SCHEDULE 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ONE LIBERTY PROPERTIES, INC.
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(Name of Registrant as Specified in Its Charter)
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ONE LIBERTY PROPERTIES, INC.
60 CUTTER MILL ROAD
GREAT NECK, NEW YORK 11021
(516) 466-3100
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 2004
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The annual meeting of stockholders of One Liberty Properties, Inc. will be
held at the Inn at Great Neck, located at 30 Cutter Mill Road, Great Neck, NY,
on Monday, June 14, 2004 at 9:30 a.m. eastern time. We are holding the meeting
for the following purposes:
1. To elect four directors to hold office for a term expiring in 2007;
one director to hold office for a term expiring in 2006; and one director
to hold office for a term expiring in 2005.
2. To approve (a) an amendment to our Articles of Incorporation to (i)
remove the $16.50 cumulative convertible preferred stock from the company's
authorized capital stock, (ii) renumber and reletter subsections and revise
cross references as a result of the deletion of the text setting forth the
terms of such preferred stock and (iii) update outdated references to
statutes, organizations and associations, and (b) the restatement of our
Articles of Incorporation to integrate and combine the full text of our
Articles of Incorporation, as amended, into one document.
3. To ratify the appointment of Ernst & Young LLP as our independent
auditors for 2004.
4. To transact any other business properly brought before the meeting.
Holders of record of the company's common stock at the close of business on
April 24, 2004 are entitled to notice of the annual meeting and to vote at the
meeting and any adjournment thereof.
To assure that your vote will be counted, please complete, date and sign
the enclosed proxy card and return it in the enclosed prepaid envelope, whether
or not you plan to attend the meeting. Most stockholders can also vote by
telephone or via the internet. Telephone and internet voting information is
provided on the accompanying proxy card. Your proxy may be revoked in the manner
described in the accompanying proxy statement at any time before it has been
voted at the meeting.
By order of the Board of Directors
Mark H. Lundy, Secretary
Dated: April 29, 2004
TABLE OF CONTENTS
PAGE NO.
--------
General..................................................... 1
About the Meeting and Voting................................ 1
Governance of the Company................................... 3
Audit Committee........................................ 4
Audit Committee Financial Expert....................... 4
Compensation Committee................................. 4
Nominating and Corporate Governance Committee.......... 4
Compensation of Directors.............................. 6
Compensation Committee Interlocks and Insider
Participation......................................... 6
Non-management Director Executive Sessions............. 6
Stockholder Communications with Directors.............. 6
Director Attendance at Annual Meetings................. 7
Share Ownership of Certain Beneficial Owners, Directors and
Officers.................................................. 8
Election of Directors (Proposal 1).......................... 10
Nominees for Election to serve until the 2007 Annual
Meeting............................................... 11
Nominee for Election to serve until the 2006 Annual
Meeting............................................... 11
Nominee for Election to serve until the 2005 Annual
Meeting............................................... 11
Directors to Continue in Office until the 2006 Annual
Meeting............................................... 12
Directors to Continue in Office until the 2005 Annual
Meeting............................................... 12
Adoption of Amendments to, and Restatement of, the Company's
Articles of Incorporation (Proposal 2).................... 13
Independent Auditors (Proposal 3)........................... 15
General................................................ 15
Audit and Other Fees................................... 15
Pre-Approval Policy for Audit and Non-Audit Services... 16
Approval Process....................................... 16
Report of the Audit Committee............................... 17
Executive Compensation...................................... 18
Summary Compensation Table............................. 18
One Liberty Pension Plan............................... 18
Stock Options Granted, Exercised and Fiscal Year End
Option Values......................................... 19
Report of the Compensation Committee........................ 20
Certain Relationships and Related Transactions.............. 22
Section 16(a) Beneficial Ownership Reporting Compliance..... 24
Performance Graph........................................... 25
Additional Information...................................... 26
Appendix A - Amended and Restated Articles of
Incorporation............................................. A-1
Appendix B - Audit Committee Charter........................ B-1
ONE LIBERTY PROPERTIES, INC.
60 CUTTER MILL ROAD
GREAT NECK, NEW YORK 11021
(516) 466-3100
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PROXY STATEMENT
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GENERAL
Our board of directors is furnishing you with this proxy statement to
solicit proxies on its behalf to be voted at the 2004 annual meeting of
stockholders of One Liberty Properties, Inc. The meeting will be held at the Inn
at Great Neck, 30 Cutter Mill Road, Great Neck, NY on June 14, 2004 at 9:30
a.m., eastern time. The proxies may also be voted at any adjournments or
postponements of the meeting.
The mailing address of our principal executive offices is Suite 303, 60
Cutter Mill Road, Great Neck, NY 11021. We are first sending the proxy materials
on or about April 29, 2004 to persons who were stockholders at the close of
business on April 24, 2004, the record date for the meeting.
All properly executed proxy cards, and all properly completed proxies
submitted by telephone or by the internet, that are delivered pursuant to this
solicitation will be voted at the meeting in accordance with the directions
given on the proxy, unless the proxy is revoked before the meeting.
Our fiscal year begins on January 1st and ends on December 31st. Reference
in this proxy statement to the year 2003 or fiscal 2003 refers to the
twelve-month period from January 1 through December 31, 2003.
ABOUT THE MEETING AND VOTING
Q: WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
A: At our annual meeting, stockholders will vote on the following matters:
- election of six directors (Joseph A. Amato, Jeffrey A. Gould, Matthew J.
Gould and J. Robert Lovejoy to hold office until the 2007 annual meeting,
Joseph A. DeLuca to hold office until the 2006 annual meeting and Jeffrey
Fishman to hold office until the 2005 annual meeting);
- to approve (a) an amendment to our Articles of Incorporation to (i)
remove the $16.50 cumulative convertible preferred stock from the
company's authorized capital stock, (ii) renumber and reletter
subsections and revise cross references as a result of the deletion of
the text setting forth the terms of such preferred stock and (iii) update
outdated references to statutes, organizations and associations, and (b)
the restatement of our Articles of Incorporation to integrate and combine
the full text of our Articles of Incorporation, as amended, into one
document;
- ratification of the appointment of the independent auditors (Ernst &
Young LLP) for 2004; and
- such other matters as may properly come before the meeting.
Q: WHO IS ENTITLED TO VOTE?
A: We are mailing this proxy statement on or about April 29, 2004 to our
stockholders of record on April 24, 2004. The record date was established by our
board of directors. Common stockholders as of the close of business on the
record date of April 24, 2004 are entitled to vote their shares at the meeting.
Each outstanding share of common stock is entitled to one vote. As of the record
date there were outstanding and entitled to vote at the meeting 9,725,599 shares
of common stock.
Q: HOW DO I VOTE?
A: If your shares are held by a bank, broker or other nominee, please follow
the instructions provided to you by such nominee. If you wish to vote at the
Annual Meeting and your shares are held by a nominee, you must
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contact the nominee to obtain evidence of your ownership of our common stock as
of the record date. If you hold your shares directly and complete, sign and date
the accompanying proxy card and return it in the prepaid envelope, your shares
will be voted confidentially and according to your instructions. If you do not
mark any selections but return the signed proxy card, your shares will be voted
by the proxies named on the proxy card in favor of the nominees for election as
directors, in favor of the amendment to and the restatement of the Articles of
Incorporation, in favor of the proposal to ratify the appointment of Ernst &
Young LLP as independent auditors for 2004, and as the proxy holders may
determine in their discretion with respect to other matters that properly come
before the meeting. The proxy of a stockholder who is a participant in our Cash
Distribution Reinvestment Plan will also serve as an instruction to vote the
shares held for the account of the participant in the manner indicated on the
proxy card. Registered holders (those who hold shares directly rather than
through a bank or broker) can simplify their voting by calling 1-800-PROXIES
(776-9437) or by accessing the internet website www.voteproxy.com. Telephone
voting information and internet voting information is provided on the proxy
card. The internet and telephone voting facilities for stockholders of record
will close at 12:01 a.m., eastern time on June 14, 2004. You should be aware
that if you vote over the internet you may incur costs, such as telephone and
internet access charges, for which you will be responsible. If you vote by
telephone or via the internet, it is not necessary to return your proxy card. If
you attend the meeting, you may deliver your completed proxy or vote in person.
If you wish to name as a proxy someone other than the proxies named on the
proxy card, you may do so by crossing out the name of the designated proxies and
inserting the name of another person. In that case it will be necessary to sign
the proxy card and deliver it to the person so named and for the person so named
to be present at and vote at the meeting. Proxy cards so marked should not be
mailed to us or to American Stock Transfer and Trust Company.
Q: WHO WILL COUNT THE VOTE?
A: Representatives of American Stock Transfer and Trust Company will tabulate
the votes and act as inspector of elections.
Q: CAN I REVOKE MY PROXY BEFORE IT IS EXERCISED?
A: If you hold stock directly in your name, you may revoke a proxy with a later
dated, properly executed proxy (including an internet or telephone vote), or a
written revocation delivered to our Secretary at any time before the polls for
the meeting are closed. The proxy holders' powers may also be suspended if you
attend the meeting and notify our Secretary at the meeting that you would like
to change your vote or vote in person. If your stock is held in the name of a
broker, bank or other nominee, you must contact such nominee and comply with the
nominee's procedures if you want to revoke or change the instructions that you
previously provided to the nominee. Attendance at the meeting will not
automatically revoke a previously granted proxy.
Q: WHAT CONSTITUTES A QUORUM? WHAT IS THE EFFECT OF MARKED ABSTENTIONS AND
BROKER NON-VOTES?
A: A quorum must be present at the meeting for business to be conducted. A
quorum is the presence in person or by proxy of stockholders holding a majority
of the outstanding shares of common stock. Proxies marked as abstaining, and any
proxies returned by brokers as "non-votes" on behalf of shares held in street
name because beneficial owners' discretion has been withheld as to one or more
matters to be acted upon at the annual meeting, will be treated as present for
purposes of determining whether a quorum is present at the annual meeting. Any
shares not voted as a result of a marked abstention or a broker non-vote will
have no effect on the outcome of the election of directors or the ratification
of our independent auditors. Abstentions and broker non-votes will have the same
effect as a vote against the proposal relating to the amendment to and the
restatement of the Articles of Incorporation.
Q: HOW MANY VOTES DOES IT TAKE TO APPROVE THE ITEMS TO BE VOTED UPON?
A: Directors are elected by the affirmative vote of a plurality of the votes
cast at the meeting in person or by proxy. This means that assuming a quorum is
present at the meeting, the six director nominees will be elected if each
receives a majority of the votes cast. The affirmative vote of a majority of our
outstanding shares is required to approve the amendment to and restatement of
the Articles of Incorporation. The affirmative vote
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of a majority of the votes cast at the meeting is required to ratify the
appointment of Ernst & Young LLP as the independent auditors for 2004.
