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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
PRESIDENTIAL REALTY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
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PRESIDENTIAL REALTY CORPORATION
180 SOUTH BROADWAY,
WHITE PLAINS, N.Y. 10605
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 2001
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
PRESIDENTIAL REALTY CORPORATION has been called for and will be held at 2:00
P.M., New York Time, on Thursday, June 14, 2001 at the Marriott Residence Inn, 5
Barker Avenue, White Plains, New York, for the following purposes:
1. To elect, by vote of the Class A shares, 4 directors of the
Company to serve for the ensuing year;
2. To elect, by vote of the Class B shares, 2 directors of the
Company to serve for the ensuing year; and
3. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 24, 2001 are
entitled to notice of and to vote at the meeting.
Stockholders are cordially invited to attend the meeting in person. If you
are not able to do so and wish your stock voted, you are requested to complete,
sign and date the accompanying proxy or proxies and promptly return the same in
the enclosed stamped envelope. The proxy for Class A stock is blue and the proxy
for Class B stock is white. If you hold both classes of stock please make sure
that you send in both proxies.
BY ORDER OF THE
BOARD OF DIRECTORS
ROBERT E. SHAPIRO
Chairman of the Board of Directors
Dated: April 27, 2001
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PRESIDENTIAL REALTY CORPORATION
180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by
the management of PRESIDENTIAL REALTY CORPORATION of proxies to be used at the
Annual Meeting of Stockholders of the Company to be held June 14, 2001, and at
any adjournment thereof. If proxies in the accompanying form are properly
executed and returned, the shares represented thereby will be voted as
instructed in the proxy. A stockholder executing and returning a proxy has the
power to revoke it at any time before it is voted by giving written notice to
the Secretary of the Company, by submission of another proxy bearing a later
date or by attending the meeting and requesting to vote in person.
Only stockholders of record as of the close of business on April 24, 2001
will be entitled to vote.
The distribution of this Proxy Statement and the enclosed form of Proxy to
stockholders will commence on or about April 27, 2001. The Company's annual
report to stockholders for 2000, including financial statements, is being mailed
to stockholders with this Proxy Statement.
As of March 30, 2001, there were outstanding and entitled to vote at the
Annual Meeting 478,733 shares of the Company's Class A Common Stock (held by
approximately 163 holders of record) and 3,232,099 shares of the Company's Class
B Common Stock (held by approximately 668 holders of record). The Company is
authorized to issue 700,000 Class A shares and 10,000,000 Class B shares. The
holders of the Class A Common Stock have the right at all times to elect
two-thirds of the membership of the Board of Directors of the Company, and the
holders of the Class B Common Stock have the right at all times to elect
one-third of the membership of the Board of Directors of the Company. All
directors, once elected, have equal authority and responsibility. On all other
matters, the holders of the Class A Common Stock and the holders of the Class B
Common Stock have one vote per share for all purposes. However, no action may be
taken which would alter or change the special rights or powers given to either
class of Common Stock so as to affect such class adversely, or which would
increase or decrease the amount of the authorized stock of such class, or
increase or decrease the par value thereof, except upon the affirmative vote of
the holders of the requisite majority of the outstanding shares of the class of
stock so affected.
Accordingly, the Class A shares will vote as a class for the election of
four Directors of the Company to serve for the ensuing year (Proposal No. 1 on
the accompanying Notice of Annual Meeting), and for this purpose each Class A
share will be entitled to one vote. The Class B shares will vote as a class for
the election of two directors of the Company for the ensuing year (Proposal No.
2 on the accompanying Notice of Annual Meeting), and for this purpose each Class
B share will be entitled to one vote.
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ELECTION OF DIRECTORS
ELECTION OF DIRECTORS BY CLASS A STOCKHOLDERS
It is intended that proxies in the accompanying form as received from the
holders of Class A Common Stock will be voted in favor of the four persons
listed below, each of whom is at present a director, as directors for the
ensuing year. If for any reason any of these nominees becomes unable to accept
nomination or election, it is intended that such proxies will be voted for the
election, in his place, of any substituted nominee as management may recommend,
and of the other nominees listed. The management, however, has no reason to
believe that any nominee will be unable or unwilling to serve as director. The
directors so elected will serve until the next Annual Meeting of Stockholders
and until their respective successors are duly elected and have qualified.
FIRST CLASS A CLASS B
BECAME DIRECTOR COMMON COMMON
OCCUPATION OR OF PRESIDENTIAL BENEFICIALLY BENEFICIALLY PERCENTAGE OF ALL
PRINCIPAL OR ITS OWNED AND OWNED AND OUTSTANDING STOCK
EMPLOYMENT PREDECESSOR PERCENTAGE PERCENTAGE (CLASS A AND B)
NAME AND AGE OF DIRECTOR FOR PAST 5 YEARS COMPANY OF CLASS(1) OF CLASS(1) COMBINED
------------------------ ---------------- --------------- ------------ ------------ -----------------
Robert Feder (70)................. Partner, Cuddy & 1981 916* 25,135* *
Feder & Worby,
Attorneys
Jeffrey F. Joseph (59)**.......... President of 1993 198,735(2) 64,000(3) (7.0)
Presidential (41.5) (1.9)
Robert E. Shapiro (83)**.......... Chairman of the 1961 None 41,744 (1.1)
Board of (1.3)
Directors of
Presidential
Joseph Viertel (85)**............. Director and 1961 3,000* 6,000*
Chairman of the
Executive
Committee of
Presidential.
