UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the
Registrant
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Filed by a Party other than the
Registrant
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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 Pursuant to
§240.14a-12
Feldman Mall Properties, 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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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
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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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Proposed maximum aggregate value of transaction:
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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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EXPLANATORY
NOTE
Mercury Real Estate Advisors LLC (
Mercury
),
Three River Road, Greenwich, CT 06807, owner of
590,453 shares of common stock of Feldman Mall Properties,
Inc. (the
Company
), gave notice to the
Company on December 18, 2006 that it intended to present
for action at the 2007 Annual Meeting the following stockholder
proposal (the
Mercury Proposal
):
The stockholders of the Company recommend that the Board
promptly engage an investment banking firm and pursue a sale or
liquidation of the Company.
Mercury believes that a sale of the Company is in the best
interests of stockholders for the following reasons:
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The Company has failed to match returns reflected by certain
industry benchmarks. Since going public on December 15,
2004, the Company has posted a total return of negative 4.79%.
The MSCI US REIT Index has achieved a total return of positive
55.77% over this same period. This reflects substantial
underperformance of 60.53%.
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The Company lacks the sufficient size required to operate as a
public company. In Mercurys view, shareholders
equity is being wasted on general and administrative expenses
that are not commensurate with the size of the company. General
and administrative expenses at the Company totaled 13.6% of
revenues during fiscal 2005 while the ratio of G&A to
revenues in the Companys Peer Group average 4.3%.
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The Company has suffered a series of earnings misses and
downward revisions to guidance. The first downward revision of
guidance came in November 2005 with regards to third quarter
2005 results. The Company lowered FFO/share guidance 17% from a
range of $0.28-$0.30 to $0.23-$0.25. Fourth quarter 2005
FFO/share guidance was also lowered from a range of $0.25-$0.27
to $0.17-$0.18. This is a 32% decrease from the guidance that
was offered just a few months prior. In Mercurys view,
management has lost credibility with investors as a result of
being overly optimistic and not realistic on a number of
occasions.
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The Company is an attractive acquisition candidate for a
national or regional mall owner/operator. While Mercury believes
that the Company is too small to generate economies of scale
with its widely dispersed portfolio, several of the national or
regional owner/operators could achieve operating synergies
through an acquisition of the Company. Further, Mercury believes
the Company is trading at a significant discount to its
intrinsic or liquidation value.
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Mercury has submitted additional letters to the Board on
January 30, 2007, March 20, 2007 and May 16, 2007
requesting that the Company hire an investment bank to explore
various strategic alternatives.
As previously announced by the Company, on June 5, 2007,
the Company retained Friedman, Billings, Ramsey & Co.
to assist the Company in exploring strategic alternatives in
order to enhance stockholder value. These strategic alternatives
included the raising of capital through the sale of the
Companys assets, joint ventures or strategic partnerships,
selective acquisitions or dispositions, and its combination,
sale or merger with another entity. These efforts have not yet
led to the Companys announcement or completion of any of
these alternatives.
The Company has determined to exclude the Mercury Proposal from
the Proxy Statement on the grounds that it has already
implemented the proposal subsequent to the receipt of
Mercurys notice. The Company believes that it is permitted
to exclude the proposal on the grounds that it is now represents
a deficiency that cannot be remedied as provided in
Rule 14a-8(f).
FELDMAN MALL PROPERTIES,
INC.
1010 Northern Blvd, Suite 314
Great Neck, New York 11021
November [ ], 2007
Dear Stockholder:
We cordially invite you to attend our 2007 Annual Meeting of
Stockholders. We will hold the meeting at 1010 Northern Blvd,
Suite 314, Great Neck, New York, 11021 on December 21,
2007 at 10:00 a.m. local time.
At the annual meeting, we will ask our stockholders to:
1. Elect four directors to our Board of Directors to serve
until the 2008 annual meeting of stockholders and until their
successors are duly elected and qualified;
2. Ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2007; and
3. To approve the convertibility feature of our 6.85%
Series A Cumulative Contingently Convertible Preferred
Stock, par value $0.01 per share (the
Series A
Preferred Stock
), in accordance with the terms of the
Series A Preferred Stock.
4. To transact such other business as may properly come
before the annual meeting or any postponement or adjournment of
the meeting.
The attached proxy statement contains details of the proposals
to be voted on at the annual meeting and other important
matters. We encourage you to read the proxy statement carefully.
YOUR BOARD OF DIRECTORS HAS CONCLUDED THAT THE ELECTION OF THE
FOUR NOMINEES AS DIRECTORS, THE APPROVAL OF THE CONVERTIBILITY
FEATURE OF THE SERIES A PREFERRED STOCK AND THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT
PUBLIC ACCOUNTANTS ARE IN THE BEST INTERESTS OF THE CORPORATION
AND THE BEST INTERESTS OF OUR STOCKHOLDERS. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THESE
PROPOSALS.
We cordially invite all stockholders to attend the annual
meeting in person. Any stockholder attending the annual meeting
may vote in person even if he or she previously returned a proxy.
Sincerely,
Larry Feldman
Chairman of the Board
TABLE OF CONTENTS
FELDMAN MALL PROPERTIES,
INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On December 21,
2007
NOTICE IS HEREBY GIVEN that the 2007 annual meeting of
stockholders (the
Annual Meeting
) of Feldman
Mall Properties, Inc., a Maryland corporation (the
Company
), will be held at 1010 Northern Blvd,
Suite 314, Great Neck, New York 11021 on December 21,
2007 at 10:00 a.m. local time, for the following purposes as
further described in the accompanying proxy statement:
1. To elect to the Board of Directors four members to hold
office until the 2008 annual meeting of stockholders and until
their successors are duly elected and qualified. The nominees to
the Board are the following: Larry Feldman, Bruce E. Moore,
Lawrence S. Kaplan and Paul H. McDowell.
2. To ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2007.
3. To approve the convertibility feature of our 6.85%
Series A Cumulative Contingently Convertible Preferred
Stock, par value $0.01 per share (the
Series A
Preferred Stock
), in accordance with the terms of the
Series A Preferred Stock.
4. To transact such other business as may properly come
before the annual meeting or any postponement or adjournment of
the meeting.
The Board has fixed November [ ], 2007 as the
record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting or any
postponement or adjournment of the meeting. Holders of record of
our common stock at the close of business on that day will be
entitled to vote at the Annual Meeting.
By Order of the Board of Directors
Thomas E. Wirth
Secretary
Great Neck, New York
November [ ], 2007
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE POSTAGE PREPAID ENVELOPE ENCLOSED FOR THAT
PURPOSE.
FELDMAN MALL PROPERTIES,
INC.
1010 Northern Blvd, Suite 314
Great Neck, New York 11021
2007 Annual Meeting of
Stockholders
To Be Held December 21,
2007
We are sending this proxy statement to holders of our common
stock as of November [ ], 2007 in connection
with the solicitation by our Board of Directors of proxies to be
voted at our 2007 Annual Meeting of Stockholders or at any
postponement or adjournment of the meeting.
This proxy statement is accompanied by a copy of our Annual
Report to Stockholders for the year ended December 31, 2006.
About the
Meeting
Who is
entitled to vote at the meeting?
Only holders of record of our common stock at the close of
business on
[ ],
2007 are entitled to receive notice of and to vote at the Annual
Meeting or at any postponement or adjournment of the meeting. On
the record date, there were 13,018,831 issued and outstanding
shares of common stock.
What
constitutes a quorum?
The presence, either in person or by proxy, of the holders of a
majority of the voting power of the outstanding common stock on
the record date is necessary to constitute a quorum at the
Annual Meeting.
What
are the voting rights of stockholders and what vote is needed to
approve each proposal?
Each stockholder is entitled to one vote for each share of
common stock registered in the stockholders name on the
record date. A plurality vote of the voting power of the
outstanding common stock is required for the election of
directors. An affirmative vote of a majority of the votes cast
at the meeting by holders of our common stock is required for
the approval and ratification of each other matter.
How is
my vote counted?
If you properly execute a proxy in the accompanying form, and if
we receive it prior to voting at the Annual Meeting, the shares
that the proxy represents will be voted in the manner specified
on the proxy. If no specification is made, the common stock will
be voted FOR the proposals relating to the election of the four
nominees as directors, the approval of the convertibility
feature of the Series A Preferred Stock and the
ratification of our independent auditors and as recommended by
the Board with regard to all other matters in its discretion.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting,
who will determine whether or not a quorum is present. The
election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders for a
vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter. Under
New York Stock Exchange (
NYSE
) rules, if
your shares are held by a broker, bank, or other nominee, your
shares may be voted by such nominee on the proposals relating to
the election of the four nominees as directors and the
ratification of our independent auditors, even if you do not
provide voting instructions, because they involve matters that
are considered routine. Your broker, bank, or other nominee may
not vote on the other proposals if you do not provide
instructions, because they involve matters that are considered
non-routine.
Can I
change my vote after I submit my proxy card?
If you cast a vote by proxy, you may revoke it at any time
before it is voted by giving written notice to our Secretary
expressly revoking the proxy, by signing and forwarding to us a
proxy dated later, or by attending the Annual Meeting and
personally voting the common stock owned of record by you.
Who
pays the costs of soliciting proxies?
We will pay the costs of soliciting proxies from our
stockholders. In addition to solicitation by mail, certain of
our directors, officers and regular employees may solicit the
return of proxies by telephone, facsimile, personal interview or
otherwise without being paid additional compensation. We will
also reimburse brokerage firms and other persons representing
the beneficial owners of our shares for their reasonable
expenses in forwarding proxy solicitation material to the
beneficial owners in accordance with the proxy solicitation
rules and regulations of the Securities and Exchange Commission
(the
SEC
) and NYSE. The Altman Group, Inc.
has been engaged to solicit proxies on our behalf for a fee of
$4,000 plus expenses.
PROPOSAL 1:
ELECTION
OF DIRECTORS
In accordance with the provisions of our charter, each member of
our Board is elected annually.
All of the nominees for director are presently directors. If a
nominee becomes unavailable to serve as a director for any
reason, the shares represented by any proxy will be voted for
the person, if any, who may be designated by the Board to
replace that nominee. At this time, the Board has no reason to
believe that any nominee will be unavailable to serve as a
director if elected.
All of the nominees for director, other than Mr. Feldman,
are independent within the standards prescribed by the NYSE.
The following table sets forth the name, age and the position(s)
with us (if any) currently held by each person nominated as a
director:
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Name
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Age
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Title
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Larry Feldman
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Chairman
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Lawrence S. Kaplan(1)
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Director
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Bruce E. Moore(2)
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Director
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Paul H. McDowell(3)
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Director
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(1)
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Chairman of Audit Committee and Member of Compensation Committee
and Nominating and Corporate Governance Committee.