Q: WHO IS SOLICITING MY VOTE AND WHO PAYS THE COST?
A: Our board of directors is soliciting votes for the meeting and we will pay
the entire cost of the solicitation, including preparing and mailing this proxy
statement. We will reimburse banks, brokerage firms, custodians, nominees and
fiduciaries for their reasonable expenses in sending proxy materials to the
beneficial owners of shares of common stock. Proxies may also be solicited
personally, by mail, telephone, e-mail, facsimile or other electronic means, by
our directors, officers or other employees, without remuneration other than
regular compensation.
Q: WHEN ARE STOCKHOLDER PROPOSALS DUE FOR THE YEAR 2005 ANNUAL MEETING?
A: If a stockholder wants a proposal to be included in our proxy statement for
the 2005 annual meeting of stockholders, the proposal, in writing and addressed
to our Secretary, must be received by us no later than December 30, 2004. Upon
timely receipt of any such proposal, we will determine whether or not to include
such proposal in the proxy statement in accordance with applicable regulations
governing the solicitation of proxies.
For any proposal that is not submitted for inclusion in next year's proxy
statement, but is instead intended to be presented directly at the 2005 annual
meeting, SEC rules permit us to exercise discretionary voting authority to the
extent conferred by proxy if we:
- receive notice of the proposal before March 15, 2005 and advise
stockholders in the 2005 proxy statement of the nature of the proposal
and how management intends to vote on such matter; or
- do not receive notice of the proposal before March 15, 2005.
Notices of intention to present proposals at our 2005 annual meeting should
be submitted in writing and addressed to our Secretary.
Q: WHAT OTHER INFORMATION ABOUT ONE LIBERTY IS AVAILABLE?
A: Stockholders can call (516) 466-3100 or write us at 60 Cutter Mill Road,
Suite 303, Great Neck, NY 11021, Attention: Secretary to request a copy of our
Annual Report on Form 10-K. This and other important information about us is
also available on our web site which is located at www.onelibertyproperties.com.
Our Annual Report to Stockholders accompanies this proxy statement.
GOVERNANCE OF THE COMPANY
Pursuant to the Maryland General Corporation Law and the company's by-laws,
the business, property and affairs of our company are managed by or under the
direction of the board of directors. Members of the board are kept informed of
the company's business through discussions with the chief executive officer and
other officers, by reviewing materials provided to them and by participating in
meetings of the board and its committees.
The board has three standing committees:
- The Audit Committee, the members of which are Charles Biederman, Joseph
A. Amato and James J. Burns;
- The Compensation Committee, the members of which are Charles Biederman,
James J. Burns and Patrick J. Callan, Jr.; and
- The Nominating and Governance Committee, the members of which are Joseph
A. Amato, Charles Biederman and Patrick J. Callan, Jr.
The board has determined that Joseph A. Amato, Charles Biederman, James J.
Burns and Patrick J. Callan, Jr., currently directors, and J. Robert Lovejoy and
Joseph A. DeLuca, nominees for director, are
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"independent" for the purposes of Section 303A of the Listed Company Manual of
the New York Stock Exchange; that the members of our Audit Committee are
independent for the purposes of Section 10A(m)(3) of the Securities Exchange Act
of 1934 and Section 303.01 of the Listed Company Manual; and that the members of
our Compensation and Nominating and Corporate Governance Committees are
independent under Section 303A of the Listed Company Manual. The board based
these determinations primarily on (i) a review of responses of the directors and
nominees for director to questions regarding employment history and affiliations
and other relationships with the company, (ii) discussions with management
regarding their knowledge of such affiliations or other relationships, and (iii)
discussions with the directors and nominees for directors.
The board has adopted a charter for each of the three standing committees
and corporate governance guidelines that address the make-up and functioning of
the board. The board has also adopted a code of business conduct and ethics that
applies to all employees, officers and directors including the company's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions. You can find
these materials by accessing the corporate governance section of our website at:
www.onelibertyproperties.com. You may also obtain a copy of each charter, the
corporate governance guidelines and the code of business conduct and ethics by
writing to us at 60 Cutter Mill Road, Great Neck, New York 11021.
During fiscal 2003, the board held 4 meetings, conducted board business on
4 occasions by unanimous consent, and the committees held a total of 7 meetings.
None of the directors attended fewer than 75% of the total number of meetings of
the board of directors and the board committees of which he was a member during
fiscal 2003.
AUDIT COMMITTEE
The Audit Committee met six times during 2003. The Audit Committee is
responsible for (i) the quality and integrity of the company's financial
statements and internal controls, (ii) the company's compliance with legal and
regulatory requirements, (iii) the independent auditors' qualification and
independence, and (iv) the performance of the company's internal audit function
and the independent auditors. The board has determined that each member of the
Audit Committee satisfies the financial literacy and expertise requirements of
the New York Stock Exchange.
AUDIT COMMITTEE FINANCIAL EXPERT
The board has determined that James J. Burns, a member of the Audit
Committee, is an "audit committee financial expert", as that term is defined in
Item 401(h) of Regulation S-K, and "independent" for purposes of New York Stock
Exchange listing standards and Section 10A(m)(3) of the Securities Exchange Act
of 1934.
COMPENSATION COMMITTEE
The Compensation Committee met one time in 2003. The Compensation Committee
assists management in making recommendations to the board of directors with
respect to salaries and bonuses of the chief executive officer and vice
president, acquisitions and with respect to all stock incentive awards. The
Compensation Committee also administers the company's stock option plan and
equity incentive plan.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee which did not hold any
meetings in 2003, held its first meeting in January 2004. The responsibilities
of the committee include proposing a slate of directors for election to the
board of directors at the annual stockholders' meeting, identification and
recommendation of candidates to fill vacancies on the board of directors between
annual stockholder meetings and proposing, monitoring and recommending changes
to the company's corporate governance guidelines.
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The board believes that it should be comprised of directors with varied,
complementary backgrounds, and that directors should, at a minimum, have
expertise that may be useful to the company. Directors should also possess the
highest personal and professional ethics and should be willing and able to
devote the required amount of time to company business.
When considering candidates for director, the committee will take into
account a number of factors, including the following:
- Independence from management;
- Whether the candidate has relevant business experience;
- Judgment, skill, integrity and reputation;
- Financial and accounting background, to enable the committee to determine
whether the candidate would be suitable for Audit Committee membership;
- Executive compensation background, to enable the committee to determine
whether the candidate would be suitable for Compensation Committee
membership; and
- The size and composition of the existing board.
The committee will consider candidates for director suggested by
stockholders applying the criteria for candidates described above and
considering the additional information referred to below. Stockholders wishing
to suggest a candidate for director should write to our corporate secretary and
include:
- A statement that the writer is a stockholder and is proposing a candidate
for consideration by the committee;
- The name of and contact information for the candidate;
- A statement of the candidate's business and educational experience;
- Information regarding each of the factors listed above sufficient to
enable the committee to evaluate the candidate;
- A statement detailing any relationship between the candidate and any
competitor of the company;
- Detailed information about any relationship or understanding between the
proposing stockholder and the candidate; and
- A statement that the candidate is willing to be considered and willing to
serve as a director if nominated and elected.
Before nominating a sitting director for re-election at an annual meeting,
the committee will consider:
- The director's performance on the board; and
- Whether the director's re-election would be consistent with the company's
governance guidelines.
When seeking candidates for director, the Nominating and Corporate
Governance Committee may solicit suggestions from management, incumbent
directors or others. The committee will interview a candidate if it believes the
candidate might be suitable to be a director. The committee may also ask the
candidate to meet with management. If the committee believes a candidate would
be a valuable addition to the board, it will recommend the candidate's election
to the full board.
This year, Messrs. Jeffrey Fishman, J. Robert Lovejoy and Joseph A. DeLuca
are standing for election by the stockholders for the first time. Mr. Lovejoy
and Mr. DeLuca were recommended to the Nominating and Corporate Governance
Committee by the Chairman of our board and our President, respectively, who
believe that Mr. Lovejoy and Mr. DeLuca will make valuable additions to our
board based on their financial expertise and industry experience.
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COMPENSATION OF DIRECTORS
Members of our board of directors, who are not employees of the company,
are paid an annual retainer of $15,000. In addition to regular board fees, each
member of the Audit Committee (other than the Chairman) is paid an annual
retainer of $5,000, the Chairman of the Audit Committee is paid an annual
retainer of $6,000, each member of the Compensation Committee is paid an annual
retainer of $3,000 and each member of the Nominating and Corporate Governance
Committee is paid an annual retainer of $2,000. In addition, each non-employee
director was awarded 750 shares of restricted common stock under the One Liberty
Properties, Inc. 2003 Incentive Plan in 2003. The restricted shares granted to
the directors have a five year vesting period during which period the registered
owner is entitled to vote and receive cash distributions on such shares.
Non-employee directors who reside outside of the local area also receive
reimbursement for travel expenses incurred in attending board and committee
meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee in 2003 were Charles Biederman,
James J. Burns and Patrick J. Callan, Jr. None of the members has ever been an
officer or employee of the company or any of its subsidiaries and no
"compensation committee interlocks" existed during 2003.
NON-MANAGEMENT DIRECTOR EXECUTIVE SESSIONS
In accordance with New York Stock Exchange listing standards, the company's
non-management directors will meet at regularly scheduled executive sessions
without management. Non-management directors are all those directors who are not
officers of the company. The board does not intend to designate a "Lead
Director" or a single director to preside at executive sessions. The person who
presides over executive sessions of non-management directors will be one of the
independent directors and the presiding director position will rotate among the
independent directors.
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS
Stockholders of the company who want to communicate with the board or any
individual director can write to:
One Liberty Properties, Inc.
Suite 303
60 Cutter Mill Road
Great Neck, New York 11021
Attention: Corporate Secretary
Your letter should indicate that you are a One Liberty stockholder. Depending on
the subject matter, management will:
- Forward the communication to the director or directors to whom it is
addressed;
- Attempt to handle the inquiry directly; for example where it is a request
for information about the company or it is a stock-related matter; or
- Not forward the communication if it is primarily commercial in nature or
if it relates to an improper or irrelevant topic.
At each board meeting, a member of management will present a summary of all
communications received since the last meeting that were not forwarded and make
those communications available to the directors on request.
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DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
We typically schedule a board meeting in conjunction with our annual
meeting and expect that our directors will attend, absent a valid reason, such
as a schedule conflict. Last year, seven of the nine individuals then serving as
directors attended our annual meeting.
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND OFFICERS
The following table sets forth information concerning shares of our common
stock owned by (i) all persons known to own beneficially 5% or more of our
outstanding shares, (ii) all directors and nominees for election as directors,
(iii) each executive officer named in the Summary Compensation Table, and (iv)
all directors and executive officers as a group.