- ---------------
* Less than 1% of the class of stock
** Member of the Executive Committee of the Board of Directors
(1) These figures, based on information as of March 30, 2001, include 124 shares
of Class A Common Stock and 27,781 shares of Class B Common Stock of
Presidential held in trust or in the names of wives, the beneficial
ownership of which is disclaimed by the respective Directors. Each of the
owners of the shares set forth in the table has the sole voting and
investment power over such shares except that such owner has no voting or
investment power over shares the beneficial ownership of which is
disclaimed.
(2) These shares are owned by Pdl Partnership, a general partnership in which
Mr. Joseph has a 20% partnership interest. See Principal Holders of
Securities below.
(3) Includes presently exercisable options to purchase 24,000 shares of Class B
Common Stock.
Robert E. Shapiro and Joseph Viertel are brothers.
ELECTION OF DIRECTORS BY CLASS B STOCKHOLDERS
It is intended that proxies in the accompanying form as received from the
holders of Class B Common Stock will be voted in favor of the two persons listed
below, each of whom is at present a director, as directors for the ensuing year.
If for any reason any of these nominees becomes unable to accept nomination or
election, it is intended that such proxies will be voted for the election, in
his place, of any substituted nominee as management may recommend, and of the
other nominees listed. The management, however, has no reason to believe that
any nominee will be unable or unwilling to serve as a director. The directors so
elected will serve
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until the next Annual Meeting of Stockholders and until their respective
successors are duly elected and have qualified.
FIRST CLASS A CLASS B
BECAME DIRECTOR COMMON COMMON
OCCUPATION OR OF PRESIDENTIAL BENEFICIALLY BENEFICIALLY PERCENTAGE OF ALL
PRINCIPAL OR ITS OWNED AND OWNED AND OUTSTANDING STOCK
EMPLOYMENT PREDECESSOR PERCENTAGE PERCENTAGE (CLASS A AND B)
NAME AND AGE OF DIRECTOR FOR PAST 5 YEARS COMPANY OF CLASS(1) OF CLASS(1) COMBINED
------------------------ ---------------- --------------- ------------ ------------ -----------------
Richard Brandt (73)............... Chairman of the 1972 none 9,000* *
Board of
Directors of
Trans-Lux
Corporation(2)
Mortimer M. Caplin (84)........... Partner, Caplin 1984 none 74,866 (2.0)
& Drysdale, (2.3)
Attorneys(3)
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* Less than 1% of the class of stock
(1) These figures, based on information as of March 30, 2001, include 34,755
shares of Class B Common Stock of Presidential held by a private charitable
foundation established by a Director, the beneficial ownership of which is
disclaimed by the Director. Each of the owners of the shares set forth in
the table has the sole voting and investment power over such shares except
that such owner has no voting or investment power over shares the beneficial
ownership of which is disclaimed.
(2) Trans-Lux Corporation is a manufacturer of stock tickers and electronic
displays and its entertainment division operates motion picture theaters.
(3) Mr. Caplin is a director of Fairchild Corporation and Danaher Corporation.
PRINCIPAL HOLDERS OF SECURITIES
As of March 30, 2001 the following persons owned beneficially the following
amounts and percentages of the Class A and Class B Common Stock of Presidential:
CLASS A CLASS B PERCENTAGE OF ALL
COMMON PERCENTAGE OF PERCENTAGE OF OUTSTANDING STOCK
STOCK PERCENTAGE COMMON STOCK CLASS B (CLASS A AND B
BENEFICIALLY OF CLASS A BENEFICIALLY COMMON COMMON STOCK
NAME OWNED COMMON STOCK OWNED STOCK COMBINED)
---- ------------- ------------ ------------- ------------- -----------------
Pdl Partnership....... 198,735(1) (41.5) none none (5.3)
180 South Broadway
White Plains,
NY 10605
The Trust Company of
New Jersey.......... none none 337,100(2) (10.2) (8.9)
35 Journal Square
Jersey City, NJ
07306
Wilshire Oil Company
of Texas............ none none 191,100(3) (5.8) (5.1)
921 Bergen Avenue
11th Floor
Jersey City, NJ
07306
All officers and
directors as a group
(10 persons)........ 227,252(4) (47.5) 316,615(4) (9.6) (14.2)
- ---------------
(1) Such amount does not include 24,601 shares owned by certain partners of Pdl
Partnership, including 4,762 shares owned by a partner as trustee, the
beneficial ownership of which 4,762 shares is disclaimed.
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The partners of Pdl Partnership are Jeffrey Joseph, an officer and director
of Presidential and a nominee for director, and Steven Baruch and Thomas
Viertel, officers of Presidential.