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(2)
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Chairman of Compensation Committee and Member of Audit Committee
and Nominating and Corporate Governance Committee.
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(3)
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Chairman of Nominating and Corporate Governance Committee and
Member of Compensation Committee and Audit Committee.
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Larry Feldman
is our Chairman and has served as a
director of the Company since our incorporation in 2004. He
served as the Chief Executive Officer of the Company since our
inception through October 2007. From 1999 to 2004 he served as
Chairman and Chief Executive Officer of Feldman Equities and,
since April 2002, Feldman Equities of Arizona. From 1997 until
1998, he served as Chairman of the Board, Chief Executive
Officer and President of Tower Realty Trust. From 1990 until
1997, Mr. Feldman served as President and Chief Executive
Officer of Feldman Equities, where he was employed since 1980.
Mr. Feldman is also the founder and former Chairman of the
Midtown West Association of New York City and a member of the
International Council of Shopping Centers and National
Association of Real Estate Investment Trusts. Mr. Feldman
is also currently the Chairman of the Buildings &
Grounds Committee and a member of the Board of Trustees of East
Woods School in Oyster Bay Cove, New York. Mr. Feldman
graduated from Windham College in 1976 with a Bachelors of
Science degree in Economics.
2
Paul H. McDowell
has served as a director of the Company
since our initial public offering in December 2004.
Mr. McDowell is a founder of CapLease, Inc., a NYSE listed
REIT, where he has been continuously employed since 1994,
including as Chief Executive Officer since March 2001, and as
Senior Vice President, General Counsel and Secretary from 1994
until February 2001. He has served on the board of directors of
CapLease since November 2001, where he is also chairman of the
investment committee and the investment oversight committee of
the board. From 1991 until 1994, Mr. McDowell was Corporate
Counsel for Sumitomo Corporation of America, the principal
U.S. subsidiary of one of the worlds largest
integrated trading companies. As Corporate Counsel,
Mr. McDowell advised on a wide range of domestic and
international corporate legal matters, including acquisitions,
complex financing transactions, power plant development,
shipping, litigation management and real estate. From 1987 to
1990, Mr. McDowell was an associate in the corporate
department at the Boston law firm of Nutter, McClennen &
Fish. Mr. McDowell received a JD with honors from Boston
University School of Law in 1987 and received a Bachelor of Arts
from Tulane University in 1982.
Bruce E. Moore
has served as a director of the Company
since our initial public offering in December 2004.
Mr. Moore has been a Director of American Land Lease, a
NYSE listed publicly traded REIT, since July 2001, and is a
member of the Audit, Compensation, Nominating and Corporate
Governance Committees. From 1998 to 2001, Mr. Moore served
as President and Chief Operating Officer of American Land Lease.
Mr. Moore is the founder and is the Chief Executive Officer
of Brandywine Financial Services Corporation and its affiliates,
or Brandywine, a private real estate firm specializing in
various aspects of the real estate industry, including asset
management, consulting, development, property management,
brokerage and capital formation. Mr. Moore holds a Masters
in Accounting and a Bachelor of Science in Economics from the
Wharton School of the University of Pennsylvania. In addition,
Mr. Moore is a member of the National Association of Real
Estate Investment Trusts and the International Council of
Shopping Centers.
Lawrence S. Kaplan
has served as a director of the
Company since our initial public offering in December 2004.
Mr. Kaplan is a Certified Public Accountant and retired as
a partner from Ernst & Young LLP in September of 2000
where he was the national director of that firms REIT
Advisory Services group. Mr. Kaplan joined
Ernst & Young LLP as a partner in 1995 and was
actively involved in the formation of numerous publicly traded
real estate investment trusts. After his retirement,
Mr. Kaplan was retained by Ernst & Young LLP as a
consultant during 2000 and 2001. Mr. Kaplan has served on
the board of governors of the National Association of Real
Estate Investment Trusts and has been actively involved in REIT
legislative and regulatory matters for over 20 years.
Mr. Kaplan is a member of the board of directors of
Highwoods Properties, Inc., a publicly traded REIT, where he
serves as chairman of the Audit Committee. Mr. Kaplan is
also a member of the board of directors of Maguire Properties,
Inc., a publicly traded REIT, where he also serves as chairman
of the Audit Committee. Mr. Kaplan holds a Bachelor of
Science degree from the University of Chicago and an MBA from
Columbia University.
Recommendation
Regarding the Election of Directors
The Board recommends that you vote FOR the four named nominees
to be elected as our directors.
PROPOSAL 2:
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Board has appointed KPMG LLP as our independent registered
public accounting firm for the fiscal year ending
December 31, 2007, subject to ratification by our
stockholders. We expect a representative of KPMG LLP to attend
the Annual Meeting to make a statement, if he or she desires,
and to respond to appropriate questions.
Stockholder ratification of the selection of KPMG LLP as our
independent registered public accounting firm is not required by
the Bylaws or otherwise. However, the Board is submitting the
selection of KPMG LLP to the stockholders for ratification as a
matter of corporate practice. If the stockholders fail to ratify
the selection, the Audit Committee may reconsider whether or not
to retain KPMG in the future. Even if the selection is ratified,
the Audit Committee in its discretion may direct the appointment
of a different independent registered public
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accounting firm at any time during the year if the Audit
Committee determines that such a change would be in the best
interests of the Company.
The affirmative vote of a majority of the votes cast at the
Annual Meeting is required for the ratification of the selection
of KPMG LLP as our independent registered public accounting firm.
Recommendation
Regarding Ratification of the Appointment of KPMG LLP
The Board recommends that you vote FOR ratification of this
appointment.
PROPOSAL 3:
APPROVAL
OF CONVERTIBILITY FEATURE OF 6.85% SERIES A PREFERRED
STOCK
On April 10, 2007, we entered into an agreement to issue
and sell to Inland American Real Estate Trust, Inc.
(
Inland American
) up to 2,000,000 shares
of our Series A Preferred Stock in one or more private
placements. The terms of the Series A Preferred Stock are
set forth in our articles supplementary with respect to the
Series A Preferred Stock (the
Articles Supplementary
).
The Series A Preferred Stock has no stated maturity and has
a liquidation preference of $25.00 per share (the
Liquidation Preference
). Dividends on the
Series A Preferred Stock accumulate at 6.85% of the
Liquidation Preference, payable quarterly. Initially, the
Series A Preferred Stock is not convertible into our common
stock. However, if our stockholders approve such convertibility,
the Series A Preferred Stock will be convertible into our
common stock, at the option of the holders thereof, after
June 30, 2009, in whole or in part, at an initial
conversion ratio of 1:1.77305 (representing an effective
conversion price of $14.10 per share of common stock). Under the
Articles Supplementary, in the event that stockholder
approval to permit such conversion has not been obtained prior
to June 1, 2008, the dividend rate on the Series A
Preferred Stock will be increased to 7.85% on June 1, 2008
and by 100 basis points each year after that up to a
maximum rate of 9.85% at June 1, 2010 (reverting to 6.85%
as soon as convertibility approval is obtained). If the
convertibility is approved by the stockholders, the rate will
remain at 6.85% until conversion or redemption. Dividends will
also be permanently increased by an additional 1.00% per annum
from and after any failure by us to pay four quarterly dividends
on the Series A Preferred Stock (which need not be
consecutive).
We have the option to redeem the Series A Preferred Stock
at any time beginning on August 1, 2009 at the Liquidation
Preference ($25.00 per share). In addition, within 45 days
following a merger or consolidation or sale of substantially all
of our assets, we may redeem the Series A Preferred Stock
at a price equal to 102% of the Liquidation Preference ($25.50
per share) plus accumulated and unpaid dividends. The Company
may also redeem the Series A Preferred Stock at 103.5% of
the Liquidation Preference ($25.88 per share), plus accrued and
unpaid dividends to the date of redemption, at any time
following a rejection by our stockholders of approval to permit
convertibility.
If we engage in a disposition of 50% or more of our assets in
one or a related series of transactions, and if the stockholder
approval to permit conversion has by that time been obtained,
the Series A Preferred Stock holders will have full
conversion rights before June 30, 2009. The conversion rate
for the Series A Preferred Stock will be adjusted for stock
splits, combinations, stock dividends and other similar
recapitalization events. At all times, conversion of the
Series A Preferred will be subject to the provisions of our
Charter and Bylaws, including capital stock ownership limits and
requirements that will allow us to qualify as a real estate
investment trust (
REIT
).
Holders of Series A Preferred Stock will have no voting
rights except to elect one member of the Board of Directors.
From and after the occurrence of a Dividend Default or Financial
Covenant Default (each as defined in the
Articles Supplementary), the holders of Series A
Preferred Stock will have the right to elect a maximum of one
additional member of the Board of Directors (regardless of the
number of such defaults in existence).
The Series A Preferred Stock requires that, starting as of
March 31, 2008 (upon public release of the unaudited
interim financial statements for such date) we are required to
satisfy a Fixed Charge Coverage Ratio and a Capitalization
Ratio, each as defined in the Articles Supplementary.
4
At the Annual Meeting, stockholders are being asked to approve
the convertibility of the Series A Preferred Stock. If
approved by an affirmative vote of a majority of the votes cast
at the meeting by holders of our common stock, the Series A
Preferred Stock will be convertible into our common stock on the
terms described above at an initial conversion ratio of
1:1.77305 (representing an effective conversion price of $14.10
per share of common stock).
Recommendation
Regarding Approval of Convertibility Feature of the
Series A Preferred Stock
The Board recommends that you vote FOR approval of this
convertibility feature for the following reasons:
By approving the convertibility feature of the Series A
Preferred Stock, we will avoid increasing the dividend rate of
the Series A Preferred Stock as outlined above.
We believe that avoiding the increase in dividends on the terms
outlined above is more important to us at this stage than
allowing the holders of the Series A Preferred Stock to
convert their shares into common stock, which will effectively
allow such holders to share in the appreciation of our common
stock price only at or above the $14.10 level.
OTHER
INFORMATION
Information
Regarding the Board of Directors and Its Committees
How
often did the Board meet during 2006?
The Board conducts its business through meetings and actions
taken by written consent in lieu of meetings. During the fiscal
year ended December 31, 2006, the Board held eight meetings
attended by all directors and acted ten times by written consent
in lieu of a meeting.
What
Committees has the Board Established?
The Board has three standing committees: the Audit Committee,
the Compensation Committee, and the Nominating and Corporate
Governance Committee.