AMOUNT OF BENEFICIAL PERCENT
NAME AND ADDRESS OWNERSHIP (1) OF CLASS
---------------- -------------------- --------
Gould Investors L.P. (2) (3)................................ 789,947 8.1%
Joseph A. Amato............................................. 1,750 *
615 Route 32, Highland Mills, NY 10930-0503
James J. Burns.............................................. 3,750 *
535 Madison Avenue/26th Floor, New York, NY 10022
Charles Biederman........................................... 6,750 *
5 Sunset Drive, Englewood, CO 80110
Patrick J. Callan, Jr....................................... 2,750 *
4350 East-West Highway, Suite 400, Bethesda, MD 20814
Joseph A. DeLuca............................................ -- --
154 East Shore Road, Huntington Bay, NY 11743
Jeffrey Fishman (2) (12).................................... 18,225 *
Fredric H. Gould (2) (3) (4)................................ 1,265,811 13.0
Jeffrey A. Gould (2) (5).................................... 153,533 1.6
Matthew J. Gould (2) (3) (6)................................ 977,008 10.0
J. Robert Lovejoy........................................... -- --
1 Rockefeller Plaza, 32nd Floor, New York, NY 10020
Simeon Brinberg (2) (7)..................................... 38,646 *
David W. Kalish (2) (7) (12)................................ 51,831 *
Lawrence G. Ricketts, Jr. (2)............................... 10,125 *
Arthur Hurand............................................... 47,486 *
4100 Pier North Blvd Suite C, Flint, MI 48504
Marshall Rose (8)........................................... 160,027 1.6
667 Madison Avenue, New York, NY 10021
Third Avenue Management LLC (9)............................. 662,375 6.8
622 Third Avenue, New York, NY 10017
K.G. Redding & Associates, LLC (10)......................... 743,700 7.6
One Wacker Drive Suite 4343, Chicago, IL 60606
Directors and officers as a group........................... 2,087,340 21.4
(17 individuals) (11) (12)
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* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the Securities and Exchange Commission. In computing the
number of shares beneficially owned by a person and the percentage
ownership of that person, shares of common stock subject to options and
warrants held by that person that are currently exercisable or exercisable
within 60 days of the date hereof are deemed outstanding. Such shares,
however, are not deemed outstanding for the purposes of computing the
percentage ownership of any other person. Securities are listed as
beneficially owned by a person who directly or indirectly holds or shares
the power to vote or to dispose of the securities, whether or not the
person has an economic interest in the securities. Except as indicated in
the footnotes to this table, each
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stockholder named in the table has sole voting and investment power with
respect to the shares set forth opposite such stockholder's name. The
percentage of beneficial ownership is based on 9,725,599 shares of common
stock outstanding on April 24, 2004.
(2) Address is 60 Cutter Mill Road, Great Neck, NY 11021.
(3) Fredric H. Gould is sole shareholder, sole director and chairman of the
board of the corporate managing general partner of Gould Investors L.P. and
sole member of a limited liability company which is the other general
partner of Gould Investors L.P. Matthew J. Gould is president of the
corporate managing general partner of Gould Investors L.P.
(4) Includes 259,484 shares of common stock owned directly, 789,947 shares of
common stock owned by Gould Investors L.P. and 216,380 shares of common
stock owned by entities and trusts over which Mr. Gould has sole or shared
voting and dispositive power. Does not include 47,566 shares of common
stock owned by Mrs. Fredric H. Gould, as to which shares Mr. Gould
disclaims any beneficial interest and Mrs. Gould has sole voting and
investment power.
(5) Includes 146,352 shares of common stock owned directly and 7,181 shares of
common stock owned as custodian for minor children (as to which shares Mr.
Gould disclaims any beneficial interest). Does not include 2,228 shares of
common stock owned by Mrs. Jeffrey A. Gould, as to which shares Mr. Gould
disclaims any beneficial interest and Mrs. Gould has sole voting and
investment power.
(6) Includes 164,136 shares of common stock owned directly, 22,925 shares of
common stock owned as custodian for minor children (as to which shares Mr.
Gould disclaims any beneficial interest) and 789,947 shares of common stock
owned by Gould Investors L.P. Does not include 3,552 shares of common stock
owned by Mrs. Matthew J. Gould, as to which shares Mr. Gould disclaims any
beneficial interest and Mrs. Gould has sole voting and investment power.
(7) Includes 16,356 shares of common stock owned by a pension trust over which
Messrs. Brinberg and Kalish have shared voting and dispositive power.
(8) Includes 24,898 shares of common stock owned directly and 135,129 shares of
common stock owned by entities and trusts over which Mr. Rose has sole or
shared voting and dispositive power.
(9) Third Avenue Management LLC, an investment adviser registered under the
Investment Advisers Act of 1940, has reported beneficial ownership of
662,375 shares of common stock with respect to which it has sole power to
vote 661,775 shares and sole power to dispose of 662,375 shares. The above
information has been obtained from a Schedule 13 G/A filed with the
Securities and Exchange Commission.
(10) K.G. Redding & Associates, LLC, an investment adviser registered under the
Investment Advisers Act of 1940, has reported beneficial ownership of
743,700 shares of common stock with respect to which it has shared power to
vote 502,500 shares and shared power to dispose of 743,700 shares. The
above information has been obtained from a Schedule 13G filed with the
Securities and Exchange Commission.
(11) This total is qualified by notes (2) through (8).
(12) Includes 3,750 shares and 4,813 shares, respectively, underlying options
held by Jeffrey Fishman and David W. Kalish.
9
ELECTION OF DIRECTORS
(PROPOSAL 1)
Pursuant to our by-laws, the number of directors was fixed at eleven by our
board of directors. The board is divided into three classes. Each class is
elected to serve a three year term and is to be as equal in size as is possible,
and the classes are elected on a staggered basis. The terms of Joseph A. Amato,
Jeffrey A. Gould and Matthew J. Gould expire at the 2004 Annual Meeting. Each of
them and J. Robert Lovejoy has been nominated by the board of directors to stand
for election at the meeting to hold office until our 2007 Annual Meeting and
until his successor is elected and qualifies. In addition, Jeffrey Fishman has
been nominated to stand for election at the meeting to hold office until our
2005 Annual Meeting and Joseph A. DeLuca has been nominated to stand for
election at the meeting to hold office until our 2006 Annual Meeting. Mr. DeLuca
is being nominated to replace Arthur Hurand, whose term of office will end on
the date of the Annual Meeting. Mr. Fishman is being nominated at this time for
a one year term in order that the size of each class of directors may be as
equal as is possible. Five other individuals serve as directors but are not
standing for election because their terms extend past the date of the Annual
Meeting. Proxies will not be voted for a greater number of persons than the
number of nominees named in the proxy statement.
It is not contemplated that any of the nominees will be unable to stand for
election. Should any nominee become unavailable for election, all proxies
(except proxies marked to the contrary) will be voted for the election of a
substitute nominee nominated by the board of directors.
If any director is unable to serve his full term, the board, by majority
vote of the directors then in office, may designate a substitute. The director
chosen by the board shall hold office for a term expiring at the annual meeting
of stockholders at which the term of the class to which the director has been
elected expires.
The affirmative vote of a plurality of the voting power of stockholders
present in person or represented by proxy at the meeting is required for the
election of each nominee for director.
10
The following table sets forth certain information regarding the nominees
for director:
NOMINEES FOR ELECTION TO SERVE UNTIL THE 2007 ANNUAL MEETING
PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
NAME AND AGE AND OTHER DIRECTORSHIPS OR SIGNIFICANT AFFILIATIONS
------------ ---------------------------------------------------
Joseph A. Amato Director since June 1989; Real estate developer;
69 Years Managing Partner of the Kent Companies, an owner,
manager and developer of income producing real estate,
since 1970.
Jeffrey A. Gould Vice President of our company since 1989 and a Senior
38 Years Vice President and Director of our company since
December 1999; President and Chief Executive Officer of
BRT Realty Trust, a mortgage real estate investment
trust, since January 1, 2002 and President and Chief
Operating Officer of BRT Realty Trust from March 1996 to
December 31, 2001; Trustee of BRT Realty Trust; Senior
Vice President of Georgetown Partners, Inc., the
managing general partner of Gould Investors L.P., a
limited partnership primarily engaged in real estate
ownership, since March 1996. Jeffrey A. Gould is the son
of Fredric H. Gould and brother of Matthew J. Gould.
Matthew J. Gould Director since December 1999; President and Chief
44 Years Executive Officer of our company from June 1989 to
December 1999 and a Senior Vice President of our company
since December 1999; President of Georgetown Partners,
Inc.; Senior Vice President of BRT Realty Trust. Matthew
J. Gould is the son of Fredric H. Gould and brother of
Jeffrey A. Gould.
J. Robert Lovejoy Senior managing director of Ripplewood Holdings L.L.C.,
59 Years a private equity investment firm, since January 2000; a
managing director of Lazard Freres & Co. LLC and a
general partner of Lazard's predecessor partnership for
over 15 years prior thereto; Director of Orient-Express
Hotels Ltd. and Director of the YMCA of Greater New
York.
NOMINEE FOR ELECTION TO SERVE UNTIL THE 2006 ANNUAL MEETING
Joseph A. DeLuca Principal and sole shareholder of Joseph A. DeLuca,
58 Years Inc., an entity engaged in real estate capital and
investment consulting, since September 1998, including
serving as Director of Real Estate Investments for
Equitable Life Assurance Society of America under a
consulting contract from June 1999 to June 2002;
Executive Vice President and head of Real Estate Finance
at Chemical Bank from September 1990 until its merger
with The Chase Manhattan Bank in 1996 and Managing
Director and Group Head of The Chase Real Estate Finance
Group of the Chase Manhattan Bank from the merger to
April 1998.
NOMINEE FOR ELECTION TO SERVE UNTIL THE 2005 ANNUAL MEETING
Jeffrey Fishman President and Chief Executive Officer of our company
45 Years since January 1, 2002; President and Chief Operating
Officer of our company from December 1999 to December
2001; Senior Managing Director of Cogswell Properties,
LLC, a real estate property owner and manager, from 1996
to December 1999.
11
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF JOSEPH A. AMATO,
JEFFREY A. GOULD, MATTHEW J. GOULD, J. ROBERT LOVEJOY, JOSEPH A. DELUCA AND
JEFFREY FISHMAN AS DIRECTORS. THE PERSONS NAMED IN THE PROXY CARD INTEND TO VOTE
SUCH PROXY FOR THE ELECTION OF JOSEPH A. AMATO, JEFFREY A. GOULD, MATTHEW J.
GOULD, J. ROBERT LOVEJOY, JOSEPH A. DELUCA AND JEFFREY FISHMAN UNLESS YOU
INDICATE THAT YOUR VOTE SHOULD BE WITHHELD.
