Director of the Fund. Unless otherwise
noted, each Director has engaged in the principal occupation listed in the
following table for five years or more. The business address of each listed
person is 605 Third Avenue, New York, New York 10158.
INFORMATION REGARDING NOMINEES
FOR ELECTION AT 2007 ANNUAL MEETING
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
CLASS II
________________________________________________________________________________________________________________
Independent Fund Directors
________________________________________________________________________________________________________________
John Cannon (77) Consultant. Formerly, 62 Independent Trustee
Director Chairman, CDC Investment or Director of three
Since inception Advisers (registered series of Oppenheimer
investment adviser), 1993 Funds: Limited Term
to January 1999; formerly, New York Municipal
President and Chief Fund, Rochester
Executive Officer, AMA Fund Municipals,
Investment Advisors, an and Oppenheimer
affiliate of the American Convertible Securities
Medical Association. Fund, since 1992.
________________________________________________________________________________________________________________
C. Anne Harvey (69) President, C.A. Harvey 62 Formerly, President,
Director Associates since October Board of Associates
Since inception 2001; formerly, Director, to The National
AARP, 1978 to December Rehabilitation
2001. Hospital's Board of
Directors, 2001 to 2002;
formerly, Member,
Individual Investors
Advisory Committee
to the New York Stock
Exchange Board of
Directors, 1998 to June
2002.
________________________________________________________________________________________________________________
6
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
George W. Morriss (59) Formerly, Executive 62 Member, Board of
Director Vice President and Chief Managers, Old Mutual
Since February 2007 Financial Officer, People's Funds of Hedge Funds
Bank (a financial services (registered hedge fund),
company), 1991 to 2001. since October 2006.
________________________________________________________________________________________________________________
Tom D. Seip (57) General Partner, Seip 62 Director, H&R Block,
Director Investments LP (a private Inc. (financial services
Since inception; investment partnership); company) since May
Lead Independent formerly, President 2001; Chairman,
Director and CEO, Westaff, Inc. Compensation
Since 2006 (temporary staffing), May Committee, H&R
2001 to January 2002; Block, Inc. since 2006;
formerly, Senior Executive Director, America
at the Charles Schwab One Foundation
Corporation, 1983 to 1998, since 1998; formerly,
including Chief Executive Chairman, Governance
Officer, Charles Schwab and Nominating
Investment Management, Committee, H&R
Inc. and Trustee, Schwab Block, Inc., 2004
Family of Funds and to 2006; formerly,
Schwab Investments, 1997 Director, Forward
to 1998, and Executive Vice Management, Inc. (asset
President-Retail Brokerage, management company),
Charles Schwab & Co., Inc., 1999 to 2006;
1994 to 1997. formerly Director,
E-Bay Zoological
Society, 1999 to 2003;
formerly, Director,
General Magic (voice
recognition software),
2001 to 2002; formerly,
Director, E-Finance
Corporation (credit
decisioning services),
1999 to 2003; formerly,
Director, Save-Daily.
com (micro investing
services), 1999 to 2003.
________________________________________________________________________________________________________________
7
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
Director who is an "Interested Person" *
________________________________________________________________________________________________________________
Jack L. Rivkin* (66) Executive Vice President 62 Director, Dale Carnegie
President and Director and Chief Investment and Associates, Inc.
Since December 2002 Officer, Neuberger Berman (private company)
Inc. (holding company) since since 1998; Director,
2002 and 2003, respectively; Solbright, Inc. (private
Managing Director and company) since 1998.
Chief Investment Officer,
Neuberger Berman since
December 2005 and 2003,
respectively; formerly,
Executive Vice President,
Neuberger Berman,
December 2002 to 2005;
Director and Chairman,
NB Management since
December 2002; formerly,
Executive Vice President,
Citigroup Investments, Inc.,
September 1995 to February
2002; formerly, Executive
Vice President, Citigroup
Inc., September 1995 to
February 2002.
________________________________________________________________________________________________________________
8
INFORMATION REGARDING DIRECTORS
WHOSE CURRENT TERMS CONTINUE
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
CLASS I
________________________________________________________________________________________________________________
Independent Fund Directors
________________________________________________________________________________________________________________
Faith Colish (71) Counsel, Carter Ledyard & 62 Formerly, Director
Director Milburn LLP (law firm) (1997 to 2003) and
Since inception since October 2002; Advisory Director
formerly, Attorney-at-Law (2003 to 2006), ABA
and President, Faith Colish, Retirement Funds
A Professional Corporation, (formerly, American
1980 to 2002. Bar Retirement
Association)
(not-for-profit
membership
corporation).
________________________________________________________________________________________________________________
Michael M. Knetter (46) Dean, School of Business, 62 Trustee, Northwestern
Director University of Wisconsin Mutual Series Fund,
Since February 2007 - Madison; formerly, Inc., since February
Professor of International 2007; Director, Wausau
Economics and Associate Paper, since 2005;
Dean, Amos Tuck School Director, Great Wolf
of Business - Dartmouth Resorts, since 2004.
College, 1998 to 2002.
________________________________________________________________________________________________________________
Cornelius T. Ryan (75) Founding General Partner, 62 None.
Director Oxford Partners and Oxford
Since inception Bioscience Partners (venture
capital investing) and
President, Oxford Venture
Corporation since 1981.
________________________________________________________________________________________________________________
Peter P. Trapp (62) Regional Manager for 62 None.
Director Mid-Southern Region, Ford
Since inception Motor Credit Company
since September 1997;
formerly, President, Ford
Life Insurance Company,
April 1995 to August 1997.
________________________________________________________________________________________________________________
9
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
Director who is an "Interested Person" *
________________________________________________________________________________________________________________
Peter E. Sundman * (47) Executive Vice President, 62 Director and Vice
Chief Executive Officer, Neuberger Berman Inc. President, Neuberger &
Director and Chairman (holding company) since Berman Agency, Inc.
of the Board 1999; Head of Neuberger since 2000; formerly,
Since inception Berman Inc.'s Mutual Director, Neuberger
Funds Business (since 1999) Berman Inc. (holding
and Institutional Business company), October
(1999 to October 2005); 1999 to March 2003;
responsible for Managed Trustee, Frost Valley
Accounts Business and YMCA; Trustee,
intermediary distribution College of Wooster.
since October 1999; President and
Director, NB Management since 1999;
Managing Director, Neuberger Berman
since 2005; formerly, Executive Vice
President, Neuberger Berman, 1999 to
December 2005; formerly, Principal,
Neuberger Berman, 1997 to 1999;
formerly, Senior Vice President, NB
Management, 1996 to 1999.
