UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
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Filed
by the Registrant ☒ |
Filed
by a party other than the Registrant ☐ |
Check
the appropriate box:
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Preliminary
Proxy Statement |
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) |
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Definitive
Proxy Statement |
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Definitive
Additional Materials |
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Soliciting
Material Under Rule14a-12 |
Presidio
Property Trust, Inc.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required. |
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No
fee on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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of each class of securities to which transaction
applies: |
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Aggregate
number of securities to which transaction applies: |
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined): |
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(4) |
Proposed
maximum aggregate value of transaction: |
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Total
fee paid: |
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Fee
paid previously with preliminary materials. |
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing. |
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Amount
Previously Paid: |
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Form,
Schedule or Registration Statement No.: |
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Date
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April
15, 2022
Dear
Stockholder:
You
are cordially invited to attend the 2022 Annual Meeting of
Stockholders (“Annual Meeting”) of Presidio Property Trust, Inc., a
Maryland corporation (“Company”), to be held at 8:30 A.M., Pacific
Time, on Thursday, May 26, 2022. As a result of the public health
impact of the coronavirus outbreak or COVID-19, and to promote the
safety, health and well-being of our stockholders, we will host a
virtual Annual Meeting, conducted via a live audio-only webcast.
Please visit www.proxydocs.com/SQFT to register to attend
and vote at the meeting, and for more details.
The
Notice Regarding the Availability of Proxy Materials describes the
business we will conduct at the Annual Meeting and provides
information about how to access the proxy materials that you should
consider when you vote your shares. Whether you own a few or many
shares and whether or not you plan to participate in our virtual
Annual Meeting, please cast your vote by submitting an electronic
ballot or by proxy. None of our stockholders owns more than 15% of
our outstanding shares, so every vote is important to us. We urge
you to read the Proxy Statement and vote in accordance with the
Board of Directors’ recommendations.
Thank
you for your continued support of the Company. We look forward to
your participation at our virtual Annual Meeting.
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Sincerely, |
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Jack K. Heilbron |
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President
and Chief Executive Officer |
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Chairman
of the Board |
NOTICE
OF 2022 ANNUAL MEETING OF STOCKHOLDERS
NOTICE
IS HEREBY GIVEN that the 2022 Annual Meeting of Stockholders
(“Annual Meeting”) of Presidio Property Trust, Inc., a Maryland
corporation (“Company”), will be held as follows:
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TIME: |
8:30
A.M., Pacific Time |
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| DATE: |
May
26, 2022 |
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PLACE: |
Annual
Meeting to be held live, audio-only, via the Internet. Please visit
www.proxydocs.com/SQFT for registration and more
details. |
ITEMS
OF BUSINESS:
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1. |
To
elect five (5) members to serve on our Board of Directors until the
2023 Annual Meeting of Stockholders or until their respective
successors are duly elected and qualify;
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To
consider and vote upon the ratification of the appointment of Baker
Tilly US, LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31,
2022;
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To
consider and vote upon an amendment to the Company’s charter to
provide for the reclassification of any unissued shares of common
stock from time to time into one or more classes or series of stock
having such terms as determined by the Board of
Directors;
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To
consider and vote upon a non-binding, advisory proposal to approve
the compensation of our named executive officers; |
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To
consider and vote upon an amendment to the Company’s 2017 Incentive
Award Plan to increase the number of shares available for issuance
thereunder to 2,500,000 from 1,100,000 shares of common stock;
and |
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To
transact such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
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The
foregoing items of business are more fully described in the
attached Proxy Statement, which forms a part of this notice and is
incorporated herein by reference.
WHO
MAY VOTE:
Our
Board of Directors has fixed the close of business on April 1, 2022
as the record date for the determination of stockholders entitled
to notice of, and to vote at, the Annual Meeting or any
postponement or adjournment thereof.
Pursuant
to the rules of the Securities and Exchange Commission, we have
elected to furnish proxy materials to our stockholders over the
Internet. In addition, we will send a full set of proxy materials
to any stockholder who makes a timely request for such materials by
mail.
We
will send a Notice Regarding the Availability of Proxy Materials
and provide access to our proxy materials over the Internet,
beginning on or about April 15, 2022, for the record and beneficial
owners of our common stock as of the close of business on the
record date. The Notice Regarding the Availability of Proxy
Materials instructs you on how to access and review the Proxy
Statement and our Annual Report on Form 10-K for the year ended
December 31, 2021, how to authorize your proxy on-line via the
Internet or by telephone, and how to receive a printed copy of our
proxy materials.
Proxy
Voting: Your vote is important. All stockholders are cordially
invited to register and attend our virtual Annual Meeting. Whether
or not you plan to participate in our Annual Meeting via the live,
audio-only webcast, please authorize your proxy as soon as possible
on-line or by telephone, or, if you receive a paper copy of the
proxy materials by mail, please mark, sign, date, and return your
proxy card, in order for your shares to be represented at the
Annual Meeting. If you plan to attend the virtual Annual Meeting
and wish to vote your shares by submitting an electronic ballot at
such time, you must register to attend the meeting so you may do so
at any time before the polls are closed.
You
may attend the Annual Meeting via the live, audio-only webcast to
vote on the proposals described in the Proxy Statement if you
register to attend at www.proxydocs.com/SQFT. You will be asked to
provide the Control Number located inside the shaded gray box and
marked by the arrow on your Notice Regarding the Availability of
Proxy Materials or proxy card. If you register to attend, further
instructions, including a unique link to access the Annual Meeting,
will be e-mailed to you. If you request a printed copy of our proxy
materials by mail, your broker or nominee will provide a voting
instruction card for you to use.
You
are encouraged to read the Proxy Statement before voting or
authorizing a proxy to vote on your behalf.
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BY
ORDER OF THE |
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BOARD
OF DIRECTORS, |
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Jack K. Heilbron |
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President
and Chief Executive Officer
Chairman
of the Board
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| San
Diego, California |
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| April
15, 2022 |
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Important
Notice Regarding the Availability of Proxy Materials for the
2022
Annual
Meeting to be held on May 26, 2022:
This
Notice, Proxy Statement and 2021 Annual Report to Stockholders
are
available
at www.proxydocs.com/SQFT.
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4995
Murphy Canyon Road, Suite 300
San
Diego, California 92123
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PROXY
STATEMENT |
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FOR |
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ANNUAL
MEETING OF STOCKHOLDERS |
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to be held on May 26, 2022 at 8:30 A.M., Pacific
Time |
This
Proxy Statement is furnished to the stockholders of Presidio
Property Trust, Inc., a Maryland corporation (“Company,” “we,”
“us,” or “our”), in connection with the solicitation by the Board
of Directors of the Company (“Board” or “Board of Directors”) of
your proxy to be voted at the 2022 Annual Meeting of Stockholders
of the Company (“Annual Meeting”) and at any postponements or
adjournments thereof. The Annual Meeting is to be held live via the
Internet on Thursday, May 26, 2022 at 8:30 A.M., Pacific Time.
Please visit www.proxydocs.com/SQFT for more details. The mailing
address of our principal executive office is 4995 Murphy Canyon
Road, Suite 300, San Diego, California 92123. As described in
detail in this Proxy Statement, we have chosen to deliver
electronically this Proxy Statement, accompanying proxy materials,
and our Annual Report on Form 10-K for the year ended December 31,
2021 (“Annual Report”) by posting them on our website,
www.PresidioPT.com, and mailing the Notice Regarding the
Availability of Proxy Materials to stockholders on or about April
15, 2022.
Important
Information Regarding Delivery of Proxy Materials
What
is “Notice and Access”?
“Notice
and access” generally refers to rules governing how companies must
provide proxy materials.
Under
the notice and access model, a company may select one of the
following two options for making proxy materials available to
stockholders:
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the
full set delivery option; or |
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the
notice only option. |
A
company may use a single method for all its stockholders, or use
full set delivery for some while adopting the notice only option
for others.
What
is the Full Set Delivery Option?
Under
the “Full Set Delivery” option, a company delivers all proxy
materials to its stockholders. This delivery can be by mail or, if
a stockholder has previously agreed, by e-mail. In addition to
delivering proxy materials to stockholders, the company must also
post all proxy materials on a publicly accessible website and
provide information to stockholders about how to access that
website.
What
is the Notice Only Option?
Under
the “Notice Only” option, a company must post all its proxy
materials on a publicly accessible website and deliver a Notice
Regarding the Availability of Proxy Materials. The notice includes,
among other matters:
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information
regarding the date and time of the meeting of stockholders as well
as the items to be considered at the meeting; |
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information
regarding the website where the proxy materials are posted;
and |
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the
means by which a stockholder can request paper or electronic copies
of the proxy materials. |
In
connection with the Annual Meeting, the Company has elected to use
the Notice Only option. Accordingly, you should have received a
Notice Regarding the Availability of Proxy Materials by mail, which
included instructions on how to access and view the proxy materials
and vote online or by telephone, or, if you have previously elected
to receive proxy materials by mail, you should have received a full
set paper copy of the Proxy Statement, accompanying proxy
materials, and our Annual Report.
You
may view your proxy materials, including our Annual Report and
proxy card online, by going to www.proxydocs.com/SQFT. If
you received the Notice Only and would like one or more paper
copies of the Proxy Statement, Annual Report or accompanying proxy
materials, you may request such copies by calling 1-866-648-8133.
You will also have the opportunity to make a request to receive
paper copies for all future meetings or only for the 2022 Annual
Meeting. Paper copies will be sent within three business days via
first class U.S. mail.
PURPOSE
OF THE MEETING
At
the Annual Meeting, the stockholders of the Company will be
asked:
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Proposal
1: |
To
elect five (5) members to serve on our Board of Directors until the
2023 Annual Meeting of Stockholders or until their respective
successors are duly elected and qualify; |
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Proposal
2:
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To
consider and vote upon the ratification of the appointment of Baker
Tilly US, LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31,
2022; |
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Proposal
3: |
To
consider and vote upon an amendment to the Company’s charter to
provide for the reclassification of any unissued shares of common
stock from time to time into one or more classes or series of stock
having such terms as determined by the Board of
Directors;
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Proposal
4: |
To
consider and vote upon a non-binding, advisory proposal to approve
the compensation of our named executive officers; |
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Proposal
5: |
To
consider and vote upon an amendment to the Company’s 2017 Incentive
Award Plan to increase the number of shares available for issuance
thereunder to 2,500,000 from 1,100,000 shares of common stock;
and |
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Proposal
6: |
To
transact of such other business as may properly come before the
Annual Meeting or any postponement or adjournment
thereof. |
ATTENDANCE
You
may attend the Annual Meeting via a live, audio-only webcast to
vote on the proposals described in this Proxy Statement if you
register to attend at www.proxydocs.com/SQFT by 2:00 P.M.,
Pacific Time on May 24, 2022 (“Registration Deadline”). You will be
asked to provide the Control Number located inside the shaded gray
box and marked by the arrow on your Notice Regarding the
Availability of Proxy Materials or proxy card. If you register by
the Registration Deadline, further instructions, including a unique
link to access the Annual Meeting, will be emailed to you. If you
request a printed copy of our proxy materials by mail, your broker
or nominee will provide a voting instruction card for you to
use.
QUORUM
The
presence, in person or by proxy, of stockholders entitled to cast a
majority of all the votes entitled to be cast on a matter will
constitute a quorum at the Annual Meeting. Votes “for” and
“against,” “abstentions,” and “broker non-votes” will be counted as
present to determine whether a quorum has been established. If a
quorum is not present, the chairman of the meeting or the
stockholders entitled to vote at the Annual Meeting, present in
person or by proxy, may adjourn the Annual Meeting or adjourn the
Annual Meeting to a date not more than 120 days after the original
record date, without notice other than announcement at the meeting.
The persons named as proxies will vote in favor of any such
adjournment.
VOTING
RIGHTS
Only
holders of record of outstanding shares of our common stock at the
close of business on April 1, 2022 are entitled to receive notice
of and to vote at the Annual Meeting or any postponement or
adjournment of the meeting. As of the record date, there were
issued and outstanding
[ ]
shares of the Company’s common stock. Each share of common stock
entitles the holder thereof to one vote for as many individuals as
there are directors to be elected at the Annual Meeting and one
vote on each other matter properly brought before the Annual
Meeting.
VOTING
PROCEDURES
An
abstention from voting on any proposal and broker non-votes are
considered present for the purpose of determining the presence of a
quorum. A “broker non-vote” occurs when a bank, broker, or other
holder of record holding shares for a beneficial owner does not
vote because that holder does not have discretionary voting power
and has not received voting instructions from the beneficial owner.
Brokers no longer have the discretion to vote your shares without
receiving voting instructions from you in an uncontested election
of directors. This is a very important change to the process that
many investors may have relied on when considering whether to
return voting instructions. As a result, if you do not complete the
voting instructions, your votes will not be cast for the election
of directors. In addition, brokers do not have discretionary
authority to vote your shares on any of the other proposals to be
considered at the Annual Meeting without receiving voting
instructions from you, except for Proposal 2.
Telephone
and Internet voting for all stockholders of record will be
available 24-hours a day at www.proxydocs.com/SQFT, up until the
time that the polls close during the Annual Meeting, which
commences at 8:30 A.M., Pacific Time, on Thursday, May 26, 2022.
You may also vote your shares on the day of and during the virtual
Annual Meeting at www.proxypush.com/SQFT. Attendance at the virtual
Annual Meeting will not revoke a previously submitted proxy unless
you actually vote by submitting an electronic ballot at the
meeting. For shares you hold beneficially in street name, you may
change your vote by submitting a new voting instruction to your
broker or other nominee following the instructions they provided
or, if you have obtained a legal proxy from your broker or other
nominee giving you the right to vote your shares, by attending the
virtual Annual Meeting and voting by submitting an electronic
ballot.
VOTE
REQUIRED
Voting
for the election of directors in Proposal 1 will be cumulative if,
prior to commencement of the voting, a stockholder gives us notice
of his or her intention to cumulate votes. If any stockholder gives
such a notice, then every stockholder will be entitled to such
rights, in which case, you may cumulate your total votes and cast
all of your votes for any one or a combination of director
nominees. In cumulative voting, your total votes equal the number
of director nominees multiplied by the number of shares of common
stock that you are entitled to vote. In the event that a quorum is
not present and the meeting is not convened, each of the Company’s
current directors will remain in office and continue to serve until
their successors are duly elected and qualify. You may vote FOR all
of the nominees, WITHHOLD your vote from all of the nominees, or
WITHHOLD your vote from any one or more of the nominees. If you
elect to withhold authority for any individual nominee or nominees,
you may do so by making an “X” in the box marked “FOR ALL EXCEPT,”
and by writing the name(s) of such nominee or nominees on the
applicable proxy card. In the event of cumulative voting, the five
nominees for the Board who receive the most votes will be elected.
If no stockholder provides notice of an intention to cumulate votes
in the election of directors, directors will be elected by a
plurality of all the votes cast at a meeting in which directors are
being elected. In the event of cumulative voting, abstentions and
broker non-votes, if any, will have no effect on the result of the
vote, although they will be considered present for the purpose of
determining the presence of a quorum. In the event that votes are
not cumulated in the election of directors, abstentions and broker
non-votes, if any, will have no effect on the result of the
vote.