The following table sets forth information regarding directors whose terms
will continue after the date of the Annual Meeting:
DIRECTORS TO CONTINUE IN OFFICE UNTIL THE 2006 ANNUAL MEETING
PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
NAME AND AGE AND OTHER DIRECTORSHIPS OR SIGNIFICANT AFFILIATIONS
------------ ---------------------------------------------------
James J. Burns Director since June 2000; Senior Vice President and
64 Years Chief Financial Officer of Wellsford Real Properties,
Inc., a real estate merchant banking company, from
October 1999 to the present; Partner of Ernst & Young
LLP, certified public accountants, from June 1995 to
September 1999; Director of Cedar Shopping Centers,
Inc., a real estate investment trust engaged in the
ownership, management and leasing of retail properties.
Fredric H. Gould Chairman of the Board of our company since June 1989 and
68 Years Chief Executive Officer from December 1999 to December
2001; Chairman of Georgetown Partners, Inc., the
managing general partner of Gould Investors L.P., a
limited partnership primarily engaged in real estate
ownership; Chairman of the Board of BRT Realty Trust,
and President of REIT Management Corp., advisor to BRT
Realty Trust; Director of EastGroup Properties, Inc., a
real estate investment trust engaged in the acquisition,
ownership and development of industrial properties.
Fredric H. Gould is the father of Jeffrey A. Gould and
Matthew J. Gould.
DIRECTORS TO CONTINUE IN OFFICE UNTIL THE 2005 ANNUAL MEETING
Charles Biederman Director since June 1989; Presently engaged in real
70 Years estate development; Principal of Sunstone Hotel
Investors LLC, a company engaged in the management,
ownership and development of hotel properties, from
November 1999 to present; Executive Vice President of
Sunstone Hotel Investors Inc., a REIT engaged in the
ownership of hotel properties, from September 1994 to
November 1999 and Vice Chairman of Sunstone Hotel
Investors from January 1998 to November 1999.
Patrick J. Callan, Jr. Vice President of Real Estate for Kimco Realty
42 Years Corporation, a real estate investment trust which owns
and operates neighborhood and community shopping
centers, from May 1998 to March 2004; Senior Vice
President of First Washington Realty, Inc., a company
engaged in the ownership, through a joint venture with
CalPERS, of a diversified portfolio of shopping center
properties, from March 2004 to present.
Marshall Rose Director since June 1989; Real estate consultant;
67 Years Chairman of The Georgetown Group, Inc., a real estate
consultant and investor, since 1978; Director of Estee
Lauder, Inc.; Chairman Emeritus of the New York Public
Library; Director of Lincoln Center for the Performing
Arts.
12
ADOPTION OF AMENDMENTS TO, AND RESTATEMENT OF,
THE COMPANY'S ARTICLES OF INCORPORATION
(PROPOSAL 2)
The company's board of directors proposes to amend the company's Articles
of Incorporation to (i) remove from the company's authorized capital stock, the
$16.50 cumulative convertible preferred stock which the company is currently
authorized to issue, (ii) renumber and reletter subsections and revise cross
references as a result of deleting the text setting forth the terms of the
preferred stock and (iii) update outdated references to statutes, organizations
and associations. The board of directors proposes to reflect such amendments in
restated articles of incorporation which would integrate and combine the full
text of the company's Articles of Incorporation, as amended, into one document.
The complete text of the proposed Amended and Restated Articles of Incorporation
as it would read if the amendment and restatement is approved by the
stockholders of the company is attached to this proxy statement as Appendix A
and the discussion below is qualified in its entirety by reference to the
proposed Amended and Restated Articles.
REASONS FOR PROPOSAL
The company's $16.50 cumulative convertible preferred stock was authorized
in 1989 in order to offer the stockholders of the company an alternative to the
ownership of the common stock of the company (for those electing to exchange
shares of common stock for preferred stock). The preferred stock was redeemable
by the company and if redeemed, the holder of the preferred stock had the option
to convert the preferred stock into common stock. On December 30, 2003, all
outstanding shares of preferred stock were either redeemed for cash or converted
into common stock. Accordingly, since December 30, 2003, there have not been any
shares of $16.50 cumulative convertible preferred stock issued or outstanding.
The Articles of Incorporation, as amended, authorizes the issuance of
2,300,000 shares of $16.50 cumulative convertible preferred stock and a total of
864,715 shares were issued. All of these outstanding shares of preferred stock
have been redeemed or converted. The company by appropriate resolution adopted
by its board of directors, could issue up to 1,435,285 shares of preferred
stock. However, the board of directors does not intend to authorize the issuance
of any additional shares of such preferred stock.
PROPOSED AMENDMENTS
Since the company does not intend to issue additional shares of its
cumulative convertible preferred stock, the board is proposing to eliminate the
preferred shares which the company is authorized to issue under its Articles of
Incorporation and, therefore, simplify the company's Articles of Incorporation
by deleting all of the detailed provisions of the preferred stock which are no
longer germane.
As a result of the removal of the 2,300,000 shares of authorized preferred
stock, the company's authorized capital will consist of 25,000,000 shares of
common stock having a par value of $1.00 per share. As of the record date for
the annual meeting of stockholders, 9,725,599 shares of common stock were issued
and outstanding and no shares of preferred stock were issued and outstanding.
In addition, the company proposes to renumber and reletter subsections and
revise cross references in the Articles of Incorporation as a result of deleting
the text setting forth the terms of the preferred stock. Finally, the company
proposes to update outdated references to statutes, organizations and
associations in the Articles of Incorporation. For example, since the adoption
of the Articles of Incorporation, the Internal Revenue Code was amended in 1986
and accordingly all references in the Articles of Incorporation to the Internal
Revenue Code will be amended to refer to the Internal Revenue Code of 1986. The
board also recommends that the company's Articles of Incorporation, as amended
to date and including the proposed amendments described herein, be restated,
integrated and combined into one document. This will simplify the company's
Articles of Incorporation because all applicable current provisions of the
certificate of incorporation will be contained in one document instead of in a
series of documents.
13
Other than eliminating our board's ability to issue a class of stock with
dividend and liquidation rights that are preferential to the rights of the
holders of common stock, the proposed amendment and restatement of the company's
Articles of Incorporation will have no effect on the holders of common stock.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of common
stock on the record date will be required to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADOPTION
OF THE AMENDMENT TO, AND RESTATEMENT OF, THE COMPANY'S ARTICLES OF
INCORPORATION. THE PERSONS NAMED IN THE PROXY CARD INTEND TO VOTE SUCH PROXY FOR
THE AMENDMENT AND RESTATEMENT OF OUR ARTICLES OF INCORPORATION UNLESS YOU
INDICATE THAT YOUR SHARES SHOULD BE VOTED OTHERWISE.
14
INDEPENDENT AUDITORS
(PROPOSAL 3)
GENERAL
The Audit Committee and the board of directors is seeking the ratification
of the appointment of Ernst & Young LLP as independent auditors for the fiscal
year ending December 31, 2004. A representative of Ernst & Young LLP is expected
to be present at the Annual Meeting and will have the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
We are not required to have our stockholders ratify the selection of Ernst
& Young LLP, as our independent auditors. We are doing so, because we believe it
is a matter of good corporate practice. If the stockholders do not ratify the
selection, the Audit Committee will reconsider whether or not to retain Ernst &
Young LLP but may retain such independent auditors. Even if the selection is
ratified, the Audit Committee, in its discretion, may change the appointment at
any time during the year if it determines that such a change would be in the
best interests of the company and its stockholders.
The affirmative vote of the holders of a majority of the votes cast at the
meeting is required to ratify the appointment of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 2004.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS
FOR 2004. THE PERSONS NAMED IN THE PROXY CARD INTEND TO VOTE SUCH PROXY FOR THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS UNLESS YOU INDICATE
THAT YOUR SHARES SHOULD BE VOTED OTHERWISE.
AUDIT AND OTHER FEES
The following table presents the fees for professional audit services
billed by Ernst & Young LLP for the audit of our annual consolidated financial
statements for the years ended December 31, 2002 and 2003, and fees billed for
other services rendered to us by Ernst & Young LLP for each of such years:
FISCAL FISCAL
2002 2003
-------- --------
Audit fees (1).............................................. $ 79,000 $ 94,750
Audit related fees (2)...................................... 65,000 97,500
Tax fees (3)................................................ 25,000 16,000
All other fees.............................................. -- --
-------- --------
Total fees............................................. $169,000 $208,250
---------------
(1) Audit fees include fees for the audit of our annual consolidated financial
statements and for review of financial statements included in our quarterly
reports on Form 10-Q.
(2) Audit related fees include fees for audits performed for significant
property acquisitions and fees related to services rendered in connection
with registration statements filed with the Securities and Exchange
Commission.
(3) Tax fees consist of fees for tax advice, tax compliance and tax planning.
The Audit Committee has concluded that the provision of non-audit services
listed above is compatible with maintaining the independence of Ernst & Young
LLP.
15
PRE-APPROVAL POLICY FOR AUDIT AND NON-AUDIT SERVICES
The Audit Committee must pre-approve all audit and non-audit services
involving the company's independent auditors.
In addition to the audit work necessary for the company to file required
reports under the Securities Exchange Act of 1934 (i.e., quarterly reports on
Form 10-Q and annual reports on Form 10-K) the independent auditors may perform
non-audit services, other than those prohibited by the Sarbanes-Oxley Act of
2002, provided they are pre-approved by the Audit Committee. The Audit Committee
approved all non-audit services performed by the independent auditors in 2003.
The independent auditors are prohibited from providing the following types
of services:
- bookkeeping or other services related to the company's accounting records
or financial statements;
- financial information systems, design and implementation;
- appraisal or valuation services, fairness opinions or contribution - in
kind - reports;
- actuarial services;
- internal outsourcing services;
- management functions or human resources;
- broker or dealer, investment adviser or investment banking services; and
- legal services and expert services related to the audit.
APPROVAL PROCESS
At the beginning of the fiscal year, the Audit Committee reviews and
approves the audit scope concerning the audit of the company's consolidated
financial statements for that year, including the proposed audit fee associated
with the audit. In addition, the Committee approves the provision of tax related
non-audit services and the maximum expenditure which may be incurred for such
tax services for such year. Any fees for the audit in excess of those approved
and any fees for tax related services in excess of the maximum established by
the Committee must receive the prior approval of the Audit Committee.
Proposals for any other non-audit services to be performed by the
independent auditors must be approved by the Audit Committee in advance at a
regularly scheduled meeting, by unanimous consent or at a meeting held by
telephone conference.
16
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the board of directors is comprised of three
independent directors and operates under a written charter adopted by the board
of directors, a copy of which, as amended, is included as Appendix B to this
proxy statement. The Audit Committee reviews the charter on an annual basis. The
board of directors has reviewed Section 10A(m)(3) of the Securities Exchange Act
of 1934 and the New York Stock Exchange listing standards definition of
independence for Audit Committee members and has determined that each member of
the Audit Committee is independent.