________________________________________________________________________________________________________________
10
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
CLASS III
________________________________________________________________________________________________________________
Independent Fund Directors
________________________________________________________________________________________________________________
Robert A. Kavesh (79) Marcus Nadler Professor 62 Formerly, Director, The
Director Emeritus of Finance and Caring Community
Since inception Economics, New York (not-for-profit)
University Stern School from 1997 to 2006;
of Business; formerly, formerly, Director,
Executive Secretary- DEL Laboratories,
Treasurer, American Inc. (cosmetics and
Finance Association, 1961 pharmaceuticals), 1978
to 1979. to 2004; formerly,
Director, Apple Bank
for Savings, 1979
to 1990; formerly,
Director, Western
Pacific Industries, Inc.,
1972 to 1986 (public
company).
________________________________________________________________________________________________________________
Howard A. Mileaf (70) Retired; formerly, Vice 62 Director, Webfinancial
Director President and General Corporation (holding
Since inception Counsel, WHX Corporation company) since
(holding company), 1993 to December 2002;
2001. formerly, Director
WHX Corporation
(holding company),
January 2002 to
June 2005; formerly,
Director, State Theatre
of New Jersey (not-for-
profit theater), 2000 to
2005.
________________________________________________________________________________________________________________
11
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
Edward I. O'Brien (78) Formerly, Member, 62 Director, Legg Mason,
Director Investment Policy Inc. (financial services
Since inception Committee, Edward holding company)
Jones, 1993 to 2001; since 1993; formerly,
President, Securities Director, Boston
Industry Association Financial Group (real
("SIA") (securities industy's estate and tax
representative in government shelters), 1993 to 1999.
relations and regulatory
matters at the federal and
state levels), 1974 to 1992;
Adviser to SIA, November
1992 to November 1993.
________________________________________________________________________________________________________________
William E. Rulon (74) Retired; formerly, Senior 62 Formerly, Director, Pro-
Director Vice President, Foodmaker, Kids Golf and Learning
Since inception Inc. (operator and franchiser Academy (teach golf
of restaurants) until January and computer usage
1997. to "at risk" children),
1998 to 2006; formerly,
Director, Prandium,
Inc. (restaurants),
March 2001 to July
2002.
________________________________________________________________________________________________________________
12
________________________________________________________________________________________________________________
Number of
Portfolios in
Name, Age, Position, Fund Complex Other Directorships Held
Term of Office (1), and Overseen by Outside Fund Complex
Length of Time Served Principal Occupation(s) Director (2) by Director
________________________________________________________________________________________________________________
Candace L. Straight (59) Private investor and 62 Director, Montpelier Re
Director consultant specializing in (reinsurance company)
Since inception the insurance industry; since 2006; Director,
formerly, Advisory Director, National Atlantic
Securitas Capital LLC Holdings Corporation
(a global private equity (property and casualty
investment firm dedicated to insurance company)
making investments in the since 2004; Director,
insurance sector), 1998 to The Proformance
December 2003. Insurance Company
(property and casualty
insurance company)
since March 2004;
formerly, Director,
Providence Washington
Insurance Company
(property and casualty
insurance company),
December 1998 to
March 2006; formerly,
Director, Summit
Global Partners
(insurance brokerage
firm), 2000 to 2005.
________________________________________________________________________________________________________________
(1) The Board of Directors shall at times be divided as equally as possible into three classes of Directors
designated Class I, Class II, and Class III. The terms of office of Class I, Class II, and Class III
Directors shall expire at the annual meeting of stockholders held in 2009, 2007, and 2008, respectively,
and at each third annual meeting of stockholders thereafter.
(2) For funds organized in a master-feeder structure, we count the master fund and its associated feeder
funds as a single portfolio.
* Indicates a Director who is an "interested person" within the meaning of the 1940 Act. Mr. Sundman
and Mr. Rivkin are interested persons of the Fund by virtue of the fact that they are officers and/or
directors of NB Management and Managing Directors of Neuberger Berman.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended
("1934 Act"), Section 30(h) of the 1940 Act and Securities and Exchange
Commission ("SEC") regulations thereunder, certain of the Fund's officers and
the Fund's Directors and portfolio managers, persons owning more than 10% of the
Fund's common stock and certain officers and directors of the Fund's investment
manager and sub-adviser are required to report their transactions in the Fund's
stock to the SEC and the NYSE.
13
Based solely on the review by the Fund of the copies of such reports it
received, the Fund believes that, during its fiscal year ended October 31,
2006, all filing requirements applicable to such persons were met.
Board of Directors and Committee Meetings
The Fund's Board met seven times during the fiscal year ended October 31,
2006. Each Director attended at least 75% of the total number of meetings of the
Board and of any committee of which he or she was a member during that year.
The Board has established several standing committees to oversee particular
aspects of the Fund's management. The standing committees of the Board are
described below. The Board does not have a standing compensation committee.
Audit Committee. The purposes of the Fund's Audit Committee are (a) to
oversee the accounting and financial reporting processes of the Fund and its
internal control over financial reporting and, as the Committee deems
appropriate, to inquire into the internal control over financial reporting of
certain third-party service providers; (b) to oversee the quality and integrity
of the Fund's financial statements and the independent audit thereof; (c) to
oversee, or, as appropriate, assist Board oversight of, the Fund's compliance
with legal and regulatory requirements that relate to the Fund's accounting and
financial reporting, internal control over financial reporting and independent
audits; (d) to approve prior to appointment the engagement of the Fund's
independent registered public accounting firm and, in connection therewith, to
review and evaluate the qualifications, independence and performance of the
Fund's independent registered public accounting firm; (e) to act as a liaison
between the Fund's independent registered public accounting firm and the full
Board; and (f) to prepare an audit committee report as required by Item 306 of
Regulation S-K to be included in proxy statements relating to the election of
directors/trustees. The independent registered public accounting firm for the
Fund shall report directly to the Audit Committee. The Fund has adopted a
written charter for its Audit Committee. The charter of the Audit Committee
was attached to the Fund's proxy statement dated February 28, 2006 and is
available on NB Management's website at www.nb.com. The Audit Committee of the
Fund has delegated the authority to grant pre-approval of permissible non-audit
services and all audit, review or attest engagements of the Fund's independent
registered public accounting firm to the Chairman of the Audit Committee, and,
if the Committee Chair is not available, to any other member of the Audit
Committee.