(2) The Company has been informed by The Trust Company of New Jersey that it has
sole voting and dispositive power with respect to 325,600 of such shares and
shared voting and dispositive power with respect to 11,500 of such shares.
This information is based upon Amendment number 11 dated February 12, 2001
to a Schedule 13G filed by The Trust Company of New Jersey.
(3) The Company has been informed by Wilshire Oil Company of Texas that it has
sole voting and dispositive power with respect to 191,100 shares of Class B
Common Stock. This information is based upon a Schedule 13D dated March 10,
1999 filed by Wilshire Oil Company of Texas.
(4) Such amount includes (i) 198,735 shares of Class A Common Stock owned by Pdl
Partnership (see Note 1 above), (ii) 4,886 shares of Class A Common Stock
and 27,781 shares of Class B Common Stock held in trust or in the names of
wives, the beneficial ownership of which is disclaimed by the respective
persons and (iii) options to purchase 60,000 shares of Class B Common Stock.
Except as noted in the table, each of the owners of the shares set forth in
the table has the sole voting and dispositive power over such shares except that
such owner has no voting or dispositive power over shares the beneficial
ownership of which is disclaimed.
The Company's management knows of no other persons owning beneficially more
than 5% of either the outstanding Class A Common Stock or the outstanding Class
B Common Stock of the Company. A Schedule 13D dated December 26, 1989 was filed
by Jack Harry Stewart of 9300 S.W. 90th Street, Miami, Florida reflecting the
ownership of 70,700 shares of Class A common stock (14.7%). However, the Company
has not received a more recent filing from Mr. Stewart and believes that Mr.
Stewart no longer owns more than 5% of the Class A common stock.
Neither Pdl Partnership nor its partners have any contract, arrangement,
understanding or relationship (legal or otherwise) with respect to any
securities of the Company, except as described below. 212,648 Class A Shares
owned by Pdl Partnership or its partners are pledged to Robert E. Shapiro and
Joseph Viertel, directors of the Company, as security for loans previously made
in connection with the purchase of 134,334 Class A Shares by Pdl Partnership's
predecessor in interest. The partners of Pdl Partnership have entered into an
Agreement pursuant to which they have agreed among themselves that the Class A
Shares owned by Pdl Partnership may (1) be voted by Pdl Partnership only by
action of any two of them or (2) be sold by Pdl Partnership only with the
approval of any two of them.
EXECUTIVE OFFICERS
The following table sets forth information with respect to the executive
officers of Presidential. Each officer has been elected for a period of one year
and thereafter until his successor is elected, subject to the terms of the
Employment Agreements described below.
NAME AGE POSITION WITH REGISTRANT
---- --- ------------------------
Jeffrey F. Joseph..................... 59 President and a Director
Thomas Viertel........................ 59 Executive Vice President and Chief Financial Officer
Steven Baruch......................... 62 Executive Vice President
Elizabeth Delgado..................... 56 Treasurer
Roslyn Lacativa....................... 63 Secretary
Mr. Joseph has been President of the Company since February, 1992 and a
Director since April, 1993.
Thomas Viertel has been an Executive Vice President of the Company since
January, 1993 and its Chief Financial Officer since April of that year. Mr.
Viertel is also the Chairman of the Board of Scorpio Entertainment, Inc., a
privately owned company which produces theatrical enterprises. (See Certain
Transactions below.)
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Mr. Baruch has been an Executive Vice President of the Company since
January, 1993. Mr. Baruch is also the President of Scorpio Entertainment, Inc.
(See Certain Transactions below.) Mr. Baruch also serves as a member of the
Board of Directors of Trans-Lux Corporation, of which Richard Brandt, a director
of Presidential Realty Corporation and a member of its Compensation Committee,
is Chairman of the Board of Directors.
Ms. Delgado has been Treasurer of the Company since 1986.
Ms. Lacativa has been the Secretary of the Company since November, 1993.
Thomas Viertel is the son of Joseph Viertel, a Director of Presidential and
the nephew of Robert E. Shapiro, a Director of Presidential. Steven Baruch is
the cousin of Robert E. Shapiro and Joseph Viertel.
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table and discussion summarizes the compensation for the year
ended December 31, 2000 of the Chief Executive Officer of the Company and of any
other executive officer of the Company who served as such at December 31, 2000
and whose total annual compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------- --------------------------
(A) (B) (E) (G)
(C) (D) OTHER ANNUAL STOCK
SALARY BONUS COMPENSATION(A) OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
--------------------------- ---- -------- -------- --------------- -------
Jeffrey F. Joseph..................... 2000 $268,361 $ 80,335 0 0
President and Chief Executive
Officer 1999 262,584 157,735(1) 0 24,000
and Director 1998 258,449 57,880 0 0
Thomas Viertel........................ 2000 180,331 60,252 0 0
Executive Vice President and 1999 176,450 58,722 0 18,000
Chief Financial Officer 1998 173,671 43,410 0 0
Steven Baruch......................... 2000 180,331 60,252 0 0
Executive Vice President 1999 176,450 58,722 0 18,000
1998 173,671 43,410 0 0
Elizabeth Delgado..................... 2000 101,634 0 0 0
Treasurer 1999 97,745 12,932 0 0
1998 94,878 0 0 0
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(A) Does not include perquisites or other personal benefits which in the
aggregate do not exceed the lesser of (a) 10% of annual salary and bonus or
(b) $50,000. The Company pays the premiums on life insurance policies on the
lives of, and owned by, Jeffrey F. Joseph, Thomas Viertel and Steven Baruch.