Approval
of Proposal 2 requires a majority of the votes cast. Abstentions
and broker non-votes, if any, will have no effect on the result of
the vote on Proposal 2, although they will be considered present
for the purpose of determining the presence of a quorum.
Approval
of Proposal 3 requires the affirmative vote of a majority of all
the votes entitled to be cast on the matter. Abstentions and broker
non-votes, if any, will have the same effect as votes against
Proposal 3, although they will be considered present for the
purpose of determining the presence of a quorum.
Approval
of Proposal 4 requires the affirmative vote of a majority of the
votes cast on the matter. Abstentions and broker non-votes, if any,
will have no effect on the result of the vote on Proposal 4,
although they will be considered present for the purpose of
determining the presence of a quorum.
Approval
of Proposal 5 requires the affirmative vote of a majority of the
votes cast on the matter. Abstentions and broker non-votes, if any,
will have no effect on the result of the vote on Proposal 5,
although they will be considered present for the purpose of
determining the presence of a quorum.
SOLICITATION
OF PROXIES
If
you cannot attend the Annual Meeting, the accompanying proxy card
should be used to instruct the persons named as proxies to vote
your shares in accordance with your directions. The persons named
in the accompanying proxy card will vote shares represented by all
valid proxies in accordance with the instructions contained
therein. In the absence of instructions, shares represented by
properly executed proxies will be voted FOR the election of the
five individuals designated hereinafter as nominees for the Board,
FOR the ratification of the appointment of Baker Tilly US, LLP as
the Company’s independent registered public accounting firm for the
year ending December 31, 2022, FOR the approval of the amendment to
the Company’s charter to provide for the reclassification of any
unissued shares of common stock from time to time into one or more
classes or series of stock having such terms as determined by the
Board of Directors, FOR the non-binding advisory proposal to
approve the compensation of our named executive officers, and FOR
an amendment to the Company’s 2017 Incentive Award Plan to increase
the number of shares available for issuance thereunder to 2,500,000
from 1,100,000 shares of common stock. As to any other business
which may properly come before the Annual Meeting and be submitted
to a vote of the stockholders, proxies received by the Board of
Directors will be voted in the discretion of the named proxy
holders.
Attendance
at the Annual Meeting will not revoke a previously submitted proxy
unless you actually vote by submitting an electronic ballot at the
meeting. For shares you hold beneficially in street name, you may
change your vote by submitting a new voting instruction to your
broker or other nominee following the instructions they provided
or, if you have obtained a legal proxy from your broker or other
nominee giving you the right to vote your shares, by attending the
virtual Annual Meeting and voting by submitting an electronic
ballot.
If
you are a stockholder of record, you may revoke a proxy at any time
before it is voted at the Annual Meeting by:
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(a) |
delivering
a proxy revocation or another duly executed proxy bearing a later
date to the Secretary of the Company at 4995 Murphy Canyon Road,
Suite 300, San Diego, CA 92123; or |
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(b) |
attending
the virtual Annual Meeting and voting by submitting an electronic
ballot; or |
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authorizing
a proxy to vote via the Internet or by telephone with new voting
instructions. |
The
expense of soliciting proxies, including the cost of preparing and
mailing the Notice of Availability of Proxy Materials for the
Annual Meeting and the Annual Report, and the cost of Internet
hosting and telephone and Internet voting will be paid by the
Company. In addition to solicitation by mail, our directors,
officers and employees, and representatives from Donnelley
Financial Solutions, P.O. Box 932721, Cleveland, OH 44193 and
Mediant Communications, 3 Columbus Circle, Suite 2110, New York, NY
10019, may solicit proxies by telephone, Internet or otherwise. Our
directors, officers and employees will not be additionally
compensated for the solicitation, but may be reimbursed for their
out-of-pocket expenses. The Company will pay Donnelley Financial
Solutions (“Donnelley”) and Mediant Communications (“Mediant”) a
fee to maintain the Internet and telephone voting services.
Brokerage firms, fiduciaries and other custodians who forward
soliciting material to the beneficial owners of shares held of
record by them will be reimbursed for their reasonable expenses
incurred in forwarding such materials.
CONFIDENTIALITY
The
Company will keep all the proxies, ballots and voting tabulations
private, except as necessary to meet applicable legal requirements.
We will permit the Inspector of Elections and our legal counsel to
examine these documents. The Company will, however, disclose the
total votes received for and against each proposal in a Form 8-K
filing following the Annual Meeting as required by law.
ELECTRONIC
DELIVERY OF COMPANY STOCKHOLDER COMMUNICATIONS
Company
stockholders will be able to view the Proxy Statement, accompanying
proxy material, and Annual Report over the Internet in addition to
receiving paper copies by mail upon request. Please follow the
instructions provided in your proxy materials, including on your
proxy card, or the instructions provided when you authorize your
vote over the Internet by going to the website
www.proxypush.com/SQFT.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD LIVE VIA THE INTERNET ON May 26,
2022. THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT AND 2021 ANNUAL
REPORT ARE AVAILABLE AT WWW.PROXYDOCS.COM/SQFT.
ANNUAL
REPORT AND FINANCIAL STATEMENTS OF THE COMPANY
The
annual report of the Company, containing audited financial
statements for the fiscal year ended December 31, 2021, is included
with this Proxy Statement and is available at
www.proxydocs.com/SQFT.
PROPOSALS
ON WHICH YOU MAY VOTE
WHETHER
OR NOT YOU PLAN TO ATTEND THE VIRTUAL ANNUAL MEETING AND VOTE BY
SUBMITTING AN ELECTRONIC BALLOT, WE URGE YOU TO HAVE YOUR VOTE
RECORDED. STOCKHOLDERS MAY SUBMIT THEIR PROXIES VIA THE INTERNET AT
WWW.PROXYPUSH.COM/SQFT OR VIA TELEPHONE AT
1-866-249-5360.
PROPOSAL
1
ELECTION
OF DIRECTORS
Pursuant
to our Bylaws and as fixed by our Board of Directors, the number of
members of the Board is currently set at five directors.
At
the meeting, you will be asked to elect five directors to the
Board. The following current directors have been nominated for
re-election at the Annual Meeting: Jennifer A. Barnes, David T.
Bruen, James R. Durfey, Jack K. Heilbron, and Sumner J.
Rollings.
For
your review and consideration, a biography of each nominee for
director is contained in this Proxy Statement under the section
titled Director Biographies. The term of office of each individual
elected to be a director of the Company will be until the next
annual meeting of stockholders or until such individual’s successor
is duly elected and qualified. If any unforeseen event prevents one
or more of the nominees from serving as a director, your votes will
be cast for the election of a substitute or substitutes selected by
the Board. In no event, however, can the proxies be voted for a
greater number of individuals than the current size of the
Board.
DIRECTOR
NOMINEES
Set
forth below are the names of the individuals nominated as
directors, their ages, their offices in the Company, if any, their
principal occupations or employment for at least the past five
years, the length of their tenure as directors, and the names of
other public companies in which such persons hold or have held
directorships during the past five years.
The
table below provides the skills and qualifications of each director
nominee. The director qualifications currently focus on what the
Nominating and Corporate Governance Committee believes to be
essential competencies to effectively serve on the Board in
conjunction with the director qualification standards and selection
criteria outlined by the Corporate Governance Guidelines. In
reviewing and considering potential nominees for the Board, the
Nominating and Corporate Governance Committee reviewed the
candidate’s experience in corporate management, such as serving as
an officer or former officer of a publicly held company, the
candidate’s experience as a board member of a publicly held
company, the candidate’s professional and academic experience
relevant to the Company’s industry, the strength of the candidate’s
leadership skills, the candidate’s experience in finance and
accounting and/or executive compensation practices, and whether the
candidate has the time required for preparation, participation and
attendance at Board meetings and committee meetings, as well as the
candidate’s geographic background, gender, age and ethnicity. The
Nominating and Corporate Governance Committee and the Board have
concluded that each of the nominees for election to the Board
should serve as a member of the Board at the time of filing the
Proxy.
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Jack
K.
Heilbron
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Jennifer
A.
Barnes
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David
T.
Bruen
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James
R.
Durfey
|
|
Sumner
J.
Rollings
|
| Financial
and Accounting expertise |
|
X |
|
X |
|
X |
|
|
|
X |
| Multi-industry/Corporate
Management experience |
|
X |
|
X |
|
X |
|
X |
|
|
| Real
Estate experience |
|
X |
|
|
|
X |
|
X |
|
X |
| Human
Resources and Compensation Practices experience |
|
X |
|
X |
|
|
|
X |
|
X |
| Director,
officer or former officer of public company |
|
X |
|
|
|
|
|
X |
|
|
| Officer
or former officer of emerging company |
|
X |
|
X |
|
|
|
|
|
X |
| Community
Involvement |
|
X |
|
X |
|
X |
|
X |
|
X |
| Personal
and Professional Integrity, Ethics and Values |
|
X |
|
X |
|
X |
|
X |
|
X |
DIRECTOR
BIOGRAPHIES
Name
(Age)
Jennifer
A. Barnes (42)
Mrs. Barnes has served as a director and as a member of the Audit
Committee since February 2020. Effective December 31, 2020, Mrs.
Barnes joined the Nominating and Corporate Governance Committee as
a member. Mrs. Barnes currently serves as CEO of Optima Office,
Inc., an accounting and HR services company that she founded in
October 2018. From September 2012 to September 2018, she served as
CEO of Pro Back Office, LLC, a company that she co-founded. Mrs.
Barnes has also held a number of Controller and Director of
Accounting positions at privately held for-profit and non-profit
companies. She currently serves on the boards of the San Diego
Chapter of Junior Achievement, the Better Business Bureau of the
Pacific Southwest as the Treasurer of the Foundation Board and is
also the Treasurer for Tech Coast Angels. Mrs. Barnes received a
Bachelor of Science in Finance and Marketing from the University of
Arizona and an Executive MBA from San Diego State University. She
also completed the Becker CPA courses. Based on her extensive
experience in accounting and personnel matters, the Nominating and
Corporate Governance Committee determined that Mrs. Barnes is
qualified to serve on the Board of Directors.
David
T. Bruen (77)
Mr.
Bruen has served as our Lead Independent Director since May 2020
and Chair of our Audit Committee since February 2020. Mr. Bruen
joined our Board of Directors in 2008 and has served as a member of
the Audit Committee since 2010 until his appointment as Chair in
2020. Mr. Bruen retired in 2008 from San Diego National Bank after
six years as a senior commercial lending officer. During the
previous 17 years, Mr. Bruen was in commercial lending for mid-size
businesses in San Diego County for First Interstate Bank, Wells
Fargo Bank, Mellon 1st Business Bank, and San Diego National Bank.
He is a Life Member of the Holiday Bowl Committee and has been a
member of the Presidents Association for Palomar College, Financial
Executives International, the San Diego MIT Enterprise Forum, and
the Association for Corporate Growth. Mr. Bruen is a graduate of
San Diego State University and has an M.B.A. from the University of
Southern California. Based on his experience with banks, his
educational background, and his achievements in the community, the
Nominating and Corporate Governance Committee determined that Mr.
Bruen is qualified to serve on the Board of Directors.
James
R. Durfey (71)
Mr.
Durfey has served as a director, as a member of the Compensation
Committee, and as a member of the Nominating and Corporate
Governance Committee since December 2019. Effective December 31,
2020, Mr. Durfey was appointed to serve as Chair of the Nominating
and Corporate Governance Committee. Mr. Durfey retired in 2017 from
American Assets Trust, Inc. (NYSE: AAT), a publicly traded REIT,
where he served as Vice President, Office Properties, since 2004.
During his tenure at AAT, Mr. Durfey supervised property management
and leasing of Class A office buildings, assisted in the
acquisition and/or development of office buildings, and worked with
AAT’s board in developing corporate investment strategies. From
1996 to 2004, Mr. Durfey was Vice President of Trammell Crow
Company and General Manager of the Century Plaza Towers and the ABC
Entertainment Center. From 1980 to 1996, Mr. Durfey held various
senior roles at Homart Development Company, which was the
commercial real estate subsidiary of Sears, Roebuck and Company.
Mr. Durfey received his Bachelor of Science degree in Business
Management from Indiana University and is a licensed real estate
broker in California. Based on his extensive experience in various
facets of commercial real estate and with a publicly traded REIT,
the Nominating and Corporate Governance Committee determined that
Mr. Durfey is qualified to serve on the Board of
Directors.
Jack
K. Heilbron (71)
Mr.
Heilbron has served as a director and our Chief Executive Officer
and President since our inception. Mr. Heilbron also has served as
Chairman, CEO and President of NetREIT Dubose Model Home REIT, Inc.
(“NetREIT Dubose”) since its inception, and has served as CEO,
President and/or Managing Member of NetREIT Advisors, LLC, Dubose
Advisors, LLC, NTR Property Management, Inc., Murphy Canyon
Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC since
their inceptions, all of which are Company affiliated entities. Mr.
Heilbron was a founding officer, director, and stockholder of the
former CI Holding Group, Inc. and of its subsidiary corporations
(Centurion Counsel, Inc., Bishop Crown Investment Research Inc.,
PIM Financial Securities Inc., Centurion Institutional Services
Inc. and CHG Properties, Inc.) and currently serves as Chairman and
CEO of Centurion Counsel, Inc., a licensed investment advisor. He
also served as a director of the Centurion Counsel Funds, an
investment company registered under the Investment Company Act of
1940, from 2001 until 2005. From 1994 until its dissolution in
1999, Mr. Heilbron served as the Chairman and/or director of Clover
Income and Growth REIT. Mr. Heilbron graduated with a B.S. degree
in Business Administration from California Polytechnic College, San
Luis Obispo, California. Based on his experience as a director and
his experience with other
REITs,
the Nominating and Corporate Governance Committee determined that
Mr. Heilbron is qualified to serve on the Board of
Directors.
Sumner
J. Rollings (73)
Mr.
Rollings has served as a director since 2001, is a member of the
Audit Committee, and in December 2020 was appointed Chair of the
Compensation Committee. He also previously served as Chair of the
Nominating and Corporate Governance Committee. From 2001 to 2014,
Mr. Rollings owned and operated the Wagon Wheel Restaurant as the
Chief Executive Officer of Rolling Wheel Restaurant, Inc., in
Escondido, California. From 1999 to 2001, Mr. Rollings served as
sales executive for Joseph Webb Foods of Vista, California and from
1985 to 1999, as sales executive for Alliant Food Service Sales.
Mr. Rollings also served as a director of the Centurion Counsel
Funds, an investment company registered under the Investment
Company Act of 1940, from March 2001 until 2005. Based on his
experience owning and operating a business and having served as a
director on another board, the Nominating and Corporate Governance
Committee determined that Mr. Rollings is qualified to serve on the
Board of Directors.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
Our Board unanimously recommends that stockholders vote FOR each of
the nominees set forth above.