The Audit Committee is appointed by the board of directors to oversee and
monitor, among other things, the financial reporting process, the independence
and performance of the independent auditors and the functioning of the company's
internal controls. It is the responsibility of executive management to prepare
financial statements in accordance with generally accepted accounting principles
and of the independent auditors to perform an independent audit of the financial
statements and to express an opinion on the conformity of those financial
statements with generally accepted accounting principles.
In this context, the Audit Committee met on six occasions and held
discussions with management and the independent auditors. Management represented
to the Audit Committee that the year end consolidated financial statements were
prepared in accordance with generally accepted accounting principles, and the
Audit Committee reviewed and discussed the consolidated financial statements
with management and the independent auditors. The Audit Committee also reviewed
with the company's management the process used for the certifications under the
Sarbanes-Oxley Act of 2002 of the company's filings with the Securities and
Exchange Commission. In 2003, the Audit Committee met to review the unaudited
quarterly financial statements prior to filing each Form 10-Q with the
Securities and Exchange Commission. In 2003, the Audit Committee also reviewed
each quarterly earnings press release prior to public release. The Audit
Committee discussed with the independent auditors matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication With Audit
Committee).
In addition, the Audit Committee discussed with the independent auditors
the auditors' independence from the company and its management, and has received
the written disclosures and letter from the independent auditors required by
Independence Standards Board Standard No. 1 (Independence Discussions With Audit
Committees). Further, the Audit Committee reviewed and approved the auditors'
fees, both for performing audit and non-audit services and considered whether
the provision of non-audit services by the independent auditors was compatible
with maintaining the auditors' independence and concluded that it was
compatible.
The Audit Committee meets with the independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the internal controls, and the overall quality of the company's
financial reporting.
Based on the reviews and discussions referred to above, the Audit Committee
recommended that the audited financial statements for the year ended December
31, 2003 be included in Annual Report on Form 10-K for the year ended December
31, 2003 for filing with the Securities and Exchange Commission.
The Audit Committee approved the retention of Ernst & Young LLP as
independent auditors for the fiscal year ended December 31, 2004 after reviewing
the firm's performance, estimated fees for 2004 and independence from the
company and its management.
Charles Biederman (Chairman)
James J. Burns
Joseph A. Amato
17
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table discloses the compensation paid
and accrued for services rendered in all capacities to the company during the
last three fiscal years for our chief executive officer and for our other
executive officers whose compensation exceeded $100,000 for the fiscal year
ended December 31, 2003.
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION SECURITIES
FISCAL ---------------------- RESTRICTED STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARDS ($) (1) OPTIONS COMPENSATION($) (2)
--------------------------- ------ ---------- --------- ---------------- ---------- -------------------
Jeffrey Fishman(3)....... 2003 $288,839 $75,000 $40,766 -- $30,000
President and 2002 250,000 50,000 -- -- 30,000
Chief Executive 2001 200,000 -- -- 5,000 25,500
Officer
Simeon Brinberg(4)....... 2003 $113,365 -- $40,766 -- --
Senior Vice 2002 91,198 -- -- -- --
President 2001 30,053 -- -- 5,000 --
David W. Kalish(4)....... 2003 $103,828 -- $40,766 -- --
Senior Vice 2002 95,690 -- -- -- --
President and 2001 35,863 -- -- 5,000 --
Chief Financial Officer
Lawrence Ricketts........ 2003 $ 95,365 $15,000 $14,824 -- $16,500
Vice President, 2002 75,827 15,000 -- -- 13,500
Acquisitions 2001 65,019 15,000 -- 3,500 11,888
---------------
(1) Represents the grant of restricted stock awards which the executive has the
right to receive subject to vesting. The restricted stock awards vest after
five years. The values set forth above are based on the closing price of our
common stock on the American Stock Exchange on July 22, 2003, the date of
the awards, which was $18.53. The restricted stock awards receive cash
dividends at the rate paid on all of the company's shares of common stock.
The number of restricted shares awarded were 2,200 shares for each of
Jeffrey Fishman, Simeon Brinberg and David W. Kalish and 800 shares for
Lawrence G. Ricketts, Jr.
(2) Represents annual contributions made under our Pension Plan. The only other
type of Other Annual Compensation for each of the named executive officers
is in the form of perquisites and was less than the level required for
reporting.
(3) Mr. Fishman served as president and chief operating officer in 2000 and
2001. He was designated chief executive officer effective January 1, 2002.
Reference is made to the caption "Certain Relationships and Related
Transactions" for a discussion of compensation paid to Mr. Fishman by
affiliated entities.
(4) Simeon Brinberg and David W. Kalish do not receive compensation directly
from the company. Each is compensated by Gould Investors L.P. and related
entities and his salary is allocated to the company pursuant to a shared
services agreement. See "Certain Relationships and Related Transactions".
ONE LIBERTY PENSION PLAN
We have adopted a non-contributory defined contribution pension plan
covering employees. The pension plan is administered by Fredric H. Gould, Simeon
Brinberg and David W. Kalish (Messrs. Brinberg and Kalish are non-director
officers). Annual contributions are based on 15% of an employee's annual
earnings, not to exceed $30,000 per employee. Partial vesting commences one year
after employment, increasing annually until full vesting is achieved at the
completion of six years of employment. The method of payment of benefits to
participants upon retirement is determined solely by the participant, who may
elect a lump sum payment or the purchase of an annuity, the amount of which is
determined by the amount of contributions and the results of the Plan's
investments. For the year ended December 31, 2003, $30,000 was contributed for
the
18
benefit of Jeffrey Fishman with four years of credited service. The aggregate
amount accumulated to date for Mr. Fishman is approximately $125,000. For the
year ended December 31, 2003, $16,500 was contributed for the benefit of
Lawrence G. Ricketts, Jr. with five years of credited service. The aggregate
amount accumulated to date for Mr. Ricketts is approximately $62,000. Messrs.
Brinberg and Kalish do not participate in the Pension Plan.
STOCK OPTIONS GRANTED, EXERCISED AND FISCAL YEAR END OPTION VALUES
OPTION GRANTS IN 2003
The company did not grant any stock options during 2003.
OPTION EXERCISES IN 2003 AND FISCAL YEAR END OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END($) (2)
ACQUIRED VALUE REALIZED --------------------------- ---------------------------
NAME ON EXERCISE ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------------- ----------- ------------- ----------- -------------
Jeffrey Fishman.......... 4,250 $36,231 3,750 1,250 $29,100 $9,700
Simeon Brinberg.......... 3,500 14,494 11,750 1,250 95,013 9,700
David W. Kalish.......... 7,000 27,800 7,313 1,250 57,418 9,700
Lawrence G. Ricketts,
Jr..................... 7,225 51,470 -- 875 -- 6,790
---------------
(1) Represents the closing price of the common stock underlying the stock
options on the date of exercise less the stock option exercise price.
(2) The year end values represent the difference between the closing price of
the common stock on December 31, 2003 and the exercise price of the options.
The closing price of the common stock on the American Stock Exchange on
December 31, 2003 was $19.95.
19
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is composed of three independent non-employee
directors. The Compensation Committee is responsible for advising management and
the board of directors on matters pertaining to compensation arrangements for
executive employees, and also is responsible for administering the company's
stock option plan and the One Liberty Properties, Inc. 2003 Incentive Plan.
In 2003, the only officers who were compensated directly by us were Fredric
H. Gould, chairman of the board, Jeffrey Fishman, president and chief executive
officer, and Lawrence G. Ricketts, Jr., vice president, acquisitions. Other
officers were paid by Gould Investors L.P. (or other affiliated entities) and,
pursuant to a shared services agreement between the company, Gould Investors
L.P. and other affiliated entities, payroll expenses were allocated to the
company based on the estimated time devoted by the executive to the company's
affairs in comparison to the estimated time devoted by the executive to the
affairs of the other entities which participate in the sharing arrangement. The
allocation for payroll expenses of all executive officers of the company (6 in
number) pursuant to the shared services agreement was $412,400 in the aggregate
in 2003 and except for Simeon Brinberg and David W. Kalish, did not exceed
$100,000 as to any executive officer. A portion of the allocated expenses in
2003 was attributable to time expended by executive officers in connection with
the public offering consummated by the company in October and November 2003 and
time attributable to legal and accounting activities, including property
acquisitions, mortgage financings, banking matters, joint venture activities and
corporate governance matters.
COMPENSATION OVERVIEW
The Compensation Committee has determined that the annual compensation of
executive officers compensated by the company will be composed of three
elements: (i) an annual base salary; (ii) an annual bonus; and (iii) a long term
component realized through the grant of stock options and the award of
restricted shares under the 2003 Incentive Plan.
BASE SALARY AND BONUS
Base salaries are targeted to be competitive with salaries paid to senior
executives at other real estate investment trusts located in the same geographic
area, of similar market capitalization and involved in similar business
activities. In determining base salaries, the company takes into account an
individual's achievements and performance, increases in the company's rental
income, the operating performance of the company in the most recently concluded
fiscal year and the performance of the company's stock. The determination by the
Compensation Committee of base compensation is subjective and is not based on
any structured formula. In determining compensation for the 2003 fiscal year the
Compensation Committee took into account the expertise which the executive
officers demonstrated in managing the business. Among other things, the
Compensation Committee gave consideration to the company's acquisition
activities resulting in an increase in rental income, the company's operating
results, management of the real estate portfolio, and activities of the company
in joint venture investments.
The company does not have a bonus plan in existence and it does not
establish a bonus pool. Bonuses are granted on a case by case basis, with the
amount thereof being subjective. In determining bonus amounts, if any, the
Compensation Committee takes into consideration, among other things, the base
compensation of each officer, the performance of each officer during the most
recently concluded fiscal year, the results of operations for such year, the
performance of the company's stock and the recommendations of management.
LONG TERM COMPENSATION -- STOCK OPTIONS AND RESTRICTED STOCK AWARDS
In 2003, the board of directors authorized, and the company's stockholders
approved, the adoption of the One Liberty Properties, Inc. 2003 Incentive Plan,
which authorizes the grant of incentive and non-statutory stock options and the
award of restricted shares. The granting of options and the awarding of
restricted shares under the 2003 Incentive Plan is at the discretion of the
Compensation Committee and is not based on any formula. No stock options were
granted in 2003 under the 2003 Incentive Plan. In 2003, the Compensation
Committee approved the awarding of 26,350 restricted shares to a total of 20
persons, including employees,
20
officers, directors and consultants. The awards granted in 2003 provide for a
five year vesting period and, therefore, the shares awarded are not to be
transferred by the recipient until the five year vesting period has been
satisfied. Accordingly, an award of restricted shares under the 2003 Plan cannot
be realized unless the awardee remains with the company for a period of five
years during which five year period the awardee realizes the benefits of any
cash distributions paid on the shares awarded to him. The Compensation Committee
believes that awarding restricted shares under the 2003 Plan provides the
recipients with an incentive to devote their best efforts in pursuing the
success of the company by providing awardees with an opportunity to share in the
growth and prosperity of the company through the ownership of shares of the
company.