The Audit Committee of the Fund, established in accordance with Section
3(a)(58)(A) of the 1934 Act, is composed entirely of Independent Fund Directors
who are also considered independent under the listing standards applicable to
the Fund. Its members are John Cannon, Howard A. Mileaf, Cornelius T. Ryan
(Chairman), Tom D. Seip and Peter P. Trapp. Members of the Audit Committee
receive additional compensation for serving on this committee. The Audit
Committee Report relating
14
to the audit of Fund financial statements for the fiscal year ended
October 31, 2006 is attached hereto as Appendix A. During the fiscal year ended
October 31, 2006, the Committee met seven times.
Closed-End Funds Committee. The Fund's Closed-End Funds Committee is
responsible for consideration and evaluation of issues specific to the Fund.
Its members are Edward I. O'Brien (Chairman), Jack L. Rivkin, William E. Rulon,
and Tom D. Seip. All members other than Mr. Rivkin are Independent Fund
Directors. During the fiscal year ended October 31, 2006, the Committee met
once.
Contract Review Committee. The Contract Review Committee of the Fund is
responsible for overseeing and guiding the process by which the Independent
Fund Directors annually consider whether to continue the Fund's principal
contractual arrangements. Its members are Faith Colish (Chairwoman), Robert A.
Kavesh, William E. Rulon and Candace L. Straight. All members are Independent
Fund Directors. During the fiscal year ended October 31, 2006, the Committee
met twice.
Ethics and Compliance Committee. The Ethics and Compliance Committee of the
Fund oversees: (a) the Fund's program for compliance with Rule 38a-1 under the
1940 Act and the Fund's implementation and enforcement of its compliance
policies and procedures; (b) compliance with the Fund's Code of Ethics (which
restricts the personal securities transactions, including transactions in Fund
shares, of employees, officers, and Directors), and (c) the activities of the
Fund's Chief Compliance Officer ("CCO"). The Committee shall not assume
oversight duties to the extent that such duties have been assigned by the Board
expressly to another Committee of the Board (such as oversight of internal
controls over financial reporting, which has been assigned to the Audit
Committee.) The Committee's primary function is oversight. Each investment
adviser, sub-adviser, administrator and transfer agent (collectively, "Service
Providers") is responsible for its own compliance with the federal securities
laws and for devising, implementing, maintaining and updating appropriate
policies, procedures and codes of ethics to ensure compliance with applicable
laws and regulations. The CCO is responsible for administering the Fund's
Compliance Program, including devising and implementing appropriate methods of
testing compliance by the Fund and its Service Providers. The members of the
Committee are John Cannon (Chairman), Faith Colish, C. Anne Harvey and Edward I.
O'Brien. All members are Independent Fund Directors. The Board will receive at
least annually a report on the compliance programs of the Fund and Service
Providers and the required annual reports on the administration of the Code of
Ethics and the required annual certifications from the Fund, Neuberger Berman
and NB Management. During the fiscal year ended October 31, 2006, the Committee
met four times.
Executive Committee. The Executive Committee of the Fund is responsible for
acting in an emergency when a quorum of the Board of Directors is not available;
the Committee has all the powers of the Board of Directors when the Board is not
in session to the extent permitted by Maryland law. Its members are John Cannon,
15
Howard A. Mileaf, Edward I. O'Brien, Tom D. Seip and Peter E. Sundman
(Chairman). All members except for Mr. Sundman are Independent Fund Directors.
During the fiscal year ended October 31, 2006, the Committee did not meet.
Governance and Nominating Committee. The Governance and Nominating
Committee of the Fund is responsible for: (a) considering and evaluating the
structure, composition and operation of the Board of Directors and each
committee thereof, including the operation of the annual self-evaluation by the
Board; (b) evaluating and nominating individuals to serve as Directors,
including as Independent Fund Directors, as members of committees, as Chair of
the Board and as officers of the Fund; and (c) considering and making
recommendations relating to the compensation of Independent Fund Directors and
of those officers as to whom the Board is charged with approving compensation.
The Committee met to discuss matters relating to the nomination of Class II
Directors with respect to the Fund. Its members are C. Anne Harvey (Chairwoman),
Robert A. Kavesh, Howard A. Mileaf and Tom D. Seip. All members are Independent
Fund Directors and are not "interested parties" of the Fund as defined in
section 2(a)(19) of the 1940 Act. During the fiscal year ended October 31, 2006,
the Committee met twice.
Investment Performance Committee. The Investment Performance Committee of
the Fund is responsible for overseeing and guiding the process by which the
Board reviews Fund performance. Its members are Robert A. Kavesh, Edward I.
O'Brien, Jack L. Rivkin (Vice Chairman), Cornelius T. Ryan and Peter P. Trapp
(Chairman). All members except for Mr. Rivkin are Independent Fund Directors.
During the fiscal year ended October 31, 2006, the Committee met twice.
Portfolio Transactions and Pricing Committee. The Portfolio Transactions
and Pricing Committee of the Fund (a) monitors the operation of policies and
procedures reasonably designed to ensure that each portfolio holding is valued
in an appropriate and timely manner, reflecting information known to the manager
about current market conditions ("Pricing Procedures"); (b) considers,
evaluates, and recommends to the Board when the Committee deems it appropriate,
amendments to the Pricing Procedures proposed by management, counsel, the
independent registered public accounting firm and others; (c) from time to time,
as required or permitted by the Pricing Procedures, establishes or ratifies a
method of determining the fair value of portfolio securities for which market
prices are not readily available; (d) oversees the program by which the manager
seeks to monitor and improve the quality of execution for portfolio
transactions; and (e) oversees the adequacy and fairness of the arrangements for
securities lending; in each case with special emphasis on any situations in
which the Fund deals with the manager or any affiliate of the manager as
principal or agent.