CORPORATE
GOVERNANCE
INFORMATION
REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Policy
Governing Communications with the Board of Directors
Stockholders
and other interested parties may communicate with the Board or one
or more members of the Board, including our Lead Independent
Director, or the non-management directors as a group, by sending an
email to Investor Relations, Lowell Hartkorn, at
LHartkorn@presidiopt.com or in writing in care of the Secretary of
Presidio Property Trust, Inc., at our principal executive office,
4995 Murphy Canyon Road, Suite 300, San Diego, California 92123.
All appropriate correspondence will be promptly forwarded by the
Secretary, to the director or directors for whom it is
intended.
Corporate
Governance Guidelines
Our
Board of Directors has adopted Corporate Governance Guidelines to
serve as a flexible framework within which our Board of Directors
and its committees operate. These guidelines cover a number of
areas, including the size and composition of our Board of
Directors, Board of Directors membership criteria and director
qualifications, director responsibilities, Board of Directors
agenda, roles of the Chairman of the Board of Directors and Chief
Executive Officer, meetings of independent directors, committee
responsibilities and assignments, Board of Directors member access
to management and independent advisors, director compensation,
director orientation and continuing education and management
succession planning. Our Nominating and Corporate Governance
Committee reviews our Corporate Governance Guidelines from time to
time as it deems appropriate and, if necessary, recommends changes
thereto to our Board of Directors.
Board
Committees
The
Board has adopted a charter for each of the Audit Committee, the
Compensation Committee, and the Nominating and Corporate Governance
Committee. The Board may, from time to time, establish certain
other committees to facilitate the management of the Company. The
committee charters and the Corporate Governance Guidelines are
posted on the Company’s website at www.PresidioPT.com and will be
provided without charge upon request to the Secretary, Presidio
Property Trust, Inc., 4995 Murphy Canyon Road, Suite 300, San
Diego, California 92123. The information contained on the Company’s
website is not incorporated by reference into and does not form a
part of this Proxy Statement. The table below indicates the members
and chair of each Board committee as of December 31,
2021.
|
Director |
|
Audit |
|
Compensation |
|
Nominating
and
Corporate
Governance
|
| |
|
|
|
|
|
|
| Jennifer
A. Barnes |
|
X
^ |
|
|
|
X |
| David
T. Bruen |
|
Chair
^ |
|
|
|
|
| James
R. Durfey |
|
|
|
X |
|
Chair |
| Sumner
J. Rollings |
|
X |
|
Chair |
|
|
^
Financial expert
Board
Independence
Our
Board of Directors has determined that each of our current
directors and nominees, except for Mr. Heilbron and Larry G.
Dubose, has no relationship which would interfere with the exercise
of independent judgment in carrying out the responsibilities of a
director and is “independent” within the meaning of the listing
standards of Nasdaq (“Nasdaq Rules”) and our director independence
standards. Also as previously
disclosed, Mr. Dubose notified the Company that he
is resigning from his positions with NetREIT
Advisors, LLC and Dubose Advisors, LLC in 2022 and will not stand
for re-election at the Annual Meeting, due to his other
professional commitments and demands on his time. However, he will
continue to remain an employee of our model home division.
Mr. Heilbron is a named executive officer of the Company. The Board
of Directors established and employed the following categorical
standards (which are at least as restrictive as “independent”
standards of the Nasdaq Rules) in determining whether a
relationship is material and thus would disqualify such director
from being independent:
|
■ |
The
director is, or has been within the last three years, our employee
or an employee of any of our subsidiaries; |
| |
|
| ■ |
An
immediate family member of the director is, or has been within the
last three years, our executive officer or an executive officer of
any of our subsidiaries; |
| |
|
| ■ |
The
director (or an immediate family member of the director) received
during any 12-month period within the last three years, more than
$120,000 in direct compensation from us and/or any of our
subsidiaries, other than director and committee fees and pension or
other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service); |
| |
|
| ■ |
The
director was affiliated with or employed within the last three
years by our present or former external auditor or an immediate
family member of the director was affiliated with or employed in a
professional capacity by our present or former external auditor and
worked on our audit within the last three years; |
| |
|
| ■ |
The
director (or an immediate family member of the director) is, or has
been within the last three years, employed as an executive officer
of another company where any of our executives serve or served on
that company’s compensation committee; |
| |
|
| ■ |
The
director, or an immediate family member of the director, is
currently a controlling stockholder, partner or executive officer
of another company that made payments to, or received payments from
us or any of our subsidiaries for property or services in an amount
which, in any of the last three fiscal years, exceeds the greater
of $200,000, or 5% of such other company’s consolidated gross
revenues; or |
| |
|
| ■ |
The
director (or an immediate family member of the director) was,
within the last three years, an officer, director or trustee of a
charitable organization where our (or an affiliated charitable
foundation’s) annual discretionary charitable contributions to the
charitable organization exceeded the greater of $200,000 or 5% of
that organization’s consolidated gross revenues. |
An
“affiliate” includes any person beneficially owning in excess of
10% of the voting power of, or a general partner or managing member
of, a company.
Meetings
and Attendance
The
Board met four times during 2021 and the various committees of the
Board met a total of 11 times. For the 2021 fiscal year, all
directors attended at least 75% of the total number of meetings of
the Board and of the committees of the Board on which the director
served during the year. Although the Company has no policy with
regard to Board members’ attendance at the Company’s Annual
Meeting, the Company expects all Board members to attend any
meeting of stockholders at which stockholders are anticipated by
the Company to be present. Since very few stockholders attend
annual meetings, no director attended the 2021 Annual Meeting. To
ensure free and open discussion among the Independent Directors of
the Board, if necessary, the Independent Directors may meet prior
to or after Board meetings, but in no event fewer than two times
per year.
Diversity
Our
Nominating and Corporate Governance Committee recognizes the
benefits associated with, and strives to create, diversity on the
Board of Directors as a whole when identifying and selecting
nominees. Although our Nominating and Corporate Governance
Committee does not have a specific policy with respect to board
diversity, the Nominating and Corporate Governance Committee
utilizes a broad conception of diversity and will consider the
candidate’s geographic background, gender, age and ethnicity. These
and the additional factors such as a candidate’s experience in
corporate management, such as serving as an officer or former
officer of a publicly held company, the candidate’s experience as a
board member of a publicly held company, the candidate’s
professional and academic experience relevant to the Company’s
industry, the strength of the candidate’s leadership skills, the
candidate’s experience in finance and accounting and/or executive
compensation practices, and whether the candidate has the time
required for preparation, participation and attendance at Board of
Directors meetings and committee meetings, and others are
considered useful by our Nominating and Corporate Governance
Committee and are reviewed in terms of assessing the needs of our
Board of Directors at any particular point in time. Our Nominating
and Corporate Governance Committee focuses on having a Board of
Directors which collectively possesses a broad range of talent,
skill, expertise and experience useful to the effective oversight
of our Company’s business and affairs. Typically, on an annual
basis, as part of our Board of Directors’ self-evaluation, each
director assesses whether the overall mix of our Board members is
appropriate for our Company.
Board
Leadership Structure and Role in Risk Oversight
The
Board believes the combined role of Chairman and Chief Executive
Officer, together with a Lead Independent Director, is in the best
interests of the Company because it provides the appropriate
balance between strategic development and independent oversight of
management.
The
Company believes the chosen leadership structure is the most
appropriate for its size and business. Since our inception, Jack K.
Heilbron has served as both Chairman of the Board and Chief
Executive Officer. The Company has a Lead Independent Director,
David T. Bruen, who also serves as Chair of the Audit Committee. As
Lead Independent Director, Mr. Bruen is able to monitor and address
any compliance issues, improprieties, or ethical considerations,
including anonymous submissions by Company employees.
Code
of Ethics and Conduct
The
Board of Directors has adopted a Code of Ethics and Conduct
(“Ethics Code”) that applies to all of our directors, officers and
employees, including our Chief Executive Officer, Chief Financial
Officer, and Chief Accounting Officer. The Ethics Code, which was
last revised on December 6, 2019, is posted under the Investor /
Corporate Governance section of our website at www.PresidioPT.com.
To the extent required by applicable Securities and Exchange
Commission (“SEC”) rules, we intend to post any future amendments
to or waivers from the Ethics Code promptly following the date of
such amendment or waiver on our website at
www.PresidioPT.com.
NOMINATING
AND CORPORATE GOVERNANCE COMMITTEE
In
2021, the Nominating and Corporate Governance Committee was
comprised of Mr. Durfey (Chair) and Mrs. Barnes, each of whom was
or is “independent” within the meaning of the Nasdaq Rules and our
director independence standards.
The
Nominating and Corporate Governance Committee met three times
during 2021. The Nominating and Corporate Governance Committee’s
principal responsibilities include:
|
■ |
Reviewing
the purpose, structure and membership of the committees of the
Board of Directors; |
| ■ |
Reviewing
the succession planning for our executive management; |
| ■ |
Assisting
the Board in developing and implementing our Corporate Governance
Guidelines; |
| ■ |
Considering
questions of possible conflicts of interest of the Board, as such
questions arise; |
| ■ |
Determining
the size, needs and composition of the Board and its
committees; |
| ■ |
Monitoring
a process to evaluate and assess the effectiveness of the Board;
and |
| ■ |
Recommending
nominees to the full Board. |
Stockholder
Recommendations of Director Candidates
The
Nominating and Corporate Governance Committee’s policy is to
consider candidates recommended by stockholders. The stockholder
must submit a resume of the candidate and an explanation of the
reasons why such stockholder believes the candidate is qualified
for service on the Board and how the candidate satisfies the Board
criteria noted above. The stockholder must also provide such other
information about the candidate as would be required by the rules
of the SEC to be included in a proxy statement. In addition, the
stockholder must include the consent of the candidate to serve as a
director if elected and describe any arrangements or undertakings
between the stockholder and the candidate regarding the nomination.
The stockholder must submit proof of ownership of the Company’s
shares of stock. See “Stockholder Proposals for 2022 Annual
Meeting” in this Proxy Statement. All communications are to be
directed to the Chair of the Nominating and Corporate Governance
Committee, c/o Secretary, Presidio Property Trust, Inc., 4995
Murphy Canyon Road, Suite 300, San Diego, California 92123.
Properly submitted stockholder recommendations will be evaluated by
the Nominating and Corporate Governance Committee using the same
criteria used to evaluate other director candidates.
COMPENSATION
COMMITTEE
In
2021, the Compensation Committee was comprised of Mr. Rollings
(“Chair”) and Mr. Durfey, each whom was or is “independent” within
the meaning of the Nasdaq Rules and our director independence
standards. The Compensation Committee met three times during 2021.
The Compensation Committee’s principal responsibilities
include:
|
■ |
reviewing
and approving the corporate goals and objectives with respect to
the compensation of our Chief Executive Officer (“CEO”) and
evaluating our CEO’s performance in light of these goals and
objectives and, based upon this evaluation (either alone or, if
directed by the Board of Directors, in conjunction with a majority
of the independent directors on the Board), setting our CEO’s
compensation (our CEO may not be present during voting
deliberations on his compensation); |
|
■ |
reviewing
and setting or recommending to the Board the compensation of our
named executive officers other than the CEO; |
| |
|
| ■ |
reviewing
and providing oversight of our compensation philosophy and
composition of our peer company community used for market
comparisons; |
| |
|
| ■ |
reviewing
and approving or recommending to the Board our incentive
compensation and equity- based plans and arrangements; |
| |
|
| ■ |
performing
a periodic evaluation of the Compensation Committee’s performance
in fulfilling its duties and responsibilities under the
Compensation Committee charter; |
| |
|
| ■ |
reviewing
and recommending to the Board the compensation of our non-employee
directors; |
| |
|
| ■ |
to
the extent that we are required to include a Compensation
Discussion and Analysis (“CD&A”) in our Annual Report on Form
10-K or annual proxy statement, reviewing and discussing with
management our CD&A and considering whether to recommend to our
Board that our CD&A be included in the appropriate
filing; |
| |
|
| ■ |
preparing
the annual Compensation Committee Report; |
| |
|
| ■ |
reporting
regularly to the Board regarding the activities of the Compensation
Committee; and |
| |
|
| ■ |
annually
reviewing and reassessing our Compensation Committee charter and
submitting any recommended changes to the Board for its
approval. |
The
Compensation Committee may also delegate any or all of its
responsibilities to a subcommittee of the Compensation Committee
and/or delegate the authority to grant stock or other equity rights
to one or more officers of our Company in a manner that is in
accordance with applicable law.
EXECUTIVE
COMPENSATION
Overview
of Compensation Program
The
Compensation Committee is responsible for establishing,
implementing and continually monitoring adherence with our
compensation philosophy. The Compensation Committee ensures that
the total compensation paid is fair, reasonable, and competitive.
The following narrative explains our compensation philosophy,
objectives, policies, and practices with respect to our named
executive officers, as determined in accordance with applicable SEC
rules. The Compensation Committee does not utilize compensation
consultants for executive or director compensation.
Compensation
Objectives, Philosophy and Risk Assessment
The
Compensation Committee believes that the most effective executive
compensation program is one that is designed to reward the
achievement of specific annual, long-term and strategic goals by us
and that aligns executives’ interests with those of the
stockholders by rewarding performance above established goals with
the ultimate objective of improving stockholder value. Together
with the Chief Executive Officer, the Compensation Committee
evaluates both performance and compensation to ensure that we
maintain our ability to attract and retain employees in key
positions with superior ability, experience and leadership
capability and that compensation provided to key employees remains
competitive relative to the compensation paid to similarly situated
executives of our peer companies. To that end, the Compensation
Committee believes that executive compensation packages provided to
our employees, including our named executive officers, should
include both cash and share-based compensation that rewards
performance measured against established goals.
The
Compensation Committee believes that measures such as growth in
assets and number of properties, rental income, and funds from
operations1 (“FFO”) play an important part in setting
compensation; however, the Compensation Committee also recognizes
that often outside forces beyond the control of management, such as
economic conditions, capital market conditions, changing retail and
real estate markets, and other factors, may contribute to less
favorable near-term results. The Compensation Committee also
strives to assess whether management is making appropriate
strategic decisions that will allow us to succeed over the long
term and build long-term stockholder value. These may include
ensuring that we have the appropriate leasing and acquisition
pipelines to ensure a future stream of recurring and increasing
revenues, assessing our risks associated with real estate markets
and tenant credit, managing our debt maturities, and determining
whether our staffing and general and administrative expense is
appropriate given our projected operating requirements.
We
believe that our compensation programs do not encourage unnecessary
or excessive risk taking that could have a material adverse effect
on our Company. In establishing and reviewing our compensation
program, the Compensation Committee considers whether the program
encourages unnecessary or excessive risk taking and has concluded
that it does not. Base salaries are fixed in amount and thus do not
encourage risk taking. In addition, the annual bonus program
appropriately balances risk and the desire to focus on goals
important to our success without putting undue emphasis on any
particular performance measure or encouraging unnecessary or
excessive risk taking. Furthermore, a significant portion of the
compensation provided to our named executive officers may be in the
form of equity awards that are important to help further align
executives’ interests with those of our stockholders. These awards
do not encourage unnecessary or excessive risk taking since the
ultimate value of the awards is tied to the value of our stock, and
grants are subject to vesting or retention schedules to help ensure
that executives have significant value tied to our long-term stock
performance.