The Audit
Committee
The Audit Committee is responsible for, among other things,
retaining or dismissing our independent registered accounting
firm, reviewing with the auditors the plan and scope of the
audit and audit fees, monitoring the adequacy of reporting and
internal controls and meeting periodically with management and
our independent auditors.
From the date of our initial public offering in December 2004
through the current date, the Audit Committee has been composed
of Lawrence S. Kaplan (Chairman), Bruce E. Moore and Paul H.
McDowell. Each of the members of the Audit Committee is
independent as defined by the Audit Committees charter and
the NYSE listing standards. Mr. Kaplan qualifies as an
audit committee financial expert as defined by the
SEC. Other members of the Board may also qualify as financial
experts. The Audit Committee operates under a written charter
that was adopted by the Board in 2004. A copy of the charter may
be found on our website at www.feldmanmall.com. The Audit
Committee met 11 times during 2006.
The
Compensation Committee
From the date of our initial public offering in December 2004
through the current date, the Compensation Committee has been
composed of Lawrence S. Kaplan, Bruce E. Moore (Chairman) and
Paul H. McDowell. Each of the members of the Compensation
Committee is independent as defined by the Compensation
Committees charter and the NYSE listing standards. The
functions of the Compensation Committee are described under the
Report of Compensation Committee contained elsewhere in this
proxy statement. The Compensation Committee operates under a
written charter that was adopted by the Board in 2004. A copy of
the charter may be found on our website at www.feldmanmall.com.
The Compensation Committee met four times during 2006.
5
The
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible
for, among other things, considering and recommending actions
relating to corporate governance matters. In addition, the
Committee considers and recommends to the Board individuals to
serve as our directors. In making such recommendations, the
Nominating and Corporate Governance Committee consider such
factors as it deems appropriate. These factors may include
judgment, skill, diversity, experience with businesses and other
organizations comparable to the Company, the interplay of the
candidates experience with the experience of other Board
members, and the extent to which the candidate would be a
desirable addition to the Board and any committees. The
Committee may solicit and consider suggestions of the directors
or management regarding possible nominees, may consider nominees
suggested by stockholders and generally shall guide the process
of recruiting new directors. The Nominating and Corporate
Governance Committee may employ professional search firms or
consultants (for which it may pay a fee) to assist it in
identifying potential members of the Board with the desired
skills and disciplines. Nominations made by stockholders should
be made in accordance with the procedures set forth in this
proxy statement under Corporate Governance
Initiatives Stockholder Nominations for
Directors. Candidates proposed by stockholders will be
considered using the same criteria and in the same manner as all
other candidates are considered.
From the date of our initial public offering in December 2004
through the current date, the Nominating and Corporate
Governance Committee has been composed of Lawrence S. Kaplan,
Bruce E. Moore and Paul H. McDowell (Chairman). Each
of the members of the Nominating and Corporate Governance
Committee is independent, as independence is defined by the NYSE
listing standards. The Nominating and Corporate Governance
Committee operates under a written charter that was adopted by
the Board in 2004. A copy of the charter may be found on our
website at www.feldmanmall.com. The Nominating and the Corporate
Governance Committee met two times during 2006.
Are
there any special arrangements under which members of our Board
serve as Directors?
No arrangement or understanding exists between any director and
any other person or persons pursuant to which any director was
or is to be selected as a director or nominee.
Executive
Officers and Other Officers
Who
Are Our Key Officers?
Information with regard to some of our other key officers is set
forth below. All of our officers serve at the pleasure of the
Board and are customarily appointed as officers at the annual
organizational meeting of the Board held following each annual
meeting of stockholders.
Thomas Wirth
has been our President and Chief Financial
Officer since October 2007. He has served as our Executive Vice
President and our Chief Financial Officer since December, 2004.
Mr. Wirth is responsible for managing all of our
capital-raising initiatives, financial reporting and investor
relations activities, as well as overseeing all other finance,
treasury and accounting functions. Mr. Wirth served as a
Vice President and Principal Accounting Officer of SL Green
Realty Corp. from February 2004 to August 2004, Chief Financial
Officer of SL Green Realty Corp. from June 1999 to February
2004, and Vice President of Finance of SL Green Realty Corp.
from 1997 to 1999. Prior to joining SL Green Realty Corp.,
Mr. Wirth was Vice President of Financial Reporting and
Analysis for Greenwich,
Connecticut-based
United Waste System, Inc., a waste management company acquired
in 1997 by USA Waste Systems, Inc. Mr. Wirth also spent ten
years with Ernst & Young LLP in various positions,
including Senior Manager. Mr. Wirth received his B.A.
degree in business management and accounting from Gettysburg
College in 1985.
James Bourg
has served as a director of the Company since
our incorporation in 2004. Mr. Bourg is an Executive Vice
President of the Company and serves as our Chief Operating
Officer. From 1999 to 2004, he served in various partnership
capacities with Feldman Equities and, since April 2002, Feldman
Equities of Arizona. From 1997 until 1999, he served as Vice
President of Development and Acquisitions Southwest
Region of Tower Realty Trust. Prior to joining Tower Realty
Trust, he served as the Vice President of
Development & Acquisitions-Southwest Region of Tower
Equities. Prior to that, Mr. Bourg was a Real Estate
Investment Sales Specialist at Grubb & Ellis with
emphasis on financial and real estate evaluation for
institutional sellers and he has over 16 years of real
estate experience. Mr. Bourg graduated from California
State Polytechnic University in 1978 with a Bachelor of Science
degree in accounting.
6
REPORT OF
THE AUDIT COMMITTEE
In connection with our financial statements for the fiscal year
ended December 31, 2006, the Audit Committee has reviewed
and discussed our audited financial statements with management
and our independent registered public accounting firm. The Audit
Committee has discussed with the independent registered public
accounting firm the matters required to be discussed by
Statement on Auditing Standards No. 61,
Communication
with Audit Committees
, as amended. The Audit Committee has
received and reviewed the written disclosures and the letter
from the independent public accountants required by Independence
Standard No. 1,
Independence Discussions with Audit
Committees
, as amended, and have discussed with the
independent registered public accounting firm their
independence. The Audit Committee has discussed with our
independent registered public accounting firm the overall scope
and plans for their audit. The Audit Committee met with our
independent registered public accounting firm, with and without
management present, to discuss the results of their
examinations, their evaluations of our internal controls and the
overall quality of our financial reporting and our compliance
with Section 404 of the Sarbanes-Oxley Act of 2002.
Based on the reviews and discussions referred to above, the
Audit Committee did not become aware of any material
misstatements or omissions in the financial statements referred
to above and we recommended to the Board that the financial
statements be included in our Annual Report on
Form 10-K,
as amended, for the fiscal year ended December 31, 2006
filed with the SEC.
Submitted by the Audit Committee:
Lawrence S. Kaplan (Chairman)
Bruce E. Moore
Paul H. McDowell
The above report will not be deemed to be incorporated by
reference into any filing by us under the Securities Act of
1933, as amended or the Securities Exchange Act of 1934, as
amended, except to the extent that we specifically incorporate
the same by reference.
CORPORATE
GOVERNANCE MATTERS
This section of our proxy statement contains information about a
variety of our corporate governance policies and practices. In
this section, you will find information about how we are
complying with the NYSEs final corporate governance rules
that were approved by the SEC. We are committed to operating our
business under strong and accountable corporate governance
practices. You are encouraged to visit the corporate governance
section of our corporate website at www.feldmanmall.com to view
or to obtain copies of our committee charters, code of business
conduct and ethics and corporate governance guidelines.
Additional information relating to the corporate governance of
our company is also included in other sections of this Proxy
Statement.
Corporate
Governance Guidelines
Our Board has approved a set of guidelines that provide the
framework for the governance of our Company. Our Board
recognizes that there is on-going and energetic debate about
corporate governance standards and that best practices and legal
requirements will evolve over time. Our Board will review these
guidelines and other aspects of governance periodically, as
necessary. Our corporate governance guidelines may be found on
our website at www.feldmanmall.com and are available in print to
any stockholder upon request.
Director
Independence
Our Corporate Governance Guidelines provide that a majority of
the directors serving on our Board must be independent as
required by NYSE listing standards. Based upon its review of all
relevant facts and circumstances, our Board has affirmatively
determined that three of our companys five current
directors, Lawrence S. Kaplan, Bruce E. Moore, and Paul H.
McDowell, qualify as independent directors under NYSE listing
standards.
8
Meetings
of Non-Management Directors
Our non-management directors meet regularly in scheduled
executive sessions, without management present. These meetings
normally follow each scheduled quarterly meeting of our Board.
The current chairman of our Board is Larry Feldman and the
current chairman of the Nominating and Corporate Governance
Committee is Paul H. McDowell. Stockholders wishing to
communicate directly with the chairman of the executive sessions
of non-management directors or the non-management directors may
send correspondence addressed in care of: Company Secretary,
1010 Northern Boulevard, Suite 314, Great Neck, NY 11021.
Committee
Charters
Our Audit, Compensation, Disclosure and Nominating and Corporate
Governance Committee charters meet the standards that have been
established by the NYSE. Copies of these charters are available
on our website at www.feldmanmall.com and are available in print
to any stockholder upon request.
Code of
Business Conduct and Ethics
Our Code of Business Conduct and Ethics documents the principles
of conduct and ethics to be followed by our directors, officers
and employees. The purpose of the Code is to promote honest and
ethical conduct, compliance with applicable governmental rules
and regulations, full, fair, accurate, timely and understandable
disclosure in periodic reports, prompt internal reporting of
violations of the Code, and a culture of honesty and
accountability. A copy of the Code has been provided to each of
our directors, officers and employees. Among its many features,
the Code describes how employees can report any matter that may
be of concern to them on an anonymous basis. We have also
established an independent hotline service that may be used by
employees who wish to report any concerns or suspected
violations of our standards of conduct, policies or laws and
regulations. A copy of our Code of Business Conduct and Ethics
may be found on our website at
www.feldmanmall.com
and is
available in print to any stockholder upon request.
Audit
Committee Financial Expert
Our Board has determined that Lawrence Kaplan, the chairman of
our Audit Committee, meets the criteria of an audit committee
financial expert, as adopted by the SEC. Mr. Kaplan has
agreed to serve as our companys Audit Committee financial
expert.
Disclosure
Committee
We maintain a Disclosure Committee consisting of members of our
executive management staff. The Disclosure Committee meets at
least quarterly. The purpose of the Committee is to bring
together employees involved in the preparation of our financial
statements so that the group can discuss any issues or matters
of which the members are aware that should be considered for
disclosure in our public SEC filings. The Disclosure Committee
reports to our Board of Directors and, as appropriate, to our
Audit Committee. The Disclosure Committee has adopted a written
charter to memorialize the Committees purpose and
procedures. A copy of the charter may be found on our website at
www.feldmanmall.com.
