-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wv15CiPT9EJFtngLySQtaLIDY6IxiSBTs7M1YLYNxlChQ5DLhvMQNxvX6rxNVHXy otLKr4voRvxd9hx5Gpfjhg== 0000950123-03-004863.txt : 20030429 0000950123-03-004863.hdr.sgml : 20030429 20030428182954 ACCESSION NUMBER: 0000950123-03-004863 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030612 FILED AS OF DATE: 20030429 EFFECTIVENESS DATE: 20030429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRESIDENTIAL REALTY CORP/DE/ CENTRAL INDEX KEY: 0000731245 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 131954619 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08594 FILM NUMBER: 03667595 BUSINESS ADDRESS: STREET 1: 180 S BROADWAY CITY: WHITE PLAINS STATE: NY ZIP: 10605 BUSINESS PHONE: 9149481300 MAIL ADDRESS: STREET 1: 180 SOUTH BROADWAY CITY: WHITE PLAINS STATE: NY ZIP: 10605 DEF 14A 1 y85090ddef14a.txt PRESIDENTIAL REALTY CORPORATION SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-12 PRESIDENTIAL REALTY CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] 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. (1) Amount Previously Paid: ---------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------------------------------------------- (3) Filing Party: ---------------------------------------------------------------------------- (4) Date Filed: ---------------------------------------------------------------------------- PRESIDENTIAL REALTY CORPORATION 180 SOUTH BROADWAY, WHITE PLAINS, N.Y. 10605 ------------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS JUNE 12, 2003 ------------------------ NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of PRESIDENTIAL REALTY CORPORATION has been called for and will be held at 2:00 P.M., New York Time, on Thursday, June 12, 2003 at the Marriott Residence Inn, 5 Barker Avenue, White Plains, New York, for the following purposes: 1. To elect, by vote of the Class A shares, 4 directors of the Company to serve for the ensuing year; 2. To elect, by vote of the Class B shares, 2 directors of the Company to serve for the ensuing year; and 3. To transact such other business as may properly come before the meeting. Only stockholders of record at the close of business on April 22, 2003 are entitled to notice of and to vote at the meeting. Stockholders are cordially invited to attend the meeting in person. If you are not able to do so and wish your stock voted, you are requested to complete, sign and date the accompanying proxy or proxies and promptly return the same in the enclosed stamped envelope. The proxy for Class A stock is blue and the proxy for Class B stock is white. If you hold both classes of stock please make sure that you send in both proxies. BY ORDER OF THE BOARD OF DIRECTORS ROBERT E. SHAPIRO Chairman of the Board of Directors Dated: April 27, 2003 PRESIDENTIAL REALTY CORPORATION 180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605 ------------------------ PROXY STATEMENT ------------------------ This Proxy Statement is furnished in connection with the solicitation by the management of PRESIDENTIAL REALTY CORPORATION of proxies to be used at the Annual Meeting of Stockholders of the Company to be held June 12, 2003, and at any adjournment thereof. If proxies in the accompanying form are properly executed and returned, the shares represented thereby will be voted as instructed in the proxy. A stockholder executing and returning a proxy has the power to revoke it at any time before it is voted by giving written notice to the Secretary of the Company, by submission of another proxy bearing a later date or by attending the meeting and requesting to vote in person. Only stockholders of record as of the close of business on April 22, 2003 will be entitled to vote. The distribution of this Proxy Statement and the enclosed form of Proxy to stockholders will commence on or about April 27, 2003. The Company's annual report to stockholders for 2002, including financial statements, is being mailed to stockholders with this Proxy Statement. As of March 29, 2003, there were outstanding and entitled to vote at the Annual Meeting 478,733 shares of the Company's Class A Common Stock (held by approximately 152 holders of record) and 3,275,738 shares of the Company's Class B Common Stock (held by approximately 605 holders of record). The Company is authorized to issue 700,000 Class A shares and 10,000,000 Class B shares. The presence at the Annual Meeting of a majority, or 239,368, of the outstanding shares of the Company's Class A Common Stock and a majority, or 1,637,870, of the outstanding shares of the Company's Class B Common Stock, either in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. The holders of the Class A Common Stock have the right at all times to elect two-thirds of the membership of the Board of Directors of the Company, and the holders of the Class B Common Stock have the right at all times to elect one-third of the membership of the Board of Directors of the Company. All directors, once elected, have equal authority and responsibility. On all other matters, the holders of the Class A Common Stock and the holders of the Class B Common Stock have one vote per share for all purposes. However, no action may be taken