The annual premiums for each of years 2000, 1999, and 1998 were $12,750 for
Mr. Joseph, $9,250 for Mr. Viertel and $10,500 for Mr. Baruch. These amounts
are not included under Column (e) of the Summary Compensation Table because
the aggregate perquisites and other personal benefits do not exceed the
lesser of (a) 10% of annual salary and bonus or (b) $50,000.
(1) Includes 7,000 shares of Class B Common Stock valued at $49,438 at the time
of grant.
There were no grants of options or stock appreciation rights in the year
ended December 31, 2000.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
(C)
SECURITIES (D)
UNDERLYING VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
12/31/00 12/31/00(A)
(A) (B) ---------------- ----------------
SHARES VALUE (#) ($)
ACQUIRED ON REALIZED EXERCISABLE(E) EXERCISABLE(E)
NAME EXERCISE(#) ($) UNEXERCISABLE(U) UNEXERCISABLE(U)
- ---- ----------- -------- ---------------- ----------------
Jeffrey F. Joseph...................... 0 0 E - 24,000 E - ($1,500)
President and Chief Executive
Officer and Director
Thomas Viertel......................... 0 0 E - 18,000 E - (1,125)
Executive Vice President and
Chief Financial Officer
Steven Baruch.......................... 0 0 E - 18,000 E - (1,125)
Executive Vice President
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(A) Based on the $6.375 per share exercise price of all options and the $6.3125
per share closing price on the American Stock Exchange on December 31, 2000.
In connection with the exercise of stock options in 1999, the Company
loaned $367,500 in the aggregate to Jeffrey Joseph ($147,000), Thomas Viertel
($110,250) and Steven Baruch ($110,250) to pay for the purchase price of the
stock. The recourse notes, secured by the stock, bear interest at 8% per annum,
payable quarterly, and the principal is due at maturity on November 30, 2004.
The Employment Agreements for Messrs. Joseph, Viertel and Baruch provide
that to the extent that any of the existing stock options held by those
executives are either exercised or lapse, the Company will grant to the
executive new options in the amount of the stock options that have either been
exercised or have lapsed, which new options will have an exercise price equal to
the closing price of the Class B common stock on the date that the new option is
actually granted, will have a term of six years from the date such new option is
granted and will be otherwise subject to the terms of the 1999 Stock Option Plan
or any successor plan.
DEFINED BENEFIT PENSION PLAN
The Company has a Defined Benefit Pension Plan which covers substantially
all of its employees, including the officers listed in the Summary Compensation
Table. Directors who are not employees of the Company are not eligible to
participate in the Plan.
The Plan is a non-contributory, tax qualified defined benefit plan which
provides a monthly retirement benefit payable for a participant's lifetime in an
amount equal to the sum of (i) 7.15% of an employee's average monthly
compensation and (ii) .62% of such employee's average monthly compensation in
excess of the average Social Security wage base, multiplied in each case by the
employee's years of service commencing after December 31, 1993 (up to a maximum
of 10 years). Average monthly compensation for these purposes is the employee's
monthly compensation averaged over the five consecutive Plan years which produce
the highest monthly average within the employee's last ten years of service.
However, the amount of compensation taken into account under a tax qualified
plan was limited to $170,000 per annum in 2000, which limit may be increased in
future years for cost of living increases. Maximum benefits under the Plan are
attainable after ten years of service commencing after December 31, 1993, and
are payable at age 65. Mr. Joseph (59 years old), Mr. Viertel (59 years old) and
Mr. Baruch (62 years old) all have seven years of service credited under the
Plan.
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EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Jeffrey F. Joseph, President
of the Company, that extends through December 31, 2002 and provides for annual
compensation of $277,295 for calendar year 2001. The employee may also become
entitled to a bonus for each calendar year based on a formula relating to the
Company's earnings, which bonus is limited to a maximum amount of 33 1/3% of his
annual basic compensation for that year. The agreement also provides for
retirement benefits commencing at age 65 in the annual amount of $29,000,
subject to increases based on fifty percent of any increase in the cost of
living subsequent to the first year of retirement.
The Company also has employment agreements with Steven Baruch, Executive
Vice President of the Company, and Thomas Viertel, Executive Vice President and
Chief Financial Officer of the Company, that each extend to December 31, 2002
and provide for annual compensation of $186,335 for calendar year 2001. Mr.