Communications
with Stockholders
We provide the opportunity for stockholders to communicate with
the members of our Board. Communications to members of our
Board, any of its committees, or one or more of its individual
members may be made by mail to
c/o Company
Secretary, 1010 Northern Boulevard, Suite 314, Great Neck,
NY 11021.
Whistleblowing
and Whistleblower Protection Policy
Our Audit Committee has established procedures for (1) the
anonymous and confidential submission by employees of complaints
or concerns regarding questionable accounting and auditing
matters and (2) the receipt, retention and treatment of
employee complaints or concerns regarding such matters. An
employee may make a report by (i) calling our Compliance
Hotline at
866-294-5491,
(ii) emailing our Compliance Email Box at
9
https://secure.ethicspoint.com/domain/en/report_custom.asp?clientid=8076
,
or (iii) delivering the report via regular mail, to
c/o Audit
Committee, Feldman Mall Properties, Inc., 1010 Northern
Boulevard, Suite 314, Great Neck, NY 11021. Any such
communications may be made anonymously.
Identification
of Director Candidates
Our Corporate Governance Guidelines and the written charter of
the Nominating and Corporate Governance Committee give such
committee responsibility for assisting our Board in identifying
and reviewing director candidates to determine whether they
qualify for membership on our Board and for recommending to our
Board the director nominees to be considered for election at our
annual meetings of stockholders.
Our Nominating and Corporate Governance Committee seeks
candidates from diverse business, professional and educational
backgrounds with the highest personal and professional ethics,
integrity and values and outstanding achievements, judgment and
other skills and experience that will be committed to
representing the long-term interests of the company and its
stockholders. The Nominating and Corporate Governance Committee
reviews candidates with the objective of assembling a slate of
directors that can best fulfill the companys goals and
promote the interests of stockholders.
Members of our Board will be asked to submit recommendations to
the Chairman of our Nominating and Corporate Governance
Committee when it is determined that there is an opening or an
anticipated opening on our Board. Our Nominating and Corporate
Governance Committee may also procure the services of outside
sources or third parties to assist in the identification of
director candidates. If our Nominating and Corporate Governance
Committee were to use the services of a third party, it would
expect to pay a fee for such services.
Our Nominating and Corporate Governance Committee will also
consider director candidates recommended by our stockholders.
Our Nominating and Corporate Governance Committee will apply the
same standards in considering candidates submitted by
stockholders as it does in evaluating candidates submitted by
members of our Board.
EXECUTIVE
COMPENSATION
Overview
Set forth below is a discussion of the principles underlying our
executive compensation policies and decisions, which are the
most important factors relevant to an analysis of these policies
and decisions. They provide qualitative information regarding
the manner and context in which compensation is awarded to, and
earned by, our executive officers and places in perspective the
data presented in the table and narrative that follow.
Compensation
Discussion and Analysis
The Compensation Committee sets our compensation philosophy.
The basic philosophy underlying our executive compensation
policies, plans, and programs is that executive and stockholder
financial interests should be aligned as closely as possible,
and that compensation should be based on delivering pay
commensurate with performance. Accordingly, the executive
compensation program for our executive officers has been
structured to achieve the following objectives:
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To attract, retain, motivate and reward key employees to drive
achievement of the Companys current and long-term
strategic, business and financial goals in the creation of
stockholder value;
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To provide an appropriate mix of current compensation and
long-term rewards, which is properly balanced between salary and
performance-based pay and includes cash, equity compensation and
other benefits;
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To align stockholder interests and employee rewards; and
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To establish appropriate incentives for management and employees
that are consistent with the Companys culture and values.
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In accordance with these objectives, a significant part of
executive compensation is subject to the overall performance of
the Company and the total return generated for the
Companys stockholders. We believe that this approach best
enables us to achieve our objectives and satisfy the interests
of our stockholders.
One primary performance measure that we intend to use is the
total rate of return to our stockholders, which we define as
dividends paid (assuming reinvestment) plus appreciation in the
price of our common stock.
Setting
Executive Compensation
The Compensation Committee is comprised of three independent
directors, Bruce Moore (Chairman), Larry Kaplan and Paul
McDowell. The Compensation Committee exercises independent
discretion in respect of executive compensation matters. The
Compensation Committee operates under a written charter adopted
by our Board, a copy of which is available on our website at
www.feldmanmall.com
.
The Compensation Committee determines the total compensation and
the allocation of such compensation among base salary, annual
bonus amounts and other long-term incentive compensation as well
as the allocation of such items among cash and equity
compensation for our Chairman and former Chief Executive
Officer. With respect to the compensation of our other executive
officers, the Compensation Committee solicits recommendations
from our former Chief Executive Officer regarding compensation
and reviews his recommendations. We do not have a
pre-established
policy for the allocation between either cash and non-cash
compensation or annual and long-term incentive compensation. The
ultimate determination on total compensation and the elements
that comprise that total compensation is made solely by the
Compensation Committee.
The Compensation Committee meets regularly during the year (four
meetings during 2006) to evaluate executive performance
against the goals and objectives set at the beginning of the
year, to monitor market conditions in light of these goals and
objectives and to review the compensation practices. The
Compensation Committee then reports to our Board.
What
Executive Compensation is Designed to Reward
The Compensation Committee has designed executive compensation
to achieve three primary objectives:
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Hiring Key Executives.
Hiring an experienced,
committed and effective team.
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Linking Compensation to Performance.
The
Compensation Committee generally rewards the achievement of
specific annual, long-term and strategic goals of both our
Company and each individual executive officer. The Compensation
Committee measures performance of each executive officer by
considering (1) our performance and the performance of each
executive officers department against financial measures
established at the beginning of the year and (2) a
subjective evaluation of each executive officer. The
Compensation Committee evaluates the performance of our Chairman
and former Chief Executive Officer without utilizing any
predetermined measures.
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Aligning the Interests of our Executive Officers with our
Stockholders.
Long-term incentive compensation is
designed to provide incentives for executive officers to
successfully implement our long-term strategic goals and to
retain such executive officer. We have designed our annual and
long-term incentive programs to award performance-based equity
to allow our executive officers to grow their ownership in our
Company and create a further alignment with our stockholders.
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Measuring
2006 Performance
Our compensation philosophy measures our performance as a whole
and the performance of each department. Our former Chief
Executive Officer has prepared performance targets for each of
our executive officers, other than the Chairman and former Chief
Executive Officer, and these performance targets have been
reviewed with the Compensation Committee. These targets measure
performance through the achievement of specific, objective
financial goals by us and the department of each executive
officer as well as through a subjective evaluation of each
executive officer. The Compensation Committee has not prepared
predetermined performance targets for our Chairman and former
Chief Executive Officer.
11
Elements
of our Executive Compensation Program and Why We Chose Each
Element
Executive compensation has been structured to provide short and
long-term incentives that promote continuing improvements in our
financial results and returns to our stockholders. The elements
of our executive compensation are primarily comprised of three
elements designed to complement each other. We view the various
components of compensation as related but distinct. The
Compensation Committee designs total compensation packages that
it believes will best create retention incentives, link
compensation to performance and align the interests of our
executive officers and our stockholders. Each of our named
executive officers has an employment agreement with us. Such
agreements provide for certain severance or change of control
payments under specified circumstances.
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Annual base salaries.
Annual base salaries are
paid for ongoing performance throughout the year. Our policy is
to set salaries at levels we believe will attract, retain and
motivate highly competent individuals. In establishing base
salary levels for the Companys key executives, we consider
the executives position and responsibility, experience,
length of service with the Company and overall performance, as
well as the compensation practices of other companies in the
markets where the Company competes for executive talent. We
provide this element of compensation to compensate executive
officers for services rendered during the fiscal year.
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Bonuses.
We intend to award bonuses in the
future to executive officers and other employees based upon:
(1) overall Company performance; (2) departmental
performance; (3) individual performance; and (4) other
factors we determine to be appropriate. Bonuses may consist of a
cash component and an equity component. The equity component
will likely consist of restricted stock. Restricted stock awards
typically vest in equal installments over a period of years. We
provide this element of compensation because we believe that it
promotes loyalty, hard work and focus, honesty and vision.
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Long-Term Incentives.
Our 2004 long-term stock
incentive plan provides for long-term incentives through grants
of restricted stock, long-term incentive units (
LTIP
units
), stock appreciation rights, phantom shares,
dividend equivalent rights
and/or
other
equity-based awards, the exact form and number of which will
vary, depending on the position and salary of the executive
officer. These equity based awards will be designed to link
executive compensation to our long-term common stock
performance. The Compensation Committee has the full authority
to administer and interpret our 2004 long-term stock incentive
plan, to authorize the granting of awards, to determine the
eligibility of employees, directors, executive officers,
advisors, consultants and other personnel, our subsidiaries, our
affiliates and other persons expected to provide significant
services to us or our subsidiaries to receive an award, to
determine the number of shares of common stock to be covered by
each award (subject to the individual participant limitations
provided in the 2004 long-term stock incentive plan), to
determine the terms, provisions and conditions of each award
(which may not be inconsistent with the terms of our 2004
long-term stock incentive plan), to prescribe the form of
instruments evidencing awards and to take any other actions and
make all determinations that it deems necessary or appropriate
in connection with our 2004 long-term stock incentive plan or
the administration or interpretation thereof. In connection with
this authority, the Compensation Committee establishes
performance goals that must be met in order for awards to be
granted or to vest, or for the restrictions on any such awards
to lapse. We provide this element of compensation because we
believe that it provides an incentive for executive officers to
remain with us and focus on the long-term growth in our stock
price. For more information on our 2004 long-term stock
incentive plan, we refer you to our Registration Statement on
Form S-11
filed by us on December 14, 2004. There were no long-term
incentive awards issued in 2006 and 2005 to our current
executive officers.
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Other
Personal Benefits
Employee compensation also includes various benefits, such as
health insurance plans and profit sharing and retirement plans
in which substantially all of the Companys employees are
entitled to participate. At the present time, we provide health,
life and disability insurance plans and a 401(k) plan, standard
paid time off benefits and other standard employee benefits.