CEO COMPENSATION
The Compensation Committee authorized an increase in Mr. Fishman's base
annual salary from $288,839 to $300,000 effective January 1, 2004. The
Compensation Committee's determination of Mr. Fishman's 2004 base annual salary
was based on an examination of three surveys which reported on the compensation
paid to other chief executive officers of real estate investment trusts in the
geographic area in which the company is located, the compensation paid to other
chief executive officers by real estate investment trusts having a similar
market capitalization as the company and the compensation paid to other chief
executive officers by real estate investment trusts engaged in a similar
business as the company. The Compensation Committee also took into account the
responsibilities of Mr. Fishman, the activities, performance and growth of the
company in 2003 and fees received by Mr. Fishman from affiliated entities. Based
on his performance in 2003, the Compensation Committee has approved the increase
in Mr. Fishman's base salary and the payment of a $125,000 bonus which will be
paid and expensed in 2004.
Respectfully submitted, Compensation
Committee
Joseph A. Amato
Charles Biederman
James J. Burns
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fredric H. Gould, Chairman of our board of directors, is Chairman of the
board of trustees of BRT Realty Trust, a real estate investment trust engaged in
mortgage lending. He is also Chairman of the board of directors and sole
stockholder of the managing general partner of Gould Investors L.P. and sole
member of a limited liability company which is also a general partner of Gould
Investors L.P. Jeffrey A. Gould, a director of our company, is President and
Chief Executive Officer of BRT Realty Trust and a Vice President of the managing
general partner of Gould Investors L.P. Matthew J. Gould, a director of our
company, is a Senior Vice President of BRT Realty Trust and President of the
managing general partner of Gould Investors L.P. In addition, David W. Kalish,
Simeon Brinberg, Mark H. Lundy and Israel Rosenzweig, each of whom is an
executive officer of our company, are also executive officers of BRT Realty
Trust and of the managing general partner of Gould Investors L.P. Gould
Investors L.P. owns approximately 8.1% of our outstanding shares of common
stock.
We and certain related entities, including Gould Investors L.P. and BRT
Realty Trust, occupy common office space and use certain services and personnel
in common. In 2003, we paid to Gould Investors L.P. under a shared services
agreement $901,000 for general and administrative expenses, including rent,
telecommunication services, computer services, bookkeeping, secretarial and
other clerical services and legal and accounting services. This amount includes
$51,000 contributed to the annual rent of $366,000 paid by Gould Investors L.P.,
BRT and related entities to a subsidiary of Gould Investors L.P. which owns the
building in which the offices of these entities are located and an aggregate of
$412,400, allocated to us for services (primarily legal and accounting),
performed by some executive officers who are not engaged by us on a full time
basis, including the amounts allocated to us for services rendered by Simeon
Brinberg and David W. Kalish as set forth in the "Summary Compensation Table".
The allocation of common general and administrative expenses is computed in
accordance with the shared services agreement and is based on the estimated time
devoted by executive, administrative and clerical personnel to the affairs of
each participating entity. The services of secretarial personnel generally are
allocated on the same basis as that of the executive to whom each secretary is
assigned.
Majestic Property Management Corp., an entity which is 100% owned by
Fredric H. Gould and for which certain of our executive officers are officers,
acts as managing agent, mortgage broker, leasing and sales broker and
construction supervisor for our company, related entities (including Gould
Investors L.P. and BRT Realty Trust) and unrelated entities. In 2003, we paid an
aggregate of $787,606 to Majestic Property Management Corp. consisting of
mortgage brokerage fees of $291,120 relating to mortgages in the principal
amount of $29,112,000 placed on six of our properties; leasing commissions of
$309,400; construction supervisory fees of $172,086 for supervision of
improvements to properties we own; and management fees of $15,000 relating to a
property that we own.
Fees paid to Majestic Property Management Corp. are approved by our board
of directors, including a majority of the independent directors, and are based
on the fees which would be charged by unaffiliated persons for comparable
services in the geographic area in which the properties for which the fees paid
were located.
A management fee equal to 1% of the rent paid to our movie theater joint
ventures by its tenants is paid to Majestic Property Management Corp. under
management agreements negotiated by Majestic Property Management Corp. with our
joint ventures and joint venture partners. The total management fee for 2003 was
$108,000. In addition, in accordance with agreements negotiated by Majestic
Property Management Corp. with our movie theater joint ventures, brokerage fees
of $186,000 relating to mortgages in the principal amount of $23,300,000 were
paid to Majestic Property Management Corp. by our movie theater joint ventures.
Fredric H. Gould received compensation in 2003 of $294,925 from Majestic
Property Management Corp. Jeffrey A. Gould, Matthew J. Gould, Israel Rosenzweig,
Simeon Brinberg, David W. Kalish and Mark H. Lundy, officers of our company,
received fees from Majestic Property Management Corp. in 2003 of $398,367,
$235,105, $398,967, $65,156, $93,756, and $138,257, respectively.
22
Jeffrey Fishman, our President and Chief Executive Officer, devotes
substantially all of his time to the affairs of our company. Mr. Fishman also
provides consulting services to several service oriented companies owned by
Fredric H. Gould. In 2003, Mr. Fishman received consulting fees of $346,986 from
these service oriented entities for services rendered, none of which was paid by
Majestic Property Management Corp. The officers referred to in the immediately
preceding paragraph receive consulting fees from the service oriented companies
owned by Fredric H. Gould. None of these entities, other than Majestic Property
Management Corp., provides services to us.
During December 1999 and January and February of 2000, we made three loans
aggregating $240,000 to Mr. Fishman. These loans were made for the purpose of
providing funds to Mr. Fishman for his purchase of shares of our common stock in
the open market and was agreed to by us in connection with the negotiations
pertaining to Mr. Fishman's employment by us as president. He was elected
president and chief operating officer on December 6, 1999 and was designated
chief executive officer effective January 1, 2002. No advances were made under
the loan during 2003. The largest amount outstanding under the loan to Mr.
Fishman during 2003 was $166,000. The loan was repaid in full in 2003 from the
proceeds derived from the sale of 8,000 shares of the company's common stock to
Gould Investors L.P. at the then market price of the company's common stock.
Mr. Fishman's wife owned a 5% equity interest in a limited liability
company in which we owned a 95% interest. The limited liability company owns a
66,000 square foot office building located in Brooklyn, New York. Mrs. Fishman
acquired her interest in this limited liability company prior to the time Mr.
Fishman became our employee. On September 9, 2003, our board of directors,
including all of our independent directors approved our purchase of the 5%
equity interest owned by Mrs. Fishman in this limited liability company. We paid
Mrs. Fishman $159,200 in connection with this transaction.
23
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who beneficially own more than 10% of our
shares, to file Initial Reports of Ownership and Reports of Changes in Ownership
with the Securities and Exchange Commission ("SEC") and the New York Stock
Exchange. Executive officers, directors and greater than 10% beneficial owners
are required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file. We prepare and file the requisite forms on behalf of our
executive officers and directors. Based on a review of information supplied to
us by our executive officers, directors and 10% beneficial owners, we believe
that all Section 16(a) filing requirements applicable to our executive officers,
directors and 10% beneficial owners with respect to fiscal 2003 were met. On
February 10, 2004, Gould Investors L.P., Fredric H. Gould, Matthew J. Gould and
David W. Kalish filed Forms 5 to update the number of shares of common stock
owned directly or indirectly by them to reflect the acquisition of shares under
our cash distribution reinvestment plan. Each of David W. Kalish, Seth Kobay and
Israel Rosenzweig filed amendments to Forms 4 filed on a timely basis to correct
mistakes included in the original filing. Mr. Kalish, a Senior Vice President of
the company, filed amendments on October 20, 2003 to correct Forms 4 filed on
July 22, 2003 and September 30, 2003; Seth Kobay, a Vice President and
Treasurer, filed an amendment on June 10, 2003 to correct a Form 4 filed on May
5, 2003; and Israel Rosenzweig, a Senior Vice President, filed an amendment on
September 26, 2003 to correct a Form 4 filed on September 17, 2003.
24
PERFORMANCE GRAPH
The following graph compares the performance of our common stock with the
Standard & Poor's 500 Stock Index, and a peer group index of publicly traded
equity REIT's prepared by National Association of Real Estate Investment Trusts.
In prior years we also included a comparison of our common stock with the
American Stock Exchange Market Value Index; but in view of the transfer of our
listing from the American Stock Exchange to the New York Stock Exchange on
January 15, 2004, such comparison was not deemed by us to be meaningful and is
not included in the graph. The graph assumes $100.00 was invested in our common
stock on December 31, 1998 and assumes the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ONE LIBERTY PROPERTIES, INC., THE S&P 500 INDEX
AND THE NAREIT EQUITY INDEX
[Graphic Omitted]
* $100 invested on 12/31/98 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
CUMULATIVE TOTAL RETURN
12/98 12/99 12/00 12/01 12/02 12/03
------ ------ ------ ------ ------ ------
One Liberty Properties, Inc............... 100.00 115.10 107.08 161.29 179.54 251.37
S&P 500................................... 100.00 121.04 110.02 96.95 75.52 97.18
NAREIT Equity............................. 100.00 95.38 120.53 137.32 142.57 195.51
The stock price performance included in this graph is not necessarily indicative
of future stock price performance.
25
ADDITIONAL INFORMATION
As of the date of this proxy statement, we do not know of any business that
will be presented for consideration at the meeting other than the items referred
to in the Notice of the Meeting. If any other matter is properly brought before
the meeting for action by stockholders, the holders of the proxies will vote and
act with respect to the business in accordance with their best judgment.
Discretionary authority to do so is conferred by the enclosed proxy.
By order of the Board of Directors
Mark H. Lundy, Secretary
Great Neck, NY
April 29, 2004
26
APPENDIX A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
ONE LIBERTY PROPERTIES, INC.
ARTICLE I
NAME
The name of the Corporation is:
ONE LIBERTY PROPERTIES, INC.
ARTICLE II
PURPOSES
The purpose for which the Corporation is formed is to engage in any lawful
act or activity for which corporations may be organized under the General Laws
of the State of Maryland as now or hereafter in force.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The post-office address of the principal office of the Corporation in the
State of Maryland is c/o CSC -- Lawyers Incorporating Service Company, 11 East
Chase Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in the State of Maryland is CSC -- Lawyers Incorporating Service
Company, a corporation of the State of Maryland, and the post-office address of
the resident agent is 11 East Chase Street, Baltimore, Maryland 21202.
ARTICLE IV
CAPITAL STOCK
(1) The total number of shares of capital stock which the Corporation shall
have authority to issue is twenty-five million (25,000,000) shares, all of one
class and designated Common Stock, of the par value of One Dollar ($1.00) per
share and of the aggregate par value of Twenty-Five Million Dollars
($25,000,000).