which would alter or change the special rights or powers given to either class of Common Stock so as to affect such class adversely, or which would increase or decrease the amount of the authorized stock of such class, or increase or decrease the par value thereof, except upon the affirmative vote of the holders of the requisite majority of the outstanding shares of the class of stock so affected. Accordingly, the Class A shares will vote as a class for the election of four Directors of the Company to serve for the ensuing year (Proposal No. 1 on the accompanying Notice of Annual Meeting), and for this purpose each Class A share will be entitled to one vote. The Class B shares will vote as a class for the election of two directors of the Company for the ensuing year (Proposal No. 2 on the accompanying Notice of Annual Meeting), and for this purpose each Class B share will be entitled to one vote. With respect to Proposals No. 1 and 2, directors are elected by a plurality of the votes of the shares of common stock represented and voted at the meeting. This means that the director nominee with the most affirmative votes for a particular slot is elected for that slot. Consequently, only the number of votes "for" and "against" affect the outcome, and abstentions and broker non-votes will have no effect on the outcome of the election of directors, except to the extent that failure to vote for an individual results in another individual receiving a larger number of votes. A "broker non-vote" occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary power for that particular item and has not received instructions from the beneficial owner. The Company believes that abstentions and broker non-votes should be counted for purposes of determining if a quorum is present at the Annual Meeting for the transaction of business. ELECTION OF DIRECTORS ELECTION OF DIRECTORS BY CLASS A STOCKHOLDERS It is intended that proxies in the accompanying form as received from the holders of Class A Common Stock will be voted FOR the four persons listed below, each of whom is at present a director, as directors for the ensuing year. If for any reason any of these nominees becomes unable to serve as a director, it is intended that such proxies will be voted for the election, in his place, of any substituted nominee as management may recommend, and of the other nominees listed. Management, however, has no reason to believe that any nominee will be unable to serve as director. The directors so elected will serve until the next Annual Meeting of Stockholders and until their respective successors are duly elected and have qualified.
FIRST CLASS A CLASS B BECAME DIRECTOR COMMON COMMON OCCUPATION OR OF PRESIDENTIAL BENEFICIALLY BENEFICIALLY PERCENTAGE OF ALL PRINCIPAL OR ITS OWNED AND OWNED AND OUTSTANDING STOCK EMPLOYMENT PREDECESSOR PERCENTAGE PERCENTAGE (CLASS A AND B NAME AND AGE OF DIRECTOR FOR PAST 5 YEARS COMPANY OF CLASS(1) OF CLASS(1) COMBINED) ------------------------ ---------------- --------------- ------------ ------------ ----------------- Robert Feder (72)................. Partner, Cuddy & 1981 916* 27,135* * Feder & Worby, Attorneys Jeffrey F. Joseph (61)**.......... President of 1993 198,735(2) 64,000(3) (6.9) Presidential (41.5) (1.9) Robert E. Shapiro (85)**.......... Chairman of the 1961 None 41,744 (1.1) Board of (1.3) Directors of Presidential Joseph Viertel (87)**............. Director and 1961 3,000* 6,900* * Chairman of the Executive Committee of Presidential
- --------------- * Less than 1% of the class of stock ** Member of the Executive Committee of the Board of Directors (1) These figures, based on information as of March 29, 2002, include 124 shares of Class A Common Stock and 27,781 shares of Class B Common Stock of Presidential held in trust or in the names of wives, the beneficial ownership of which is disclaimed by the respective Directors. Each of the owners of the shares set forth in the table has the sole voting and investment power over such shares except that such owner has no voting or investment power over shares the beneficial ownership of which is disclaimed. (2) These shares are owned by Pdl Partnership, a general partnership in which Mr. Joseph has a 20% partnership interest. See Principal Holders of Securities below. (3) Includes presently exercisable options to purchase 24,000 shares of Class B Common Stock. Robert E. Shapiro and Joseph Viertel are brothers. ELECTION OF DIRECTORS BY CLASS B STOCKHOLDERS It is intended that proxies in the accompanying form as received from the holders of Class B Common Stock will be voted FOR the two persons listed below, each of whom is at present a director, as directors for the ensuing year. If for any reason any of these nominees becomes unable to serve as a director, it is intended that such proxies will be voted for the election, in his place, of any substituted nominee as management may recommend, and of the other nominees listed. Management, however, has no reason to believe that any nominee will be unable or unwilling to serve as a director. The directors so elected will serve 2 until the next Annual Meeting of Stockholders and until their respective successors are duly elected and have qualified.
