PROXY STATEMENT
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
505 Main Street, P.O. Box 667
Hackensack, New Jersey 07602
-------------------------------------------
NOTICE OF ANNUAL MEETING OF HOLDERS
OF SHARES OF BENEFICIAL INTEREST
APRIL 7, 2004
-------------------------------------------
TO THE HOLDERS OF SHARES OF BENEFICIAL INTEREST OF
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
The Annual Meeting of the holders of shares of beneficial interest (the
"Shareholders") of First Real Estate Investment Trust of New Jersey (the
"Trust") will be held on Wednesday, April 7, 2004, at the Trust's executive
offices, 505 Main Street, Hackensack, New Jersey at 7:30 p.m., Eastern Daylight
Savings Time, for the following purposes:
1. To elect one (1) Trustee for a term of two (2) years or until his
successor has been elected and qualified, and to elect two (2)
Trustees, each for a term of three (3) years or until his successor
has been elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Shareholders of record at the close of business on February 20, 2004
are entitled to notice of and to vote at the meeting.
JOHN A. AIELLO
Secretary
Hackensack, New Jersey
February 27, 2004
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR REPRESENTATION
AT THE MEETING, HOWEVER, YOU ARE URGED TO SIGN AND DATE THE ACCOMPANYING PROXY
AND MAIL IT AT ONCE IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
---------------
PROXY STATEMENT
---------------
General Information
This Proxy Statement is furnished to the holders (the "Shareholders") of
shares of beneficial interest without par value (the "Shares") of First Real
Estate Investment Trust of New Jersey (the "Trust") in connection with the
solicitation of proxies for use at the Annual Meeting of the Shareholders to be
held on April 7, 2004, and any adjournment thereof (the "Annual Meeting"),
pursuant to the accompanying Notice of Annual Meeting of Holders of Shares of
Beneficial Interest. Beneficial interests in the Trust are represented by the
Shares, and the Shares are the only authorized, issued and outstanding class of
equity of the Trust. A form of proxy for use at the Annual Meeting is also
enclosed. The Trust anticipates mailing this Proxy Statement to its Shareholders
beginning on February 27, 2004. The executive offices of the Trust are located
at 505 Main Street, Hackensack, New Jersey 07601.
Shareholders may revoke the authority granted by their execution of
proxies at any time before the effective exercise of proxies by filing written
notice of such revocation with the Secretary of the Annual Meeting. Presence at
the Annual Meeting does not of itself revoke the proxy. All Shares represented
by executed and unrevoked proxies will be voted in accordance with the
instructions therein. Proxies submitted without indication will be voted FOR the
nominees for Trustee named in this Proxy Statement. The Board of Trustees of the
Trust (the "Board of Trustees") is not aware, at the date hereof, of any matters
to be presented at the Annual Meeting other than the matter described above, but
if any other matter incident to the Annual Meeting is properly presented, the
persons named in the proxy will vote thereon according to their best judgment.
The cost of preparing, assembling and mailing the proxy material is to be
borne by the Trust. Proxies for use at the Annual Meeting are being solicited by
the Board of Trustees. It is not anticipated that any compensation will be paid
for soliciting proxies and the Trust does not intend to employ specially engaged
personnel in the solicitation of proxies. It is contemplated that proxies will
be solicited principally through the mail. Members of the Board of Trustees and
executive officers of the Trust ("Executive Officers") may also, without
additional compensation, solicit proxies, personally or by mail, telephone,
telegraph, facsimile transmission or special letter.
Voting Securities
The only voting securities entitled to vote at the Annual Meeting are the
Shares. Each Share entitles its owner to one vote on an equal basis. 3,155,576
Shares were issued and outstanding on the record date, February 20, 2004. Only
Shareholders of record on the books of the Trust at the close of business on
February 20, 2004 are entitled to notice of and to vote at the Annual Meeting.
The holders of a majority of the outstanding Shares, present in person or
represented by proxy, will constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present at the Annual Meeting.
Trustees are elected by a plurality of the votes cast at the Annual
Meeting by the holders of Shares present in person or represented by proxy and
entitled to vote. The proxy card provides space for a Shareholder to withhold
votes for any nominee or all nominees to the Board of Trustees.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting who will separately tabulate affirmative votes, authority
withheld for any nominee for Trustee, abstentions and broker non-votes. Any
proxy submitted and containing any abstention or a broker non-vote will not be
counted as a vote cast on any matter to which it relates.
- 1 -
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of February 20, 2004, with
respect to beneficial ownership, as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial interests
in the Trust, as represented by the Shares, for each Trustee, nominee for
Trustee, and Executive Officer of the Trust. The only persons who beneficially
own five percent (5%), or more, of the Shares are three (3) Trustees named in
the table below.
Amount and Nature of Beneficial Ownership
(C)
Aggregate
Number of Shares
(A) Deemed to be
Aggregate (B) Beneficially
Number of Shares Number of Shares Owned (D)
Beneficially Acquirable within (Column A plus Percent
Name of Beneficial Owner Owned(1) 60 Days(2) Column B) of Class
- ------------------------ ---------------- ----------------- ---------------- --------
Robert S. Hekemian(3) 166,272(4) 56,000 222,272 6.9%
Donald W. Barney(3) 84,026(5) 56,000 140,026 4.4%
Herbert C. Klein, Esq.(6) 118,755(7) 56,000(11) 174,755 5.4%
Ronald J. Artinian(6) 233,858(8) -- 233,858 7.4%
Alan L. Aufzien(6) 3,000 13,000 16,000 (9)
John A. Aiello, Esq.(10) -- -- -- --
------- ------- ------- ----
All Trustees, Nominees for Trustee
and Executive Officers as a group
(6 persons) 605,911 181,000 786,911 23.6%
(1) Except as otherwise indicated, all of the Shares are held beneficially and
of record.
(2) Shares subject to currently exercisable options granted under the Trust's
Equity Incentive Plan.
(3) A Trustee and Executive Officer of the Trust.
(4) Includes 37,196 Shares held by Mr. Hekemian's wife, with respect to which
Mr. Hekemian disclaims beneficial ownership.Also includes (i) 36,736
Shares held by the Hekemian & Co., Inc. Pension Plan of which Mr. Hekemian
is a trustee and a participant, (ii) an aggregate of 52,682 Shares which
are held by certain partnerships in which Mr. Hekemian is a partner, (iii)
7,098 Shares held in certain trusts for which Mr. Hekemian is a trustee
and one trust in which Mr. Hekemian is a beneficiary, and (iv) 22,370
Shares held by the Robert S. Hekemian Family Foundation of which Mr.
Hekemian is the President, all of such Shares with respect to which Mr.
Hekemian disclaims beneficial ownership thereof except to the extent of
his pecuniary interest in the pension plan, partnerships and trusts.
(5) Includes 23,464 Shares held by Mr. Barney's wife, with respect to which
Mr. Barney disclaims beneficial ownership
(6) A Trustee of the Trust.
(7) Includes 13,875 Shares held by Mr. Klein's wife and 8,500 Shares held in a
trust for the benefit of Mr. Klein's son of which Mr. Klein's wife is
trustee, with respect to which Mr. Klein disclaims beneficial ownership.
(8) Includes 47,524 Shares which are in a family trust with respect to which
Mr. Artinian disclaims beneficial ownership except to the extent of his
pecuniary interest in such trust. Also includes 1,800 Shares which are
held by Mr. Artinian as custodian for the benefit of his son, with respect
to which Mr. Artinian disclaims beneficial ownership.
(9) Shares beneficially owned do not exceed one percent (1%) of the Trust's
issued and outstanding Shares.
(10) An Executive Officer of the Trust.
(11) Subsequent to the record date of February 20, 2004, established for the
Annual Meeting, Mr. Klein exercised all of these options and acquired
56,000 Shares.
- 2 -
ELECTION OF TRUSTEE
The Trust is governed by the Board of Trustees. The Declaration of Trust
provides that the Board of Trustees will consist of not fewer than five (5) nor
more than nine (9) Trustees.
The Board of Trustees has fixed the number of Trustees at five (5). The
term of three (3) Trustees shall expire at the Annual Meeting. In order to allow
the Board of Trustees to be able to strike a balance with respect to the number
of Trustees whose terms on the Board of Trustees are expiring at each annual
meeting of the Shareholders, the Board of Trustees has amended the Declaration
of Trust to provide that the term of a Trustee shall either be two (2) years or
three (3) years as determined by the Board of Trustees at the time a Trustee is
nominated for election.
Nominee
Consistent with the recommendation of the Nominating Committee, the Board
of Trustees has nominated Donald W. Barney for election at the Annual Meeting to
a two (2) year term as a Trustee to commence at the Annual Meeting, and has
nominated Ronald J. Artinian and Alan L. Aufzien for election at the Annual
Meeting, each to a three year term as a Trustee to commence at the Annual
Meeting.