(2) Each share of Common Stock shall entitle the owner thereof to vote at
the rate of one (1) vote for each share held.
(3) Any fractional shares shall carry proportionately all the rights of a
whole share, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
(4) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of these Articles of Incorporation and the
by-laws of the Corporation.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall be three (3), which
number may be increased pursuant to the by-laws of the Corporation but shall
never be less than three. Commencing with the annual meeting of stockholders
held on May 22, 1984, the directors of the Corporation shall be classified with
respect to the time for which they shall severally hold office by dividing them
into three classes, each class to be as
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nearly equal in number as possible, which classes shall be designated as Class
1, Class 2 and Class 3. Subject to the provisions hereof, the number of
directors in each class shall from time to time be designated by the Board of
Directors of the Corporation pursuant to the by-laws. The Class 1 director shall
be elected initially for a term of one year; the Class 2 directors shall be
elected initially for a term of two years; and the Class 3 directors shall be
elected initially for a term of three years. At each annual meeting, the
successors to the class of directors whose terms shall expire that year shall be
elected to hold office for a term of three years so that each term of office of
one class of directors shall expire in each year.
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in these
Articles of Incorporation or in the by-laws of the Corporation or in the General
Laws of the State of Maryland.
(3) No holder of shares of stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital stock of
the Corporation or any other security of the Corporation which it may issue or
sell (whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise) other than such right, if
any, as the Board of Directors, in its discretion, may determine.
(4) Each holder of stock of the Corporation shall upon demand disclose to
the Board of Directors in writing such information with respect to direct and
indirect ownership of securities of the Corporation as the Board of Directors
deems necessary to comply with provisions of the Internal Revenue Code of 1986,
as from time to time amended, applicable to the Corporation, or to comply with
the requirements of any taxing authority.
(5) Each, director, officer and employee of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General Laws
of the State of Maryland, as now or hereafter in force.
(6) The Board of Directors of the Corporation may make, alter or repeal
from time to time any of the by-laws of the Corporation except any particular
by-law which is specified as not subject to alteration or repeal by the Board of
Directors.
(7) The Board of Directors may authorize, subject to such approval of
stockholders and other conditions, if any, as may be required by any applicable
statute, rule or regulation, the execution and performance by the Corporation of
one or more agreements with any person, corporation, association, company,
trust, partnership (limited or general) or other organization whereby, subject
to the supervision and control of the Board of Directors, any such other person,
corporation, association, company, trust, partnership (limited or general), or
other organization shall render or make available to the Corporation managerial,
investment advisory and/or related services, office space and other services and
facilities (including, if deemed advisable by the Board of Directors, the
management or supervision of the investments of the Corporation) upon such terms
and conditions as may be provided in such agreement or agreements (including, if
deemed fair and equitable by the Board of Directors, the compensation payable
thereunder by the Corporation).
(8) The Board of Directors may authorize any agreement of the character
described in paragraph (7) of this Article V or other transaction with any
person, corporation, association, company, trust, partnership (limited or
general), or other organization, although one or more of the members of the
Board of Directors or officers of the Corporation may be the other party to any
such agreement or an officer, director, stockholder, or member of such other
party, and no such agreement or transaction shall be invalidated or rendered
voidable solely by reason of the existence of any such relationship if (i) the
existence is disclosed or known to: (a) the Board of Directors, and the Board
authorizes, approves, or ratifies the agreement or transaction by the
affirmative vote of a majority of disinterested directors, even if the
disinterested directors constitute less than a quorum; or (b) the stockholders
entitled to vote, and the agreement or transaction is authorized, approved, or
ratified by a majority of votes cast by the stockholders entitled to vote other
than the votes of shares owned of record or beneficially by the interested
director or such other entity or officer, director, stockholder or member
thereof; or (ii) the contract is fair and reasonable to the Corporation. Any
member of the Board of Directors of the Corporation who is also a director or
officer of such other entity or who is so interested or associated
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with such other entity may be counted in determining the existence of a quorum
at any meeting of the Board of Directors which shall authorize any such
agreement or transaction, and may vote thereat to authorize any such agreement
or transaction, with like force and effect as if he were not such director or
officer of such other entity or not so interested or associated.
(9) The determination as to any of the following matters made in good faith
by or pursuant to the direction of the Board of Directors consistent with the
charter of the Corporation and in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties, shall be final and conclusive
and shall be binding upon the Corporation and every holder of shares of its
capital stock, namely: the amount of the net income of the Corporation for any
period and the amount of assets at any time legally available for the payment of
dividends; the amount of paid-in surplus, other surplus, annual or other net
profit, or net assets in excess of capital, undivided profits, or excess of
profits over losses on sales of assets; the amount, purpose, time of creation,
increase or decrease, alteration or cancellation of any reserves or charges and
the propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
the fair values, or any sale, bid or asked price to be applied in determining
the fair value, of any asset owned or held by the Corporation; and any matter
relating to the acquisition, holding and disposition of any assets by the
Corporation.
(10) Notwithstanding any provision of the General Laws of the State of
Maryland requiring any action to be taken or authorized by the affirmative vote
of the holders of a greater proportion than a majority of the shares or of the
shares of each class, or otherwise to be taken or authorized by vote of the
stockholders, such action shall be effective and valid, except as otherwise
provided in Article VII hereof, if taken or authorized by the affirmative vote
of the holders of a majority of the total number of shares outstanding and
entitled to vote thereon.
(11) Only the stockholders may, at any meeting of stockholders duly called
and at which a quorum is present, by the affirmative vote or consent of the
holders of a majority of all of the outstanding shares entitled to vote, remove
any director or directors from office, and only for cause, and may elect a
successor or successors to fill any resulting vacancies for the unexpired terms
of removed directors.
(12) To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of directors and officers, no director or
officer of the Corporation shall be liable to the Corporation or its
stockholders for money damages.
Neither the amendment nor repeal of this Paragraph, nor the adoption or
amendment of any provision of the Articles of Incorporation or By-laws
inconsistent with this Paragraph, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
ARTICLE VI
REDEMPTION
If at any time the Board of Directors shall in good faith be of the opinion
that direct or indirect ownership of shares of stock of the Corporation has or
may become concentrated to an extent which would cause the Corporation to fail
to qualify or be disqualified as a real estate investment trust by virtue of
Sections 856(a)(5) or (6) of the Internal Revenue Code of 1986, as amended, or
similar provisions of successor statutes, pertaining to the qualification of the
Corporation as a real estate investment trust, the Board of Directors shall have
the power (i) by lot or other means deemed equitable by them to call for
purchase from any stockholder of the Corporation a number of shares sufficient
in the opinion of the Board of Directors to maintain or bring the direct or
indirect ownership of shares of stock of the Corporation into conformity with
the requirements of said Sections 856(a)(5) and (6) pertaining to the
Corporation, and (ii) to refuse to transfer or issue shares of the Corporation
to any person whose acquisition of such shares would, in the opinion of the
Board of Directors, result in the Corporation being unable to conform to the
requirements of said Sections 856(a)(5) and (6). The purchase price for any
shares of stock purchased pursuant hereto (i) shall be equal to the fair market
value of the shares as reflected in the closing sale price for the shares, if
then listed
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on a national securities exchange, or the average of the closing sales prices
for the shares if then listed on more than one national securities exchange,
(ii) if the shares are not at the time listed or admitted for trading on any
such exchange, then such price as shall be equal to the last reported sale
price, or if there is no such sale price, the average of the last reported bid
and asked prices, as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq"), (iii) if the shares are not at the time
quoted on the Nasdaq, then such price shall be equal to the last reported bid
and asked prices as reported by the OTC Bulletin Board, or any similar reputable
quotation and reporting service, if such quotation is not reported by the OTC
Bulletin Board, or (iv) if no such closing sales prices or quotations are
available, then the purchase price shall be equal to the net asset value of such
stock as determined by the Board of Directors in accordance with the provisions
of applicable law. Payment of the purchase price shall be made in cash by the
Corporation at such time and in such manner as may be determined by the Board of
Directors of the Corporation. From and after the date fixed for purchase by the
Board of Directors, the holder of any shares of stock so called for purchase
shall cease to be entitled to distributions, voting rights and other benefits
with respect to such shares, excepting only the right to payment of the purchase
price fixed as aforesaid. Any transfer of shares that would prevent the
corporation from continuing to be qualified as a real estate investment trust by
virtue of the application of said Sections 856(a)(5) and (6) shall be deemed
void ab initio and the intended transferees shall be deemed never to have had an
interest therein. If the foregoing provision is determined to be void or invalid
by virtue of any legal decision, statute, rule or regulation, then the
transferee of such shares shall be deemed, at the option of the Corporation, to
have acted as agent on behalf of the Corporation in acquiring such shares and to
hold such shares on behalf of the Corporation.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right from time to time to make any amendments
to its charter which may be now or hereafter authorized by law, including any
amendments changing the terms or contract rights of any of its outstanding stock
by classification, re-classification, or otherwise. No such amendment which
changes the terms or contract rights of any of its outstanding stock shall be
valid unless such amendment shall have been authorized by not less than
two-thirds of the aggregate number of votes entitled to be cast thereon by a
vote at a meeting or in writing with or without a meeting. Any other amendment
to the corporation's charter shall be valid if such amendment shall have been
authorized by not less than a majority of the aggregate number of votes entitled
to be cast thereon by a vote at a meeting or in writing with or without a
meeting. All rights and powers conferred by the charter of the Corporation on
stockholders, directors and officers are granted subject to this reservation.
ARTICLE VIII
PERPETUAL EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE IX
INAPPLICABILITY OF SUBTITLE 6 OF TITLE 3 OF
THE MARYLAND GENERAL CORPORATION LAW
The Corporation expressly elects not to be subject to or governed by the
provisions of Subtitle 6 of Title 3 of the Maryland General Corporation Law, or
any substantially similar successor law.
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APPENDIX B
ONE LIBERTY PROPERTIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee is a committee of the Board of Directors. The primary
function of the Audit Committee is to oversee the accounting, auditing and
financial reporting policies and practices of One Liberty Properties, Inc. (the
"Company") by reviewing with management and external and internal auditors the
financial information that will be provided to shareholders and others, the
systems of internal controls that management has established, the
qualifications, independence, compensation, performance and selection of
independent auditors, the Company's audit and financial reporting process, and
the Company's compliance with legal and regulatory requirements. The Audit
Committee will fulfill its responsibilities by carrying out its activities and
duties consistent with this Charter. The Audit Committee shall be given full and
direct access to the Company's management, the Company's employees and
independent auditors as necessary to carry out these responsibilities.
Committee members are encouraged to enhance their familiarity with finance
and accounting by participating in educational programs, which will be paid for
by the Company.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors. The
members of the Audit Committee shall be nominated by the Nominating and
Corporate Governance Committee and elected by the Board at the annual
organizational meeting to one-year terms or until their successors are elected
and shall qualify. Each member shall satisfy the independence, experience and
financial literacy requirements of the New York Stock Exchange, the
Sarbanes-Oxley Act of 2002 and applicable rules and regulations of the
Securities and Exchange Commission.