12
How
Each Element and Our Decisions Regarding Each Element Fit Into
Our Overall Compensation Objectives and Affect Decisions
Regarding Other Elements
Our compensation program seeks to reward our executive officers
for their superior performance and our Companys
performance, while closely aligning the interests of our
executive officers with the interests of our stockholders. In
making compensation decisions, the Compensation Committee
considers various measures of Company and industry performance,
including funds from operations (FFO). Consistent with this
approach, the Compensation Committee pays our executive officers
annual base salaries in order to provide them with a minimum
compensation level that is intended to reflect such executive
officers value and contributions to our success in light
of salary norms of our competitors. The Compensation Committee
may elect to pay our executive officers annual incentives to
reward them for achievement of financial and other performance
of our Company and of such executive officers department,
with a component of performance based on a subjective
evaluation. The Compensation Committee may elect to pay our
executive officers long-term incentives to act as a retention
tool and to provide continued and additional incentives to
maximize our stock price and thereby more closely align the
economic interests of our executive officers with those of our
stockholders. Through the elements of our compensation program,
the Compensation Committee seeks to maintain a competitive total
compensation package for each executive officer, while being
sensitive to our fiscal year budget, annual accounting costs and
the impact of share dilution in making such compensation
payments.
Other
Matters
Tax and Accounting Treatment.
The Compensation
Committee reviews and considers the deductibility of executive
compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended. Section 162(m) limits the
deductibility on our tax return of compensation over
$1 million to any of our named executive officers unless,
in general, the compensation is paid pursuant to a plan which is
performance-related, non-discretionary and has been approved by
our stockholders. The Compensation Committees policy with
respect to Section 162(m) is to make every reasonable
effort to ensure that compensation is deductible to the extent
permitted while simultaneously providing our executive officers
with appropriate compensation for their performance. The
Compensation Committee may make compensation payments that are
not fully deductible if in its judgment such payments are
necessary to achieve the objectives of our compensation program.
We account for stock-based payments through our 2004 long-term
stock incentive plan in accordance with the requirements of
Statement of Financial Accounting Standards No. 123(R).
Other
Policies
Although we do not have any policy in place regarding minimum
ownership requirements for either our executive officers or
directors, our named executive officers all have significant
stakes in us. We do not have any policy in place regarding the
ability of our executive officers or directors to engage in
hedging activities with respect to our common stock. In
addition, we do not have nonqualified deferred compensation
plans.
Compensation
Committee Report
Our executive compensation philosophy, policies, plans and
programs are under the supervision of the Compensation
Committee, which is composed of the non-management directors
named above, each of whom has been determined by our Board to be
independent under the applicable rules of the SEC and the NYSE
listing standards.
The Compensation Committee has reviewed and discussed our
Compensation Discussion and Analysis with management. Based on
the review and discussions, the Compensation Committee
recommended to our Board that the Compensation Discussion and
Analysis be included in our 2006 Annual Report on
Form 10-K/A.
Submitted by our Compensation Committee
Bruce E. Moore (Chairman)
Larry S. Kaplan
Paul H. McDowell
13
Summary
Compensation Table(1)
The following table sets forth the annual base salary and other
compensation paid or earned in 2006 to our Chief Executive
Officer and our four other most highly compensated officers. The
executive officers are referred to herein collectively as the
named executive officers.
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All Other
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Restricted Stock
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Compensation
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Name and Principal Position
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Year(2)
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Salary ($)
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Bonus ($)
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Awards ($)(3)
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($)(4)
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Total
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Larry Feldman(5)
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2006
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250,000
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9,749
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259,749
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Chairman and Chief Executive Officer
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James C. Bourg
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2006
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225,000
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20,000
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8,793
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253,793
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Director, Executive Vice President and
Chief Operating Officer
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Thomas Wirth(6)
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2006
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225,000
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20,000
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190,261
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78,556
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513,817
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Executive Vice President and
Chief Financial Officer
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Lloyd Miller(7)
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2006
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225,000
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117,500
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142,910
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76,525
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561,935
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Executive Vice President of Leasing
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Wayne Snyder(7)
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2006
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225,000
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50,000
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105,000
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55,167
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435,167
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Executive Vice President and
Chief Development Officer
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(1)
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The columns for Option Awards, Non-Equity
Incentive Plan Compensation and Change in Pension
Value and Nonqualified Deferred Compensation Earnings have
been omitted because they are not applicable.
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(2)
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We have included only one year of compensation in this table, as
permitted by SEC rules phasing in new disclosure requirements.
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(3)
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Amounts shown do not reflect compensation actually received by
the named executive. Instead, the amounts in this column include
the aggregate amount recognized for financial reporting purposes
in accordance with SFAS No. 123(R) for restricted stock
that vested during 2006. See note 2 to the financial
statements included in our
Form 10-K
for the assumptions we made in valuing all the awards included
in this column.
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(4)
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The amounts in this column include the following:
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Health Insurance
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Dividends on Stock
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All Other
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Car Allowance
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Premiums(a)
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Awards
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Compensation
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Larry Feldman
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$
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6,000
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$
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3,749
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$
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|
$
|
9,749
|
|
James C. Bourg
|
|
|
6,000
|
|
|
|
2,793
|
|
|
|
|
|
|
|
8,793
|
|
Thomas E. Wirth
|
|
|
6,000
|
|
|
|
2,556
|
|
|
|
70,000
|
|
|
|
78,556
|
|
Lloyd Miller
|
|
|
6,000
|
|
|
|
|
|
|
|
70,525
|
|
|
|
76,525
|
|
Wayne Snyder
|
|
|
6,000
|
|
|
|
3,667
|
|
|
|
45,500
|
|
|
|
55,167
|
|
|
|
|
(a)
|
|
Represents annual amounts for health insurance costs in excess
of amounts paid for non-executive officers. We currently pay 75%
of health insurance premiums for all full-time employees and
their families and 100% of health insurance premiums for
executive officers and their families. Insurance costs included
in the table represent the 25% of premiums that we do not pay
for all full-time employees.
|
|
(5)
|
|
As of October 26, 2007, Mr. Feldman resigned his
position as Chief Executive Officer of the Company.
|
|
(6)
|
|
As of October 26, 2007, Mr. Wirth was appointed
President and Chief Financial Officer of the Company.
|
|
(7)
|
|
Effective January 2007, Mr. Snyder is no longer employed by
our Company. Effective April 2007, Mr. Miller is no longer
employed by our Company.
|
Stock
Grants and Stock Options in 2006
During 2006, we granted restricted stock awards totaling
135,530 shares of stock to 20 employees and 3,000
vested shares (1,000 each) to the three independent directors.
Executive officers received none of these awards.
14
Aggregate
Option Exercises in 2006
No options were exercised by any Company employees, officers or
directors during 2006.
Stock
Vested in 2006(1)
The following table sets forth information about the vesting of
our named executive officers restricted stock awards in
2006:
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
|
Vesting
|
|
|
on Vesting(2)
|
|
Name
|
|
#
|
|
|
$
|
|
|
Larry Feldman(3)
|
|
|
|
|
|
$
|
|
|
James C. Bourg
|
|
|
|
|
|
|
|
|
Thomas E. Wirth(4)
|
|
|
15,385
|
|
|
|
188,005
|
|
Lloyd Miller
|
|
|
15,500
|
|
|
|
181,970
|
|
Wayne Snyder
|
|
|
10,000
|
|
|
|
110,500
|
|
|
|
|
(1)
|
|
The columns related to stock option awards have been omitted
because they are not applicable.
|
|
(2)
|
|
The amounts in this column have been computed based on the
closing price of our common stock on the vesting date.
|
|
(3)
|
|
As of October 26, 2007, Mr. Feldman resigned his
position as Chief Executive Officer of the Company.
|
|
(4)
|
|
As of October 26, 2007, Mr. Wirth was appointed
President and Chief Financial Officer of the Company.
|
Outstanding
Equity Awards(1)
The following table sets forth certain information with respect
to all outstanding equity awards held by each named executive
officer as of December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Market or Payout
|
|
|
|
|
|
|
Market Value of
|
|
|
Number of Unearned
|
|
|
Value of Unearned
|
|
|
|
Number of Shares of
|
|
|
Shares of Stock
|
|
|
Shares, Units or
|
|
|
Shares, Units or
|
|
|
|
Stock That Have Not
|
|
|
That Have Not
|
|
|
Other Rights That
|
|
|
Other Rights That
|
|
|
|
Vested #
|
|
|
Vested(2) #
|
|
|
Have Not Vested #
|
|
|
Have Not Vested $
|
|
|
Larry Feldman(3)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
James C. Bourg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. Wirth(4)
|
|
|
61,538
|
|
|
|
766,148
|
|
|
|
|
|
|
|
|
|
Lloyd Miller(5)
|
|
|
62,000
|
|
|
|
771,900
|
|
|
|
|
|
|
|
|
|
Wayne Snyder(6)
|
|
|
40,000
|
|
|
|
498,000
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The columns related to stock option awards have been omitted
because they are not applicable.
|
|
(2)
|
|
The amounts in this column have been computed based on the
closing price of our common stock on December 29, 2006, the
last business day of the year ($12.45). The actual value
realized by the executive will depend on the market value of our
common stock on the date that the awards vest.
|
|
(3)
|
|
As of October 26, 2007, Mr. Feldman resigned his
position as Chief Executive Officer of the Company.
|
|
(4)
|
|
These shares vest in four equal installments on January 1,
2007, 2008, 2009 and 2010. As of October 26, 2007,
Mr. Wirth was appointed President and Chief Financial
Officer of the Company.
|
|
(5)
|
|
Mr. Millers shares were forfeited in 2007 in
connection with his departure from our Company in April 2007.
|
|
(6)
|
|
Mr. Snyders shares were forfeited in 2007 in
connection with his departure from our Company in January 2007.
|
Compensation
Committee Interlocks and Insider Participation
The members of our Compensation Committee are Bruce E. Moore
(Chairman), Lawrence S. Kaplan, and Paul H. McDowell. No
member of our Compensation Committee is or was formerly an
officer or an employee of the
15
Company. No executive officer of the Company serves as a member
of the board of directors or compensation committee of any
entity that has one or more executive officers serving as a
member of our Companys Board, nor has such interlocking
relationship existed in the past.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors, executive officers and persons
who own more than 10% of a registered class of our equity
securities to file with the SEC initial reports of ownership and
reports of changes in ownership of common stock and other of our
equity securities. Directors, officers and greater than 10%
stockholders are required to furnish us with copies of all
Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to us, during the fiscal year ended
December 31, 2006, all Section 16(a) filing
requirements applicable to our directors, officers and greater
than 10% beneficial owners were met.