Each of Mr. Barney, Mr. Artinian and Mr. Aufzien is currently a member of
the Board of Trustees, with his term of office scheduled to expire as of the
date of the Annual Meeting. Please see the section of this Proxy Statement
captioned "Board of Trustees" for a description of the business experience of
and other relevant information with respect to each of Mr. Barney, Mr. Artinian
and Mr. Aufzien.
It is the intention of the persons named in the accompanying proxy to
vote, unless otherwise instructed, in favor of the election of Mr. Barney to a
two (2) year term as a Trustee, and each of Mr. Artinian and Mr. Aufzien to a
three (3) year term as a Trustee. Should any of Mr. Barney, Mr. Artinian or Mr.
Aufzien be unable to serve, the proxies will be voted for the election of such
other person as shall be determined by the persons named in the proxy in
accordance with their judgment, and any such person elected in the place of Mr.
Barney shall be elected to a two (2) year term as a Trustee. Management of the
Trust is not aware of any reason why any of Mr. Barney, Mr. Artinian or Mr.
Aufzien, if elected, would be unable to serve as a Trustee.
The Board of Trustees recommends a vote "FOR" the election of Mr. Barney
to a two (2) year term as a Trustee, and each of Mr. Artinian and Mr. Aufzien to
a three (3) year term as Trustees.
Board of Trustees
The members of the Board of Trustees of the Trust are:
Year First Elected to
Name Age the Board of Trustees
---- --- ---------------------
Robert S. Hekemian 72 1980
Donald W. Barney 63 1981
Herbert C. Klein, Esq 73 1961
Ronald J. Artinian 55 1992
Alan L. Aufzien 74 1992
Robert S. Hekemian has been active in the real estate industry for more
than fifty (50) years. Mr. Hekemian has served as Chairman of the Board and
Chief Executive Officer of Trust since 1991, and as a Trustee since 1980. From
1981 to 1991, Mr. Hekemian was President of the Trust. From June 24, 2002
through January 15, 2003, Mr. Hekemian served as Chief Financial Officer of the
Trust. As Chairman and Chief Executive Officer of the Trust, Mr. Hekemian
provides the general, day to day, management of the Trust. His current term as a
member of the Board of Trustees is scheduled to expire in April 2005. Mr.
Hekemian devotes approximately forty percent (40%) to fifty percent (50%) of his
time to perform his duties as an Executive Officer of the Trust. Since 1983, Mr.
Hekemian has also been the Chairman of the Board and Chief Executive Officer of
Hekemian & Co., Inc., a real estate brokerage and management company which
manages the Trust's properties ("Hekemian & Co."). See the section entitled
"Certain Relationships and Related Party Transactions" in this Proxy Statement.
Mr. Hekemian is a director of Pascack Community Bank. He is also a director, a
partner and an officer in numerous private real estate corporations and
partnerships.
- 3 -
Donald W. Barney has served as President of the Trust since 1993, and as a
Trustee since 1981. Mr. Barney was elected Treasurer and Chief Financial Officer
of the Trust on January 15, 2003. His current term as a member of the Board of
Trustees is scheduled to expire in April 2004. Mr. Barney has been nominated for
election to a two (2) year term as Trustee. Mr. Barney devotes approximately
fifteen percent (15%) of his time to perform his duties as an Executive Officer
of the Trust. Mr. Barney was associated with Union Camp Corporation, a
diversified manufacturer of paper, packaging products, chemicals and wood
products, from 1969 through 1998 in various positions, including Vice President
and Treasurer. Mr. Barney is a director of Hilltop Community Bank. He is also a
partner and director in several other private real estate investment companies.
Herbert C. Klein, Esq., except for the time that he served as a United
States Congressman, has served as a Trustee since 1961. His current term as a
member of the Board of Trustees expires in April 2006. From 1991 through the end
of 1992, Mr. Klein served as President of the Trust. Mr. Klein has been an
attorney since 1956 with a practice devoted to real estate, corporate matters
and government relations. From March 1995 to January 1999, Mr. Klein was a
Director of the law firm of Hannoch Weisman located in Roseland, New Jersey. In
January 1999, Mr. Klein became a Partner in the law firm of Nowell Amoroso Klein
Bierman P.A., with offices located in Hackensack, New Jersey and New York City.
See section entitled "Certain Relationships and Related Party Transactions" in
this Proxy Statement. From January 1993 to January 1995, Mr. Klein was a member
of the United States Congress, House of Representatives, for the 8th
Congressional District of New Jersey. Mr. Klein is also a former member of the
New Jersey State Assembly.
Ronald J. Artinian has served as a Trustee since 1992. His current term as
a member of the Board of Trustees is scheduled to expire in April 2004. Mr.
Artinian has been nominated for election to a three (3) year term as Trustee.
From 1989 to 1998, Mr. Artinian was an investment banker with Smith Barney,
Inc., including positions as a Managing Director and National Sales Manager. Mr.
Artinian retired from Smith Barney in January 1998 in order to pursue other
business interests as a private investor. Mr. Artinian is a director of Laser
Mortgage Management, Inc.
Alan L. Aufzien has served as a Trustee since 1992. His current term as a
member of the Board of Trustees is scheduled to expire in April 2004. Mr.
Aufzien has been nominated for election to a three (3) year term as Trustee.
Since 1986, Mr. Aufzien has been Chairman and Managing Partner of The Norall
Organization, an investment company. From 1980 to 1998, Mr. Aufzien was a
partner in the Meadowlands Basketball Association, t/a New Jersey Nets (Member
of the National Basketball Association), and was its Chairman and Chief
Executive Officer, and then its Secretary and Treasurer, as well as a member of
its Board of Directors. Since 1986, Mr. Aufzien has also been the Chairman and
Chief Executive Officer of New York Harbour Associates, a real estate developer.
Mr. Aufzien is a director of Rent A Wreck of America, Inc.
Meetings of the Board of Trustees
During the fiscal year ended October 31, 2003, the Board of Trustees held
fifteen (15) meetings. During fiscal 2003, each incumbent member of the Board of
Trustees attended more than seventy-five percent (75%) of the aggregate number
of (i) meetings of the Board of Trustees, and (ii) meetings of the committees of
the Board of Trustees on which he served. John A. Aiello, Secretary and
Executive Secretary of the Trust, attends meetings of the Board of Trustees and
each of its committees in a nonvoting capacity.
Trustee Attendance at Annual Meeting
The Trust encourages all of the Trustees to attend the Annual Meeting, and
expects that all Trustees will attend the Annual Meeting absent a valid reason
such as a scheduling conflict. All of the Trustees attended the Annual Meeting
of Shareholders held on April 15, 2003.
Committees of the Board of Trustees
The Board of Trustees has three (3) standing committees: Executive
Committee, Nominating Committee and Audit Committee.
(a) Executive Committee
The Executive Committee of the Board of Trustees is authorized to make
policy and certain business decisions during any interval between meetings of
the Board of Trustees. All decisions of the Executive Committee are reported to
the Board of Trustees on a regular basis. During fiscal 2003, the members of the
Executive Committee were, and currently are, identical to the current members of
the Board of Trustees, and accordingly, it was not necessary for the Executive
Committee to separately meet during fiscal 2003. Mr. Hekemian is the Chairman of
the Executive Committee.
- 4 -
(b) Nominating Committee
The Nominating Committee is authorized to identify, evaluate and recommend
to the Board of Trustees prospective nominees for Trustee, periodically review
the Trust's governance guidelines and make recommendations to the Board of
Trustees from time to time as to matters of governance. The Nominating Committee
also periodically reviews the performance of the Board of Trustees and its
members and makes recommendations to the Board of Trustees concerning the
number, function and composition of the Board of Trustees and the committees of
the Board of Trustees, and concerning the terms of the Trustees. The Nominating
Committee's charter is included as Appendix A to this Proxy Statement.
The Nominating Committee is authorized to review the qualifications of
various persons to determine whether they might make good candidates for
consideration for membership on the Board of Trustees. This would include a
review of the nominee's business judgment, skill and experience, the nominee's
understanding of the Trust's business and industry and other related industries,
the nominee's integrity, reputation and independence, and such other factors as
the Nominating Committee determines are relevant in light of the needs of the
Board of Trustees and the Trust and its Shareholders. With respect to any
nominee up for re-election to the Board of Trustees, the Nominating Committee is
authorized to consider the nominee's performance on the Board of Trustees before
nominating the Trustee for re-election at an annual meeting. The Trust does not
pay a fee to any third party to identify or assist in identifying or evaluating
potential nominees.