FIRST CLASS A CLASS B BECAME DIRECTOR COMMON COMMON OCCUPATION OR OF PRESIDENTIAL BENEFICIALLY BENEFICIALLY PERCENTAGE OF ALL PRINCIPAL OR ITS OWNED AND OWNED AND OUTSTANDING STOCK EMPLOYMENT PREDECESSOR PERCENTAGE PERCENTAGE (CLASS A AND B NAME AND AGE OF DIRECTOR FOR PAST 5 YEARS COMPANY OF CLASS(1) OF CLASS(1) COMBINED) ------------------------ ---------------- --------------- ------------ ------------ ----------------- Richard Brandt (75)............... Chairman of the 1972 none 11,000* * Board of Directors of Trans-Lux Corporation(2) Mortimer M. Caplin (86)........... Partner, Caplin 1984 none 76,866 (2.0) & Drysdale, (2.3) Attorneys(3)
- --------------- * Less than 1% of the class of stock (1) These figures, based on information as of March 29, 2002, include 34,755 shares of Class B Common Stock of Presidential held by a private charitable foundation established by a Director, the beneficial ownership of which is disclaimed by the Director. Each of the owners of the shares set forth in the table has the sole voting and investment power over such shares except that such owner has no voting or investment power over shares the beneficial ownership of which is disclaimed. (2) Trans-Lux Corporation is a manufacturer of stock tickers and electronic displays and its entertainment division operates motion picture theaters. (3) Mr. Caplin is a director of Fairchild Corporation and Danaher Corporation. PRINCIPAL HOLDERS OF SECURITIES As of March 29, 2002 the following persons owned beneficially the following amounts and percentages of the Class A and Class B Common Stock of Presidential:
CLASS A CLASS B PERCENTAGE OF ALL COMMON PERCENTAGE OF PERCENTAGE OF OUTSTANDING STOCK STOCK PERCENTAGE COMMON STOCK CLASS B (CLASS A AND B BENEFICIALLY OF CLASS A BENEFICIALLY COMMON COMMON STOCK NAME OWNED COMMON STOCK OWNED STOCK COMBINED) ---- ------------- ------------ ------------- ------------- ----------------- Pdl Partnership....... 198,735(1) (41.5) none none (5.2) 180 South Broadway White Plains, NY 10605 The Trust Company of New Jersey.......... none none 322,800(2) (9.7) (8.5) 35 Journal Square Jersey City, NJ 07306 Wilshire Oil Company of Texas............ none none 277,700(3) (8.3) (7.3) 921 Bergen Avenue 11th Floor Jersey City, NJ 07306............... All officers and directors as a group (9 persons)......... 227,252(4) (47.5) 323,514(4) (9.7) (14.4)
- --------------- (1) Such amount does not include 24,601 shares owned by certain partners of Pdl Partnership, including 4,762 shares owned by a partner as trustee, the beneficial ownership of which 4,762 shares is disclaimed. The partners of Pdl Partnership are Jeffrey Joseph, an officer and director of Presidential and a nominee for director, and Steven Baruch and Thomas Viertel, officers of Presidential. 3 (2) The Company has been informed by The Trust Company of New Jersey that it has sole voting and dispositive power with respect to 312,300 of such shares and shared voting and dispositive power with respect to 10,500 of such shares. This information is based upon Amendment No. 13 dated February 13, 2003 to a Schedule 13G filed by The Trust Company of New Jersey. (3) The Company has been informed by Wilshire Oil Company of Texas that it has sole voting and dispositive power with respect to 277,700 shares of Class B Common Stock. This information is based upon a Schedule 13D dated December 31, 2001 filed by Wilshire Oil Company of Texas. (4) Such amount includes (i) 198,735 shares of Class A Common Stock owned by Pdl Partnership (see Note 1 above), (ii) 4,886 shares of Class A Common Stock and 27,781 shares of Class B Common Stock held in trust or in the names of wives, the beneficial ownership of which is disclaimed by the respective persons and (iii) options to purchase 60,000 shares of Class B Common Stock. Except as set forth in the notes to the table, each of the owners of the shares set forth in the table has the sole voting and dispositive power over such shares except that such owner has no voting or dispositive power over shares the beneficial ownership of which is disclaimed. The Company's management knows of no other persons owning beneficially more than 5% of either the outstanding Class A Common Stock or the outstanding Class B Common Stock of the Company. A Schedule 13D dated December 26, 1989 was filed by Jack Harry Stewart of 9300 S.W. 90th Street, Miami, Florida reflecting the ownership of 70,700 shares of Class A common stock (14.7%). However, the Company has not received a more recent filing from Mr. Stewart and believes that Mr. Stewart no longer owns more than 5% of the Class A common stock. Neither Pdl Partnership nor its partners have any contract, arrangement, understanding or relationship (legal or otherwise) with respect to any securities of the Company, except as described below. 