Baruch and Mr. Viertel may also become entitled to a bonus for each calendar
year based on a formula relating to the Company's earnings, which bonus is
limited to a maximum amount of 33 1/3% of the annual basic compensation for the
year. Each of the agreements also provides for retirement benefits commencing at
age 65 in the annual amount of $29,000, subject to increases based on fifty
percent of any increase in the cost of living subsequent to the first year of
retirement. The Company's employment agreements with Mr. Baruch and Mr. Viertel
permit them to spend a reasonable amount of their time during normal business
hours on matters related to Scorpio Entertainment, Inc., a company which is
engaged in theatrical productions, so long as the time and effort for Scorpio
Entertainment, Inc. does not conflict or interfere with the performance of their
duties for the Company and they diligently perform their duties for the Company
to the satisfaction of the Board of Directors. (See Certain Transactions below.)
The Company also has an employment agreement with Elizabeth Delgado, the
Company's Treasurer, that extends through December 31, 2001 and provides for
annual compensation of $106,715 for calendar year 2001. The employment agreement
provides for a retirement period that commences at age 65 with annual cash
benefits during retirement equal to the sum of (a) 23.6% plus (b) 2.6% for each
year of employment subsequent to December 31, 1994, up to a maximum of 60% of
the average of the three highest annual salary rates paid during employment,
provided that such annual benefits shall not exceed $50,046 per annum, and
provided further that any payments to be made under the retirement provisions of
the employment agreement shall be reduced dollar for dollar by any amounts
payable to the employee as a participant under the Company's Defined Benefit
Pension Plan. Annual cash retirement benefits payable by the Company to Ms.
Delgado under such employment agreement cannot be less than $41,398, but could
be higher depending upon future rates of compensation and the terms of any
subsequent employment agreement.
During the retirement periods under the above agreements, the employees
will also be entitled to the continuation of certain life, group health and
disability insurance benefits. None of the employment contracts described above
provide death benefits for the recipients or for funding by Presidential of the
anticipated retirement benefits.
COMPENSATION OF DIRECTORS
The Company pays each Director (other than Jeffrey F. Joseph, who is the
President of the Company, Robert E. Shapiro, who is the Chairman of the Board of
Directors of the Company, and Joseph Viertel, who is the Chairman of the
Executive Committee of the Board of Directors of the Company) $11,000 per annum,
plus $1,500 for each meeting of the Board of Directors or Committee thereof
attended and $625 for each meeting of the Audit Committee for the review of the
Company's unaudited quarterly financial statements attended, plus reimbursement
of expenses. A portion of the above described directors fees is paid by the
issuance of 1,000 shares of the Company's Class B Common Stock to each Director.
The Company ordinarily does not pay any other compensation to Directors for
their services as Directors. However, in the year ended December 31, 2000 the
Company paid $5,000 to Richard Brandt, $4,000 to Mortimer Caplin and $6,000 to
Robert Feder for work done in 1999 as members of a special committee appointed
by the Board of Directors to review a possible tender offer for the Company's
stock. The transaction never materialized.
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Presidential also has employment agreements with two directors (who were
executive officers of the Company prior to their retirement) providing for
stipulated annual payments for life (plus continuation of life, group health and
disability insurance benefits). The annual cash retirement benefits paid under
these contracts in 2000 were as follows:
ANNUAL CASH RETIREMENT
BENEFIT (SUBJECT TO INCREASE
NAME AND AGE POSITION WITH PRESIDENTIAL FOR INFLATION)
- -------------------------------------- ---------------------------------- ----------------------------
Robert E. Shapiro (83)................ Director and Chairman of the Board $168,707
of Directors. Retired as President
in 1992.
Joseph Viertel (85)................... Director and Chairman of the 152,484
Executive Committee. Retired as
President in 1987.
CERTAIN TRANSACTIONS
Presidential currently has loans outstanding to certain affiliates of Ivy
Properties, Ltd. (collectively "Ivy") as more fully described in the table set
forth below. Ivy is owned by Thomas Viertel, Steven Baruch and Jeffrey Joseph
(the "Ivy Principals"). Mr. Joseph is currently the President and a Director of
Presidential and is a nominee for Director. Mr. Viertel is currently an
Executive Vice President and the Chief Financial Officer of Presidential and is
the son of Joseph Viertel, a Director of Presidential, and a nephew of Robert E.
Shapiro, also a Director of Presidential. Steven Baruch is currently an
Executive Vice President of Presidential and is a cousin of Robert E. Shapiro
and Joseph Viertel.
Pdl Partnership, a partnership which is wholly owned by the Ivy Principals,
currently owns 198,735 shares of the Company's Class A Common Stock. As a result
of the ownership of these shares by Pdl Partnership, together with the ownership
of an aggregate of 24,601 additional shares of Class A Common Stock individually
by the Ivy Principals, Pdl Partnership and the Ivy Principals have beneficial
ownership of an aggregate of approximately 47% of the outstanding shares of
Class A Common Stock of the Company, which class of stock is entitled to elect
two-thirds of the Board of Directors of the Company. By reason of such
beneficial ownership, the Ivy Principals are in a position substantially to
control elections of the Board of Directors of the Company.
The Board of Directors has adopted a resolution pursuant to which
Presidential will not make any loan to Ivy nor enter into any other material
transaction with Ivy unless such transaction is unanimously approved by the
Directors of Presidential who are not otherwise affiliated with Presidential or
Ivy (with no more than one abstention).