The Nominating Committee will also consider candidates for Trustee
recommended by the Shareholders. The process by which a Shareholder may suggest
a candidate to be nominated for election to the Board of Trustees can be found
in the section of this Proxy Statement entitled "Shareholder Proposals and
Recomendations for Nomination of Trustees." The Nominating Committee will apply
the same criteria described above in reviewing and evaluating the qualifications
of any candidate recommended by a Shareholder; provided, that it remains in the
sole discretion of the Nominating Committee whether any such potential nominee
suggested by a Shareholder is recommended by the Nominating Committee to the
Board of Trustees.
The current members of the Nominating Committee of the Board of Trustees
are Robert S. Hekemian and Herbert C. Klein, Esq. Mr. Klein is independent, as
independence for directors is defined in the listing standards adopted by the
National Association of Securities Dealers, Inc. ("NASD") and approved by the
Securities and Exchange Commission. Mr. Hekemian is not considered independent
under such definition since he is an Executive Officer of the Trust. During
fiscal 2003, the Nominating Committee held one (1) meeting at which the
Nominating Committee unanimously determined to recommend to the Board of
Trustees that Donald W. Barney be nominated for re-election as a Trustee at the
Annual Meeting to a two (2) year term and that each of Ronald J. Artinian and
Alan L. Aufzien be nominated by the Board of Trustees for re-election as
Trustees at the Annual Meeting to three (3) year terms.
(c) Audit Committee
The current members of the Audit Committee of the Board of Trustees are
Ronald J. Artinian, Alan L. Aufzien and Herbert C. Klein. Mr. Artinian is the
Chairman of the Audit Committee. Each of Mr. Artinian and Mr. Aufzien satisfies
the audit committee qualifications under the NASD listing standards and is
independent, as independence for audit committee members is defined in the NASD
listing standards. Although Mr. Klein meets the requirements for independence
set forth in the NASD definition of "independent director," he does not meet the
criteria for independence set forth in Exchange Act Rule 10A-3(b)(1) because the
law firm of Nowell, Amoroso, Klein, Bierman, P.A., in which Mr. Klein is
currently a partner, has received and will continue to receive legal fees from
the Trust for legal services provided and to be provided to the Trust. See the
Section of this Proxy Statement entitled "Certain Relationships and Related
Party Transactions." Accordingly, Mr. Klein does not satisfy the independence
requirement for qualification as an audit committee member under the NASD
listing standards. Mr. Klein had resigned from the Audit Committee in January
2003, upon a determination that he would not satisfy the independence
requirement of the audit committee qualifications under the NASD listing
standards. However, based on Mr. Klein's background and experience, the Board of
Trustees reappointed Mr. Klein to the Audit Committee in June 2003 since the
Board of Trustees believes that the valuable contributions Mr. Klein will make
to the Audit Committee sufficiently mitigate any concerns arising out of the
fact that he does not satisfy the independence requirement of the audit
committee qualifications under the NASD listing standards.
- 5 -
The Audit Committee held five (5) meetings during fiscal 2003. The Audit
Committee selects the independent certified public accountants to audit the
books and accounts of the Trust. In addition, the Audit Committee reviews and
pre-approves the scope and costs of all services (including non-audit services)
provided by the accounting firm selected to conduct the audit. The Audit
Committee also monitors the effectiveness of the audit effort and financial
reporting and inquires into the adequacy of the Trust's financial and operating
controls.
Based on its review of the criteria of an Audit Committee Financial Expert
under the rule adopted by the Securities and Exchange Commission ("SEC"), the
Board of Trustees believes that the members of the Trust's Audit Committee may
not qualify as Audit Committee Financial Experts.
Each of Mr. Artinian, Mr. Aufzien and Mr. Klein has made significant
contributions and provided valuable service to the Trust and its shareholders as
members of the Audit Committee. The Board of Trustees believes that each of Mr.
Artinian, Mr. Aufzien and Mr. Klein has demonstrated that he is capable of (i)
understanding accounting principles generally accepted in the United States of
America ("GAAP") and financial statements, (ii) assessing the general
application of GAAP principles in connection with the accounting for estimates,
accruals and reserves, (iii) analyzing and evaluating the Trust's financial
statements, (iv) understanding internal controls and procedures for financial
reporting, and (v) understanding audit committee functions, all of which are
attributes of an Audit Committee Financial Expert under the rule adopted by the
SEC. Given the business experience and acumen of Mr. Artinian, Mr. Aufzien and
Mr. Klein and their long standing service as members of the Board of Trustees
and its various committees, including the Trust's Audit Committee, the Board of
Trustees believes that each of Mr. Artinian, Mr. Aufzien and Mr. Klein is
qualified to carry out all duties and responsibilities of the Trust's Audit
Committee.
The Board of Trustees believes that one of its members, Mr. Barney, would
qualify as an Audit Committee Financial Expert. Mr. Barney resigned from the
Audit Committee in connection with his appointment to the office of Treasurer of
the Trust and his assumption of the role of Chief Financial Officer of the
Trust. As Chief Financial Officer of the Trust, Mr. Barney has made and will
continue to make the certifications required under the Sarbanes-Oxley Act of
2002 and the related rules adopted by the SEC with respect to (i) the Trust's
financial statements and other financial information included in periodic
reports filed with the SEC, (ii) the Trust's disclosure controls and procedures
regarding the disclosure to the certifying officers of material information
relating to the Trust, and (iii) the Trust's internal controls and the adequacy
of the design and operation of such internal controls. As a certifying officer
of the Trust, Mr. Barney will meet with and make reports to the Audit Committee
with respect to the items which are the subject matter of his certifications.
The Board of Trustees believes that it is important to maintain independence
between the Audit Committee and the certifying officers of the Trust, and that
the significance and importance of maintaining such an independent relationship
outweigh the importance of having a person who technically satisfies the
definition of an Audit Committee Financial Expert serve on the Audit Committee.
At this time, the Board of Trustees does not believe that it is necessary
to actively search for an outside person to serve on the Board of Trustees who
would qualify as an Audit Committee Financial Expert.
Audit Committee Report
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Trust filing under the Securities Act of 1933, as amended, or the Exchange
Act, except to the extent the Trust specifically incorporates this Report by
reference therein.
The Audit Committee meets each quarter during the fiscal year with the
Trust's independent auditors and members of Hekemian & Co. and focuses on the
following areas:
a. the adequacy of the Trust's internal controls and financial
reporting process and the reliability of its financial statements.
b. the independence and performance of the Trust's independent auditors
and the cooperation received by the independent auditors from
Hekemian & Co.
c. the Trust's compliance with all legal and regulatory requirements
with particular emphasis upon all disclosures made by the Trust in
its quarterly and annual reports to the SEC.
The Audit Committee meets separately with Hekemian & Co. and the Trust's
independent auditors. The independent auditors have unrestricted access to the
Audit Committee. The independent auditors make a quarterly report directly to
the Audit Committee out of the presence of Hekemian & Co. concerning all of
their functions as the Trust's independent auditors.
- 6 -
The Board of Trustees has adopted a written charter setting out the audit
related functions. The Audit Committee's charter is included as Appendix B to
this Proxy Statement. The Audit Committee reviews its charter on an annual basis
and updates the charter as necessary.
Hekemian & Co. has primary responsibility for the Trust's financial
statements and the preparation of all financial statements and the maintenance
of the Trust's internal controls.
The independent auditors audit the annual financial statements prepared by
Hekemian & Co., express an opinion as to whether those financial statements
fairly present the financial position, results of operations and cash flows of
the Trust in conformity with GAAP and discuss with the Audit Committee any
issues they believe should be raised.
This year, the Audit Committee reviewed the Trust's audited financial
statements and met with both Hekemian & Co. and J.H. Cohn, LLP, the Trust's
independent auditors, to review all financial statements. Hekemian & Co. has
represented to the Audit Committee that the financial statements were prepared
in conformity with GAPP.
The Audit Committee has received from and discussed with J.H. Cohn, LLP
the written disclosure and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). These items
relate to that firm's independence from the Trust. The Audit Committee also
discussed with J.H. Cohn, LLP any matters required to be disclosed in accord
with Auditing Standards No. 61. (Communication with Audit Committees).
On the basis of these reviews and discussions, the Audit Committee
recommended to the Board of Trustees that the Trust's audited financial
statements be included in the Trust's Annual Report on Form 10-K for the fiscal
year ended October 31, 2003, for filing with the SEC.
Audit Committee:
Ronald J. Artinian, Chairman
Alan L. Aufzien
Herbert C. Klein, Esq.