The members of the Committee are Faith Colish, Jack L. Rivkin (Vice
Chairman), William E. Rulon, Cornelius T. Ryan and Candace L. Straight
(Chairwoman). All members except for Mr. Rivkin are Independent Fund Directors.
During the fiscal year ended October 31, 2006, the Committee met four times.
16
Information Regarding the Fund's Process for Nominating Director Candidates
Governance and Nominating Committee Charter. A copy of the Governance and
Nominating Committee Charter is available to stockholders on NB Management's
website at www.nb.com.
Stockholder Communications. The Fund's Governance and Nominating Committee
will consider nominees recommended by stockholders; stockholders may send
resumes of recommended persons to the attention of Claudia A. Brandon,
Secretary, Neuberger Berman Funds, 605 Third Avenue, 21st Floor, New York,
NY, 10158-0180.
Nominee Qualifications. The Governance and Nominating Committee will
consider nominees recommended by stockholders on the basis of the same criteria
used to consider and evaluate candidates recommended by other sources. While
there is no formal list of qualifications, the Governance and Nominating
Committee considers, among other things, whether prospective nominees have
distinguished records in their primary careers, unimpeachable integrity, and
substantive knowledge in areas important to the Board's operations, such as
background or education in finance, auditing, securities law, the workings of
the securities markets, or investment advice. For candidates to serve as
independent directors, independence from the Fund's investment adviser, its
affiliates and other principal service providers is critical, as is an
independent and questioning mindset. The Committee also considers whether the
prospective candidates' workloads would allow them to attend the vast majority
of Board meetings, be available for service on Board committees, and devote the
additional time and effort necessary to keep up with Board matters and the
rapidly changing regulatory environment in which the Fund operates. Different
substantive areas may assume greater or lesser significance at particular times,
in light of the Board's present composition and the Committee's (or the Board's)
perceptions about future issues and needs.
Identifying Nominees. The Governance and Nominating Committee considers
prospective candidates from any reasonable source. The Committee initially
evaluates prospective candidates on the basis of their resumes, considered in
light of the criteria discussed above. Those prospective candidates that appear
likely to be able to fill a significant need of the Board would be contacted by
a Committee member by telephone to discuss the position; if there appeared to be
sufficient interest, an in-person meeting with one or more Committee members
would be arranged. If the Committee, based on the results of these contacts,
believed it had identified a viable candidate, it would air the matter with
the full group of independent Board members for input. Any request by management
to meet with the prospective candidate would be given appropriate consideration.
The Fund has not paid a fee to third parties to assist in finding nominees.
Director Attendance at Annual Meetings
The Fund does not have a policy on Director attendance at the annual
meeting of stockholders. One Board member attended the 2006 annual meeting of
stockholders.
17
Ownership of Securities
Set forth below is the dollar range of equity securities owned by each
Director.
Aggregate Dollar Range of Equity
Securities in all Registered
Dollar Range of Investment Companies Overseen
Equity Securities by Director in Family of
Name of Director Owned in the Fund* Investment Companies*
_________________________________________________________________________________________
Independent Fund Directors
_________________________________________________________________________________________
John Cannon None Over $100,000
Faith Colish** $1-$10,000 Over $100,000
C. Anne Harvey None $50,001-$100,000
Robert A. Kavesh None $10,001-$50,000
Michael M. Knetter None None
Howard A. Mileaf None Over $100,000
George W. Morriss None $10,001-$50,000
Edward I. O'Brien None Over $100,000
William E. Rulon None Over $100,000
Cornelius T. Ryan None $10,001-$50,000
Tom D. Seip None Over $100,000
Candace L. Straight None Over $100,000
Peter P. Trapp None Over $100,000
_________________________________________________________________________________________
Directors who are "Interested Persons"
_________________________________________________________________________________________
Jack L. Rivkin None $1-$10,000
Peter E. Sundman None Over $100,000
_________________________________________________________________________________________
* Valuation as of March 5, 2007.
** Ms. Colish owns 100 shares of common stock of the Fund, constituting less
than 1% of the Fund's outstanding shares of common stock.
Independent Fund Directors' Ownership of Securities
As of January 31, 2007, no Independent Fund Director (or his/her immediate
family members) owned securities of NB Management or Neuberger Berman or
securities in an entity controlling, controlled by or under common control with
NB Management or Neuberger Berman (not including registered investment
companies).
Officers of the Fund
The following table sets forth certain information regarding the officers
of the Fund. Except as otherwise noted, each individual has held the positions
shown in the table below for at least the last five years. The business address
of each listed person is 605 Third Avenue, New York, New York 10158. Officers of
the Fund are appointed by the Directors and serve at the pleasure of the Board.
18
_______________________________________________________________________________________________
Position and
Length of Time
Name and Age Served Principal Occupation(s)
_______________________________________________________________________________________________
Andrew B. Allard (45) Anti-Money Senior Vice President, Neuberger Berman
Laundering since 2006; Deputy General Counsel,
Compliance Neuberger Berman since 2004; formerly,
Officer since Vice President, Neuberger Berman, 2000 to
inception 2006; formerly, Associate General Counsel,
Neuberger Berman, 1999 to 2004; Anti-Money
Laundering Compliance Officer, sixteen
registered investment companies for which NB
Management acts as investment manager and
administrator (seven since 2002, three since
2003, four since 2004, one since 2005 and one
since 2006) and one registered investment
company for which NB Management acts as
investment adviser (since 2006).
_______________________________________________________________________________________________
Michael J. Bradler (37) Assistant Vice President, Neuberger Berman since
Treasurer since 2006; Employee, NB Management since
2005 1997; Assistant Treasurer, sixteen registered
investment companies for which NB
Management acts as investment manager and
administrator (fifteen since 2005 and one since
2006) and one registered investment company
for which NB Management acts as investment
adviser (since 2006).