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The following table sets forth information with respect to all outstanding
loans to Ivy at December 31, 1999 and December 31, 2000:
ORIGINAL
LOAN BASIC
DATE ADVANCED DESCRIPTION INTEREST RATE 12/31/00 12/31/99
- ---- ---------- ------------------------------ -------------- ---------- ----------
1981 $5,285,000 UTB Associates, a partnership 11.8 to 25.33% $ 408,316 $ 468,243
in which Presidential owns a
66 2/3% interest, sold an apt.
property in New Haven, CT to
Ivy for long-term,
non-recourse purchase money
notes.
1984 4,305,500 Sale by Presidential to Ivy of 6.00% 884,355 908,343
50% interest in a partnership
which owns an apartment
complex in Alexandria, VA
(Overlook loan).(1)
1991 526,454 UTB End Loans: Purchase money Various 130,594 158,183
notes on co-op apts. These
notes were transferred to
Presidential as part of the
Ivy settlement.
1991 155,084 Consolidated Loans: Replaced Chase Prime 24,694 39,259
previously defaulted loans.(2)
---------- ----------
Total Loans 1,447,959 1,574,028
Less: Discounts 114,794 132,083
Deferred gain on Overlook loan 884,355 908,343
---------- ----------
Net Carrying Value $ 448,810 $ 533,612
========== ==========
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(1) The Overlook loan, which is a nonrecourse loan resulting from the sale by
the Company to Ivy in 1984 of an apartment property, is secured by a second
mortgage note (the "Collateral Security") with a face value of $934,355. All
interest and principal collected by Ivy on the Collateral Security is paid
to Presidential in reduction of current interest, previously deferred
interest or principal.
(2) As part of the Settlement Agreement effectuated in November, 1991 between
the Company and Ivy, certain of Presidential's outstanding nonrecourse loans
to Ivy were modified and consolidated into two nonrecourse loans
(collectively, the "Consolidated Loans") that were collateralized by
substantially all of Ivy's then remaining business assets with respect to
which Presidential either did not previously have any security interest or
had a junior security interest (collectively, the "Consolidated
Collateral"). The terms of the Settlement Agreement permit Ivy to use the
proceeds of each sale of Consolidated Collateral to (1) pay existing
indebtedness of Ivy to its bank and trade creditors and certain operating
expenses and (2) create and fund specified reserves to provide for payment
of future obligations and potential liabilities. At December 31, 2000, the
Consolidated Loans had an outstanding principal balance of $4,794,744 and a
net carrying value of $24,694. Presidential does not expect to recover any
material amount on the Consolidated Loans in excess of their net carrying
value.
As part of the Settlement Agreement with Ivy, Presidential obtained an
option to acquire Scorpio Entertainment, Inc., a company owned by the Ivy
Principals to carry on theatrical productions ("Scorpio"). The option called for
a $100,000 purchase price, to be paid by crediting it against amounts due to
Presidential from the Ivy Principals under the Consolidated Loans. In 1996
Presidential and the Ivy Principals agreed to a modification of the Settlement
Agreement to provide that the Ivy Principals will make payments on the
Consolidated Loans in an amount equal to 25% of the operating cash flow (after
provision for certain reserves) of Scorpio. This agreement, and Presidential's
decision not to exercise its option to acquire the capital stock of Scorpio, was
made pursuant to the unanimous determination of the members of the Board of
Directors who are not affiliated with the Ivy Principals that such actions were
in the best interests of Presidential. As a result of this modification, during
2000 Presidential received $14,565 of principal payments and $2,940 of interest
from the Ivy Principals on the Consolidated Loans.
9
12
As described under Renumeration of Executive Officers and Directors above,
the Company made an aggregate of $367,500 of loans in 1999 to Jeffrey Joseph,
Thomas Viertel and Steven Baruch in connection with their exercise of stock
options.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Presidential has an Executive Committee, an Audit
Committee, a Compensation and Pension Committee and an Unaffiliated Director
Committee. The Board of Directors does not have a nominating committee.
The members of the Executive Committee are Jeffrey F. Joseph, Robert E.
Shapiro and Joseph Viertel. The function of the Executive Committee is to make
general and specific recommendations to the Board of Directors with respect to
matters to be considered by the Board. The Executive Committee meets monthly and
from time to time as required by the business of Presidential.
The members of the Audit Committee are Richard Brandt, Mortimer Caplin and
Robert Feder. The function of the Audit Committee is to review the policies and
procedures adopted by the Company and its independent public accountants with
respect to the financial reporting by the Company. Each member of the Audit
Committee is independent (as defined in Section 121A of the American Stock
Exchange listing standards). The Board of Directors of the Company has adopted a
written Charter for the Audit Committee, a copy of which is attached as Exhibit
A to this Proxy Statement. The Audit Committee Report dated March 22, 2001 is
attached as Exhibit B to this Proxy Statement. The Audit Committee held four
meetings during the Company's last fiscal year.