Executive Compensation
The following table sets forth information concerning the compensation of
all of the Executive Officers of the Trust as of October 31, 2003 for services
in all capacities to the Trust for the fiscal years ended October 31, 2003, 2002
and 2001. During the fiscal year ended October 31, 2003, Robert S. Hekemian
served as Chairman of the Board and Chief Executive Officer of the Trust. Mr.
Hekemian also served as Chief Financial Officer of the Trust from and after June
24, 2002 through January 15, 2003. Mr. Hekemian devotes approximately forty
percent (40%) to fifty percent (50%) of his business activities to the Trust.
During the fiscal year ended October 31, 2003, Donald W. Barney served as
President of the Trust. On January 15, 2003, Mr. Barney was elected to the
office of Treasurer and assumed the role of Chief Financial Officer of the
Trust. Mr. Barney devotes approximately fifteen percent (15%) of his business
activities to the Trust. Mr. Aiello was appointed and has served as Executive
Secretary of the Trust since August 21, 2002. Mr. Aiello became an Executive
Officer of the Trust upon being elected to the office of Secretary on January
15, 2003. Mr. Aiello's compensation information included in this Summary
Compensation Table is for the full 2003 fiscal year. Mr. Aiello devotes
approximately five percent (5%) of his business activities to the Trust. With
respect to all compensation, the term "paid" shall mean actually paid or
deferred.
- 7 -
SUMMARY COMPENSATION TABLE
Annual
Compensation
------------ All Other
Fiscal Executive Officer Other Compensation ($)(4)
Year Ended Fee ($)(2) Annual -------------------
Name and Principal Position (1) 10/31 Paid Deferred Compensation ($)(3) Paid Deferred
- ------------------------------- ---------- ---------------------- ------------------- ---- --------
Robert S. Hekemian
Chairman of the Board, 2003 -- $100,000 $ 1,672 -- $ 40,877
and Chief Executive 2002 -- $ 10,000 $ 620 -- $ 20,655
Officer 2001 -- $ 10,000 $ 201 -- $ 17,183
Donald W. Barney
President, Treasurer 2003 -- $ 25,000 $ 1,445 -- $ 27,578
and Chief Financial 2002 -- $ 10,000 $ 620 -- $ 23,564
Officer 2001 -- $ 10,000 $ 201 -- $ 21,438
John A. Aiello, Esq
Secretary 2003 $ 20,000 -- -- $ 11,500 --
- ----------
(1) Represents the positions held by each Executive Officer on October 31,
2003. Mr. Barney was elected Treasurer and assumed the role of Chief
Financial Officer from Mr. Hekemian on January 15, 2003. Mr. Aiello was
elected Secretary on January 15, 2003.
(2) Represents payment to the Executive Officers for their services as an
Executive Officer of the Trust. The amounts deferred have been at the
election of the Executive Officer pursuant to the terms of the Deferred
Compensation Plan. See Section of this Proxy Statement entitled "Deferred
Compensation Plan."
(3) Amounts represent above-market accrued interest earned on executive
officer fees payable in fiscal 2003, fiscal 2002 and fiscal 2001, but
deferred at the election of the Executive Officers pursuant to the terms
of the Deferred Compensation Plan. Payment of accrued interest is deferred
until such time that the deferred executive officer fees are paid to the
Executive Officers. See Section of this Proxy Statement entitled "Deferred
Compensation Plan."
(4) Such amounts represent annual retainer fees, Board of Trustees meeting
fees, and other fees paid to the Executive Officers as consideration for
their service on the Board of Trustees and, if applicable, its committees.
In fiscal 2003, all such amounts payable to Mr. Hekemian and Mr. Barney
were deferred at the election of the Executive Officers pursuant to the
terms of the Deferred Compensation Plan. Also includes accrued interest
earned on deferred executive officer fees payable for service as an
Executive Officer (other than above market accrued interest on executive
officer fees payable in fiscal 2003, fiscal 2002 and fiscal 2001 which is
disclosed in the "Other Annual Compensation" column of this Summary
Compensation Table) and on deferred retainer fees payable for service as a
Trustee and deferred meeting fees for attendance at meetings of the Board
of Trustees or committees thereof. Payment of accrued interest is deferred
until such time that the deferred fees are paid to the Executive Officers.
See Section of this Proxy Statement entitled "Deferred Compensation Plan."
Other than the annual executive officer fees and the accrued interest
thereon for such fees which have been deferred, and the grant of options under
the Trust's Equity Incentive Plan, the Trust has not made available or paid any
compensation or benefits to its Executive Officers, whether it be in the form of
bonus, long-term incentive compensation, perquisites, rights, warrants,
convertible securities, performance units, performance shares or other similar
instruments. The Trust does not maintain any employee benefit plans, other than
the Trust's Equity Incentive Plan. There are no employment contracts between the
Trust and any of the Executive Officers, nor is there any compensatory plan or
arrangement between the Trust and any of the Executive Officers pursuant to
which an Executive Officer would receive payments as the result of his
resignation or retirement as an Executive Officer, or any other event resulting
in the termination of his relationship with the Trust as an Executive Officer,
or as a result of a change in control of the Trust. Mr. Hekemian is Chairman of
the Board and Chief Executive Officer of Hekemian & Co, the managing agent of
the Trust. Pursuant to the terms of the Management Agreement by and between
Hekemian & Co. and the Trust, Hekemian & Co. is entitled to receive a
termination fee from the Trust under certain circumstances, including the
non-renewal of the Management Agreement by the Trust, termination of the
Management Agreement by the Trust without cause, or termination of the
Management Agreement by the Trust following an acquisition of the Trust. See the
Section of this Proxy Statement entitled "Certain Relationships and Related
Party Transactions."
- 8 -
Fiscal Year-End Option Values
The following table shows certain information, as of October 31, 2003,
regarding the fiscal year-end values of the options held by each of the
Executive Officers of the Trust. No options were exercised by the Executive
Officers during the 2003 fiscal year.
Fiscal Year-End Option Values
-------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at Fiscal Year-End (#) at Fiscal Year-End ($)
------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Robert S. Hekemian 56,000 -- $959,000 --
Donald W. Barney 56,000 -- $959,000 --
John A. Aiello, Esq -- -- -- --
- ----------
(1) The value of unexercised in-the-money options represents the difference
between an option's exercise price ($15.00) and the fair market value of
the Shares on October 31, 2003 ($32.125 per Share). The actual value, if
any, an Executive Officer may realize upon the exercise of an option will
depend upon the excess of the fair market value of the Shares over the
exercise price on the date the option is exercised.
Fiscal 2003 Compensation: Trustees
During the fiscal year ended October 31, 2003, each Trustee, including
those Trustees who also serve as Executive Officers of the Trust, was entitled
to receive an annual retainer fee in the amount of $10,000. The Trustees and the
Executive Secretary were entitled to receive meeting attendance fees in the
amount of $700 for each meeting of the Board of Trustees and its committees
attended. The Chairman of the Board, for each Board of Trustees meeting
attended, and the chairman of each Board of Trustees committee, for each
committee meeting attended, were entitled to receive meeting attendance fees of
$800. The Trustees and the Executive Secretary were also entitled to receive
property site inspection fees in the amount of $700 for each site inspection
attended, plus the reimbursement of all reasonable and verified out-of-pocket
expenses incurred in connection with the site visit. Each member of the Board of
Trustees and the Executive Secretary was entitled to receive a fee of $350 for
each meeting participated in by teleconference. The Trustees and the Executive
Secretary are entitled to defer all or any part of their retainer, meeting and
property site inspection fees pursuant to the terms of the Deferred Compensation
Plan. For the fiscal year ended October 31, 2003, the Trustees were paid or
elected to defer annual retainer fees, meeting attendance fees, site inspection
fees and accrued interest, and the Executive Secretary was paid meeting
attendance fees, in an aggregate amount of $311,023, as consideration for their
services to the Board of Trustees and its committees.
Fiscal 2004 Compensation: Trustees and Officers
For the 2004 fiscal year, the Board of Trustees has approved the following
increases in the annual executive officer and retainer fees: (i) the annual
executive officer fee for the Chief Executive Officer of the Trust has been
increased from $100,000 to $150,000; (ii) the annual executive officer fee for
the Secretary has been increased from $20,000 to $23,000; and (iii) the annual
retainer fee for the members of the Board of Trustees has been increased from
$10,000 to $11,500. There are no changes in the annual executive officer fee for
the President of the Trust, nor are there any changes in the Trustees' and
Executive Secretary's meeting fees and site inspection fees.