_______________________________________________________________________________________________
Claudia A. Brandon (50) Secretary since Senior Vice President, Neuberger Berman
inception (1) since 2007; Vice President-Mutual Fund Board
Relations, NB Management since 2000 and
Assistant Secretary since 2004; formerly, Vice
President, Neuberger Berman 2002 to 2007
and Employee since 1999; Secretary, sixteen
registered investment companies for which
NB Management acts as investment manager
and administrator (three since 1985, four
since 2002, three since 2003, four since 2004,
one since 2005 and one since 2006) and one
registered investment company for which NB
Management acts as investment adviser (since
2006).
_______________________________________________________________________________________________
19
_______________________________________________________________________________________________
Position and
Length of Time
Name and Age Served Principal Occupation(s)
_______________________________________________________________________________________________
Robert Conti (50) Vice President Managing Director, Neuberger Berman
since inception (1) since 2007; formerly, Senior Vice President,
Neuberger Berman, 2003 to 2007; formerly,
Vice President, Neuberger Berman, 1999 to
2003; Senior Vice President, NB Management
since 2000; Vice President, sixteen registered
investment companies for which NB
Management acts as investment manager and
administrator (three since 2000, four since
2002, three since 2003, four since 2004,
one since 2005 and one since 2006) and one
registered investment company for which NB
Management acts as investment adviser (since
2006).
_______________________________________________________________________________________________
Brian J. Gaffney (53) Vice President Managing Director, Neuberger Berman since
since inception (1) 1999; Senior Vice President, NB Management
since 2000; Vice President, sixteen registered
investment companies for which NB
Management acts as investment manager and
administrator (three since 2000, four since
2002, three since 2003, four since 2004,
one since 2005 and one since 2006) and one
registered investment company for which NB
Management acts as investment adviser (since
2006).
_______________________________________________________________________________________________
Maxine Gerson (56) Chief Legal Senior Vice President, Neuberger Berman since
Officer since 2002; Deputy General Counsel and Assistant
2005 (only for Secretary, Neuberger Berman since 2001;
purposes of formerly, Vice President, Neuberger Berman,
sections 307 2001 to 2002; formerly, Associate General
and 406 of the Counsel, Neuberger Berman, 2001; formerly,
Sarbanes-Oxley Counsel, Neuberger Berman, 2000; Secretary
Act of 2002) and General Counsel, NB Management since
2004; Chief Legal Officer (only for purposes
of sections 307 and 406 of the Sarbanes-Oxley
Act of 2002), sixteen registered investment
companies for which NB Management acts
as investment manager and administrator
(fifteen since 2005 and one since 2006) and one
registered investment company for which NB
Management acts as investment adviser (since
2006).
_______________________________________________________________________________________________
20
_______________________________________________________________________________________________
Position and
Length of Time
Name and Age Served Principal Occupation(s)
_______________________________________________________________________________________________
Sheila R. James (41) Assistant Assistant Vice President, Neuberger Berman
Secretary since since 2007; formerly, Employee since 1999;
inception (1) Assistant Secretary, sixteen registered
investment companies for which NB
Management acts as investment manager and
administrator (seven since 2002, three since
2003, four since 2004, one since 2005and one
since 2006) and one registered investment
company for which NB Management acts as
investment adviser (since 2006).
_______________________________________________________________________________________________
Kevin Lyons (51) Assistant Employee, Neuberger Berman since 1999;
Secretary since Assistant Secretary, sixteen registered
2003 investment companies for which NB
Management acts as investment manager and
administrator (ten since 2003, four since 2004,
one since 2005 and one since 2006) and one
registered investment company for which NB
Management acts as investment adviser (since
2006).
_______________________________________________________________________________________________
John M. McGovern (37) Treasurer Senior Vice President, Neuberger Berman
and Principal since 2007; formerly, Vice President,
Financial and Neuberger Berman, 2004 to 2007; Employee,
Accounting NB Management since 1993; Treasurer and
Officer since Principal Financial and Accounting Officer,
2005; prior sixteen registered investment companies for
thereto, Assistant which NB Management acts as investment
Treasurer since manager and administrator (fifteen since
inception (1) 2005 and one since 2006) and one registered
investment company for which NB
Management acts as investment adviser (since
2006); formerly, Assistant Treasurer, fifteen
registered investment companies for which NB
Management acts as investment manager and
administrator, 2002 to 2005.
_______________________________________________________________________________________________
Frank Rosato (36) Assistant Vice President, Neuberger Berman since
Treasurer since 2006; Employee, NB Management since
2005 1995; Assistant Treasurer, sixteen registered
investment companies for which NB
Management acts as investment manager and
administrator (fifteen since 2005 and one since
2006) and one registered investment company
for which NB Management acts as investment
adviser (since 2006).
_______________________________________________________________________________________________
21
_______________________________________________________________________________________________
Position and
Length of Time
Name and Age Served Principal Occupation(s)
_______________________________________________________________________________________________
Frederic B. Soule (60) Vice President Senior Vice President, Neuberger Berman since
since inception (1) 2003; formerly, Vice President, Neuberger
Berman, 1999 to 2003; Vice President, sixteen
registered investment companies for which
NB Management acts as investment manager
and administrator (three since 2000, four
since 2002, three since 2003, four since 2004,
one since 2005 and one since 2006) and one
registered investment company for which NB
Management acts as investment adviser (since
2006).
_______________________________________________________________________________________________
Chamaine Williams (36) Chief Senior Vice President, Lehman Brothers
Compliance Inc. since 2007; formerly, Vice President,
Officer since Lehman Brothers Inc. from 2003 to 2007;
2005 Chief Compliance Officer, sixteen registered
investment companies for which NB
Management acts as investment manager and
administrator (fifteen since 2005 and one since
2006) and one registered investment company
for which NB Management acts as investment
adviser (since 2005); Chief Compliance
Officer, Lehman Brothers Asset Management
Inc. since 2003; Chief Compliance Officer,
Lehman Brothers Alternative Investment
Management LLC since 2003; formerly, Vice
President, UBS Global Asset Management
(US) Inc. (formerly, Mitchell Hutchins Asset
Management, a wholly-owned subsidiary of
PaineWebber Inc.), 1997 to 2003.
_______________________________________________________________________________________________
(1) The officer has served since the Fund's inception in 2003.