The members of the Compensation and Pension Committee are Richard Brandt,
Mortimer Caplin and Robert Feder. The function of the Compensation and Pension
Committee is to recommend guidelines and specific compensation levels to the
Board of Directors of the Company for the executive officers of the Company. The
Compensation and Pension Committee held one meeting during the Company's last
fiscal year.
The members of the Unaffiliated Director Committee are Richard Brandt,
Mortimer Caplin and Robert Feder. The function of the Unaffiliated Director
Committee is to review and vote upon any material transaction with Ivy
Properties, Ltd. or any of its affiliates. The Company will not enter into any
material transaction with Ivy or any affiliate of Ivy unless the members of the
Unaffiliated Director Committee unanimously approve the transaction, with no
more than one abstention. The Unaffiliated Director Committee did not hold any
meetings during the Company's last fiscal year.
The Board of Directors of the Company held four meetings during the
Company's last fiscal year. All of the directors attended all of the meetings in
2000 of the Board of Directors and the committees of which they were members
except that one director was not able to attend one of the quarterly meetings of
the Audit Committee.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche, LLP, who, with their predecessor companies, have been
the independent public accountants for Presidential and its predecessor
companies since 1960, will have representatives present at the Annual Meeting of
Stockholders who will have an opportunity to make a statement if they desire to
do so and to respond to appropriate questions. Deloitte & Touche, LLP has
advised the Company that neither it nor, to the best of its knowledge, any of
its members has any direct or material indirect financial interest in the
Company nor has it had any connection during the past five years with the
Company in the capacity of promoter, underwriter, voting trustee, director,
officer or employee other than as independent auditors for the Company.
The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte") for professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended December 31, 2000 and for
the reviews of the
10
13
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year were $77,000.
Deloitte did not provide the Company with any professional services for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2000.
The aggregate fees billed by Deloitte for services rendered to the Company,
other than the services described above, for the fiscal year ended December 31,
2000 were $38,750, primarily for income tax return preparation and related
consultants, and the audits of certain subsidiaries and property audits to
fulfill SEC filing requirements of new acquisitions.
The Audit Committee has determined that the aggregate fees billed to the
Company by Deloitte for fiscal year 2000 for non-audit services has not affected
Deloitte's independence.
OTHER MATTERS
At the date of this Proxy Statement, the only proposals which the
management intends to present at the meeting are those set forth in the Notice
of the Annual Meeting of Stockholders. Management knows of no other matter which
may come before the meeting, but if any other matters properly come before the
meeting, it is intended that proxies in the accompanying forms will be voted
thereon in accordance with the judgment of the person or persons voting the
proxies.
PROPOSALS FOR 2002 ANNUAL MEETING OF STOCKHOLDERS
Shareholder proposals for the 2002 Annual Meeting of Stockholders must be
received by the Secretary at the corporate offices of Presidential, 180 South
Broadway, White Plains, New York 10605, no later than December 29, 2001 for
inclusion in the Proxy Statement for the 2002 Annual Meeting of Stockholders.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying forms has been or will
be borne by the Company. In addition to solicitation by mail, solicitations may
be made by telephone calls by existing employees of the Company.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. IF YOU ARE
UNABLE TO BE PRESENT IN PERSON, YOU ARE REQUESTED TO SIGN THE ENCLOSED PROXY OR
PROXIES AND RETURN SAME IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE.
A STOCKHOLDER EXECUTING AND RETURNING A PROXY HAS THE POWER TO REVOKE IT AT
ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE TO THE SECRETARY OF THE
COMPANY, BY SUBMISSION OF ANOTHER PROXY BEARING A LATER DATE, OR BY ATTENDING
THE MEETING AND REQUESTING TO VOTE IN PERSON.
April 27, 2001
11
14
EXHIBIT A
PRESIDENTIAL REALTY CORPORATION
AUDIT COMMITTEE CHARTER
This charter shall be reviewed, updated and approved annually by the board
of directors.
ROLE AND INDEPENDENCE
The audit committee of the board of directors assists the board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and reporting practices of the corporation and other such
duties as directed by the board. The membership of the committee shall consist
of at least three directors who are generally knowledgeable in financial and
auditing matters, including at least one member with accounting or related
financial management expertise. Each member shall be free of any relationship
that, in the opinion of the board, would interfere with his or her individual
exercise of independent judgment, and shall meet the director independence
requirements for serving on audit committees as set forth in the corporate
governance standards of the American Stock Exchange. The committee is expected
to maintain free and open communication (including private executive sessions at
least annually) with the independent accountants, the internal auditors and the
management of the corporation. In discharging this oversight role, the committee
is empowered to investigate any matter brought to its attention, with full power
to retain outside counsel or other experts for this purpose.
The board of directors shall appoint one member of the audit committee as
chairperson. He or she shall be responsible for leadership of the committee,
including arranging for the preparation of the agenda, presiding over the
meetings, making committee assignments and reporting to the board of directors.
The chairperson will to the extent reasonably necessary maintain liaison with
the CEO, CFO and the lead independent audit partner.