Deferred Compensation Plan
Effective November 1, 2000, the Board of Trustees adopted a deferred
compensation plan (the "Deferred Compensation Plan") for its Executive Officers
and its Trustees. Pursuant to the Deferred Compensation Plan, any Executive
Officer or Trustee may elect to defer receipt of any executive officer,
retainer, meeting attendance, or property site inspection fee. The Trust has
agreed to pay any such Executive Officer or Trustee, who elects to participate
in the Deferred Compensation Plan, interest on any deferred fees at the rate of
nine percent (9.0%) per annum, compounded quarterly. Any such deferred fee and
the interest accrued thereon shall be paid at the later of: (i) the retirement
age specified by the Executive Officer or Trustee in the deferral election; (ii)
actual retirement of the Executive Officer or Trustee; or (iii) upon cessation
of duties as an Executive Officer or Trustee. The Deferred Compensation Plan
provides that any such deferred fees will be paid in a lump sum or in annual
installments over a
- 9 -
period not to exceed ten (10) years, at the election of the Executive Officer or
Trustee. The Trust will not create a cash sinking fund for such deferred fees.
As a result, any Executive Officer or Trustee who elects to participate in the
Deferred Compensation Plan is an unsecured creditor of the Trust with respect to
any such deferred fee.
Compensation Report
The full Board of Trustees determines the amounts of the annual executive
officer, retainer and meeting fees paid to the Executive Officers and Trustees.
Prior to the 2003 fiscal year, the Executive Officers received only a nominal
executive officer fee as annual compensation for their services as Executive
Officers of the Trust. See section of this Proxy Statement entitled "Summary
Compensation Table."
In its review and evaluation during the 2003 fiscal year of the annual
retainer fee paid to Mr. Hekemian, the Trust's Chairman of the Board and Chief
Executive Officer, the Board of Trustees recognized that Mr. Hekemian's duties
and responsibilities have expanded over the years, and the time expended in
performing such duties and responsibilities had grown, as the Trust grew and the
number of people employed directly by the Trust increased. The Board of Trustees
reviewed information regarding compensation paid to the chief executive officers
of various real estate investment trusts of different types, market
capitalizations, management and governance systems as well as the duties and
responsibilities of such chief executive officers and considered the potential
cost to the Trust if it would have to hire a chief executive officer in the open
market who has the same background and experience level of Mr. Hekemian. The
Board of Trustees considered that while Mr. Hekemian has served as Chairman of
the Board and Chief Executive Officer of the Trust, the Trust has enjoyed
continued success and profitability, the Trust's investments in properties, both
direct investment and pursuant to joint ventures, has increased, and there have
been annual increases in dividends paid to shareholders of the Trust. The Board
of Trustees also considered that Mr. Hekemian provides executive level oversight
and management decision making with respect to various matters handled by
Hekemian & Co. on behalf of the Trust, which is beyond the scope of the services
provided by Hekemian & Co. to the Trust. After review, consideration, evaluation
and discussion of these factors, the Board of Trustees determined that Mr.
Hekemian's compensation as Chairman of the Board and Chief Executive Officer of
the Trust, was less than market level compensation for a chief executive officer
of a real estate investment trust with similar background and experience and
performing similar duties and responsibilities. Accordingly, the Board of
Trustees approved an annual executive officer fee in the amount of $100,000 for
the 2003 fiscal year for Mr. Hekemian for his services to the Trust as its
Chairman of the Board and Chief Executive Officer.
The Board of Trustees also reviewed the annual executive officer fee
payable to Mr. Barney, in his capacity as President, Treasurer and Chief
Financial Officer of the Trust, in connection with his expanded duties as
Treasurer and Chief Financial Officer during the 2003 fiscal year and the
additional time expended in performing such duties in view of, among other
things, compliance with the Sarbanes-Oxley Act of 2002. Accordingly, the Board
of Trustees approved an annual executive officer fee in the amount of $25,000
for the 2003 fiscal year for Mr. Barney for his services to the Trust as its
President, Treasurer and Chief Financial Officer.
Board of Trustees:
Robert S. Hekemian Alan L. Aufzien
Chairman of the Board
Donald W. Barney Ronald J. Artinian
Herbert C. Klein, Esq.
Corporate Governance
The Trust has a Code of Conduct which is applicable to all Trustees,
officers and management employees of the Trust, including, without limitation,
the Trust's principal executive and senior financial officers. The Audit
Committee is charged with administering and interpreting the Code of Conduct.
Copies of the Code of Conduct will be furnished without charge upon written
request received from any holder of record or beneficial owner of Shares of the
Trust. Request should be directed to Shareholder Relations, First Real Estate
Investment Trust of New Jersey, 505 Main Street, P.O. Box 667, Hackensack, New
Jersey 07602.
- 10 -
Performance Graph
The graph below compares the cumulative total return on the Shares for the
period covering the five (5) fiscal years ended October 31, 2003 with the
performance of the Russell 2000 Index and the NAREIT Equity REIT Index. The
graph assumes that $100 was invested on October 31, 1998 in the Trust's Shares,
the Russell 2000 Index, and the NAREIT Equity REIT Index, and that all dividends
were reinvested.
PERFORMANCE GRAPH APPEARS HERE
Cumulative Total Return
------------------------------------------------------------------
10/31/98 10/31//99 10/31/00 10/31/01 10/31/02 10/31/03
FIRST REAL ESTATE INVESTMENT TRUST 100.00 97.67 116.50 131.43 219.16 302.76
RUSSELL 2000 100.00 114.87 134.86 117.73 104.11 149.26
NAREIT EQUITY 100.00 92.96 109.97 125.68 133.68 179.04
- 11 -
Certain Relationships and Related Party Transactions
Robert S. Hekemian, Chairman of the Board and Chief Executive Officer of
the Trust, and his sons, Robert S. Hekemian, Jr., Bryan S. Hekemian and David B.
Hekemian, are the sole shareholders of Hekemian and Co. Robert Hekemian, Sr.
holds a 0.2% interest in Hekemian & Co. The balance of the interests in Hekemian
& Co. are held by Robert Hekemian, Jr., Bryan Hekemian and David Hekemian.
Robert Hekemian, Sr. is currently the Chairman of the Board of Hekemian & Co.
Each of Robert Hekemian, Sr.'s sons and his brother-in-law are also officers of
Hekemian & Co. and serve in the positions set forth opposite their names.
Robert S. Hekemian, Jr. (son) - President
Bryan S. Hekemian (son) - Vice President and Secretary
David B. Hekemian (son) - Vice President and Treasurer
Serge Krikorian (brother-in-law) - Vice President-Insurance Department
On April 10, 2002, the Trust and Hekemian & Co. entered into a new
Management Agreement, effective as of November 1, 2001, replacing the Management
Agreement dated December 20, 1961, as extended. The initial term of the new
Management Agreement ran from October 1, 2001 to October 31, 2003. The term of
the Management Agreement automatically renewed on October 31, 2003 for another
two (2) year period through October 31, 2005. The Trust may terminate the
Management Agreement (i) without cause upon one (1) year's prior written notice,
(ii) for cause if Hekemian & Co. has not cured an event of default within thirty
(30) days of receipt of notice of termination from the Trust, or (iii) in the
event of an acquisition of the Trust where the Trust ceases to effectively exist
as an operating entity. The Management Agreement provides for a termination fee
in the event of a termination by the Trust without cause or following an
acquisition of the Trust. Under the Management Agreement, Hekemian & Co. will
continue as Managing Agent for the Trust and the Trust's properties which the
Trust owned on November 1, 2001 and will act as Managing Agent for the Preakness
Shopping Center which was acquired on November 1, 2002 by WaynePSC, an affiliate
of the Trust. The Trust may retain Hekemian & Co. or other managing agents to
manage certain other properties acquired in the future and to perform various
other duties such as sales, acquisitions, and development with respect to any or
all of the Trust's currently owned or future acquired properties. The Trust has
retained Hekemian & Co. to manage the Damascus Shopping Center acquired on July
31, 2003 by Damascus Centre, LLC, a limited liability company in which FREIT is
the sole member. Hekemian & Co. is no longer the exclusive advisor for the Trust
to locate and recommend to the Trust investments which Hekemian & Co. deems
suitable for the Trust, and is no longer required to offer potential acquisition
properties exclusively to the Trust before acquiring those properties for
Hekemian & Co.'s own account or for others including shareholders and employees
of Hekemian & Co. Pursuant to the terms of the Management Agreement, the Trust
pays Hekemian & Co. certain basic management fees, mortgage fees, administrative
fees, other miscellaneous fees and leasing commissions as compensation for its
services. The Management Agreement includes a detailed schedule of such fees and
commissions for those services which the Managing Agent may be called upon to
perform.
From time to time, the Trust engages Hekemian & Co. to provide certain
additional services, such as consulting services related to development and
financing activities of the Trust. Separate fee arrangements are negotiated
between the Trust and Hekemian & Co. with respect to such services. The Trust
also reimburses Hekemian & Co. for the salaries, payroll taxes, insurance costs
and certain other costs of personnel employed at the Trust's properties by
Hekemian & Co. on behalf of the Trust.