Directors
Compensation(1)
Mr. Feldman does not receive any compensation from us for
his services as a director. The Company pays non-employee
directors an annual retainer of $50,000, paid in quarterly
installments of $12,500. The chairman of the Audit Committee
receives an additional $30,000 per annum, paid in quarterly
installments of $7,500 and the chairmen of the Compensation
Committee and the Nominating and Corporate Governance Committee
each receive an additional $2,500 per annum. In addition,
non-employee directors were entitled to receive
1,000 shares of stock upon completion of the Companys
initial public offering and an additional 1,000 shares upon
each annual meeting of stockholders; 2,000 shares of stock
were issued to each of the non-employee directors in 2005 in
satisfaction of such obligations. Each stock grant to
non-employee directors is non-contingent and vests immediately
upon issuance. In 2006, each director received 1,000 shares
of stock that vested on the grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
|
|
Name and Principal Position
|
|
Year(2)
|
|
|
or Paid in Cash
|
|
|
Awards ($)(3)
|
|
|
Total ($)
|
|
|
Lawrence S. Kaplan
|
|
|
2006
|
|
|
$
|
80,000
|
|
|
|
11,750
|
|
|
$
|
91,750
|
|
Bruce E. Moore
|
|
|
2006
|
|
|
|
52,500
|
|
|
|
11,750
|
|
|
|
64,250
|
|
Paul H. McDowell
|
|
|
2006
|
|
|
|
52,500
|
|
|
|
11,750
|
|
|
|
64,250
|
|
|
|
|
(1)
|
|
The columns for Option Awards, Non-Equity
Incentive Plan Compensation, Change in Pension Value
and Nonqualified Deferred Compensation Earnings and
All Other Compensation have been omitted because
they are not applicable.
|
|
(2)
|
|
We have included only one year of compensation in this table, as
permitted by SEC rules phasing in new disclosure requirements.
|
|
(3)
|
|
Amounts in this column represent the grant date fair value of
the stock awards recognized for financial reporting purposes in
accordance with SFAS No. 123(R). Each director received
1,000 shares of fully vested stock in 2006; the closing
market price of our stock on the grant date was $11.75.
|
The Company and each of our directors and executive officers
have entered into indemnification agreements. The
indemnification agreements provide that we will indemnify the
directors and the executive officers to the fullest extent
permitted by our Amended and Restated Charter and Maryland law
against certain liabilities (including settlements) and expenses
actually and reasonably incurred by them in connection with any
threatened or pending legal action, proceeding or investigation
to which any of them is, or is threatened to be, made a party by
reason of their status as our director, officer or agent, or by
reason of their serving as a director, officer or agent of
another company at our request. We will not indemnify the
directors and executive officers if it is established that:
(1) the act or omission was material to the matter giving
rise to the proceeding and was committed in bad faith or the
result of active and deliberate dishonesty, (2) the
director or officer actually received an improper personal
benefit, or (3) in the case of a criminal proceeding, the
director or officer had reasonable cause to believe the act or
omission was unlawful. In addition, we will not indemnify the
directors and executive officers for a proceeding brought by a
director or officer against us, except to enforce
indemnification. If an amendment to the Amended and Restated
Charter or Maryland law with respect to removal of limitations
on indemnification is approved, the indemnification
16
agreements will be amended accordingly. We are not required to
indemnify any director or executive officer for liabilities:
(1) for which he or she has already been unconditionally
reimbursed from other sources, or (2) resulting from an
accounting of profits under Section 16(b) of the Securities
Exchange Act of 1934, as amended. In addition, we have obtained
director and officer insurance for our directors and executive
officers.
Employment
Agreements
As discussed in the Report of our Compensation Committee, our
Company has a written employment agreement with Larry Feldman,
the Chairman of our Board and until recently our Chief Executive
Officer. If Mr. Feldmans employment is terminated
(i) by Mr. Feldman for a good reason, generally
defined as material reduction of authority, duties or
responsibility, reduction in annual salary below $250,000,
relocation of his office more than 25 miles from Long
Island, New York, failure of our Company to provide an office,
equipment and secretarial assistance, failure of our Company to
pay any amounts owing under the employment agreement, or our
Companys breach of the employment agreement, or
(ii) by our Company other than as a result of
Mr. Feldmans death, disability, conviction of (or
pleading nolo contendere to) a felony, or engagement in the
performance of his duties in willful misconduct, willful or
gross neglect, fraud, misappropriation or embezzlement,
Mr. Feldman also will be entitled to (a) a lump sum
cash payment equal to 2.99 multiplied by the sum of
Mr. Feldmans then current annual base salary and
Mr. Feldmans maximum potential bonus for the year
(subject to certain minimum amounts) in which termination occurs
(e.g. three times Mr. Feldmans then current annual
base salary), (b) full vesting of all outstanding
equity-based awards held by Mr. Feldman, (c) three
years of continuing coverage under group health plans, and
(d) any additional tax
gross-up
payment necessary for Mr. Feldman to pay any excise tax
imposed on excess parachute payments under
Section 4999 of the Internal Revenue Code.
Mr. Feldmans employment agreement also provides that,
during the term of his employment and for 12 months
thereafter, he will not engage in the business that competes
with us or provide any services to any other company that does
so, he will not solicit or hire any of our employees, and he
will not interfere with our Companys relationship with any
customer or client of our Company.
In December 2004, we entered into three-year employment
agreements with James E. Bourg, an Executive Vice President and
our Chief Operating Officer and Thomas Wirth, an Executive Vice
President and our Chief Financial Officer. In addition to the
compensation provisions described in the table above labeled
Summary of Executive Compensation, these agreements
provide that if the executives employment is terminated
(i) by the executive for a good reason, generally defined
as material reduction of authority, duties or responsibility,
reduction in annual salary below $225,000, relocation of his
office, failure of our Company to provide an office, equipment
and secretarial assistance, failure of our Company to pay any
amounts owing under the employment agreement, or our
companys breach of the employment agreement, or
(ii) by our Company other than as a result of the
executives death, disability, conviction of (or pleading
nolo contendere to) a felony, or engagement in the performance
of his duties in willful misconduct, willful or gross neglect,
fraud, misappropriation or embezzlement, the executive also will
be entitled to (a) a lump sum cash payment of equal to 2.99
multiplied by the sum of the executives then current
annual base salary and the executives bonus for the year
in which termination occurs (but assuming a minimum $150,000
bonus), (b) full vesting of all outstanding equity-based
awards held by the executive and, for those executives holding
limited partnership units in Feldman Equities Operating
Partnership, LP (the operating partnership through which our
Company conducts business), the immediate right to convert such
units to common stock in our Company and sell the common stock,
and (c) three years of continuing coverage under group
health plans. Each executives employment agreement also
provides that, during the term of his employment and for
12 months thereafter, he will not engage in the business
that competes with us or provide any services to any other
company that does so, he will not solicit or hire any of our
employees, and he will not interfere with our Companys
relationship with any customer or client of our Company.
On July 10, 2007, Mr. Wirths employment
agreement was amended such that his term of employment with us
will be extended for one year, or until November 6, 2008.
In addition, his employment agreement was modified to provide
that, for the purpose of calculating the amount to be paid to
Mr. Wirth upon a Change of Control, as defined, the average
bonus shall not be deemed to be less than $200,000. No other
modifications have been made to his employment agreement.
17
On December 17, 2006, Wayne Snyder resigned from his
position of Executive Vice President of Development in order to
pursue private real estate investing opportunities. As a result,
the Company and Mr. Snyder terminated his employment
agreement dated November 15, 2005 and he received no
severance or other benefits. Mr. Snyder remained with our
Company through January 9, 2007.
Effective April 17, 2007, we entered into an agreement with
Lloyd Miller, our Executive Vice President of Leasing since
November 2005, pursuant to which he agreed to resign from the
Company. We made a severance payment to Mr. Miller in the
amount of $147,000 and also repurchased 15,500 of
Mr. Millers shares of our common stock at a price of
$12.50 per share. Subsequent to the execution of this agreement,
Mr. Miller notified us that he had exercised his right to
rescind the agreement. He also threatened to make a claim
against us alleging breach of his employment contract with the
Company. We settled this matter with Mr. Miller in the
amount of $325,000. We have not named a replacement for
Mr. Miller.
As of October 26, 2007, Larry Feldman agreed with us to
vacate the position of Chief Executive Officer of the Company.
In connection with such action, Mr. Feldman agreed with us
that such action would not constitute good reason
under his employment agreement, except that under our agreement
with him, in the event of any termination of his employment
(including, without limitation, a voluntary termination by
Mr. Feldman), he will automatically be entitled to certain
payments and benefits pursuant to his employment agreement
within ten days after such termination. Notwithstanding the
foregoing, Mr. Feldman will not be entitled to such
payments and benefits if (i) he terminates his employment
voluntarily without good reason before
February 1, 2008, (ii) if his employment is terminated
by us for cause or (iii) if his employment is
terminated by either Mr. Feldman or us after May 31,
2008.