1
Funds from operations or “FFO” is widely used as a key measure of
financial performance by REITs. The National Association of Real
Estate Investment Trusts (“NAREIT”) defines FFO as net income
(loss) (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from extraordinary items
and sales of depreciated operating properties, plus real estate
related depreciation and amortization, impairment write-downs of
real estate and write-downs of investments in an affiliate where
the write-downs have been driven by a decrease in value of real
estate held by the affiliate and after adjustments for
unconsolidated joint ventures.
Say-on-Pay
In
reviewing our compensation objectives and practices for 2021, the
Compensation Committee and the named executive officers were aware
of the results of the 2019 “say-on-pay” vote to approve our
executive compensation practices, and the “say-on-pay frequency”
vote to review such compensation every three years, which we viewed
as generally supportive of our compensation philosophy and
practices. We included the “say-on-pay” proposal in the proxy
statement for the 2019 annual meeting held on May 23, 2019, which
was re-convened on July 24, 2019. The “say-on-pay” proposal was
approved at the annual meeting in which approximately 84% of the
votes cast on such proposal voted to approve our executive
compensation practices. Stockholders also approved the “say-on-pay”
frequency proposal in which approximately 61% of the votes cast
voted for a three-year frequency. The next “say-on-pay” vote will
occur at the Annual Meeting and the next “say-on- pay frequency”
vote will take place in 2025.
Role
of Executive Officers in Compensation Decisions
The
Compensation Committee makes direct compensation decisions with
respect to the compensation of Mr. Heilbron, our Chairman,
President and Chief Executive Officer, and establishes the general
parameters within which it establishes the compensation for our
other named executive officers and senior management team. The
Compensation Committee may also review equity awards to other
officers and employees. Our Chief Executive Officer is not present
for any deliberations or decisions on his own
compensation.
The
Chief Executive Officer reviews the performance of our other named
executive officers and senior management team annually and makes
recommendations with respect to salary adjustments, bonuses and
equity award amounts for such individuals. The Compensation
Committee may choose to exercise its discretion in modifying any
recommended adjustment or award.
Total
Compensation
Total
annual compensation consists of base salary, cash incentives, and
long-term equity incentive compensation in the form of stock. In
setting the total annual compensation for our named executive
officers, information on the performance of each named executive
officer for the prior year and market data covering peer group
salaries are generally utilized. This evaluation is comprised of
both a quantitative assessment as well as a qualitative assessment.
The target levels for the total annual compensation of our named
executive officers and senior management team are generally less
than the average of the peer group used, primarily due to our size
and status at the time as a nontraded REIT. We believe that this
approach contemplates both the quantitative and qualitative
elements of each position and rewards performance. In addition,
this approach allows our skilled and talented executives to guide
and lead our business and supports a “pay for performance”
culture.
Annual
Cash Compensation
Base Salary
Each
of our named executive officers receives a base salary to
compensate him for services performed during the year. When
determining the base salary for each of our named executive
officers, the market levels of similar positions (discounted for
size) at the peer group companies, the performance of the named
executive officer, the experience of the named executive officer in
his position, and the other components of compensation and total
compensation are generally considered. The named executive officers
are eligible for annual increases in their base
salaries.
Annual Non-Equity Compensation
A
significant portion of each named executive officer’s compensation
is in the form of an annual cash bonus. For 2021, named executive
officers could elect to receive all or a portion of their annual
cash bonus in the form of stock that immediately vested equal to
approximately two times cash. The annual bonuses are primarily
based upon quantifiable company and executive performance
objectives. This practice is consistent with our compensation
objective of supporting a performance-based environment. An annual
determination is made as to the appropriate weight between
company-wide and executive specific goals based upon an assessment
of the appropriate balance. Each year, the Compensation Committee
sets for the Chief Executive Officer a threshold and target bonus
that may be awarded to him if the threshold goals are achieved. No
specific target bonus was established for Mr. Dubose for 2021 and
his bonus was determined at the discretion of the Chief Executive
Officer.
The
Compensation Committee awarded Mr. Heilbron a $75,000 cash bonus
(of which Mr. Heilbron elected to accept $25,000 in cash and the
balance in the form of equity, equal to approximately two times
cash, or $100,000 in stock, which were paid in 2022) for his 2021
performance. In addition, Mr. Heilbron was granted 35,000 shares of
stock on January 4, 2021.
Long-Term
Incentive Compensation
We
grant long-term equity incentive awards to our named executive
officers as part of our overall compensation package. These awards
are consistent with our policies of fostering a performance-based
environment and aligning the interests of our senior management
with the financial interests of our stockholders. When determining
the amount of long-term equity incentive awards to be granted, the
following factors are considered: our business performance, using
metrics such as MFFO and performance of real estate assets
(including, but not limited to, occupancy, same-store property net
operating income growth and leasing spreads); the individual
responsibilities and performance of each executive, such as how he
performed relative to his delineated goals; strategic
accomplishment, such as identifying strategic direction for us, and
market factors, such as navigating the current economic climate and
the strength of the balance sheet and debt maturities.
We
compensate our named executive officers through grants of shares.
These shares vested equally over a three-year period for more
recent grants (and over a ten-year period for certain grants made
earlier) for all officers. The aggregate value of the long-term
incentive compensation granted is based upon established goals
including an assessment of MFFO as compared to budgeted or targeted
goals; the identification of strategic initiatives, their execution
and the anticipated long-term benefits to stockholders.
Distributions are paid on the entire grant, regardless of
vesting.
Equity
compensation is awarded to our Chief Executive Officer by the
Compensation Committee and to other named executive officers based
primarily on the strategic initiatives and performance during the
applicable fiscal year. The stock awards granted to our named
executive officers during 2021 are reflected in the Outstanding
Equity Awards at Fiscal Year End table below. On January 4, 2021,
Mr. Heilbron was granted 35,000 shares of stock; Mr. Dubose was
granted 25,974 shares of stock; Mr. Sragovicz was granted 19,480
shares of stock; and Mr. Katz was granted 19,480 shares of stock.
All such stock granted vests in equal installments over three
years. On January 3, 2022,
Mr. Heilbron was granted 127,779 shares of stock; Mr. Dubose was
granted 31,525 shares of stock; Mr. Sragovicz was granted 86,539
shares of stock; and Mr. Katz was granted 93,895 shares of stock.
All such stock granted vests in equal installments over three
years.
Perquisites
and Other Personal Benefits
We
provide our named executive officers with perquisites and other
personal benefits, including payment of premiums for an additional
life insurance policy, and for Mr. Heilbron, an auto allowance and
payment of country club dues, that we believe are reasonable and
consistent with our overall compensation program to better enable
us to attract and retain superior employees for key positions. The
Compensation Committee periodically reviews the levels of
perquisites and other personal benefits provided to the named
executive officers.
We
maintain a 401(k) retirement savings plan for all employees on the
same basis, which provides matching contributions at the rate of
100% of the employee’s contributions up to 4% of their salary. In
2021, employees could contribute up to $19,500 of their salary and
a catch-up contribution of up to $6,500 for employees aged 50 and
older, subject to annual limits under the Internal Revenue Code of
1986, as amended (the “Code”). Named executive officers are also
eligible to participate in all of our employee benefit plans, such
as medical, dental, vision, group life, disability and accidental
death and dismemberment insurance, in each case, on the same basis
as other employees.
NAMED
EXECUTIVE OFFICERS OF THE COMPANY
The
Company’s current named executive officers are as
follows:
|
Name |
|
Age |
|
Position |
| Jack
K. Heilbron |
|
71 |
|
Chairman
of the Board of Directors, President and Chief Executive
Officer |
| Adam
Sragovicz |
|
52 |
|
Chief
Financial Officer |
| Gary
M. Katz* |
|
58 |
|
Chief
Investment Officer |
*
Gary M. Katz was appointed Chief Investment Officer effective as of
December 16, 2021. He had previously served as our Senior Vice
President, Asset Management, for the prior portion of
2021.
Each
named executive officer of the Company may be removed from office
at any time by a majority vote of the Board with or without cause.
Removal of Mr. Heilbron is subject to the terms of his employment
agreement, which is described in more detail under the section
titled “Employment Agreements” below.
The
following section sets forth certain background information
regarding those persons currently serving as executive officers of
the Company, excluding Mr. Heilbron, who is described under the
section titled Director Biographies as set forth in “Proposal No. 1
– Election of Directors”:
Adam Sragovicz. Mr. Sragovicz is our Chief Financial
Officer, a position he has held since January 2018. He has also
served as the Chief Financial Officer, Treasurer and director of
Murphy Canyon Acquisition Corp., a SPAC sponsored by the Company,
since its inception in 2021. He previously served as our Senior
Vice President, Finance since May 2017, and from time to time as
our Chief Accounting Officer for brief, interim periods. Before
joining us, Mr. Sragovicz served as Treasurer of Encore Capital
Group from 2011 to 2017, where he was responsible for global
capital raising, foreign exchange risk management and cash
management. Mr. Sragovicz has also held capital markets, finance,
and treasury management positions with KPMG, Union Bank of
California / MUFG and Bank of America Merrill Lynch. Mr. Sragovicz
is the Director of the Yale Alumni Schools Committee in San Diego
and previously sat on the board of Congregation Adat Yeshurun. Mr.
Sragovicz is a graduate of Yale University with a Bachelor of Arts
degree in Soviet and Eastern European Studies, with a concentration
in Economics.
Gary M. Katz. Mr. Katz joined us as Senior Vice President,
Asset Management in 2010. He was appointed Chief Investment Officer effective as of
December 16, 2021. He has worked in the commercial real
estate industry for over 30 years and has held positions with
Legacy Partners, Lincoln Property Company, Kemper Real Estate
Management Company, Bedford Properties, and Meyer Investment
Properties. Prior to joining us, Mr. Katz served in senior
acquisition, leasing, asset management, and development roles for
Westcore Properties from 2001 to 2009 and was responsible for real
estate transactions throughout the western United States. Mr. Katz
is actively involved with NAIOP, a commercial real estate education
and advocacy organization. He was a member of the NAIOP Corporate
(National) Board, formerly served as president of the San Diego
Chapter and currently serves on the Board of Directors and as
Treasurer of the San Diego Chapter. He also sits on the San Diego
Charitable Real Estate Foundation’s Board of Directors. Mr. Katz
holds a Bachelor of Arts degree in Economics from University of
California San Diego.
Summary
Compensation Table
The
following table sets forth information concerning the compensation
earned by our named executive officers for the fiscal years ended
December 31, 2021 and 2020.
|
Name and
Principal Position |
|
Year |
|
|
Salary |
|
|
Stock
Awards
(1)
|
|
|
Non-equity
Incentive Plan Compensation
(2)
|
|
|
All
Other
Compensation
(3)
|
|
|
Total |
|
| Jack K.
Heilbron |
|
|
2021 |
|
|
$ |
371,531 |
|
|
$ |
235,462 |
|
|
|
25,000 |
|
|
$ |
117,601 |
|
|
$ |
749,594 |
|
| Chairman of the Board,
President and CEO |
|
|
2020 |
|
|
$ |
375,137 |
|
|
$ |
218,662 |
|
|
|
— |
|
|
$ |
87,837 |
|
|
$ |
681,636 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Larry G.
Dubose* |
|
|
2021 |
|
|
$ |
86,539 |
|
|
$ |
198,185 |
|
|
|
— |
|
|
$ |
44,726 |
|
|
$ |
329,450 |
|
| Former President,
NetREIT Advisors, LLC and Dubose Advisors, LLC; former CFO, NetREIT
Dubose Model Home REIT, Inc.; and Director |
|
|
2020 |
|
|
$ |
150,000 |
|
|
$ |
165,912 |
|
|
$ |
15,000 |
|
|
$ |
34,678 |
|
|
$ |
365,590 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adam
Sragovicz |
|
|
2021 |
|
|
$ |
262,895 |
|
|
$ |
106,428 |
|
|
|
14,000 |
|
|
$ |
43,350 |
|
|
$ |
426,673 |
|
| Chief Financial
Officer |
|
|
2020 |
|
|
$ |
265,447 |
|
|
$ |
81,748 |
|
|
$ |
50,000 |
|
|
$ |
28,864 |
|
|
$ |
426,059 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gary M.
Katz** |
|
|
2021 |
|
|
$ |
262,895 |
|
|
$ |
184,348 |
|
|
|
— |
|
|
$ |
46,017 |
|
|
$ |
493,260 |
|
| Chief Investment
Officer and former SVP, Asset Management |
|
|
2020 |
|
|
$ |
265,447 |
|
|
$ |
131,782 |
|
|
|
— |
|
|
$ |
24,825 |
|
|
$ |
422,054 |
|
* Mr.
Dubose resigned from these positions with NetREIT Advisors, LLC and
Dubose Advisors, LLC in 2022 and will not stand for re-election at
the Annual Meeting. However, he will continue to remain an employee
of our model home division.
** Gary M. Katz was appointed Chief Investment Officer effective as
of December 16, 2021.
| (1) |
The
amounts shown represent the aggregate grant date fair value of
awards granted during each fiscal year shown, computed in
accordance with FASB ASC Topic 718. This does not represent the
compensation expense recognized for the fiscal years shown for
financial statement reporting purposes. The value of non-vested
shares granted in 2020 was calculated based on the offering price
of the shares in the most recent private placement offering,
adjusted for stock dividends since granted and assumed selling
costs, as well as with periodic adjustments based on comparable
market valuations, which management believes approximated fair
market value as of the date of grant (well before the shares of the
Company’s stock started publicly trading in October 2020). The
value of the shares granted in 2021 were based on the closing price
of the common stock on the date of grant. The value of stock
received in lieu of approximately two times cash bonus is reported
based on the closing price of the Company’s stock on date of
issuance. |
| |
|
| (2) |
Bonuses
shown for 2021 were paid as follows: The cash component of bonuses
were paid in January 2022 (unless there was an election to defer
payment); each named executive officer elected to accept all or a
portion of his cash bonus earned in the form of stock equivalent to
approximately two times cash and such stock, which vested
immediately, was issued in January 2022 and is shown as part of the
amount in the Stock Awards column. Bonuses shown for 2020 were paid
as follows: The cash component of bonuses were paid in December
2020 and/or January 2021 (unless there was an election to defer
payment); each named executive officer elected to accept all or a
portion of his cash bonus earned in the form of stock equivalent to
approximately two times cash and such stock, which vested
immediately, was issued in January 2021 and is shown as part of the
amount in the Stock Awards column. |
| |
|
|
(3) |
The
following table sets forth the components of All Other Compensation
included above (and excludes unlimited paid time off, which is only
available to our executives): |
|
Name |
|
Year |
|
|
Distributions Received
on Stock |
|
|
Matching
Contributions to 401(k) Plan |
|
|
Group Term
Life Insurance Payments |
|
|
Auto
Allowance |
|
|
Country
Club |
|
|
Medical
Premiums |
|
|
Total of
Other Compensation |
|
| Jack K.
Heilbron |
|
|
2021 |
|
|
$ |
40,359 |
|
|
$ |
11,600 |
|
|
$ |
17,468 |
|
|
|
11,529 |
|
|
|
17,257 |
|
|
$ |
19,388 |
|
|
$ |
117,601 |
|
| |
|
|
2020 |
|
|
$ |
4,071 |
|
|
$ |
19,605 |
|
|
$ |
17,104 |
|
|
$ |
7,148 |
|
|
$ |
20,536 |
|
|
$ |
19,373 |
|
|
$ |
87,837 |
|
| Larry G.