The Trust owns a seventy-five percent (75%) equity interest in and is the
managing partner of S And A Commercial Limited Partnership ("S&A") which owns
the Olney Town Shopping Center in Olney, Maryland. The remaining twenty-five
percent (25%) interest in S&A is owned by Robert Hekemian, Jr., Bryan Hekemian
and David Hekemian, each of whom is an officer and employee of Hekemian & Co.
and the son of Robert Hekemian, Allan Tubin, an officer and employee of Hekemian
& Co., and Christopher Bell, an officer and employee of an affiliate of Hekemian
& Co.
During the fiscal year ended October 31, 2003, the Trust, Damascus Centre,
LLC and S&A paid Hekemian & Co. management fees in the approximate aggregate
amount of $825,172 and mortgage refinancing fees and commissions and leasing
commissions in the approximate aggregate amount of $317,206.
The Trust owns a forty percent (40%) equity interest in WaynePSC, LLC, a
New Jersey limited liability company ("WaynePSC"). H-TPKE, LLC, a New Jersey
limited liability company, acquired a sixty percent (60%) equity interest in
WaynePSC. Members of the immediate family of Robert Hekemian, Sr. and other
employees of
- 12 -
Hekemian & Co. control approximately seventy-three (73%) of the membership
interests in H-TPKE, LLC. The Trust is the Managing Member of WaynePSC. WaynePSC
owns a 323,000 +/ sq. ft. community shopping center located in Wayne, New
Jersey, known as the Preakness Shopping Center. Hekemian & Co. is the Managing
Agent for the Preakness Shopping Center. During the fiscal year ended October
31, 2003, WaynePSC paid Hekemian & Co. an annual property management fee in the
amount of $185,893, and financing fees in the amount of $165,850.
The Trust owns a forty percent (40%) membership interest in Westwood
Hills, LLC ("Westwood Hills") which is the owner of a 210 unit residential
apartment complex in Westwood, New Jersey. In addition, certain Trustees (Robert
S. Hekemian, Donald W. Barney, Herbert C. Klein, Esq. and Ronald J. Artinian)
and members of the immediate families of certain Trustees (Robert S. Hekemian
and Herbert C. Klein, Esq.) beneficially own thirty-five percent (35%) of the
membership interests in Westwood Hills. Pursuant to the terms of an operating
agreement, the Trust is the Managing Member of Westwood Hills. Hekemian & Co.
currently serves as the Managing Agent for Westwood Hills. During fiscal 2003,
Westwood Hills paid $159,450 in management fees and $16,750 in mortgage
refinancing fees to Hekemian & Co.
The law firm of Nowell Amoroso Klein Bierman, P.A. was retained by the
Trust during fiscal 2003 to furnish legal services and received $21,160 in fees
from the Trust for its services. Mr. Klein, a Trustee, is a partner in the law
firm.
The law firm of Giordano, Halleran & Ciesla, P.C. has been retained by the
Trust to furnish legal services. Mr. Aiello, an Executive Officer of the Trust,
is an officer and shareholder in the law firm. During fiscal 2003, Giordano,
Halleran & Ciesla, P.C. received $22,321 in fees from the Trust for its
services. In addition, Mr. Aiello paid to the law firm the amount of $31,550,
representing retainer and meeting fees which Mr. Aiello received in connection
with his services as Secretary and Executive Secretary of the Trust during
fiscal 2003.
OTHER MATTERS
The Board of Trustees does not know of any other business which will be
presented for consideration at the Annual Meeting. Except as the Board of
Trustees may otherwise permit, only the business set forth and discussed in the
Notice of Meeting and this Proxy Statement may be acted on at the Annual
Meeting. If any other business incident to the Annual Meeting is properly
presented at the Annual Meeting, or any adjournment thereof, the proxy holders
will vote in regard thereto according to their discretion insofar as such
proxies are not limited to the contrary.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Trust is made by
the Audit Committee. J.H. Cohn, LLP has been selected as the Trust's independent
public accountants for the current fiscal year. J.H. Cohn, LLP has audited the
books, records and accounts of the Trust since 1991 and has provided both audit
and non-audit services (principally, income tax compliance, income tax
consultation and sundry consultation projects) to the Trust. All audit and
non-audit services provided by J.H. Cohn, LLP are pre-approved by the Audit
Committee which gives due consideration to the potential impact of non-audit
services on auditor independence. None of the engagements of J.H. Cohn, LLP,
which were pre-approved by the Audit Committee, made use of the de minimis
exception for pre-approval contained on the rules of the SEC which permit
limited engagements for non-audit services involving amounts under a specified
threshold.
In accord with Independent Standard Board Standards No. 1 (Independence
Discussion with Audit Committees) the Trust received a letter and verbal
communication from J.H. Cohn, LLP that it knows of no state of facts which would
impair its status as the Trust's independent accountants. The Audit Committee
has considered whether the non-audit services provided by J.H. Cohn, LLP are
compatible with maintaining its independence and has determined that the nature
and substance of the limited non-audit services have not impaired J.H. Cohn,
LLP's status as the Trust's independent auditors.
Audit Fees
J.H. Cohn, LLP billed the Trust a total of $46,900 during fiscal 2003 and
a total of $39,300 during fiscal 2002 for professional services rendered in
connection with audit services rendered to the Trust.
Audit-Related Fees
J.H. Cohn, LLP did not bill the Trust for any audit related services
during fiscal 2003 or fiscal 2002.
- 13 -
Tax Fees
J.H. Cohn, LLP billed the Trust a total of $3,400 during fiscal 2003 and
fiscal 2002 for tax return preparation.
All Other Fees
J.H. Cohn, LLP did not bill the Trust for any other services during fiscal
2003 or fiscal 2002.
Presence at Annual Meeting
Representatives of J.H. Cohn, LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if the representatives desire
to do so and will be available to respond to appropriate questions.
ANNUAL REPORT
The Annual Report to Shareholders (the "Annual Report") for the
fiscal year ended October 31, 2003 accompanies this Proxy Statement. The Trust's
Annual Report on Form 10-K for the fiscal year ended October 31, 2003 which the
Trust has filed with the SEC, excluding exhibits, is included in the Annual
Report. J.H. Cohn, LLP has audited the financial statements of the Trust for the
fiscal year ended October 31, 2003, which financial statements are contained in
the Annual Report. Such Annual Report, including the audited financial
statements contained therein, is not incorporated in this Proxy Statement and is
not deemed to be part of the proxy soliciting material.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Trust's Executive Officers
and Trustees, and persons who own more than ten percent (10%) of the Shares, to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
SEC. Executive Officers, Trustees and greater than ten percent (10%)
shareholders are required by SEC regulation to furnish the Trust with copies of
all Forms 3, 4 and 5 they file.
Based solely on the Trust's review of the copies of such forms it has
received, the Trust believes that all of its Trustees, Executive Officers and
greater than ten percent (10%) beneficial owners complied with all filing
requirements applicable to them with respect to reports required to be filed by
Section 16(a) of the Exchange Act during fiscal 2003.
Shareholder Communications with Trustees
The Board of Trustees has adopted a formal process to be followed by those
Shareholders who wish to communicate directly with the Board of Trustees or any
individual Trustee, or group of Trustees of the Trust. A Shareholder can contact
the Board of Trustees or any individual Trustee or group of Trustees, by sending
a written communication to: The Board of Trustees or any specifically identified
Trustee(s), First Real Estate Investment Trust of New Jersey, c/o Secretary, 505
Main Street, P.O. Box 667, Hackensack, New Jersey 07602. A Shareholder's letter
should also indicate that he or she is a Trust Shareholder. Any such
communication received by the Secretary of the Trust will be distributed to the
Board of Trustees, or a member or members thereof, as appropriate depending on
the facts and circumstances described in the communication received. If a
Shareholder communication is addressed to one or more Trustees, but not the
entire Board of Trustees, the Secretary of the Trust shall notify any Trustees
to whom such communication was not addressed that such communication was
received and shall provide a copy of such communication upon request.
Communications which are primarily commercial in nature or related to an
improper or irrelevant topic will not be forwarded to the Board of Trustees or
any Trustee. If the Secretary of the Trust believes that the management of the
Trust can adequately handle the Shareholder's inquiry or request, the Secretary
will forward such communication to the appropriate person(s). At each meeting of
the Board of Trustees, a summary of all communications received since the last
Board of Trustees' meeting which the Secretary elected not to forward to the
Board of Trustees or a Trustee(s) shall be presented, and all such
communications shall be made available to the Trustees upon request.