RESPONSIBILITIES
The audit committee's primary responsibilities include:
- Recommending to the board the independent accountant to be selected or
retained to audit the financial statements of the corporation. In so
doing, the committee will request from the auditor a written affirmation
that the auditor is in fact independent, discuss with the auditor any
relationships that may impact the auditor's independence, and recommend
to the board any actions necessary to oversee the auditor's independence.
- Overseeing the independent auditor relationship by discussing with the
auditor the nature and rigor of the audit process, receiving and
reviewing audit reports, and providing the auditor full access to the
committee (and the board) to report on any and all appropriate matters.
- Reviewing the audited financial statements and discussing them with
management and the independent auditor. These discussions shall include
consideration of the quality of the Company's accounting principles as
applied in its financial reporting, including review of estimates,
reserves and accruals, review of judgmental areas, review of audit
adjustments whether or not recorded and such other inquiries as may be
appropriate. Based on the review, the committee shall make its
recommendation to the board as to the inclusion of the Company's audited
financial statements in the Company's annual report on Form 10-K.
- Reviewing with management and the independent auditor the quarterly
financial information prior to the Company's filing of Form 10-Q. This
review may be performed by the committee or any member thereof designated
by the chairperson.
- Discussing with management, the internal auditors and the external
auditors the quality and adequacy of the Company's internal controls.
- Discussing with management the status of pending litigation, taxation
matters and other areas of oversight to the legal and compliance area as
may be appropriate.
- Reporting audit committee activities to the full board and issuing
annually a report to be included in the proxy statement (including
appropriate oversight conclusions) for submission to the shareholders.
- Any meetings to be held hereunder may be held by telephone conference
call.
15
EXHIBIT B
PRESIDENTIAL REALTY CORPORATION
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors
(Board), the Audit Committee of the Board (Committee) assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. During
fiscal year 2000, the Committee met four times and discussed the interim
financial information contained in each quarterly earnings announcement with the
CFO, Treasurer and independent auditors prior to public release.
In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on the auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence. The
Committee also discussed with management and the independent auditors the
quality and adequacy of the Company's internal controls and the internal audit
function's organization, responsibilities, budget and staffing. The Committee
reviewed with the independent auditors their audit plans, audit scope, and
identification of audit risks.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Committee reviewed the audited financial statements of the Company as
of and for the fiscal year ended December 31, 2000, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Committee recommended to the Board that the Company's
audited financial statements be included in its Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, for filing with the Securities and
Exchange Commission. The Committee also recommended the reappointment of the
independent auditors and the Board concurred in such recommendation.
Richard Brandt, Chairman
Mortimer Caplin
Robert Feder
Date: March 22, 2001
16
PROXY
(CLASS A SHARES)
[PRESIDENTIAL REALTY CORPORATION LOGO]
PRESIDENTIAL REALTY CORPORATION
180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605
MANAGEMENT PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JEFFREY F. JOSEPH and THOMAS VIERTEL, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to appear and vote all of the shares of Class A stock standing in the name
of the undersigned on April 24, 2001, at the Annual Meeting of Stockholders of
Presidential Realty Corporation to be held at the Marriott Residence Inn, 5
Barker Avenue, White Plains, New York, on June 14, 2001 at 2:00 P.M., New York
time, and at any and all adjournments thereof, and the undersigned hereby
instructs said attorneys to vote as designated below:
(CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE)
17
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR all nominees WITHHOLD
listed below: AUTHORITY
(except as marked to to vote for all nominees
the contrary below) listed below
1. ELECTION OF / / / /
DIRECTORS
NOMINEES: ROBERT FEDER,
JEFFREY F. JOSEPH,
ROBERT E. SHAPIRO,
JOSEPH VIERTEL
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
----------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
MARK HERE IF YOU PLAN
TO ATTEND THE MEETING / /
The undersigned hereby acknowledges receipt of the Proxy Statement dated
April 27, 2001
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature_____________ Signature if held jointly_____________ Dated:______, 2001
18
PROXY
(CLASS B SHARES)
[PRESIDENTIAL REALTY CORPORATION LOGO]
PRESIDENTIAL REALTY CORPORATION
180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605
MANAGEMENT PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JEFFREY F. JOSEPH and THOMAS VIERTEL, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to appear and vote all of the shares of Class B stock standing in the name
of the undersigned on April 24, 2001, at the Annual Meeting of Stockholders of
Presidential Realty Corporation to be held at the Marriott Residence Inn, 5
Barker Avenue, White Plains, New York, on June 14, 2001 at 2:00 P.M., New York
time, and at any and all adjournments thereof, and the undersigned hereby
instructs said attorneys to vote as designated below:
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
19
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR all nominees WITHHOLD
listed below: AUTHORITY
(except as marked to to vote for all nominees
the contrary below) listed below
1. ELECTION OF / / / /
DIRECTORS
NOMINEES: RICHARD BRANDT,
MORTIMER M. CAPLIN
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
----------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
MARK HERE IF YOU PLAN
TO ATTEND THE MEETING / /
The undersigned hereby acknowledges receipt of the Proxy Statement dated
April 27, 2001
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature_____________ Signature if held jointly_____________ Dated:______, 2001