Dubose |
|
|
2021 |
|
|
$ |
26,495 |
|
|
$ |
5,160 |
|
|
$ |
1,071 |
|
|
|
12,000 |
|
|
|
— |
|
|
$ |
12,000 |
|
|
$ |
44,726 |
|
| |
|
|
2020 |
|
|
$ |
1,592 |
|
|
$ |
8,060 |
|
|
$ |
1,026 |
|
|
$ |
12,000 |
|
|
|
— |
|
|
$ |
12,000 |
|
|
$ |
34,678 |
|
| Adam
Sragovicz |
|
|
2021 |
|
|
$ |
17,407 |
|
|
$ |
11,600 |
|
|
$ |
2,343 |
|
|
|
— |
|
|
|
— |
|
|
$ |
12,000 |
|
|
$ |
43,350 |
|
| |
|
|
2020 |
|
|
$ |
1,648 |
|
|
$ |
13,518 |
|
|
$ |
1,698 |
|
|
|
— |
|
|
|
— |
|
|
$ |
12,000 |
|
|
$ |
28,864 |
|
| Gary M.
Katz |
|
|
2021 |
|
|
$ |
20,725 |
|
|
$ |
10,936 |
|
|
$ |
2,356 |
|
|
|
— |
|
|
|
— |
|
|
$ |
12,000 |
|
|
$ |
46,017 |
|
| |
|
|
2020 |
|
|
$ |
509 |
|
|
$ |
10,618 |
|
|
$ |
1,698 |
|
|
|
— |
|
|
|
— |
|
|
$ |
12,000 |
|
|
$ |
24,825 |
|
Employment
Agreement
On
October 18, 2017, we entered into a new employment agreement with
Mr. Heilbron, which superseded his January 19, 2011 employment
agreement. Pursuant to his employment agreement, Mr. Heilbron’s
initial annual base salary was $333,900, subject to increase in the
discretion of the Board or the Compensation Committee. Mr. Heilbron
is also eligible to earn an annual bonus pursuant to our bonus plan
for senior executives based on the achievement of targets and other
objectives established by the Board or the Compensation Committee
for each fiscal year. The employment agreement provides that Mr.
Heilbron’s target annual bonus is up to 100% of his base salary.
Mr. Heilbron is eligible to participate in all other incentive
plans, savings and retirement plans, welfare benefit plans,
practices, policies and programs, in each case, that are generally
applicable to our senior executives. We also provide to Mr.
Heilbron: (a) a supplemental life insurance policy on Mr.
Heilbron’s life on terms and conditions agreed to between us and
Mr. Heilbron, (b) use of an automobile at our expense, selected by
our agreement with Mr. Heilbron, and (c) club dues for membership
at a country club of Mr. Heilbron’s choosing.
Mr.
Heilbron’s employment agreement provides that if his employment is
terminated by us without “cause” or by Mr. Heilbron for “good
reason” (each as defined in the employment agreement), then,
subject to his execution and non-revocation of a release of claims,
he will be entitled to receive the following payments
|
|
● |
a
lump-sum cash payment in an amount equal to the average of the
annual bonuses received by Mr. Heilbron during the immediately
preceding two years, payable within 10 days following the release
effective date; |
| |
|
|
| |
● |
for
up to 12 months following Mr. Heilbron’s termination of employment,
healthcare benefits for Mr. Heilbron and his eligible dependents
which are substantially the same and at the same cost as the
benefits provided to our currently active employees;
and |
| |
|
|
| |
● |
100%
of the outstanding and unvested restricted stock and other equity
awards granted to Mr. Heilbron under our equity incentive plans
(other than performance-based vesting awards, if any) will become
immediately vested and exercisable in full, effective as of the
date of termination. |
The
employment agreement contains confidentiality covenants by Mr.
Heilbron which apply indefinitely and non-competition covenants by
Mr. Heilbron which apply during the term of his employment. The
foregoing severance provisions under Mr. Heilbron’s employment
agreement are substantially the same as the severance benefits to
which he was entitled under his previous employment
agreement.
Outstanding
Equity Awards at Fiscal Year End
The
following table shows information regarding restricted stock awards
held by our named executive officers on the last day of our fiscal
year ended December 31, 2021.
| |
|
Stock Awards |
|
Name |
|
Grant Date |
|
|
Number
of Shares or
Units
that have not Vested (4)
|
|
|
Market
Value of Shares or
Units
that have not Vested (5)
|
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or other
Rights that have not
Vested
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned
Shares,
Units
or other Rights that have
not
Vested
|
|
| Jack K. Heilbron |
|
1/02/2013 |
(1) |
|
|
582 |
|
|
$ |
2,188 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/02/2014 |
(1) |
|
|
1,163 |
|
|
$ |
4,373 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/02/2015 |
(1) |
|
|
2,442 |
|
|
$ |
9,182 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/04/2016 |
(1) |
|
|
3,256 |
|
|
$ |
12,243 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/03/2017 |
(1) |
|
|
4,000 |
|
|
$ |
15,040 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/01/2018 |
(1) |
|
|
7,721 |
|
|
$ |
29,031 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/02/2020 |
(2) |
|
|
5,834 |
|
|
$ |
21,936 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/04/2021 |
(2) |
|
|
23,450 |
|
|
$ |
88,172 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/21/2021 |
(3) |
|
|
22,728 |
|
|
$ |
85,457 |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Larry G. Dubose |
|
1/02/2013 |
(1) |
|
|
436 |
|
|
$ |
1,639 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/02/2014 |
(1) |
|
|
698 |
|
|
$ |
2,624 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/04/2016 |
(1) |
|
|
1,744 |
|
|
$ |
6,557 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/03/2017 |
(1) |
|
|
2,188 |
|
|
$ |
8,227 |
|
|
|
— |
|
|
|
— |
|
| |
|
1/02/2020 |
(2) |
|
|
3,425 |
|
|
$ |
12,878 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/04/2021 |
(2) |
|
|
17,403 |
|
|
$ |
65,435 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/21/2021 |
(3) |
|
|
22,728 |
|
|
$ |
85,457 |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adam Sragovicz |
|
1/02/2020 |
(2) |
|
|
2,547 |
|
|
$ |
9,577 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/04/2021 |
(2) |
|
|
13,052 |
|
|
$ |
49,076 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/21/2021 |
(3) |
|
|
6,494 |
|
|
$ |
24,417 |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gary M. Katz |
|
1/01/2020 |
(2) |
|
|
1,274 |
|
|
$ |
4,790 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/04/2021 |
(2) |
|
|
13,052 |
|
|
$ |
49,076 |
|
|
|
— |
|
|
|
— |
|
| |
|
01/21/2021 |
(3) |
|
|
25,974 |
|
|
$ |
97,662 |
|
|
|
— |
|
|
|
— |
|
(1)
Represents an award of shares of stock, of which 1/10th of the
stock award will vest on December 31 of the year in which the award
is granted and an additional 1/10th of the stock award will vest on
each anniversary of such date thereafter, subject to the named
executive officer’s continued employment.
(2)Represents
an award of shares of stock, of which 1/3rd of the stock award will
vest on December 31 of the year in which the award is granted and
an additional 1/3rd of the stock award will vest on each
anniversary of such date thereafter, subject to the named executive
officer’s continued employment.
(3)Represents
a stock grant in lieu of cash bonus earned in the form of two times
stock, which was restricted for one year. These shares will be
unrestricted on January 22, 2022.
(4)Represents
the number of unvested shares of stock as of December 31,
2021.
(5)Market
value has been calculated by multiplying the closing market price
of our common stock at January 6, 2022 of $3.76 per share by the
outstanding share of stock awards for each Named Executive
Officer.
Director
Compensation
We
compensate the directors with cash compensation and awards of
stock. We do not have a written policy regarding director
compensation. Our Compensation Committee meets at least annually to
review, and determine and approve, as appropriate, director
compensation for the next fiscal year, including cash and equity
compensation, reimbursement for travel and related expenses, and
similar matters. The Compensation Committee may also meet during
the year, as appropriate, to discuss compensation matters such as
grants of stock to our directors in connection with their services
as chairs of Board of Directors committees, and related matters. If
a director is also an employee of our Company, such director is not
paid separate compensation for services rendered as a
director.
For
the fiscal year ending December 31, 2021, the Company paid director
compensation as follows:
|
Name
(1) |
|
Fees
earned or Paid in Cash (2) |
|
|
Fees
earned or Paid in Stock (2) |
|
|
Annual
Stock Awards (3) |
|
|
All Other
Compensation (4) |
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jennifer A.
Barnes |
|
$ |
25,000 |
|
|
$ |
29,162 |
|
|
$ |
33,523 |
|
|
$ |
5,482 |
|
|
$ |
93,167 |
|
| David T.
Bruen |
|
$ |
30,000 |
|
|
$ |
25,076 |
|
|
$ |
34,969 |
|
|
$ |
6,275 |
|
|
$ |
96,320 |
|
| James R.
Durfey |
|
$ |
10,000 |
|
|
$ |
57,196 |
|
|
$ |
33,523 |
|
|
$ |
7,603 |
|
|
$ |
108,322 |
|
| Sumner J.
Rollings |
|
$ |
18,000 |
|
|
$ |
41,173 |
|
|
$ |
33,523 |
|
|
$ |
6,583 |
|
|
$ |
99,279 |
|
(1)
Messrs. Heilbron and Dubose are not included in this table as they
are employees and do not receive compensation for their services as
a director. Compensation paid for the services they provide to us
as a director or consultant are reflected in the Summary
Compensation Table.
(2)
Each non-employee director received a cash stipend of $8,000 to
$10,000 for each Board of Directors meeting attended in the first
three fiscal quarters in 2021; the cash stipend was restored to
$10,000 from $8,000 for the second fiscal quarter of 2021. Amounts
do not include reasonable out-of-pocket expenses (i.e., airfare,
hotel, car rental, etc.) incurred by directors for which we
reimburse in connection with attendance at Board of Directors and
committee meetings. No such expenses were incurred by any
non-employee director in 2021. Directors also had the option to
take all or a portion of the fee in Series A Common Stock at two
times the cash fee amount, with the number of shares determined
using market prices. These stock grants will vest on the one year
anniversary of their grant dates.
(3)
The amounts shown represent the aggregate grant date fair value of
awards made during 2021, computed in accordance with FASB ASC Topic
718. For a discussion of the valuation assumptions used to
determine the fair value of these awards, see Note 11 to the
Financial Statements for the year ended December 31, 2021 included
in our Form 10-K for such year. The stock awards vest annually in
equal installments over a three-year period.
(4)
Amount represents distributions received in 2021 from unvested
shares of our common stock held by each non-employee
director.
As of
December 31, 2021, our current non-employee directors held the
following shares of unvested restricted stock:
| Name |
|
Shares |
|
| Jennifer A.
Barnes |
|
|
14,424 |
|
| David T.
Bruen |
|
|
13,414 |
|
| James R.
Durfey |
|
|
22,364 |
|
| Sumner J.
Rollings |
|
|
17,679 |
|
Equity
Plans
2017
Incentive Award Plan
Effective
as of October 18, 2017, we adopted the 2017 Incentive Award Plan,
under which we may grant cash and equity incentive awards to
eligible service providers in order to motivate, attract and retain
the talent for which we compete.
Eligibility
and Administration. Our employees, consultants and directors
(including employees, consultants and directors of our
subsidiaries) are eligible to receive awards under the 2017
Incentive Award Plan. Approximately 19 employees, no
consultants and four non-employee directors are eligible to
participate in the 2017 Incentive Award Plan. The 2017 Incentive Award Plan
will be administered by the Board with respect to awards to
non-employee directors and by the Compensation Committee with
respect to other participants, each of which may delegate its
duties and responsibilities to committees of our directors and/or
officers (referred to collectively as the “plan administrator”),
subject to certain limitations that may be imposed under the Code,
Section 16 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and/or stock exchange rules, as applicable. The
plan administrator will have the authority to administer the 2017
Incentive Award Plan, including the authority to select award
recipients, determine the nature and amount of each award, and
determine the terms and conditions of each award. The plan
administrator will also have the authority to make all
determinations and interpretations under, prescribe all forms for
use with, and adopt rules for the administration of, the 2017
Incentive Award Plan, subject to its express terms and
conditions.
Size
of Share Reserve; Limitations on Awards. The total number of
shares reserved for issuance pursuant to awards under the 2017
Incentive Award Plan is 1,100,000 shares, which may be issued as
shares of our Series A or our Series C Common Stock, as determined
by the plan administrator, provided that, since the date on which
the Series A Common Stock became publicly listed, we have and
intend to issue only shares of Series A Common Stock under the 2017
Incentive Award Plan. Shares that are potentially deliverable under
an award that expires or is canceled, forfeited, settled for cash
or otherwise terminated without delivery of such shares will, to
the extent of such expiration, cancellation, forfeiture, cash
settlement or termination, again be available for new grants under
the 2017 Incentive Award Plan, and shares withheld by us in payment
of the exercise price or taxes relating to any award will again be
available for new grants under the 2017 Incentive Award Plan.
However, the following shares may not be used again for grant under
the 2017 Incentive Award Plan: (a) previously owned shares tendered
by a participant to satisfy exercise price or tax withholding
obligations associated with an award; and (b) shares purchased on
the open market with the cash proceeds from the exercise of
options. The total number of shares reserved for issuance under the
2017 Incentive Award Plan will not be adjusted for the reverse
stock split.
To
the extent permitted under applicable securities exchange rules
without stockholder approval, awards granted under the 2017
Incentive Award Plan in connection with the assumption,
replacement, conversion or adjustment of outstanding equity awards
in the context of a corporate acquisition or merger will not reduce
the shares authorized for grant under the 2017 Incentive Award
Plan.
The
maximum number of shares of our common stock that may be subject to
one or more awards granted to any one participant pursuant to the
2017 Incentive Award Plan during any calendar year is 1,100,000
shares and the maximum amount that may be paid under a cash award
pursuant to the 2017 Incentive Award Plan to any one participant
during any calendar year period is $5,000,000. The individual award
limit under the 2017 Incentive Award Plan will not be adjusted for
the reverse stock split.
The
plan administrator may establish compensation for our non-employee
directors in accordance with the 2017 Incentive Award Plan,
including the terms, conditions and amounts of all such
compensation. However, subject to certain exceptions, the sum of
any cash compensation and the value of awards granted to a
non-employee director as compensation for services as a
non-employee director during any calendar year may not exceed
$500,000, increased to $800,000 for the non-employee director’s
initial year of service.
Awards.
The 2017 Incentive Award Plan provides for the grant of stock
options, restricted stock, performance bonuses, dividend
equivalents, stock payments, restricted stock units (“RSUs”),
performance shares, other incentive awards and stock appreciation
rights (“SARs”). All awards under the 2017 Incentive Award Plan
will be set forth in award agreements, which will detail all terms
and conditions of the awards, including any applicable vesting and
payment terms and post-termination exercise limitations. Awards
will be settled in shares of our common stock or cash, as
determined by the plan administrator.