212,648 Class A Shares owned by Pdl Partnership or its partners are pledged to Robert E. Shapiro and Joseph Viertel, directors of the Company, as security for loans previously made in connection with the purchase of 134,334 Class A Shares by Pdl Partnership's predecessor in interest. The partners of Pdl Partnership have entered into an Agreement pursuant to which they have agreed among themselves that the Class A Shares owned by Pdl Partnership may (1) be voted by Pdl Partnership only by action of any two of them or (2) be sold by Pdl Partnership only with the approval of any two of them. EXECUTIVE OFFICERS The following table sets forth information with respect to the executive officers of Presidential. Each officer has been elected for a period of one year and thereafter until his successor is elected, subject to the terms of the Employment Agreements described below.
NAME AGE POSITION WITH REGISTRANT ---- --- ------------------------ Jeffrey F. Joseph..................... 61 President and a Director Thomas Viertel........................ 61 Executive Vice President and Chief Financial Officer Steven Baruch......................... 64 Executive Vice President Elizabeth Delgado..................... 58 Treasurer and Secretary
Mr. Joseph has been President of the Company since February, 1992 and a Director since April, 1993. Thomas Viertel has been an Executive Vice President of the Company since January, 1993 and its Chief Financial Officer since April of that year. Mr. Viertel is also the Chairman of the Board of Scorpio Entertainment, Inc., a privately owned company which produces theatrical enterprises. (See Certain Transactions below.) Mr. Baruch has been an Executive Vice President of the Company since January, 1993. Mr. Baruch is also the President of Scorpio Entertainment, Inc. (See Certain Transactions below.) Mr. Baruch also serves as a member of the Board of Directors of Trans-Lux Corporation, of which Richard Brandt, a director of Presidential Realty Corporation and a member of its Compensation Committee, is Chairman of the Board of Directors. 4 Ms. Delgado has been Treasurer of the Company since 1986, and the Secretary of the Company since 2002. Thomas Viertel is the son of Joseph Viertel, a Director of Presidential, and the nephew of Robert E. Shapiro, a Director of Presidential. Steven Baruch is the cousin of Robert E. Shapiro and Joseph Viertel. REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS The following table and discussion summarizes the compensation for the year ended December 31, 2002 of the Chief Executive Officer of the Company and of any other executive officer of the Company who served as such at December 31, 2002 and whose total annual compensation exceeded $100,000. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL COMPENSATION(A) -------------------------- --------------------------- OTHER ANNUAL STOCK SALARY BONUS COMPENSATION(A) OPTIONS NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) --------------------------- ---- -------- ------- --------------- ------- Jeffrey F. Joseph..................... 2002 $281,731 $93,909 0 0 President and Chief Executive 2001 277,361 92,423 0 0 Officer and Director 2000 268,361 80,335 0 0 Thomas Viertel........................ 2002 189,316 63,105 0 0 Executive Vice President and 2001 186,380 62,105 0 0 Chief Financial Officer 2000 180,331 60,252 0 0 Steven Baruch......................... 2002 189,316 63,105 0 0 Executive Vice President 2001 186,380 62,105 0 0 2000 180,331 60,252 0 0 Elizabeth Delgado..................... 2002 112,984 0 0 0 Treasurer and Secretary 2001 106,715 0 0 0 2000 101,634 0 0 0