22
Compensation of Directors
The following table sets forth information concerning the compensation of
the Fund's Directors. The Fund does not have any pension or retirement plan for
its Directors. For the fiscal year ended October 31, 2006, the Directors
received the amounts set forth in the following table from the Fund. For the
calendar year ended December 31, 2006, the Directors received the compensation
set forth in the following table for serving as Trustees or Directors of
investment companies in the "Neuberger Berman Fund Complex." Each officer and
Director who is a director, officer or employee of NB Management, Neuberger
Berman or any entity controlling, controlled by or under common control with NB
Management or Neuberger Berman serves as a Director and/or officer without any
compensation from the Fund.
TABLE OF COMPENSATION*
Total Compensation from Registered
Compensation from Investment Companies in the Neuberger
Name and Position the Fund for Fiscal Berman Fund Complex Paid to Directors
with the Fund Year Ended 10/31/06 for Calendar Year Ended 12/31/06
_______________________________________________________________________________________________
Independent Fund Directors
_______________________________________________________________________________________________
John Cannon
Director $2,553 $108,449
Faith Colish
Director $2,404 $101,674
C. Anne Harvey
Director $2,404 $101,674
Robert A. Kavesh
Director $2,404 $101,674
Michael M. Knetter*
Director $ 0 $ 6,077
Howard A. Mileaf
Director $2,553 $108,449
George W. Morriss*
Director $ 0 $ 6,375
Edward I. O'Brien
Director $2,404 $101,674
William E. Rulon
Director $2,404 $101,674
Cornelius T. Ryan
Director $2,639 $112,346
Tom D. Seip
Director $2,866 $126,674
_______________________________________________________________________________________________
23
Total Compensation from Registered
Compensation from Investment Companies in the Neuberger
Name and Position the Fund for Fiscal Berman Fund Complex Paid to Directors
with the Fund Year Ended 10/31/06 for Calendar Year Ended 12/31/06
_____________________________________________________________________________________________
Candace L. Straight
Director $2,404 $101,674
Peter P. Trapp
Director $2,401 $101,254
_____________________________________________________________________________________________
Directors who are "Interested Persons"
_____________________________________________________________________________________________
Jack L. Rivkin
Director and
President $0 $0
Peter E. Sundman
Director, Chairman
of the Board and
Chief Executive
Officer $0 $0
_____________________________________________________________________________________________
* Dr. Knetter and Mr. Morriss joined the Fund's Board in February 2007. They
served on the board of another fund in the Neuberger Berman Fund Complex
during part of 2006.
Vote Required
C. Anne Harvey, George W. Morriss, Jack Rivkin and Tom D. Seip each must be
elected by the holders of a majority of the Fund's outstanding Common Shares and
Preferred Shares, voting together. John Cannon must be elected by the holders of
a majority of the outstanding Preferred Shares, voting separately from the
holders of the Common Shares.
The Board Of Directors Of The Fund Unanimously Recommends
That You Vote "FOR" Each Nominee.
INFORMATION ON THE FUND'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Ernst & Young LLP ("Ernst & Young") audited the Fund's financial statements
for the fiscal year ended October 31, 2006. Ernst & Young, 200 Clarendon Street,
Boston, MA 02116, serves as the independent registered public accounting firm
for the Fund and provides audit services, tax compliance services and assistance
and consultation in connection with the review of the Fund's filings with the
SEC. In the opinion of the Audit Committee, the services provided by Ernst &
Young are compatible with maintaining the independence of the Fund's independent
registered public accounting firm. The Board of Directors of the Fund has
selected Ernst & Young as the independent registered public accounting firm for
the Fund for the fiscal year ending October 31, 2007. Ernst & Young has served
as the Fund's independent
24
registered public accounting firm since the Fund's inception. Ernst & Young has
informed the Fund that it has no material direct or indirect financial interest
in the Fund.
Representatives of Ernst & Young are not expected to be present at the
Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
Audit Fees
The aggregate fees billed by Ernst & Young for the audit of the annual
financial statements of the Fund for the fiscal years ended October 31, 2006 and
October 31, 2005 and for the review of the financial statements included in the
Fund's regulatory filings were as shown in the table below.
Audit Fees Billed
__________________________
Fiscal Year Fiscal Year
Ended Ended
Fund 10/31/06 10/31/05
________________________________________________________________________________
Neuberger Berman Realty Income Fund Inc. $33,500 $31,250
________________________________________________________________________________
Audit-Related Fees
The aggregate audit-related fees billed by Ernst & Young for the fiscal
years ended October 31, 2006 and October 31, 2005, for performing agreed-upon
procedures for the Preferred Shares of the Fund were as shown in the table
below.
Audit-Related Fees Billed
__________________________
Fiscal Year Fiscal Year
Ended Ended
Fund 10/31/06 10/31/05
________________________________________________________________________________
Neuberger Berman Realty Income Fund Inc. $6,250 $6,000
________________________________________________________________________________
Tax Fees
The aggregate fees billed by Ernst & Young for the fiscal years ended
October 31, 2006 and October 31, 2005, for tax compliance, tax advice, and tax
planning were as shown in the table below.
25
Tax Fees Billed
__________________________
Fiscal Year Fiscal Year
Ended Ended
Fund 10/31/06 10/31/05
________________________________________________________________________________
Neuberger Berman Realty Income Fund Inc. $9,500 $8,700
________________________________________________________________________________
All Other Fees
Aggregate fees billed by Ernst & Young during the fiscal years ended
October 31, 2006 and October 31, 2005 for other services provided to the Fund
were as shown in the table below.
All Other Fees
__________________________
Fiscal Year Fiscal Year
Ended Ended
Fund 10/31/06 10/31/05
________________________________________________________________________________
Neuberger Berman Realty Income Fund Inc. $0 $0
________________________________________________________________________________
Aggregate fees billed by Ernst & Young during the fiscal years ended
October 31, 2006 and October 31, 2005 for non-audit services to the Fund, NB
Management and Neuberger Berman were as shown in the table below.