Cost of
Termination Under Employment Agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical/Welfare
|
|
|
Acceleration and
|
|
|
|
|
|
Total
|
|
|
|
Cash Severance
|
|
|
Benefits (Actual
|
|
|
Continuation of
|
|
|
Excise Tax
|
|
|
Termination
|
|
Type of Termination/Name(1)
|
|
Payment(2)
|
|
|
Value)(3)
|
|
|
Equity Awards
|
|
|
Gross-Up
|
|
|
Benefits
|
|
|
Termination Upon Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Feldman(4)
|
|
|
|
|
|
$
|
44,981
|
|
|
|
|
|
|
|
|
|
|
$
|
44,981
|
|
Thomas E. Wirth(6)
|
|
$
|
25,000
|
|
|
|
30,668
|
|
|
$
|
766,148
|
|
|
|
|
|
|
|
821,829
|
|
James Bourg
|
|
|
20,000
|
|
|
|
33,515
|
|
|
|
|
|
|
|
|
|
|
|
53,515
|
|
Termination Upon Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Feldman(4)
|
|
|
|
|
|
|
44,981
|
|
|
|
|
|
|
|
|
|
|
|
44,981
|
|
Thomas E. Wirth(6)
|
|
|
25,000
|
|
|
|
30,668
|
|
|
|
766,148
|
|
|
|
|
|
|
|
821,829
|
|
James Bourg
|
|
|
20,000
|
|
|
|
33,515
|
|
|
|
|
|
|
|
|
|
|
|
53,515
|
|
Termination With Cause or With Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Feldman(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. Wirth(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Bourg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott Jensen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause or Without Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Feldman(4)(5)
|
|
|
2,990,000
|
|
|
|
44,981
|
|
|
|
|
|
|
|
|
|
|
|
3,034,981
|
|
Thomas E. Wirth(6)
|
|
|
740,025
|
|
|
|
30,668
|
|
|
|
766,148
|
|
|
|
|
|
|
|
1,536,854
|
|
James Bourg
|
|
|
1,270,750
|
|
|
|
33,515
|
|
|
|
|
|
|
|
|
|
|
|
1,304,265
|
|
Scott Jensen
|
|
|
1,270,750
|
|
|
|
33,515
|
|
|
|
|
|
|
|
|
|
|
|
1,304,265
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical/Welfare
|
|
|
Acceleration and
|
|
|
|
|
|
Total
|
|
|
|
Cash Severance
|
|
|
Benefits (Actual
|
|
|
Continuation of
|
|
|
Excise Tax
|
|
|
Termination
|
|
Type of Termination/Name(1)
|
|
Payment(2)
|
|
|
Value)(3)
|
|
|
Equity Awards
|
|
|
Gross-Up
|
|
|
Benefits
|
|
|
Termination in Connection With a Change of Control
(COC)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Feldman(4)(5)
|
|
|
2,990,000
|
|
|
|
44,981
|
|
|
|
|
|
|
$
|
1,463,901
|
|
|
|
4,498,882
|
|
Thomas E. Wirth(6)(7)
|
|
|
740,025
|
|
|
|
30,668
|
|
|
|
766,148
|
|
|
|
|
|
|
|
1,536,854
|
|
James Bourg
|
|
|
1,270,750
|
|
|
|
33,515
|
|
|
|
|
|
|
|
|
|
|
|
1,304,265
|
|
Scott Jensen
|
|
|
1,270,750
|
|
|
|
33,515
|
|
|
|
|
|
|
|
|
|
|
|
1,304,265
|
|
Aggregate Top 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Upon Death
|
|
|
45,000
|
|
|
|
109,164
|
|
|
|
766,148
|
|
|
|
|
|
|
|
920,325
|
|
Termination Upon Disability
|
|
|
45,000
|
|
|
|
109,164
|
|
|
|
766,148
|
|
|
|
|
|
|
|
920,325
|
|
Termination With Cause or Without Good Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause or For Good Reason
|
|
|
5,531,500
|
|
|
|
112,011
|
|
|
|
766,148
|
|
|
|
|
|
|
|
6,409,672
|
|
Termination in Connection With a Change of Control (COC)(7)
|
|
|
5,531,500
|
|
|
|
112,011
|
|
|
|
766,148
|
|
|
|
1,463,901
|
|
|
|
7,873,573
|
|
|
|
|
(1)
|
|
In analyzing the golden parachute tax rules
(assuming that such rules are potentially applicable here), we
have taken the position for purposes of completing the table
that no value has been assigned to the post-termination
non-competition covenants in the employment agreements with each
person set forth in the table.
|
|
(2)
|
|
All amounts reflect cash.
|
|
(3)
|
|
The cost of the medical and dental insurance is based on the
average cost paid by us for health insurance for named
individuals during 2006, each of whom will receive these
benefits for three years.
|
|
(4)
|
|
As of October 26, 2007, Mr. Feldman resigned his
position as Chief Executive Officer of the Company.
|
|
(5)
|
|
Under the employment agreement for Mr. Feldman, if any
payments constitute excess parachute payments under
Section 280G of the Internal Revenue Code (the
Code
) such that Mr. Feldman incurs an
excise tax under Section 4999 of the Code, we will provide
an excise tax
gross-up
payment in an amount such that Mr. Feldman would receive
the same amount of severance had the excise tax not applied. The
cost of the excise tax
gross-up
is
an estimate based on a number of assumptions including:
(i) Mr. Feldman is subject to a change of control
during 2006, (ii) terminated on December 31, 2006
without cause following that change of control.
|
|
(6)
|
|
As of October 26, 2007, Mr. Wirth was appointed
President and Chief Financial Officer of the Company.
|
|
(7)
|
|
On July 10, 2007, Mr. Wirths employment
agreement was amended to provide that, for the purpose of
calculating the amount to be paid to Mr. Wirth upon a
Change of Control, as defined in his employment agreement, the
average bonus shall not be deemed to be less than $200,000.
|
Independent
Auditors Fees and Services
The following summarizes the fees paid to KPMG LLP for the years
ended December 31, 2006 and 2005:
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Audit fees(1)
|
|
$
|
1,846,485
|
|
|
$
|
1,586,000
|
|
Audit-related fees(2)
|
|
|
192,800
|
|
|
|
141,800
|
|
Tax fees(3)
|
|
|
|
|
|
|
46,000
|
|
All other fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fees
|
|
$
|
2,039,285
|
|
|
$
|
1,773,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Audit fees are the aggregate fees billed by KPMG LLP
for professional services rendered in connection with the
Companys annual audit, review of unaudited financial
information and audit of the Companys internal controls
over financial reporting for the years ended December 31,
2006 and 2005. Excludes out-of-pocket expenses billed.
|
19
|
|
|
(2)
|
|
Audit-related fees include fees relating to audits
of unconsolidated joint ventures, and audits and limited reviews
of unaudited financial information relating to statements of
revenues and expenses for acquired properties.
|
|
(3)
|
|
Tax fees are fees related to tax advice and
consultation relating to REIT compliance.
|
The Companys Audit Committee is responsible for retaining
and terminating the Companys independent auditors
(subject, if applicable, to stockholder ratification) and for
approving the performance of any non-audit services by the
independent auditors. In addition, the Audit Committee is
responsible for reviewing and evaluating the qualifications,
performance and independence of the lead partner of the
independent auditors and for presenting its conclusions with
respect to the independent auditors to the full Board.
Pre-Approval
Policies and Procedures of our Audit Committee
The Audit Committee Charter provides that our Audit Committee
must pre-approve all audit services and permissible non-audit
services provided by our independent auditors, except for any
de minimis
non-audit services. Non-audit services are
considered
de minimis
if (i) the aggregate amount of
all such non-audit services constitutes less than 5% of the
total amount of fees we paid to our independent auditors during
the fiscal year in which they are provided; (ii) we did not
recognize such services at the time of the engagement to be
non-audit services; and (iii) such services are promptly
brought to our Audit Committees attention and approved
prior to the completion of the audit by our Audit Committee or
any of its member(s) who has authority to give such approval.
None of the fees reflected above were approved by our Audit
Committee pursuant to this
de minimis
exception. Our
Audit Committee may delegate to one or more of its members who
is an independent director the authority to grant pre-approvals.
All fees for services performed during 2006 and 2005 were
pre-approved by the Audit Committee.
20
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to
us as of November 7, 2007 with respect to any common stock
of the Company or operating partnership units of Feldman
Equities Operating Partnership LP owned by our continuing
directors and executive officers, and any individual or group of
stockholders known to be the beneficial owner of more than 5% of
the issued and outstanding common stock. There are no other of
our directors, nominees for director or executive officers who
beneficially own common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
% of Basic
|
|
Operating
|
|
% of Common Stock
|
|
|
Beneficially
|
|
Common Stock
|
|
Partnership Units
|
|
if all OP Units
|
Name and Address of Beneficial Owner(1)
|
|
Owned
|
|
Outstanding
|
|
Owned
|
|
Converted to Stock
|
|
Larry Feldman(2)
|
|
|
169,781
|
|
|
|
1.3
|
%
|
|
|
947,610
|
(9)
|
|
|
7.7
|
%
|
James C. Bourg(3)
|
|
|
9,615
|
|
|
|
*
|
|
|
|
233,504
|
|
|
|
1.7
|
%
|
Thomas Wirth(2)
|
|
|
86,538
|
(10)
|
|
|
*
|
|
|
|
|
|
|
|
*
|
|
Lawrence S. Kaplan(4)
|
|
|
3,000
|
|
|
|
*
|
|
|
|
|
|
|
|
*
|
|
Bruce E. Moore(5)
|
|
|
3,000
|
|
|
|
*
|
|
|
|
|
|
|
|
*
|
|
Paul H. McDowell(6)
|
|
|
3,000
|
|
|
|
*
|
|
|
|
|
|
|
|
*
|
|
Wells Fargo Capital Management Incorporated(7)
|
|
|
1,282,700
|
|
|
|
9.8
|
%
|
|
|
|
|
|
|
8.9
|
%
|
Kensington Investment Group, Inc.(12)
|
|
|
1,183,404
|
|
|
|
9.1
|
%
|
|
|
|
|
|
|
8.2
|
%
|
Inland American Real Estate Trust, Inc.(11)
|
|
|
1,283,500
|
|
|
|
9.8
|
%
|
|
|
|
|
|
|
8.9
|
%
|
All executive officers, directors and nominees for director as a
group(8)
|
|
|
274,934
|
|
|
|
2.1
|
%
|
|
|
1,181,114
|
|
|
|
10.1
|
%
|
|
|
|
*
|
|
Less than 1.0%.
|
|
(1)
|
|
Except as otherwise indicated and subject to applicable
community property laws and similar statutes, the person listed
as the beneficial owner of shares has sole voting power and
dispositive power with respect to the shares.
|
|
(2)
|
|
c/o Feldman
Mall Properties, Inc., 1010 Northern Avenue, Suite 314,
Great Neck, NY 11021. On October 26, 2007, Mr. Feldman
resigned his position as Chief Executive Officer of the Company.
|
|
(3)
|
|
c/o Feldman
Mall Properties, Inc., 2201 E. Camelback Road,
Suite 350, Phoenix, Arizona 85016.
|
|
(4)
|
|
1561 Dolington Rd., Yardley, PA 19067
|
|
(5)
|
|
c/o Brandywine
Financial Services Corp., 2 Ponds Edge Drive
POB 500, Chadds Ford, PA 19397.
|
|
(6)
|
|
c/o Capital
Lease Funding, Inc., 1065 Avenue of Americas,
19
th
Floor, New York, New York 10018.
|
|
(7)
|
|
This information was obtained from Schedule 13G filed with
the SEC on February 5, 2007. This stockholders
address is 525 Market Street, San Francisco, CA 94105.
|
|
(8)
|
|
This group is composed of the five directors (Larry Feldman,
James Bourg, Lawrence Kaplan, Bruce Moore and Paul McDowell) and
Thomas Wirth who is an executive officer but not a director.
|
|
(9)
|
|
Includes operating partnership units of Feldman Equities
Operating Partnership LP issued to Feldman Partners, LLC, an
Arizona limited liability company (
Feldman
Partners
). Feldman Partners is controlled by Larry
Feldman and is owned by Larry Feldman and his brother, sisters,
children, nieces and nephews.
|
|
(10)
|
|
Includes 76,923 shares of restricted stock that will vest
over five years, with the first vesting occurring
January 1, 2006.
|
|
(11)
|
|
This information was obtained from Schedule 13D filed with
the SEC on April 10, 2007. Assuming conversion of
2,000,000 shares of our series A preferred shares held
by Inland American Real Estate Trust, Inc.
(
Inland
) into 3,546,099 shares of common
stock, Inlands percentage ownership would be 29.1%.