At least one member of the Audit Committee shall be a "financial expert" as
required by the Sarbanes-Oxley Act of 2002, the New York Stock Exchange listing
standards and the rules and regulations of the Securities and Exchange
Commission. The designation of one or more members as a "financial expert" shall
not impose any duties, obligations or liabilities on such member greater than
the regular duties, obligations, and liabilities as a member of the Committee or
the Board.
If any Committee member simultaneously serves on the audit committee of
other public companies, the Board must determine that such simultaneous service
or services will not impair the ability of such member to effectively serve on
the Company's Audit Committee.
Unless a Chair is elected by the full Board, the members of the Committee
may designate a Chair by majority vote of the full Audit Committee membership.
No consulting, advisory or compensatory fees shall be paid by or for the
Company to any member of the Committee or to any entity with which he or she is
affiliated, other than director and committee fees payable by the Company in the
regular course. Board and committee fees may be payable in cash, shares, options
and/or in kind. Committee members may receive additional compensation from the
Company for their service on the Committee and for being Chairperson of the
Committee.
III. MEETINGS
The Audit Committee shall meet at least quarterly, or more frequently as
circumstances dictate. The timing of the meetings shall be determined by the
Audit Committee. However, the Audit Committee will meet at any time that the
independent auditors, personnel at the Company involved in internal auditing or
management believe communication to the Audit Committee is required. As part of
its job to foster open communication, the Audit Committee shall meet
periodically with management, the directors and the
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independent auditors in separate executive sessions to discuss any matter which
the Committee or each of these groups believes should be discussed privately.
Minutes shall be kept of each meeting of the Audit Committee.
IV. RESPONSIBILITIES AND DUTIES
The Committee shall have the following duties and responsibilities:
GENERAL RESPONSIBILITIES:
- To report Committee actions to the full Board of Directors and make
appropriate recommendations.
- To inquire as to the independence of the independent auditors. As part of
this responsibility, the Committee will ensure that the independent
auditors submit on a periodic basis to the Committee a formal written
statement delineating all relationships between such auditors and the
Company. The Committee is responsible for actively engaging in a dialogue
with the independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of the
independent auditors and for recommending that the Board of Directors
take appropriate action in response to the independent auditors' report
to satisfy itself of the independent auditors' independence.
- To conduct or authorize investigations into matters within the
Committee's scope of responsibility. The Committee is authorized to the
extent it deems necessary or appropriate, at the Company's expense and
without Board approval, to retain independent counsel, accountants or
other advisors to assist the Committee in fulfilling its duties. The
Committee may request any officer, director or employee of the Company or
the Company's outside counsel or independent auditors to attend any
meeting of the Committee or to meet with any members of or consultants to
the Committee.
- To review and approve, specifically and in advance, any permitted
non-audit services proposed to be provided to the Company by its
independent auditors, and ensure that such services do not interfere with
the independence of such auditors, and do not give rise to an appearance
of impropriety. Pre-approval of permitted non-audit services may be
delegated to the Chairman or another member of the Committee.
- To establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding accounting, auditing or
internal control issues.
- To meet separately and periodically, with management and with independent
auditors.
- To review and establish hiring policies regulating the hiring by the
Company of employees or former employees of the Company's independent
auditors.
- To review and approve all related party transactions involving the
Company and any affiliated Company, executive officer, director or
employee or family member of any of the foregoing.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT AUDITORS
AND REVIEWING INTERNAL AUDIT FUNCTION:
- To be directly and solely responsible for the appointment, retention and
evaluation of the independent auditors and to be solely responsible for
the approval of any replacement of the independent auditors if
circumstances warrant such action. The Audit Committee will review and
approve fees paid to the independent auditors, including audit and
non-audit fees, generally before such services are provided.
- To consider policies and procedures by the audit firm for audit and
review partner rotation as required by the rules and regulations of the
Securities and Exchange Commission.
- To obtain and review at least annually a report by the independent
auditors describing the firm's internal quality control procedures, any
material issues raised by the most recent quality control review
B-2
or peer review of the firm, or by any inquiry or investigation by
governmental or professional authorities within the preceding five years
respecting one or more independent audits carried on by the firm, and any
steps taken to deal with any such issues;
- To review and discuss with management and the independent auditors the
quality and adequacy of the Company's internal controls.
- To review and discuss with management and the independent auditors the
significant findings resulting from any examination of the Company's
internal controls.
RESPONSIBILITIES REGARDING THE ANNUAL AUDIT
AND QUARTERLY AND ANNUAL FINANCIAL STATEMENTS:
- The Audit Committee will discuss with the Independent Auditors:
- The planned arrangements and scope of the annual audit prior to
significant audit services being performed and the Committee will approve
the scope of the annual audit.
- The adequacy of the Company's internal controls, including computerized
information systems controls and security and financial reporting
controls.
- The need for the independent auditors to assess their responsibility for
detecting accounting and financial reporting errors, fraud and
defalcations, illegal acts and non-compliance with the Company's Code of
Business Conduct and Ethics.
- The need for changes or improvements in financial or accounting practices
or controls.
- The Audit Committee will strive to insure that the independent auditors
provide the Committee with timely notification and analysis of
significant financial reporting issues.
- The Audit Committee will have discussions with management and the
independent auditors regarding the annual report filed with the
Securities and Exchange Commission (Form 10-K) and other published
documents containing the Company's financial statements including related
notes and all of the Company's disclosures under "Management Discussion
and Analysis of Financial Condition and Results of Operations". Each Form
10-K must be approved by the Committee prior to filing, either at a
meeting, or by a telephone conference call in which management and the
independent auditors participate.
- The Audit Committee will have discussions with management and the
independent auditors regarding each quarterly report filed with the
Securities and Exchange Commission (Form 10-Q) and all of the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations". Each Form 10-Q must be approved by
the Committee prior to filing, either at a meeting, or by a telephone
conference call in which management and the independent auditors
participate.
- The Audit Committee Will Discuss With Management And The Independent
Auditors:
- The independent auditor's audit of, and report on, the financial
statements.
- The independent auditor's qualitative judgment about the quality, not
just the acceptability, of the accounting principles and financial
disclosures.
- The matters required to be discussed by Statement on Auditing Standards
No. 61, as it may be amended, including but not limited to:
- Methods used to account for significant unusual transactions.
- Effect of significant accounting policies in controversial or
emerging areas.
- Process and basis for sensitive accounting estimates.
B-3
- Disagreements between independent auditors and management over
accounting or disclosure matters.
- Any serious difficulties or disputes with management encountered during
the course of the audit. The Audit Committee is directly responsible for
the resolution of disagreements between management and the Company's
independent auditors regarding financial reporting.
- The Company's significant risks and exposures and the steps management
has taken to monitor and control such exposures, including the Company's
risk assessment and risk management policies or guidelines, if any.
PERIODIC RESPONSIBILITIES:
- Review annually the Committee's charter for adequacy and recommend any
changes to the Board.
- Meet with the independent auditors and management in separate executive
sessions to discuss matters that should be discussed privately with the
Committee.
- Review the Committee's methodology and functions at least annually;
evaluate its performance and institute appropriate changes to improve
performance or reflect changes in the business environment.
- Prepare an annual Committee report or other proxy statement disclosure
about the Committee and its activities in accordance with rules and
regulations of the Securities and Exchange Commission and other
applicable law.
- Include a copy of the Committee charter as an appendix to the proxy
statement at least once every three years.
- Review periodically the Company's policies and procedures that pertain to
the Company's financial reporting process, system of internal controls,
and compliance and ensure that management has established a system to
enforce these policies.
- Discuss with management the Company's earnings press releases, as well as
financial information and earnings guidance provided to analysts and
rating agencies, if any.
- Perform an annual self-evaluation of its performance and compliance with
the Charter.
The Audit Committee does not itself prepare financial statements or perform
audits, and its members are not auditors or certifiers of the Company's
financial statements. Members of the Committee rely without independent
verification on the information provided to them and the representations made to
them by management and the independent auditors, and look to management to
provide full and timely disclosure of all material facts affecting the Company.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting policies, appropriate internal controls and procedures or
appropriate disclosure controls and procedures, or that the Company's reports
and information provided under the Securities Exchange Act of 1934 ("Exchange
Act") are accurate and complete. Furthermore, the Audit Committee's
consideration and discussions referred to in this Charter do not assure that the
audit of the Company's financial statements has been carried out in accordance
with generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles, that the
Company's auditors are in fact "independent", or that the matters required to be
certified by the Company's Chief Executive Officer, Chief Financial Officer or
other officers of the Company under the Sarbanes-Oxley Act of 2002 and the
applicable rules and regulations of the Securities and Exchange Commission have
been properly and accurately certified.
B-4
ONE LIBERTY PROPERTIES, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints SIMEON BRINBERG AND MARK H. LUNDY, as
Proxies each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all the shares
of Common Stock, $1.00 par value per share, of One Liberty Properties, Inc. held
of record by the undersigned on April 24, 2004 at the Annual Meeting of
Stockholders to be held on June 14, 2004 or any adjournments thereof.
(TO BE SIGNED ON REVERSE SIDE)
--------------------------------------------------------------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES (776-9437) and follow the instructions. Have
your control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at www.voteproxy.com and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS
____________
1. Election of six Directors
|_| FOR ALL NOMINEES |_| WITHHOLD FOR ALL NOMINEES
|_| WITHHOLD FOR ALL EXCEPT AS NOTED
Nominees: Joseph A. Amato, Matthew J. Gould,
Jeffrey A. Gould, J. Robert Lovejoy, Jeffrey
Fishman and Joseph A. DeLuca. INSTRUCTIONS: To
withhold authority to vote for a nominee, place an
"X" in the "Withhold For All Except As Noted" box
and strike a line through the nominee's name.
For Against Abstain 2. Approval of the Amendment to the Articles of
Incorporation and the Restated Articles of
Incorporation.
|_| |_| |_|
For Against Abstain 3. Appointment of Ernst & Young LLP as independent
auditor for the year ending December 31, 2004.
|_| |_| |_|
4. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come
before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER, AND IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE:
Dated: ________________________________, 2004
________________________________________L.S.
________________________________________L.S.
(NOTE: PLEASE SIGN EXACTLY, AS YOUR NAME
APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, DIRECTORS, ETC. SHOULD
INDICATE WHEN SIGNING, GIVING FULL TITLE
AS SUCH. IF SIGNER IS A CORPORATION,
EXECUTE IN FULL CORPORATE NAME BY
AUTHORIZED OFFICER. IF SHARES ARE HELD
IN THE NAME OF TWO OR MORE PERSONS, ALL
SHOULD SIGN.)