Aggregate Non-Audit Fees
__________________________
Fiscal Year Fiscal Year
Ended Ended
Fund 10/31/06 10/31/05
________________________________________________________________________________
Neuberger Berman Realty Income Fund Inc. $141,750 $175,350
________________________________________________________________________________
The Audit Committee has considered these fees and the nature of the
services rendered, and has concluded that they are compatible with maintaining
the independence of Ernst & Young. The Audit Committee did not approve any of
the services described above pursuant to the "de minimis exceptions" set forth
in Rule 2-01(c)(7)(i)(C) and Rule 2-01(c)(7)(ii) of Regulation S-X. Ernst &
Young did not provide any audit-related services, tax services or other
non-audit services to NB Management or Neuberger Berman that the Audit Committee
was required to approve pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.
OTHER MATTERS
No business, other than as set forth above, is expected to come before the
Meeting. Should any other matters requiring a vote of stockholders properly come
before the Meeting, the persons named as proxies in the enclosed proxy will vote
thereon in accordance with their best judgment in the interests of the Fund.
26
STOCKHOLDER PROPOSALS
The Fund's Bylaws require stockholders wishing to nominate Directors or
make proposals to be voted on at the Fund's annual meeting to provide notice of
the nominations or proposals in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Fund. The Secretary
must receive the nomination or proposal not less than 90 days in advance of the
anniversary of the date the Fund's proxy statement was released to stockholders
in connection with the previous year's annual meeting. In order to be considered
at the Fund's 2008 annual meeting, stockholder nominations and proposals must be
received by the Fund no later than January 21, 2008 and must satisfy the other
requirements of the federal securities laws. Timely submission of a nomination
or proposal does not guarantee that such nomination or proposal will be
included. The chairperson of the Meeting may refuse to acknowledge a nomination
or other proposal by a stockholder that is not made in the manner described
above.
OTHER INFORMATION
The Board on an ongoing basis evaluates the options available to reduce the
discount at which the Fund's common stock trades. The Board believes that one
such option would be a managed distribution plan, under which the Fund could
include long-term capital gains in its distributions to stockholders more
frequently than is permitted by the 1940 Act. The Fund in 2004 filed with the
SEC an exemptive application to allow such distributions; shortly thereafter,
however, the SEC for policy reasons imposed a moratorium on such exemptions. In
light of a recent letter from the SEC staff proposing to resume the processing
of such applications subject to new conditions, the Board has approved the
filing of an amended application.
There can, of course, be no assurance that the SEC will grant the exemptive
relief sought by the Fund, nor does the Fund know when the SEC may act on its
application. If the Fund receives the exemptive relief it seeks from the SEC,
the Fund currently intends to pay common stockholders a stable monthly
distribution that may include net investment income, long-term capital gain,
and/or return of
capital. The Fund's Board will determine the amount of such distributions only
after the Fund receives exemptive relief and after the Board takes into account
the particular circumstances existing at that time. Although the Fund currently
has significant unrealized long-term capital gain that it could realize and pay
out in such distributions, there can be no assurance that the Fund will have
sufficient long-term capital gain available if and when the application is
granted to permit managed distributions of any particular amount or for any
particular length of time without including a return of capital.
The Board has determined that, if the Fund had the exemptive relief today, its
goal would be to implement a managed distribution plan under which the Fund
would pay monthly distributions at a level sufficient to provide an annualized
yield (based on net asset value) that would fall within the top quartile of the
Fund's peer group (a representative group of closed-end funds categorized by
Lipper as funds that invest primarily in equity securities of domestic and
foreign companies engaged in the real estate industry). In the future, such
distribution payments may include income, realized capital gains and/or return
of capital. If the Fund implements a managed distribution plan, its Board would
have the ability to amend or terminate the plan at any time, without prior
notice to stockholders.
The Fund's Board believes that implementing a managed distribution plan may
help the Fund attract new investors, which could have a positive effect on the
market price of the Fund's common stock and aid in narrowing the discount at
which the Fund's common stock trades. The distributions also would provide
stockholders with a steady monthly cash source.
27
NOTICE TO BANKS, BROKER-DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Fund, c/o its Secretary at 605 Third Avenue New York, New
York 10158, whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of the Proxy
Statement you wish to receive in order to supply copies to such beneficial
owners of shares.
By order of the Board of Directors,
/s/ Claudia A. Brandon
Claudia A. Brandon
Secretary
Dated: April 19, 2007
APPENDIX A
AUDIT COMMITTEE REPORT
NEUBERGER BERMAN DIVIDEND ADVANTAGE FUND INC.
NEUBERGER BERMAN INCOME OPPORTUNITY FUND INC.
NEUBERGER BERMAN INTERMEDIATE MUNICIPAL FUND INC.
NEUBERGER BERMAN CALIFORNIA INTERMEDIATE MUNICIPAL FUND INC.
NEUBERGER BERMAN NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
NEUBERGER BERMAN REAL ESTATE INCOME FUND INC.
NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND INC.
NEUBERGER BERMAN REALTY INCOME FUND INC.
(COLLECTIVELY, THE "FUNDS")
The Audit Committees of the Boards of Directors of the Funds operate
pursuant to a Charter, which sets forth the role of an Audit Committee in a
Fund's financial reporting process. Pursuant to the Charter, the role of the
Audit Committee is to oversee the Fund's accounting and financial reporting
processes and the quality and integrity of the Fund's financial statements and
the independent audit of those financial statements. The Committee is
responsible for, among other things, recommending the initial and ongoing
engagement of the independent registered public accounting firm and reviewing
the scope and results of each Fund's annual audit with the Fund's independent
registered public accounting firm. Fund management is responsible for the
preparation, presentation and integrity of the Funds' financial statements and
for the procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent registered public accounting
firm for the Funds is responsible for planning and carrying out proper audits
and reviews.
The Audit Committees met on December 12, 2006 to review each Fund's audited
financial statements for the fiscal year ended October 31, 2006. In performing
this oversight function, the Audit Committees have reviewed and discussed the
audited financial statements with the Funds' management and their independent
registered public accounting firm, Ernst & Young LLP ("E&Y"). The Audit
Committees have discussed with E&Y the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended, and have received the
written disclosures and the letter from E&Y required by Independence Standards
Board Standard No. 1. The Audit Committees also have discussed with E&Y its
independence.