Stock
Options. Stock options provide for the purchase of shares of
our common stock in the future at an exercise price set on the
grant date. The exercise price of a stock option may not be less
than 100% of the fair market value of the underlying share on the
date of grant, except with respect to certain substitute options
granted in connection with a corporate transaction. The term of a
stock option may not be longer than ten years. Vesting conditions
determined by the plan administrator may apply to stock options and
may include continued service, performance and/or other
conditions.
Restricted
Stock Units. RSUs are contractual promises to deliver shares of
our common stock (or the fair market value of such shares in cash)
in the future, which may also remain forfeitable unless and until
specified vesting conditions are met. RSUs generally may not be
sold or transferred until vesting conditions are removed or expire.
The shares underlying RSUs will not be issued until the RSUs have
vested, and recipients of RSUs generally will have no voting or
dividend rights prior to the time the RSUs are settled in shares,
unless the RSU includes a dividend equivalent right (in which case
the holder may be entitled to dividend equivalent payments under
certain circumstances). Delivery of the shares underlying the RSUs
may be deferred under the terms of the award or at the election of
the participant, if the plan administrator permits such a deferral.
On the settlement date or dates, we will issue to the participant
one unrestricted, fully transferable share of our common stock (or
the fair market value of one such share in cash) for each vested
and nonforfeited RSU.
Restricted
Stock. Restricted stock is an award of nontransferable shares
of our common stock that remain forfeitable unless and until
specified vesting conditions are met. Vesting conditions applicable
to restricted stock may be based on continuing service, the
attainment of performance goals and/or such other conditions as the
plan administrator may determine. In general, restricted stock may
not be sold or otherwise transferred until all restrictions are
removed or expire.
Stock
Appreciation Rights. SARs entitle their holder, upon exercise,
to receive an amount equal to the appreciation of the shares
subject to the award between the grant date and the exercise date.
The exercise price of a SAR may not be less than 100% of the fair
market value of the underlying share on the date of grant (except
with respect to certain substitute SARs granted in connection with
a corporate transaction) and the term of a SAR may not be longer
than ten years. Vesting conditions determined by the plan
administrator may apply to SARs and may include continued service,
performance and/or other conditions. SARs under the 2017 Incentive
Award Plan will be settled in cash or shares of common stock, or in
a combination of both, as determined by the
administrator.
Performance
Shares. Performance shares are contractual rights to receive a
range of shares of our common stock in the future based on the
attainment of specified performance goals, in addition to other
conditions which may apply to these awards. Conditions applicable
to performance shares may be based on continuing service, the
attainment of performance goals and/or such other conditions as the
plan administrator may determine.
Stock
Payments. Stock payments are awards of fully vested shares of
our common stock that may, but need not, be made in lieu of base
salary, bonus, fees or other cash compensation otherwise payable to
any individual who is eligible to receive awards.
Other
Incentive Awards. Other incentive awards are awards other than
those enumerated in this summary that are denominated in, linked to
or derived from shares of our common stock or value metrics related
to our shares, and may remain forfeitable unless and until
specified conditions are met. Other incentive awards may be linked
to any one or more specific performance criteria determined by the
plan administrator.
Dividend
Equivalents. Dividend equivalents represent the right to
receive the equivalent value of dividends paid on shares of our
common stock and may be granted alone or in tandem with awards
other than stock options or SARs. Dividend equivalents are credited
as of dividend payments dates during the period between a specified
date and the date such award terminates or expires, as determined
by the plan administrator.
Performance
Bonus Awards. Performance bonus awards are cash bonus awards
that are granted subject to vesting and/or payment based on the
attainment of specified performance goals.
Certain
Transactions. The plan administrator has broad discretion to
take action under the 2017 Incentive Award Plan, as well as make
adjustments to the terms and conditions of existing and future
awards, to prevent the dilution or enlargement of intended benefits
and facilitate necessary or desirable changes in the event of
certain transactions and events affecting our common stock, such as
stock dividends, stock splits, mergers, acquisitions,
consolidations and other corporate transactions. In addition, in
the event of certain non-reciprocal transactions with our
stockholders known as “equity restructurings,” the plan
administrator will make equitable adjustments to the 2017 Incentive
Award Plan and outstanding awards. In the event of a “change in
control,” to the extent that the surviving entity declines to
assume or substitute outstanding awards or it is otherwise
determined that awards will not be assumed or substituted, the plan
administrator shall cause the awards to become fully vested and
exercisable in connection with the transaction.
Claw-Back
Provisions, Transferability, and Participant Payments. All
awards will be subject to the provisions of any claw-back policy
implemented by us to the extent set forth in such claw-back policy
and/or in the applicable award agreement. With limited exceptions
for estate planning, domestic relations orders, certain beneficiary
designations and the laws of descent and distribution, awards under
the 2017 Incentive Award Plan are generally non-transferable prior
to vesting, and are exercisable only by the participant, unless
otherwise provided by the plan administrator. With regard to tax
withholding, exercise price and purchase price obligations arising
in connection with awards under the 2017 Incentive Award Plan, the
plan administrator may, in its discretion, accept cash or check,
shares of our common stock that meet specified conditions, a
“market sell order” or such other consideration as it deems
suitable.
Plan
Amendment and Termination. The Board may amend or terminate the
2017 Incentive Award Plan at any time, subject to certain
exceptions. In addition, no amendment, suspension or termination of
the 2017 Incentive Award Plan may, without the consent of the
affected participant, impair any rights or obligations under any
previously-granted award, unless the award itself otherwise
expressly so provides. If not earlier terminated by the Board, the
2017 Incentive Award Plan will terminate in October
2027.
Additional
REIT Restrictions. The 2017 Incentive Award Plan provides that
no participant will be granted, become vested in the right to
receive or acquire or be permitted to acquire, or will have any
right to acquire, shares under an award if such acquisition would
be prohibited by the restrictions on ownership and transfer of our
stock contained in our charter or would impair our status as a
REIT.
Securities
Laws. The 2017 Incentive Award Plan is intended to conform to
all provisions of the Securities Act of 1933, as amended (the
“Securities Act”), and the Exchange Act and any and all regulations
and rules promulgated by the SEC thereunder, including, without
limitation, Rule 16b-3. The 2017 Incentive Award Plan will be
administered, and awards will be granted and may be exercised, only
in such a manner as to conform to such laws, rules and
regulations.
Federal
Income Tax Consequences. The material federal income tax
consequences of the 2017 Incentive Award Plan under current federal
income tax law are summarized in the following discussion, which
deals with the general tax principles applicable to the 2017
Incentive Award Plan. The following discussion is based upon laws,
regulations, rulings and decisions now in effect, all of which are
subject to change. Foreign, state and local tax laws, and
employment, estate and gift tax considerations are not discussed
due to the fact that they may vary depending on individual
circumstances and from locality to locality.
Stock
Options and SARs. A 2017 Incentive Award Plan participant generally
will not recognize taxable income and we generally will not be
entitled to a tax deduction upon the grant of a stock option or
SAR. Only non-qualified stock options may be granted under the 2017
Incentive Award Plan. Upon exercising an option when the fair
market value of our stock is higher than the exercise price of the
option, a 2017 Incentive Award Plan participant generally will
recognize taxable income at ordinary income tax rates equal to the
excess of the fair market value of the stock on the date of
exercise over the purchase price, and we (or our subsidiaries, if
any) generally will be entitled to a corresponding tax deduction
for compensation expense, in the amount equal to the amount by
which the fair market value of the shares purchased exceeds the
purchase price for the shares. Upon a subsequent sale or other
disposition of the option shares, the participant will recognize a
short-term or long-term capital gain or loss in the amount of the
difference between the sales price of the shares and the
participant’s tax basis in the shares.
Upon
exercising or settling an SAR, a 2017 Incentive Award Plan
participant will recognize taxable income at ordinary income tax
rates, and we should be entitled to a corresponding tax deduction
for compensation expense, in the amount paid or value of the shares
issued upon exercise or settlement. Payments in shares will be
valued at the fair market value of the shares at the time of the
payment, and upon the subsequent disposition of the shares the
participant will recognize a short-term or long-term capital gain
or loss in the amount of the difference between the sales price of
the shares and the participant’s tax basis in the
shares.
Restricted
Stock and RSUs. A 2017 Incentive Award Plan participant generally
will not recognize taxable income at ordinary income tax rates and
we generally will not be entitled to a tax deduction upon the grant
of restricted stock or RSUs. Upon the termination of restrictions
on restricted stock or the payment of RSUs, the participant will
recognize taxable income at ordinary income tax rates, and we
should be entitled to a corresponding tax deduction for
compensation expense, in the amount paid to the participant or the
amount by which the then fair market value of the shares received
by the participant exceeds the amount, if any, paid for them. Upon
the subsequent disposition of any shares, the participant will
recognize a short-term or long-term capital gain or loss in the
amount of the difference between the sales price of the shares and
the participant’s tax basis in the shares. However, a 2017
Incentive Award Plan participant granted restricted stock that is
subject to forfeiture or repurchase through a vesting schedule such
that it is subject to a “risk of forfeiture” (as defined in Section
83 of the Code) may, subject to our consent, make an election under
Section 83(b) of the Code to recognize taxable income at ordinary
income tax rates, at the time of the grant, in an amount equal to
the fair market value of the shares of common stock on the date of
grant, less the amount paid, if any, for such shares. We will be
entitled to a corresponding tax deduction for compensation, in the
amount recognized as taxable income by the participant. If a timely
Section 83(b) election is made, the participant will not recognize
any additional ordinary income on the termination of restrictions
on restricted stock, and we will not be entitled to any additional
tax deduction.
Other
Stock or Cash Based Awards. A 2017 Incentive Award Plan participant
will not recognize taxable income and we will not be entitled to a
tax deduction upon the grant of other stock or cash based awards
until cash or shares are paid or distributed to the participant. At
that time, any cash payments or the fair market value of shares
that the participant receives will be taxable to the participant at
ordinary income tax rates and we should be entitled to a
corresponding tax deduction for compensation expense. Payments in
shares will be valued at the fair market value of the shares at the
time of the payment, and upon the subsequent disposition of the
shares, the participant will recognize a short-term or long-term
capital gain or loss in the amount of the difference between the
sales price of the shares and the participant’s tax basis in the
shares.
1999
Flexible Incentive Plan
We
established the 1999 Flexible Incentive Plan (the “1999 Plan”) for
the purpose of attracting and retaining employees. No additional
awards have been granted under the 1999 Plan since October
2017.
Share
Reserve. The 1999 Plan provided that the maximum number of
shares to be issued under the 1999 Plan would be an amount equal to
10% of the Company’s issued and outstanding common stock at such
time; the aggregate number of common stock that may be issued under
the 2017 Incentive Award Plan is 1,100,000 shares. At December 31,
2021, approximately 256,929 restricted shares of common stock had
been issued under the 1999 Plan and approximately 513,380 shares of
Restricted Stock (as defined in the 2017 Incentive Award Plan) had
been issued under such Plan.
Awards.
The 1999 Plan provides that our administrator may grant or issue
stock options, restricted stock, performance awards, dividend
equivalents, stock appreciation rights, phantom stock awards or any
combination thereof. The administrator considers each award grant
subjectively, considering factors such as the individual
performance of the recipient and the anticipated contribution of
the recipient to the attainment of our long-term goals. Each award
is set forth in a separate agreement with the person receiving the
award and indicates the type, terms and conditions of the award. To
date, only restricted stock has been issued under the 1999
Plan.
Restricted
stock may be granted to participants and made subject to such
restrictions as may be determined by the administrator. Typically,
restricted stock may be repurchased by us at the original purchase
price or, if no cash consideration was paid for such stock,
forfeited for no consideration if the conditions or restrictions
are not met, and the restricted stock may not be sold or otherwise
transferred to third parties until restrictions are removed or
expire. Recipients of restricted stock, unlike recipients of
options, may have voting rights and may receive dividends, if any,
prior to when the restrictions lapse.
Administration.
Our Board of Directors administers the 1999 Plan. Subject to the
terms and conditions of the 1999 Plan, the administrator has the
authority to select the persons to whom awards are to be made, to
determine the type or types of awards to be granted to each person,
determine the number of awards to grant, determine the number of
shares to be subject to such awards, and the terms and conditions
of such awards, and make all other determinations and decisions and
to take all other actions necessary or advisable for the
administration of the 1999 Plan. The plan administrator is also
authorized to prescribe, amend and rescind rules relating to
administration of the 1999 Plan, subject to certain
restrictions.
Eligibility.
Awards under the 1999 Plan may be granted to individuals who are
then our employees, consultants and members of our Board of
Directors and our subsidiaries. Approximately 19 employees, no
consultants and four non-employee directors are eligible to
participate in the 1999 Plan.
Corporate
Transactions. In the event of a corporate transaction where the
acquirer does not assume awards granted under the 1999 Plan, awards
issued under the 1999 Plan will be subject to accelerated vesting
such that 100% of the awards will become vested and exercisable or
payable. Under the 1999 Plan, a corporate transaction is generally
defined as any recapitalization, merger, consolidation or
conversion involving our company or any exchange of securities
involving the common stock, provided that a primary issuance of
shares of common stock shall not be deemed to be a corporate
transaction.
Amendment
and Termination of the 1999 Plan. Our Board of Directors may
terminate, amend or modify the 1999 Plan.
Securities
Laws. The 1999 Plan is intended to conform to all provisions of
the Securities Act and the Exchange Act and any and all regulations
and rules promulgated by the SEC thereunder, including, without
limitation, Rule 16b-3. The 1999 Plan will be administered, and
awards will be granted and may be exercised, only in such a manner
as to conform to such laws, rules and regulations.
Federal
Income Tax Consequences. The material federal income tax
consequences of the 1999 Plan under current federal income tax law
are summarized in the following discussion, which deals with the
general tax principles applicable to the 1999 Plan. The following
discussion is based upon laws, regulations, rulings and decisions
now in effect, all of which are subject to change. Foreign, state
and local tax laws, and employment, estate and gift tax
considerations are not discussed due to the fact that they may vary
depending on individual circumstances and from locality to
locality.
A
1999 Plan participant generally will not recognize taxable income
at ordinary income tax rates and we generally will not be entitled
to a tax deduction upon the grant of restricted stock. Upon the
termination of restrictions on restricted stock, the participant
will recognize taxable income at ordinary income tax rates, and we
should be entitled to a corresponding tax deduction for
compensation expense, in the amount paid to the participant or the
amount by which the then fair market value of the shares received
by the participant exceeds the amount, if any, paid for them. Upon
the subsequent disposition of any shares, the participant will
recognize a short-term or long-term capital gain or loss in the
amount of the difference between the sales price of the shares and
the participant’s tax basis in the shares. However, a 1999 Plan
participant granted restricted stock that is subject to forfeiture
or repurchase through a vesting schedule such that it is subject to
a “risk of forfeiture” (as defined in Section 83 of the Code) may
make an election under Section 83(b) of the Code to recognize
taxable income at ordinary income tax rates, at the time of the
grant, in an amount equal to the fair market value of the shares of
common stock on the date of grant, less the amount paid, if any,
for such shares. We will be entitled to a corresponding tax
deduction for compensation, in the amount recognized as taxable
income by the participant. If a timely Section 83(b) election is
made, the participant will not recognize any additional ordinary
income on the termination of restrictions on restricted stock, and
we will not be entitled to any additional tax deduction.