Pursuant to the purchase agreement that Inland entered into with
us on April 10, 2007, the preferred shares are convertible
into common shares after June 20, 2009, at an initial
conversion ratio of 1:1.77305, if approved by a majority of our
common stockholders. The stockholders address is 2901
Butterfield Road, Oak Brook, Illinois 60523.
|
|
(12)
|
|
This information was obtained from Schedule 13G/A filed
with the SEC on January 30, 2007. The Stockholders
address is 4 Orinda Way, Suite 200 C, Orinda, CA 94563.
|
21
Certain
Relationships and Related Transactions
Messrs. Feldman, Bourg and Jensen have the right to receive
additional OP Units for ownership interests contributed as
part of the formation transactions upon our achieving a 15%
internal rate of return from the Harrisburg joint venture on or
prior to December 31, 2009. The right to receive such
additional OP Units is a financial instrument that we
recorded as an obligation of the offering that is adjusted to
fair value each reporting period until the thresholds have been
achieved and the OP Units have been issued. Based on the
expected operating performance of the Harrisburg Mall, the fair
value is estimated to be $3.9 million and $5.3 million
at December 31, 2006 and 2005, respectively. The reduction
in the fair value estimate for the year ended December 31,
2006 totaling $1.4 million was caused by our reduction of
the anticipated return we will receive on the project. The
decrease in our anticipated return is due to an increase in the
anticipated redevelopment costs and delays in the timing of
certain redevelopment plans. The fair value of this obligation
is assessed by management on a quarterly basis.
Effective November 3, 2006, Jeffrey Erhart, our former
General Counsel, left our Company. In connection with
Mr. Erharts separation, we bought back his
OP Units, totaling approximately 179,000 units, at a
price of $9.75 per share or $1.7 million. As of
December 31, 2006, we had paid 90% of this amount, or
$1.6 million, to Mr. Erhart in cash. Under the terms
of Mr. Erharts separation agreement, the remaining
10%, or $175,000, was paid in April 2007.
The Company may engage Brandywine Financial Services Corporation
and/or
its
affiliates for which Mr. Bruce Moore serves as Chief
Executive Officer to provide certain organizational assistance
to the Company, including back office accounting and budgeting
support. The details of such engagement have not been determined
as of the date of this proxy statement.
In April 2007, the Company entered into an agreement to issue
and sell to Inland American up to 2,000,000 shares of our
Series A Preferred Stock in one or more private placements.
In connection with this issuance and in accordance with the
Articles Supplementary with respect to the Series A
Preferred Stock, the holders of the Series A Preferred
Stock have the right to nominate and elect a director to the
Board. As of the date of this proxy statement, such holders have
declined to nominate and elect a director to serve on the Board.
Other
Matters
When
Are Stockholder Proposals Due for the 2007 Annual
Meeting?
Under SEC rules, proposals from our eligible stockholders for
presentation for action at the 2008 annual meeting of
stockholders must be received by us no later than
[ ],
2007, in order to be considered for inclusion in the Proxy
Statement and Proxy for the 2008 annual meeting. Any such
proposals, as well as any questions relating thereto, should be
directed to the Secretary of the Company at the Companys
principal executive offices. Proposals we receive after
[ ],
2007 will not be included in the Proxy Statement or acted upon
at the 2008 annual meeting.
Under our Bylaws, and as SEC rules permit, stockholders must
follow certain procedures to nominate a person for election as a
director at an annual or special meeting, or to introduce an
item of business at an annual meeting. A stockholder must notify
the Secretary of the Company in writing of the director nominee
or the other business. The notice must include the required
information and be delivered to the Secretary at the principal
executive offices of the Company not earlier than the
150
th
day
and not later than 5:00 p.m., Eastern Standard Time, on the
120
th
day
prior to the first anniversary of the date of mailing of the
notice for the preceding years annual meeting.
If the date of the Annual Meeting is advanced or delayed by more
than 30 days from the first anniversary of the date of the
preceding years annual meeting, notice by the stockholder
must be delivered as described above not earlier than the
150
th
day
prior to the date of mailing of the notice for such annual
meeting and not later than 5:00 p.m., Eastern Standard
time, on the later of the
120
th
day
prior to the date of such annual meeting or the
10
th
day
following the day on which disclosure of the date of such
meeting is first made. The public announcement of a postponement
or adjournment of an annual meeting does not change or create a
new opportunity for notice as described above.
22
The stockholders notice shall set forth the following, as
applicable:
(1) as to each individual whom the stockholder proposes to
nominate for election or reelection as a director, (a) the
name, age, business address and residence address of such
individual, (b) the class, series and number of any shares
of our stock that are beneficially owned by such individual,
(c) the date such shares were acquired and the investment
intent of such acquisition, and (d) all other information
relating to such individual that is required to be disclosed in
solicitations of proxies for election of directors in an
election contest (even if an election contest is not involved),
or is otherwise required, in each case pursuant to
Regulation 14A and Schedule 14A (or any successor
provision) under the Securities Exchange Act of 1934 and the
rules thereunder (including such individuals written
consent to being named in the proxy statement as a nominee and
to serving as a director if elected);
(2) as to any other business that the stockholder proposes
to bring before the meeting, a description of such business, the
reasons for proposing such business at the meeting and any
material interest in such business of such stockholder and any
Stockholder Associated Person (as defined below) individually or
in the aggregate, (including any anticipated benefit to the
stockholder and the Stockholder Associated Person therefrom);
(3) as to the stockholder giving the notice and any
Stockholder Associated Person, the class, series and number of
all shares of stock of the Corporation which are owned by such
stockholder and by such Stockholder Associated Person, if any,
and the nominee holder for, and number of, shares owned
beneficially but not of record by such stockholder and by any
such Stockholder Associated Person;
(4) as to the stockholder giving the notice and any
Stockholder Associated Person covered by clauses (2) or
(3) above, the name and address of such stockholder, as
they appear on the Companys stock ledger and current name
and address, if different, and of such Stockholder Associated
Person; and
(5) to the extent known by the stockholder giving the
notice, the name and address of any other stockholder supporting
the nominee for election or reelection as a director or the
proposal of other business on the date of such
stockholders notice.
Stockholder Associated Person
of any
stockholder means (1) any person controlling, directly or
indirectly, or acting in concert with, such stockholder,
(2) any beneficial owner of shares of stock of the Company
owned of record or beneficially by such stockholder and
(3) any person controlling, controlled by or under common
control with such Stockholder Associated Person.
Are
there any other matters coming before the 2007 Annual
Meeting?
Our management does not intend to bring any other matters before
the Annual Meeting and knows of no other matters that are likely
to come before the meeting. In the event any other matters
properly come before the Annual Meeting, the persons named in
the accompanying proxy will vote the shares represented by such
proxy in accordance with their best judgment on such matters.
We urge you to submit your vote on the accompanying proxy card
by completing, signing, dating and returning it in the
accompanying postage-paid return envelope at your earliest
convenience, whether or not you presently plan to attend the
meeting in person.
By Order of the Board of Directors
/s/ Thomas E. Wirth
Thomas E. Wirth
Secretary
Great Neck, New York
November [ ], 2007
23
FELDMAN
MALL PROPERTIES, INC.
1010 Northern Blvd, Suite 314
Great Neck, New York 11021
Proxy for Annual Meeting of Stockholders to be held on December 21, 2007
THIS PROXY IS SOLICITED BY OUR BOARD OF DIRECTORS
For the annual meeting of stockholders to be held December 21, 2007, the undersigned appoints
Lawrence Feldman, Lawrence S. Kaplan, Bruce E. Moore and Paul H. McDowell, or any one of them, with
full power of substitution to attend the Annual Meeting of Stockholders of Feldman Mall Properties,
Inc. on December 21, 2007 (the Annual Meeting), and any adjournments thereof, on behalf of the
undersigned and to vote all shares which the undersigned would be entitled to vote and to take all
actions which the undersigned would be entitled to take if personally present upon the following
matters set forth in the Notice of Annual Meeting and described more fully in the Proxy Statement.
This proxy, when properly executed, will be voted as directed. If this proxy is executed but no
direction is indicated, this proxy will be voted
FOR
the proposal to elect Lawrence Feldman,
Lawrence S. Kaplan, Bruce E. Moore and Paul H. McDowell as directors to serve until the 2008 annual
meeting of stockholders or until their respective successors are elected and duly qualified;
FOR
the approval of the appointment of KPMG LLP as the Companys Independent Registered Public
Accounting Firm for the fiscal year 2007;
FOR
the approval of the convertibility feature of the
Companys 6.85% Series A Cumulative Contingently Convertible Preferred Stock, par value $0.01 per
share; and in the discretion of the proxy holder on any other business that properly comes before
the Annual Meeting or any adjournment or postponement thereof. The undersigned hereby revokes any
proxy heretofore given with respect to such meeting.
|
|
|
Please
vote and sign on other side and
return promptly in the enclosed envelope.
|
|
SEE REVERSE
SIDE
|
þ
|
|
Please mark your votes as in this example.
|
|
1.
|
|
Proposal to elect four directors to serve until the 2008 annual meeting of stockholders or
until their successors are elected and duly qualified.
|
|
|
|
|
|
|
|
Nominees:
|
|
Lawrence Feldman
|
|
|
|
|
Lawrence S. Kaplan
|
|
|
|
|
Bruce E. Moore
|
|
|
|
|
Paul H. McDowell
|
|
|
|
|
|
FOR ALL NOMINEES
|
|
WITHHOLD AUTHORITY FOR
ALL NOMINEES
|
|
FOR ALL EXCEPT
|
o
|
|
o
|
|
o
|
2.
|
|
Proposal to approve the appointment of KPMG LLP as the Companys Independent Registered
Public Accounting Firm for the fiscal year 2007.
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
o
|
|
o
|
|
o
|
3.
|
|
Proposal to approve the convertibility feature of our 6.85% Series A Cumulative Contingently
Convertible Preferred Stock, par value $0.01 per share.
|
|
|
|
|
|
FOR
¨
|
|
AGAINST
¨
|
|
ABSTAIN
¨
|
4.
|
|
In their discretion, upon such other business as may properly come before the meeting and any
adjournments thereof.
|
|
|
|
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying notice of annual
meeting of stockholder, the proxy statement with respect thereof and our annual report to
stockholders with respect to our 2006 fiscal year and hereby revoke(s) any proxy or proxies
heretofore given. This proxy may be revoked at any time before it is exercised.
|
o
|
|
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
|
|
|
|
|
|
|
|
|
|
|
|
Signature:
|
|
|
Date:
|
|
|
Signature:
|
|
|
Date:
|
|
|
If Held Jointly
|
Note: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
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