The members of the Audit Committees are not employed by the Funds as
experts in the fields of auditing or accounting and are not employed by the
Funds for accounting, financial management or internal control purposes. Members
of the Audit Committees rely without independent verification on the information
provided and the representations made to them by management and E&Y.
Based upon this review and related discussions, and subject to the
limitation on the role and responsibilities of the Audit Committee set forth
above and in the Charter, the Audit Committees recommended to the Board of
Directors that the audited financial statements be included in each Fund's
Annual Report to Stockholders for the fiscal year ended October 31, 2006.
A-1
The members of the Audit Committees are listed below. Each has been
determined to be independent pursuant to American Stock Exchange Rule 121B(b)(1)
and New York Stock Exchange Rule 303.01.
John Cannon
Howard A. Mileaf
Cornelius T. Ryan (Chairman)
Tom D. Seip
Peter P. Trapp
December 12, 2006
A-2
____________________
| | |
| NEUBERGER | BERMAN |
|___________|________|
A Lehman Brothers Company
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, New York 10158-0180
www.nb.com
H0283 04/07
YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES OF STOCK YOU OWN.
PLEASE SIGN AND DATE THE REVERSE SIDE
OF THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
PROXY
NEUBERGER BERMAN REALTY INCOME FUND INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 2, 2007
The undersigned appoints as proxies Robert Conti, Frederic B. Soule and
Claudia A. Brandon, and each of them (with power of substitution), to vote
all the undersigned's shares of common stock in Neuberger Berman Realty
Income Fund Inc. ("Fund") at the Annual Meeting of Stockholders to be held
on May 2, 2007, at 11:30 AM Eastern Time at the offices of Neuberger
Berman, LLC, 605 Third Avenue, 41st Floor, New York, New York 10158-3698,
and any adjournments thereof ("Meeting"), with all the power the
undersigned would have if personally present.
Receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement
is acknowledged by your execution of this proxy. THIS PROXY IS BEING
SOLICITED ON BEHALF OF THE FUND'S BOARD OF DIRECTORS.
The shares of common stock represented by this proxy will be voted as
instructed. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" THE PROPOSAL SPECIFIED ON THE REVERSE SIDE.
THIS PROXY ALSO GRANTS DISCRETIONARY POWER TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING. YOUR VOTE IS IMPORTANT NO MATTER
HOW MANY SHARES YOU OWN. PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
------------------ ----------------
/ SEE REVERSE SIDE / / SEE REVERSE SIDE /
------------------ ----------------
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES IN THE
PROPOSAL.
- --------------------------------------------------------------------------------
1. To elect four Class II Directors to serve until the annual meeting of
stockholders in 2010, or until their successors are elected and qualified:
FOR ALL WITHHOLD FOR ALL
ALL EXCEPT
[ ] [ ] [ ]
(01) C. Anne Harvey
(02) George Morriss
(03) Jack Rivkin
(04) Tom D. Seip
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S),
MARK THE BOX "FOR ALL EXCEPT" AND WRITE ON THE LINE
BELOW THE NUMBER(S) OF THE NOMINEE(S) FOR
WHOM YOU DO NOT WANT TO VOTE.
------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CALL
1-877-461-1899.
Date ______________________________________, 2007
_________________________________________________
Signature (owner, trustee, custodian, etc.)
_________________________________________________
Signature, if held jointly
Please sign exactly as name appears hereon. If
shares are held in the name of two or more
persons, any may sign. If shares are held by a
corporation, partnership, trust, estate or similar
account, the name and capacity of the individual
signing the proxy card should be indicated unless
it is reflected in the form of registration.
YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES OF STOCK YOU OWN.
PLEASE SIGN AND DATE THE REVERSE SIDE
OF THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
PROXY
NEUBERGER BERMAN REALTY INCOME FUND INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 2, 2007
The undersigned appoints as proxies Robert Conti, Frederic B. Soule and
Claudia A. Brandon, and each of them (with power of substitution), to vote
all the undersigned's shares of preferred stock in Neuberger Berman Realty
Income Fund Inc. ("Fund") at the Annual Meeting of Stockholders to be held
on May 2, 2007, at 11:30 a.m. Eastern Time at the offices of
Neuberger Berman, LLC, 605 Third Avenue, 41st Floor, New York, New York
10158-3698, and any adjournments thereof ("Meeting"), with all the power
the undersigned would have if personally present.
Receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement
is acknowledged by your execution of this proxy. THIS PROXY IS BEING
SOLICITED ON BEHALF OF THE FUND'S BOARD OF DIRECTORS.
The shares of preferred stock represented by this proxy will be voted as
instructed. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" THE PROPOSAL SPECIFIED ON THE REVERSE SIDE.
THIS PROXY ALSO GRANTS DISCRETIONARY POWER TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING. YOUR VOTE IS IMPORTANT NO MATTER
HOW MANY SHARES YOU OWN. PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE
------------------ ----------------
/ SEE REVERSE SIDE / / SEE REVERSE SIDE /
------------------ ----------------
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES IN THE
PROPOSAL.
- --------------------------------------------------------------------------------
1. To elect five Class II Directors to serve until the annual meeting of
stockholders in 2010, or until their successors are elected and qualified:
FOR ALL WITHHOLD FOR ALL
ALL EXCEPT
[ ] [ ] [ ]
(01) C. Anne Harvey
(02) George Morriss
(03) Jack Rivkin
(04) Tom D. Seip
(05) John Cannon
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S),
MARK THE BOX "FOR ALL EXCEPT" AND WRITE ON THE LINE
BELOW THE NUMBER(S) OF THE NOMINEE(S) FOR
WHOM YOU DO NOT WANT TO VOTE.
------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CALL
1-877-461-1899.
Date ______________________________________, 2007
_________________________________________________
Signature (owner, trustee, custodian, etc.)
_________________________________________________
Signature, if held jointly
Please sign exactly as name appears hereon. If
shares are held in the name of two or more
persons, any may sign. If shares are held by a
corporation, partnership, trust, estate or similar
account, the name and capacity of the individual
signing the proxy card should be indicated unless
it is reflected in the form of registration.