The
following table summarizes information about our equity
compensation plans as of December 31, 2021.
|
Plan
category |
|
Number of
securities to be issued upon exercise of outstanding options,
warrants and rights |
|
|
Weighted-average
exercise price of outstanding options, warrants and
rights |
|
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a)) |
|
| |
|
(a) |
|
|
(b) |
|
|
(c) |
|
| Equity compensation
plans approved by security holders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity compensation
plans not approved by security holders |
|
|
— |
|
|
|
— |
|
|
|
1,280,527 |
(1) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
— |
|
|
|
— |
|
|
|
1,280,527 |
|
|
|
(1) |
Of
these securities: (i) 586,620 shares of common stock remain
available for future issuance under the 2017 Incentive Award Plan,
and (ii) 693,907 shares of common stock remain available for future
issuance under the 1999 Plan. |
AUDIT
COMMITTEE
General
The
Audit Committee is comprised of Mr. Bruen (Chair), Mrs. Barnes and
Mr. Rollings, each of whom is “independent” within the meaning of
the Nasdaq Rules, our director independence standards and the audit
committee requirements of the SEC. The Board of Directors has
determined that Mr. Bruen and Mrs. Barnes each qualify as an “audit
committee financial expert,” as defined by the SEC and that each
member of the Audit Committee is “financially literate” under the
Nasdaq Rules. The Audit Committee met five times during
2021.
The
Audit Committee’s main function is to oversee our accounting and
financial reporting processes and the audits of our financial
statements. The Audit Committee also shares responsibility for
performing risk assessment. The Audit Committee is responsible for
discussing with management the guidelines, policies and processes
relied upon and used by management to assess and manage our
exposure to risk.
The
Audit Committee ensures that procedures have been established for
the receipt, retention and treatment of complaints from our
employees on accounting, internal accounting controls or auditing
matters, as well as for the confidential, anonymous submissions by
our employees of concerns regarding questionable accounting or
auditing matters or other potentially material risks.
The
Audit Committee’s principal responsibilities include:
|
■ |
Assisting
the Board of Directors in fulfilling its responsibility for
oversight of the quality and integrity of our accounting, auditing
and reporting practices; |
| |
|
| ■ |
Reviewing
and monitoring compliance with our code of ethics and
conduct; |
| |
|
| ■ |
The
ultimate authority over the appointment, retention, compensation,
oversight and evaluation of the work of our independent registered
public accounting firm; |
|
■ |
Preparing
the report that the SEC requires in our annual proxy statement;
and |
| |
|
| ■ |
The
selection, approval and engagement of our independent registered
public accounting firm, including approving any special assignments
given to the independent accounting firm and reviewing: |
|
|
■ |
The
independence of the independent registered public accounting
firm; |
| |
|
|
| |
■ |
Any
audit and non-audit services to be performed by the independent
registered public accounting firm; |
| |
|
|
| |
■ |
Our
guidelines and policies with respect to risk assessment and risk
management; and |
| |
|
|
| |
■ |
Our
compliance with legal and regulatory requirements. |
The
Audit Committee responsibilities are more fully described in its
charter, which is available on our website at
www.PresidioPT.com.
In
determining whether to appoint or reappoint the independent
registered public accounting firm as our independent auditor, the
Audit Committee takes into consideration a number of factors,
including audit fees, the expertise of the lead audit partner with
respect to real estate and, specifically REITs, the length of time
the firm has been engaged by us, the quality of the Audit
Committee’s ongoing discussions with its independent registered
public accounting firm and an assessment of the professional
qualifications, external data relating to audit quality and
performance, including recent Public Company Accounting Oversight
Board reports relating to our independent registered public
accounting firm and past performance of the firm’s lead audit
partner responsible for our audit. The Audit Committee has also
been involved in the selection of the lead audit
partner.
AUDIT
COMMITTEE REPORT
Management
of the Company has the primary responsibility for the preparation
of the financial statements as well as executing the financial
reporting process, principles and internal controls. The
independent registered public accounting firm is responsible for
performing an audit of the Company’s financial statements and
expressing an opinion as to the conformity of such financial
statements with accounting principles generally accepted in the
United States. The Audit Committee is responsible for assisting the
Board of Directors in overseeing the conduct of these activities by
the Company’s management and the independent auditors.
The
Audit Committee, with respect to the audit of the Company’s 2021
consolidated financial statements, reports as follows:
|
■ |
The
Audit Committee and the Company’s management met with Baker Tilly
US, LLP, in advance of the 2021 audit to discuss the annual audit
planning. The discussions included identifying critical audit
areas, accounting and reporting controls and the overall audit
approach. |
| |
|
| ■ |
The
Audit Committee has reviewed and discussed the audit of the
financial statements, for the year ended December 31, 2021, with
Baker Tilly US, LLP and with the Company’s management. |
| |
|
| ■ |
The
Audit Committee has discussed with Baker Tilly US, LLP the matters
required by Statement on Auditing Standard No. 61 (Communication
with Audit Committees), as currently in effect. In addition, the
Audit Committee has received the written disclosures and the letter
from Baker Tilly US, LLP as required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit
Committees), as currently in effect, and the Audit Committee has
discussed with Baker Tilly US, LLP their independence from the
Company. The Audit Committee has also considered whether Baker
Tilly US, LLP’s other non-audit services to the Company are
compatible with maintaining Baker Tilly US, LLP’s
independence. |
|
■ |
Following
discussions and a complete review of the financial statements, the
Audit Committee approves and authorizes for filing, the financial
report filings (Forms 10-K and 10-Qs) prior to the Company’s
management filing of these financial statements with the SEC. Based
on the review and discussions described in this report, the Audit
Committee recommended to the Board of Directors that the audited
financial statements for the year ended December 31, 2021 be
included in our Annual Report on Form 10-K for filing with the
SEC. |
During
the year ended December 31, 2021, Baker Tilly US, LLP served as our
independent auditor and has continuously served in that capacity
since 2009. The Audit Committee has the right, however, to select a
new auditor at any time in the future in its discretion if it deems
the change would be in our best interests. Any such decision would
be disclosed to the stockholders in accordance with applicable
securities laws.
Submitted
by the members of the Audit Committee of the Board of
Directors.
|
|
David
T. Bruen, Chair |
| |
Jennifer A.
Barnes |
| |
Sumner
J. Rollings |
The
above report of the Audit Committee will not be deemed to be
incorporated by reference into any filing by the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, except to the extent that the Company
specifically incorporates the same by reference.
Audit
Fees
The
following table presents fees for professional services rendered by
Baker Tilly US, LLP for fiscal years 2021 and 2020:
| |
|
2021 |
|
|
2020 |
|
| Audit
fees1 |
|
$ |
189,540 |
|
|
$ |
153,460 |
|
| Audit-related
fees2 |
|
|
94,180 |
|
|
|
85,780 |
|
| Tax fees |
|
|
66,107 |
|
|
|
— |
|
| Total fees |
|
$ |
349,827 |
|
|
$ |
239,240 |
|
| 1 |
Audit
fees represent aggregate fees billed for professional services in
connection with our annual audit of our consolidated financial
statements and reviews of our quarterly reports on Form
10-Q. |
| |
|
| 2 |
Audit-related
fees represent fees for assurance and related services reasonably
related to the audit and/or review of financial statements, such as
audits required in connection with property acquisitions, certain
additional services associated with accessing the capital markets,
including reviewing registration statements and amendments thereto,
the issuance and preparation of comfort letters and consents,
and/or other accounting-related services. |
Pre-Approval
Policies and Procedures
The
Audit Committee has adopted a policy that it generally must
pre-approve all audit and non-audit services to be performed by the
Company’s independent registered public accounting firm before the
firm is engaged to perform the services. The Audit Committee
reviews and approves these fees in advance, taking into
consideration the quality and timing of service and the
competitiveness of the fees charged. The Audit Committee believes
that audit independence has not been impaired as a result of the
non-audit services provided, if any.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information as of March 28, 2022
relating to the beneficial ownership of shares of our common stock
by (1) each director and named executive officer named in the
Summary Compensation Table, (2) all executive officers and
directors as a group as of March 28, 2022 and (3) 5% or greater
holders. Beneficial ownership is determined in accordance with the
rules of the SEC and includes voting or investment power with
respect to the securities. Except as indicated in footnotes to this
table, we believe that the stockholders named in this table have
sole voting and investment power with respect to all shares of
common stock shown to be beneficially owned by them based on
information provided to us by these stockholders. The address of
each person is c/o Presidio Property Trust, Inc., 4995 Murphy
Canyon Road, Suite 300, San Diego, CA 92123 unless otherwise
indicated herein.
| |
|
Number of
Shares |
|
|
% of
Total |
|
| |
|
of Series
A |
|
|
Outstanding |
|
|
Directors
and Named Executive Officers |
|
Common
Stock |
|
|
Shares
(1) |
|
| Jennifer A.
Barnes |
|
|
27,552 |
(2) |
|
|
* |
|
| David T.
Bruen |
|
|
46,836 |
(3) |
|
|
* |
|
| Larry G.
Dubose |
|
|
144,574 |
(4) |
|
|
1.2 |
% |
| James R.
Durfey |
|
|
47,492 |
(5) |
|
|
* |
|
| Jack K.
Heilbron |
|
|
306,217 |
(6) |
|
|
2.5 |
% |
| Gary M.
Katz |
|
|
158,958 |
(7) |
|
|
1.3 |
% |
| Sumner J.
Rollings |
|
|
62,813 |
(8) |
|
|
* |
|
| Adam
Sragovicz |
|
|
132,170 |
(9) |
|
|
1.1 |
% |
| All current directors
and executive officers as a group (8 people) |
|
|
926,612 |
|
|
|
7.5 |
% |
| 5% or greater
stockholders |
|
|
|
|
|
|
|
|
| Armistice Capital,
LLC, Steven Boyd, 510 Madison Avenue, 7th Floor, New York, New York
10022 (10) |
|
|
1,320,552 |
(11) |
|
|
10.68 |
% |
| |
(1) |
Based
on 12,364,289 shares of common stock of the Company issued and
outstanding as of March 28, 2022. |
| |
(2) |
Includes
22,541 shares are unvested stock that are scheduled to become fully
vested by December 31, 2024. |
| |
(3) |
Includes
21,346 shares of unvested stock that are scheduled to become fully
vested by December 31, 2024. |
| |
(4) |
Includes
36,402 shares of unvested stock that are scheduled to become fully
vested by December 31, 2026. |
| |
(5) |
Includes
30,481 shares are unvested stock that are scheduled to become fully
vested by December 31, 2024. |
| |
(6) |
Of
these shares: (i) 10,655 shares are held by Puppy Toes, Inc. and
its subsidiaries (including Centurion Counsel, Inc.), of which Mr.
Heilbron is the controlling shareholder, (ii) 10,007 shares are
held by Mr. Heilbron’s spouse, (iii) 600 shares are held by or FBO
Mr. Heilbron’s grandchildren and (iv) includes 149,956 shares are
unvested stock that are scheduled to become fully vested by
December 31, 2027. |
| |
|
|
| |
(7) |
Includes
86,153 shares of unvested stock that are scheduled to become fully
vested by December 31, 2024. |
| |
(8) |
Of
these shares: (i) 2,677 shares are held by Mr. Rollings’ spouse,
and (ii) includes 25,796 shares are unvested stock that are
scheduled to become fully vested by December 31, 2024. |
| |
(9) |
Includes
87,426 shares of unvested stock that are scheduled to become fully
vested by December 31, 2024. |
| |
(10) |
Based
solely on a Schedule 13G filed with the SEC on February 15, 2022.
The Schedule 13G was filed by Armistice Capital, LLC and Steven
Boyd (collectively, “Armistice”). According to the Schedule 13G, as
of February 15, 2022, Armistice Capital, LLC and Steven Boyd have
shared voting power and shared dispositive power with regard to
1,320,552 shares of common stock. |
| |
(11) |
Does
not include 2,000,000 warrants with a 19.99% beneficial ownership
blocker. |
Delinquent
Section 16(a) Reports
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s
directors, executive officers and any owner of greater than 10% of
the Company’s Common Stock to file reports with the Securities and
Exchange Commission concerning their ownership of the Company’s
Common Stock. Based solely upon information provided to the Company
by individual directors and executive officers, the Company
believes that, during the year ended December 31, 2021, all of its
directors and executive officers and owners of greater than 10% of
the Company’s Common Stock complied with the Section 16(a) filing
requirements, except that Jack Heilbron filed one late Form 4 with
respect to one transaction.
Related
Party Transactions
In
the last two fiscal years, there have been no transactions in which
the Company was or is to be a party in which the amount involved
exceeds $120,000 and in which any director, executive officer,
holder of more than 5% of the Company’s common stock or any member
of the immediate family of any of the foregoing persons had or will
have a direct or indirect material interest except as set forth
below.
Our
Audit Committee reviews and approves all related party transactions
that management has determined are required to be disclosed in the
audited financial statements.
In
November 2021, our subsidiary Murphy Canyon Acquisition Sponsor,
LLC (the “Sponsor”), purchased 4,312,500 founder shares of Murphy
Canyon Acquisition Corp. for an aggregate purchase price of
$25,000, or approximately $0.006 per share. On January 26, 2022,
the Sponsor surrendered and forfeited 1,006,250 founder shares for
no consideration, following which the Sponsor held 3,306,250
Founder Shares at approximately $0.008 per share.
In
February 7, 2022, the Sponsor purchased 754,000 units (the “Private
Placement Units”) from Murphy Canyon Acquisition Corp., at a price
of $10.00 per Private Placement Unit.
In
2021 and 2022, the Sponsor loaned $300,000 to Murphy Canyon
Acquisition Corp., which was repaid on February 7, 2022. These
loans were non-interest bearing and unsecured.
Indemnification
of Our Directors and Officers in Our Charter and Bylaws
Our
charter authorizes us to obligate ourselves, and our bylaws
obligate us, to the maximum extent permitted by Maryland law in
effect from time to time, to indemnify and, without requiring a
preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to:
|
■ |
any
present or former director or officer who is made or threatened to
be made a party to, or witness in, a proceeding by reason of his or
her service in that capacity; or |
| |
|
|
■ |
any
individual who, while a director or officer of our Company and at
our request, serves or has served as a director, officer, partner,
trustee, member or manager of another corporation, real estate
investment trust, limited liability company, partnership, joint
venture, trust, employee benefit plan or any other enterprise and
who is made or threatened to be made a party to, or witness in, the
proceeding by reason of his or her service in that
capacity. |
Our
charter and bylaws also permit us to indemnify and advance expenses
to any individual who served any of our predecessors in any of the
capacities described above and any employee or agent of us or any
of our predecessors.