- 14 -
SHAREHOLDER PROPOSALS AND RECOMMENDATIONS
FOR NOMINATION OF TRUSTEES
Shareholder proposals for presentation at the Trust's 2005 Annual Meeting
of Shareholders must be received by the Trust at its principal executive office
for inclusion in its proxy statement and form of proxy relating to that meeting
no later than October 30, 2004. A Shareholder wishing to submit a proposal
should write to the Trust's Secretary and include a detailed description of such
proposal. The Nominating Committee or the Board of Trustees will also consider
candidates for nomination as Trustees who are recommended by Shareholders
applying the same criteria for nominees described in the section of this Proxy
Statement entitled "Committees of the Board of Trustees - Nominating Committee."
A Shareholder who wishes to suggest a candidate for nomination as a Trustee
should write to the Trust's Secretary and include the following information: (1)
the name and contact information for the candidate; (2) a statement of the
candidate's business experience and educational background; (3) a detailed
description describing any relationship between the candidate and the proposing
Shareholder; (4) a statement by the Shareholder explaining why he or she
believes that the candidate is qualified to serve on the Board of Trustees and
how his or her service would benefit the Trust and its Shareholders; and (5) a
statement that the candidate is willing to be considered and willing to serve as
a Trustee of the Trust if nominated and elected. A Shareholder wishing to
suggest, for consideration by the Nominating Committee, a candidate for
nomination at the Trust's 2005 Annual Meeting of Shareholders must submit the
required information to the Trust and such information must be received by the
Trust by October 30, 2004.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS VOTE
IN FAVOR OF THE NOMINEES, DONALD W. BARNEY FOR A TWO (2) YEAR TERM, AND EACH OF
RONALD J. ARTINIAN AND ALAN L. AUFZIEN FOR THREE (3) YEAR TERMS, TO THE BOARD OF
TRUSTEES.
THE TRUST SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE UPON
WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF SHARES
OF THE TRUST. REQUESTS SHOULD BE DIRECTED TO SHAREHOLDER RELATIONS, FIRST REAL
ESTATE INVESTMENT TRUST OF NEW JERSEY, 505 MAIN STREET, P.O. BOX 667,
HACKENSACK, NEW JERSEY 07602.
ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND SEND THEIR PROXIES
WITHOUT DELAY TO REGISTRAR AND TRANSFER COMPANY, 10 COMMERCE DRIVE, CRANFORD,
NEW JERSEY 07016. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.
February 27, 2004 John A. Aiello, Secretary
- 15 -
(This Page Left Blank Intentionally)
Exhibit A
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
NOMINATING COMMITTEE CHARTER
Purpose
The purpose of the Nominating Committee is to consider and report to the
Board of Trustees on all matters relating to the identification, evaluation and
recommendation of candidates for election to the Board of Trustees.
Membership
The Nominating Committee will consist of two or more Trustees designated
as members of the Nominating Committee by the full Board of Trustees.
The Nominating Committee will meet at least one time during each fiscal
year.
Responsibilities
The Nominating Committee shall have the following specific duties:
1. Develop and recommend to the Board of Trustees guidelines and
criteria which the Nominating Committee believes are relevant for
selecting nominees to the Board of Trustees. This would include a
prospective nominee's business judgment, skill and experience, the
prospective nominee's understanding of the Trust's business and
industry and other related industries, and the prospective nominee's
integrity, reputation and independence.
2. Review the qualifications of and recommend to the Board of Trustees
(i) those persons to be nominated for election to the Board of
Trustees who shall be submitted to the holders of shares of
beneficial interest (the "Shareholders") for election at each Annual
Meeting of Shareholders, and (ii) the nominees to be appointed by
the Board of Trustees to fill vacancies and newly created
trusteeships.
3. Review and evaluate the qualifications of any potential nominee
suggested by a Shareholder, applying the same guidelines and
criteria utilized by the Nominating Committee for selecting nominees
to the Board of Trustees, and determine whether any such person
shall be recommended to the Board of Trustees as a candidate for
nomination for election to the Board of Trustees.
4. Develop a pool of potential Trustee candidates for consideration in
the event of a vacancy in the Board of Trustees.
5. Consider the performance of incumbent members of the Board of
Trustees in determining whether to recommend that they be nominated
for reelection.
6. Consider annually the performance of the Nominating Committee.
7. Make recommendations to the Board concerning the size and
composition of the Board of Trustees.
8. Make delegations of authority and responsibilities as the Nominating
Committee deems proper and periodically review such delegations.
9. Periodically review the Trust's governance guidelines and make
recommendations to the Board of Trustees as to matters of
governance.
A-1
(This Page Left Blank Intentionally)
Exhibit B
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
AUDIT COMMITTEE CHARTER
- --------------------------------------------------------------------------------
The objective of the Audit Committee (the "Committee") is to assist the
Board of Trustees (the "Board") of First Real Estate Investment Trust ("FREIT"
or the "Trust"), in fulfilling its responsibility to oversee the business and
affairs of the Trust. The Committee's primary duties and responsibilities are
to: 1) serve as an independent and objective body to monitor the financial
reporting process and internal control system of the Trust; 2) oversee the
quality and integrity of the financial statements of the Trust; 3) review and
appraise the qualifications, performance and independence of the Trust's
independent auditors; 4) provide an open forum for communication among the
independent auditors, senior financial officers, other members of management and
the Board; 5) prepare an annual committee report to be included in the Trust's
proxy statement as required by the regulations of the United States Securities
and Exchange Commission (the "SEC"); and 6) assist in assuring the Trust's
compliance with legal and regulatory requirements. References herein to
"management" shall mean the principal executive officers, senior financial
officers and other officers of FREIT and executive management employees of
FREIT.
The Committee will fulfill the responsibilities listed above primarily by
carrying out the activities enumerated in this Audit Committee Charter (this
"Charter"). In addition, it shall encourage continuous improvement of and
adherence to the Trust's policies, procedures and practices, including, but not
limited to, the Trust's Code of Business Conduct and Ethics (the "Code of
Conduct").
I. RESPONSIBILITIES, OBLIGATIONS AND DUTIES
In order to fulfill its purpose, the Committee shall have the following
responsibilities, obligations and duties:
Evaluation and Selection of Independent Auditors
1. Evaluate and select the independent auditors, considering
independence and effectiveness, and approve the terms of the
engagement and the fees and other compensation to be paid to the
independent auditors. On an annual basis, the Committee shall review
and discuss with the auditors all significant relationships the
auditors have with the Trust to determine the independence of the
auditors.
2. Pre-approve any permissible non-audit services to be provided to the
Trust by the independent auditors and the fees associated with such
non-audit services.
3. Pre-approve any non-audit services to be provided to the Trust by
outside consultants, other than the independent auditors, and the
fees associated with such non-audit services.
4. Periodically consult with the independent auditors about internal
controls and procedures and the completeness and accuracy of the
Trust's financial statements and other financial information.
5. Review the performance of the independent auditors and approve any
proposed discharge of the independent auditors when circumstances
warrant. The Committee shall request, at least annually, a report
from the independent auditors detailing i) the auditors' internal
quality control procedures, ii) any problems or material issues
raised by recent internal quality control reviews, investigations or
inquiries, or by any inquiry or investigation by governmental or
professional authorities, and iii) the steps taken to rectify any
factors that would call into question the auditors' independence,
including all relationships between the Trust and the auditors.
6. Ensure that the lead audit partner assigned by the Trust's
independent auditors to the Trust, as well as the audit partner
responsible for reviewing the Trust's audit, shall be changed at
least every five (5) years.
B-1
7. Establish clear hiring policies in the manner set forth below with
regard to employees and former employees of the Trust's independent
auditors. The Committee shall establish a one-year cooling-off
period before the lead partner, the concurring partner or any other
member of an audit engagement team who provides more than ten hours
of audit services during an annual audit period may be employed by
the Trust in a financial oversight role, including, without
limitation, as a member of the Board, chief executive officer,
president, chief financial officer, chief operating officer, chief
accounting officer, controller or an equivalent position.
Review and Preparation of Documents and Reports
8. Review and assess the adequacy of this Charter annually and update
this Charter as conditions warrant.
9. Review with senior financial officers and the independent auditors
the quarterly report on Form 10-Q, including significant changes in
accounting principles or their application, disclosure under
Management's Discussion and Analysis of Financial Condition and
Results of Operations, the discussion of the Trust's critical
accounting policies and estimates, the certification of financial
statements included in the Form 10-Q and other financial
information, prior to the filing of the Form 10-Q with the SEC or
prior to the release of earnings to the public. The Chair of the
Committee may represent the entire Committee for purposes of this
review.