Indemnification
Agreements
We
have entered into indemnification agreements with each of our named
executive officers and directors whereby we agree to indemnify such
executive officers and directors to the fullest extent permitted by
Maryland law against all expenses and liabilities. These
indemnification agreements also provide that upon an application
for indemnity by an executive officer or director to a court of
appropriate jurisdiction, such court may order us to indemnify such
executive officer or director. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors or executive officers, we have been informed that in the
opinion of the SEC such indemnification is against public policy
and is therefore unenforceable.
PROPOSAL 2
RATIFICATION
OF THE APPOINTMENT OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee of our Board of Directors has engaged Baker Tilly
US, LLP as our independent auditor to audit our financial
statements for the year ending December 31, 2022. A representative
of Baker Tilly US, LLP may be present at the Annual Meeting and
will have an opportunity to make a statement if he or she so
desires. The representative, if present, will be available to
respond to appropriate questions from our stockholders.
Although
it is not required to do so, our Board is submitting the Audit
Committee’s appointment of our independent registered public
accounting firm for ratification by our stockholders at the Annual
Meeting in order to ascertain the view of the stockholders
regarding such appointment.
In
the event stockholders fail to ratify the appointment, our Audit
Committee will reconsider whether to retain our independent
registered public accounting firm at its next scheduled meeting.
Even if the appointment is ratified, the Audit Committee, in its
discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of the
Company.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
Our Board unanimously recommends a vote FOR ratification of the
appointment of Baker Tilly US, LLP as our independent registered
public accounting firm for the year ending December 31,
2022.
PROPOSAL
3
PROPOSAL
TO AMEND OUR CHARTER
TO
PROVIDE FOR THE RECLASSIFICATION OF OUR COMMON STOCK
Description
of Proposal
The
Board of Directors has declared advisable and recommends to the
stockholders an amendment (“Charter Amendment”) to the charter of
the Company to provide the Board with the power to reclassify any
unissued shares of common stock from time to time into one or more
classes or series of stock having such preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption
as determined by the Board. The full text of the Charter Amendment
is set forth in the Articles of Amendment attached hereto as
Appendix A and is incorporated by reference
herein.
The
current charter of the Company grants the Board the power to
classify any unissued shares of preferred stock, par value $0.01
per share (“preferred stock”), of the Company into one or more
classes or series of stock having such preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption as
determined by the Board. However, when the Company moved its
jurisdiction of incorporation from California to Maryland in 2010,
the charter omitted a similar power for the Board to reclassify
shares of common stock. From time to time, the Company has relied
on the existing charter provisions to classify undesignated shares
of preferred stock into classes and series of common stock and
preferred stock. However, the ability to only classify and
reclassify shares of preferred stock has resulted in the Company
having only 80,000 shares of undesignated preferred stock currently
authorized under the charter and 9,000,000 shares of Series C
common stock, which Series C common stock the Company has no
intention of issuing following the Company’s initial public
offering of shares of Series A common stock in October
2020.
Purpose
and Effect of Amendment
The
principal purpose and effect of the Charter Amendment is to provide
the Board with additional flexibility in the management of the
Company’s capitalization and financing. The ability to reclassify
common stock into other classes or series of stock is a
well-recognized and commonly-employed financing tool that could be
used by us, instead of debt or currently available shares of
preferred stock, to raise capital for future acquisitions or other
business purposes. Having the flexibility to issue the full range
of securities, including new classes or series of common stock,
preferred stock, debt and other securities, is crucial to ensuring
that the Company can competitively finance future acquisitions and
other business needs with the same tools employed by our
competitors. The issuance of new classes or series of stock may,
depending on market conditions, provide the Company with a lower
cost of capital than alternative means of financing, which, in
turn, can positively affect earnings available to our
stockholders.
The
overwhelming majority of publicly-traded REITs have the authority
to classify and reclassify shares of common and preferred stock,
and a significant number of these REITs have issued multiple
classes or series of stock. By way of example, the following REITs,
among many others, have similar provisions authorized under their
charters:
|
Acadia
Realty Trust |
|
CyrusOne,
Inc. |
|
Federal
Realty Investment Trust |
| Alexandria
Real Estate Equities, Inc. |
|
Digital
Realty Trust, Inc. |
|
Hudson
Pacific Properties, Inc. |
| Arbor
Realty Trust, Inc. |
|
Extra
Space Storage Inc. |
|
STORE
Capital Corporation |
| Corporate
Office Properties Trust |
|
Franklin
Street Properties Corp. |
|
UDR,
Inc. |
The
foregoing list includes industry-leading REITs. In competing for
property acquisitions, the acquiror’s cost of capital is a critical
element to success. As a result, we may be at a potential
competitive disadvantage to other REITs due to our inability to
reclassify common stock into other classes or series of stock as an
additional financing tool to achieve the lowest possible overall
cost of capital, particularly should the Company exhaust the
available 80,000 undesignated shares of preferred stock currently
authorized under the charter. Moreover, in order for the Company to
maintain its qualification as a REIT under the Code, we must
distribute annually at least 90% of our REIT taxable income.
Therefore, the Company (like all REITs) must regularly access the
capital markets to finance its growth since it is generally unable
to do so by retaining earnings. As a result, due to the capital
intensive nature of the REIT industry, having the ability to
reclassify and issue new classes or series of stock is an important
financing tool for many REITs.
If
Proposal 3 is approved by the Company’s stockholders, then the
Company will file the Articles of Amendment containing the text of
the Charter Amendment set forth in Appendix A to this Proxy
Statement for record with the State Department of Assessments and
Taxation of Maryland, which we expect to occur promptly after the
Annual Meeting. In addition, the Company intends to reclassify the
9,000,000 shares of Series C common stock into undesignated shares
of preferred stock and 1,000 shares of Series B common stock into
shares of Series A common stock promptly following the filing of
the Articles of Amendment containing the Charter Amendment.
Following such reclassifications, the Company would have
110,001,000 shares of stock authorized under the charter,
consisting of (i) 100,001,000 shares of Series A common stock and
(ii) 10,000,000 shares of preferred stock, of which 920,000 shares
are classified as 9.375% Series D Cumulative Redeemable Perpetual
Preferred Stock.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
Our Board unanimously recommends a vote FOR approval of the Charter
Amendment described in this Proposal 3.
PROPOSAL 4
ADVISORY
VOTE TO APPROVE EXECUTIVE COMPENSATION
Section
14A of the Exchange Act, as amended by the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”),
entitles our stockholders an opportunity to vote to approve, on a
non-binding, advisory basis, the compensation of our named
executive officers as disclosed in this Proxy Statement in
accordance with the compensation disclosure rules of the Securities
and Exchange Commission.
As
described in detail under the heading “Compensation Narrative,” we
seek to closely align the interests of our named executive officers
with the interests of our stockholders. Our compensation programs
are designed to reward the achievement of specific annual,
long-term and strategic goals by the Company and to align such
executive officers’ interests with those of our stockholders by
rewarding performance above established goals with the ultimate
objective of improving stockholder value.
We
encourage you to carefully review the section of this Proxy
Statement titled “Compensation Narrative” for additional details on
our executive officer compensation program as well as the reasons
and processes for how our Compensation Committee determined the
structure and amounts of the 2021 compensation of our named
executive officers.
We
are asking our stockholders to indicate their support for the
compensation of our named executive officers as set forth in this
Proxy Statement. This proposal, commonly known as a “say-on-pay”
proposal, gives our stockholders the opportunity to express their
views on our named executive officers’ compensation. Accordingly,
we ask that our stockholders vote “FOR” the following
resolution.
“RESOLVED,
that the stockholders of Presidio Property Trust, Inc. (“Presidio”)
approve, on an advisory basis, the compensation of Presidio’s named
executive officers, as disclosed in Presidio’s Proxy Statement for
the 2022 Annual Meeting of Stockholders, pursuant to the
compensation disclosure rules of the Securities and Exchange
Commission, including the related compensation tables and
disclosures.”
The
vote on this resolution is not intended to address any specific
element of compensation, but rather the vote relates to the
compensation of our named executive officers, as described in this
Proxy Statement. Pursuant to the Dodd-Frank Act, the vote is
advisory, which means that the vote is not binding on the Company,
our Board of Directors or our Compensation Committee. Nevertheless,
the views expressed by our stockholders, whether through this vote
or otherwise, are important to us and, accordingly, the Board of
Directors and the Compensation Committee intend to consider the
results of this vote in making determinations in the future
regarding executive compensation arrangements.
PROPOSAL 5
PROPOSAL
TO INCREASE THE TOTAL NUMBER OF SHARES OF COMMON
STOCK
AUTHORIZED FOR ISSUANCE UNDER THE 2017 INCENTIVE AWARD
PLAN
FROM 1,100,000 SHARES TO2,500,000 SHARES
We
are seeking stockholder approval of an amendment to the 2017
Incentive Award Plan to increase the number of shares issuable
pursuant to the 2017 Incentive Award Plan to 2,500,000 from
1,100,000. In determining the amount of the increase contemplated
by the proposed amendment to the 2017 Incentive Award Plan, the
Board of Directors has taken into consideration the desire to
continue to retain the flexibility to offer incentives to our
officers, directors, consultants and others.
Upon
stockholder approval, an additional 1,400,000 shares of common
stock will be available for issuance under the 2017 Incentive Award
Plan, the purpose of which will be to enable us to continue to
incentivize our officers, directors, consultants and others thereby
attracting, retaining and motivating the individuals who will be
critical to the Company’s success in achieving its business
objectives and thereby creating greater value for all our
stockholders. In addition, the proposed amendment to the 2017
Incentive Award Plan will clarify that shares of Series A Common
Stock became issuable as awards following the listing of the Series
A Common Stock on the Nasdaq Capital Market, which occurred on
October 7, 2020.
Section
3.1(a) of the 2017 Incentive Award Plan shall be amended and
restated in its entirety as follows:
(a)
Subject to Section 3.1(b) and Section 11.2 hereof, the aggregate
number of Shares which may be issued or transferred pursuant to
Awards under the Plan is 2,500,000 Shares (the “Share
Limit”), which may be issued as Shares of Series A Common Stock
or Shares of Series C Common Stock, as determined by the
Administrator in its sole discretion and to the extent such series
of Common Stock exists from time to time; provided,
however, that, from and after the date on which the Series A
Common Stock is listed on any established securities exchange (such
as the New York Stock Exchange, the NASDAQ Global Market and the
NASDAQ Global Select Market) (the “Listing Date”), only
shares of Series A Common Stock may be issued pursuant to Awards
hereunder. The Share Limit shall not be adjusted pursuant to
Article 11 in the event of the proposed reverse stock split of the
Series A Common Stock to be effected by the Company immediately
prior to the Listing Date. From and after the day immediately prior
to the Listing Date, no additional awards will be granted under the
Prior Plan. Following the Listing Date, any Shares that again
become available for future grants of Awards under the Plan shall
be treated as Series A Common Stock hereunder.
Approval
of the amendment will permit the Company to continue to use and
offer incentives to eligible participants in order to motivate and
reward those providing services to the Company or any
subsidiary.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR amending
the 2017 Incentive Award Plan to increase the number of shares
available for issuance thereunder to 2,500,000 from 1,100,000
shares of common stock.
OTHER
BUSINESS
Management
does not intend to present any business at the meeting not
mentioned in this Proxy Statement, and at the time of preparation
of this Proxy Statement knows of no other business to be presented.
If any other matters are properly brought before the meeting or at
any postponement or adjournment thereof, the appointed proxies will
vote all proxies on such matters in accordance with their
discretion.
Other
Information Regarding the Company’s Proxy
Solicitation
STOCKHOLDER
PROPOSALS
In
accordance with Rule 14a-8 under the Exchange Act, to be considered
for inclusion in the proxy statement relating to the Company’s 2022
Annual Meeting, stockholder proposals must have been received no
later than December 16, 2021. Our Secretary has not received any
valid notice of any such matter to be presented by a stockholder at
our Annual Meeting.
A
stockholder proposal submitted pursuant to Rule 14a-8 under the
Exchange Act for inclusion in our proxy statement and form of proxy
for the 2023 Annual Meeting must be received by our Company by
December 16, 2022. Such a proposal must also comply with the
requirements as to form and substance established by the SEC for
such proposals. To be considered for presentation at the 2023
Annual Meeting, although not included in the Company’s proxy
statement, proposals, under our current Bylaws, must generally be
received no earlier than November 16, 2022 nor later than 5:00
P.M., Pacific Time on December 16, 2022 and must be submitted in
accordance with the requirements of our current Bylaws. Proposals
that are not received in a timely manner will not be voted on at
the 2023 Annual Meeting. If a proposal is received on time, the
proxies that management solicits for such meeting may still
exercise discretionary voting authority on the proposal under
circumstances consistent with the proxy rules of the SEC. All
stockholder proposals should be marked for the attention of the
Secretary of the Company at 4995 Murphy Canyon Road, Suite 300, San
Diego, California 92123.
ANNUAL
REPORT ON FORM 10-K
Company
stockholders will receive in the mail or be able to view the Proxy
Statement and Annual Report over the Internet at www.proxyvote.com
by following the instructions provided in your Notice of
Availability of Proxy Materials or by going to the website
www.proxydocs.com/SQFT and following the instructions. The Annual
Report contains important information about the Company and its
financial condition that is not included in the Proxy Statement. If
you prefer a paper copy of the proxy materials, you may request one
by calling 1-866-249-5360.
|
|
BY
ORDER OF THE BOARD OF DIRECTORS, |
| |
|
| |
Jack K. Heilbron |
| |
|
| |
President
and Chief Executive Officer
Chairman
of the Board
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| San
Diego, California |
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| April
15, 2022 |
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APPENDIX
A
PRESIDIO
PROPERTY TRUST, INC.
ARTICLES
OF AMENDMENT
Presidio
Property Trust, Inc., a Maryland corporation (the
“Corporation”), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST:
The charter of the Corporation is hereby amended by adding the
following sentence at the end of Section 6.2 of Article
VI:
“The
Board of Directors may reclassify any unissued shares of Common
Stock from time to time into one or more classes or series of stock
having such preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption as determined by the Board
of Directors.”
SECOND:
The amendment to the charter of the Corporation as set forth above
has been duly advised by the Board of Directors and approved by the
stockholders of the Corporation as required by law.
THIRD:
There has been no increase in the authorized shares of stock of the
Corporation effected by the amendment to the Charter as hereinabove
set forth.
FOURTH:
The information required by Section 2-607(b)(2)(i) of the Maryland
General Corporation Law is not changed by the foregoing amendment
of the charter.
FIFTH:
These Articles of Amendment shall become effective at 4:00 p.m.,
Eastern Time, on _______, 2022.
SIXTH:
The undersigned acknowledges these Articles of Amendment to be the
corporate act of the Corporation and, as to all matters or facts
required to be verified under oath, the undersigned acknowledges
that, to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this
statement is made under the penalties of perjury.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be signed in its name and on its behalf by its
President and Chief Executive Officer and attested to by its
Secretary on this ___ day of ____________, 2022.
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ATTEST: |
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PRESIDIO
PROPERTY TRUST, INC. |
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By: |
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(SEAL) |
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Name: |
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Name: |
Jack
K. Heilbron |
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| Title: |
Secretary |
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Title: |
President
and Chief Executive Officer |
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Presidio Property (NASDAQ:SQFT)
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