10. Review with senior financial officers and the independent auditors
the annual report on Form 10-K, including significant changes in
accounting principles or their application, disclosure under
Management's Discussion and Analysis of Financial Condition and
Results of Operations, the discussion of the Trust's critical
accounting policies and estimates, the certification of financial
statements included in the Form 10-K and other financial
information, prior to the filing of the Form 10-K with the SEC or
prior to the release of earnings to the public.
11. Recommend to the Board that the annual financial statements of the
Trust be included in the Trust's annual report on Form 10-K.
12. Review with senior financial officers and the independent auditors,
as appropriate, the annual report to shareholders prior to its
distribution to shareholders and prior to its filing with the SEC.
13. Prepare an annual committee report to be included in the Trust's
proxy statement as required by SEC regulations.
Financial Reporting Process
14. In consultation with the independent auditors, review the integrity
of the Trust's financial reporting processes, both internal and
external, including the adequacy of the Trust's disclosure controls
and procedures.
15. Discuss with the independent auditors any material correcting
adjustments that have been identified by the independent auditors
and made to conform with generally accepted accounting principles.
16. Consider the judgments of the independent auditors concerning the
quality and appropriateness of the Trust's accounting principles as
applied in its financial reporting.
17. Consider and approve, if appropriate, major changes to the Trust's
auditing and accounting principles and practices as suggested by the
independent auditors or management, including alternatives to, and
the rationale for, the decisions made.
18. Review and discuss with the Board, management and the independent
auditors the Trust's policies with respect to risk assessment and
risk management, including the Trust's major financial risk exposure
and steps taken by management to monitor and mitigate such exposure.
19. Discuss with the Trust's management and the Trust's independent
auditors all significant deficiencies in the design or operation of
internal controls and procedures which could adversely affect the
Trust's ability to record, process, summarize and report financial
data and any material weaknesses in internal controls, and, any
fraud, whether or not material, that involves management or other
employees of FREIT who have a significant role in the Trust's
internal controls.
B-2
Oversight and Process Improvement
20. Establish regular and separate systems of reporting to the Committee
by management and the independent auditors regarding any significant
judgments made by management or the independent auditors in its
preparation of the financial statements.
21. Following completion of the annual audit, review separately with
each of management and the independent auditors any significant
difficulties encountered during the course of the audit, including,
but not limited to any restrictions on the scope of work or access
to required information.
22. Review with management and the independent auditors the extent to
which changes or improvements in financial or accounting practices,
as approved by the Committee, have been implemented.
23. Review and resolve any significant disagreement among management and
the independent auditors in connection with the preparation of the
financial statements or other financial information.
24. Oversee and evaluate all related party transactions proposed to be
entered into by the Trust.
25. Assess annually the overall performance and effectiveness of the
Committee.
Ethical and Legal Compliance
26. Review and update periodically and carry out the purposes of the
Trust's Code of Conduct.
27 .Review management's monitoring of the Trust's compliance with the
Code of Conduct.
28. Review and investigate any matters pertaining to the integrity of
management, including conflicts of interest and adherence to
standards of business conduct as required in the Code of Conduct.
29. Review the system established by management to ensure that the
Trust's financial statements and reports are accurately and timely
disseminated to governmental organizations and the public and
satisfy all legal requirements.
30. Review with the Trust's counsel any legal matter that could have a
significant impact on the organization's financial statements or
other financial information.
31. Review with the Trust's counsel legal compliance and regulatory
matters.
32. Perform any other activities consistent with this Charter, the
Trust's By-laws, rules of the NASDAQ OTC Bulletin Board ("OTCBB")
and governing law, as the Committee or the Board deems necessary or
appropriate.
Procedures for Receiving and Handling Complaints
33. Establish written procedures for handling complaints regarding
accounting, internal accounting controls and auditing matters,
including procedures for confidential, anonymous submission of
concerns by employees and/or agents regarding accounting and
auditing matters.
34. Establish written procedures for the confidential receipt, retention
and consideration of any report by an attorney of evidence of (i) a
material violation of any applicable Federal or state securities
law, (ii) a material breach of fiduciary duty arising under Federal
or state law, or (iii) a similar material violation of any Federal
or state law, by the Trust or any officer, trustee, employee or
agent of the Trust.
35. Investigate any matter brought to the Committee's attention with
full access to all books, records, facilities and personnel of the
Trust, and make recommendations to the Board as to any corrective or
remedial action unless such action shall be within the purview of
the authority of this Committee, in which case the Committee shall
implement the corrective or remedial action. The Committee is
authorized to retain such additional expert personnel as the
Committee may deem necessary in connection with any such
investigation.
B-3
II. COMPOSITION AND QUALIFICATIONS
The Committee shall be comprised of a minimum of three (3) trustees, as
determined by the Board, who qualify as "independent" trustees in accordance
with the rules and regulations of the SEC, as such rules and regulations may be
amended from time to time.
All Committee members shall be financially literate at the time of their
appointment or election, which includes having a working familiarity with basic
finance and accounting practices, and shall have sufficient financial expertise
and ability to enable them to discharge their responsibilities. The Board shall
endeavor to appoint at least one financial expert to the Committee. The term
"financial expert" shall have the meaning ascribed thereto in the rules and
regulations of the SEC, as such rules and regulations may be amended from time
to time. In the event that a financial expert is not appointed to the Committee,
the Trust shall make such disclosure as may be required by the SEC or other
regulatory body. Committee members may enhance their familiarity with finance
and accounting by participating in educational programs.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified. The Board may remove a member of the Committee in
its discretion. Unless a Chair is elected by the full Board, the members of the
Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS, REPORTS, ADVISORS AND FUNDING
The Committee shall meet quarterly, or more frequently as circumstances
dictate. As part of its job to foster open communication and inquiry, the
Committee shall meet at least annually with management and the independent
auditors in separate sessions to discuss any matters that the Committee or each
of these groups believes should be discussed. In addition, the Committee shall
meet in a separate session with the independent auditors at least twice a year
to review the Trust's financial statements. The Committee shall meet with senior
financial officers and the independent auditors at least quarterly to review the
Trust's financial statements and the quarterly report on Form 10-Q, and three of
such meetings may be via teleconferencing or other electronic means.
The Committee is authorized to retain persons having special competence,
legal counsel and other advisors as may be necessary or appropriate to assist
the Committee in fully complying with all duties and obligations set forth in
this Charter. The Committee shall make regular reports to the Board of its
activities, which shall include, where appropriate, recommendations for future
action by the Board. The Board shall ensure that the Committee is adequately
funded to (i) compensate any registered public accounting firm engaged for the
purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Trust; (ii) compensate any registered public
accounting firm engaged for the purpose of providing non-audit services; and
(iii) carry-out the activities and utilize the resources provided for herein.
B-4
REVOCABLE PROXY
First Real Estate Investment Trust of New Jersey
[X]PLEASE MARK VOTES AS IN THIS EXAMPLE
Annual Meeting of Holders of Shares of
Beneficial Interest - April 7, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby nominates and appoints Robert S. Hekemian and John
A. Aiello, Esq. and each of them, the true and lawful attorneys, agents and
proxies of the undersigned, with full power of substitution, to vote with
respect to all of the shares, representing beneficial interests, of FIRST REAL
ESTATE INVESTMENT TRUST OF NEW JERSEY standing in the name of the undersigned at
the close of business on February 20, 2004, at the annual meeting of holders of
shares of beneficial interest to be held at the Trust's headquarters, 505 Main
Street, Hackensack, New Jersey 07601, on April 7, 2004 at 7:30 p.m., and at any
and all adjournment or adjournments thereof, with all powers that the
undersigned would possess if personally present and especially (but without
limiting the general authorization and power hereby given) to vote as indicated
hereon.
1. ELECTION OF TRUSTEES: With- For All
For hold Except
Donald W. Barney, for a two (2) year term [_] [_] [_]
With- For All
For hold Except
Ronald J. Artinian, for a three (3) year term [_] [_] [_]
With- For All
For hold Except
Alan L. Aufzien, for a three (3) year term [_] [_] [_]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
2. In their discretion upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof. The shares represented by
this Proxy will be voted in the manner directed, and if no instructions to the
contrary are indicated, will be voted FOR the election of the nominees indicated
on this Proxy.
IMPORTANT: Please sign exactly as your name appears. When signing as attorney,
executor, administrator, trustee or guardian, please set forth your full title.
If signer is a corporation, please sign the full corporate name by a duly
authorized officer. Joint owners should each sign.
Please be sure to sign and date this Proxy in the box below.
-----------------------------
Date
-----------------------------
Shareholder sign above
-----------------------------
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
If your address has changed, please correct the address in the space provided
below and return this portion with the proxy in the envelope provided.
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------