- --------------- (A) Does not include perquisites or other personal benefits which in the aggregate do not exceed the lesser of (a) 10% of annual salary and bonus or (b) $50,000. The Company pays the premiums on life insurance policies on the lives of, and owned by, Jeffrey F. Joseph, Thomas Viertel and Steven Baruch. The annual premiums for each of years 2002, 2001 and 2000 were $12,750 for Mr. Joseph, $9,250 for Mr. Viertel and $10,500 for Mr. Baruch. These amounts are not included because the aggregate perquisites and other personal benefits do not exceed the lesser of (a) 10% of annual salary and bonus or (b) $50,000. There were no grants of options or stock appreciation rights in the year ended December 31, 2002. 5 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
SECURITIES UNDERLYING NUMBER OF VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY 12/31/02 OPTIONS 12/31/02(A) ---------------- ------------------- SHARES VALUE (#) ($) ACQUIRED ON REALIZED EXERCISABLE(E) EXERCISABLE(E) NAME EXERCISE(#) ($) UNEXERCISABLE(U) UNEXERCISABLE(U) - ---- ----------- -------- ---------------- ------------------- Jeffrey F. Joseph...................... 0 0 E - 24,000 E - $11,400 President and Chief Executive Officer and Director Thomas Viertel......................... 0 0 E - 18,000 E - 8,550 Executive Vice President and Chief Financial Officer Steven Baruch.......................... 0 0 E - 18,000 E - 8,550 Executive Vice President
- --------------- (A) Based on the $6.375 per share exercise price of all options and the $6.85 per share closing price on the American Stock Exchange on December 26, 2002. In connection with the exercise of stock options in 1999, the Company loaned $367,500 in the aggregate to Jeffrey Joseph ($147,000), Thomas Viertel ($110,250) and Steven Baruch ($110,250) to pay for the purchase price of the stock. The recourse notes, secured by the stock, bear interest at 8% per annum, payable quarterly, and the principal is due at maturity on November 30, 2004. The Employment Agreements for Messrs. Joseph, Viertel and Baruch provide that to the extent that any of the existing stock options held by those executives are either exercised or lapse, the Company will grant to the executive new options in the amount of the stock options that have either been exercised or have lapsed, which new options will have an exercise price equal to the closing price of the Class B common stock on the date that the new option is actually granted, will have a term of six years from the date such new option is granted and will be otherwise subject to the terms of the 1999 Stock Option Plan or any successor plan. DEFINED BENEFIT PENSION PLAN The Company has a Defined Benefit Pension Plan which covers substantially all of its employees, including the officers listed in the Summary Compensation Table. Directors who are not employees of the Company are not eligible to participate in the Plan. The Plan is a non-contributory, tax qualified defined benefit plan which provides a monthly retirement benefit payable for a participant's lifetime in an amount equal to the sum of (i) 7.15% of an employee's average monthly compensation and (ii) .62% of such employee's average monthly compensation in excess of the average Social Security wage base, multiplied in each case by the employee's years of service commencing after December 31, 1993 (up to a maximum of 10 years). Average monthly compensation for these purposes is the employee's monthly compensation averaged over the five consecutive Plan years which produce the highest monthly average within the employee's last ten years of service. However, the amount of compensation taken into account under a tax qualified plan was limited to $170,000 per annum in 2001, which limit was increased in 2002 to $200,000 and may be increased in future years for cost of living increases. Maximum benefits under the Plan are attainable after ten years of service commencing after December 31, 1993, and are payable at age 65. Mr. Joseph (61 years old), Mr. Viertel (61 years old) and Mr. Baruch (64 years old) all have nine years of service credited under the Plan. 6 EMPLOYMENT AGREEMENTS The Company has an employment agreement with Jeffrey F. Joseph, President of the Company, that extends through December 31, 2005 and provides for annual compensation of $290,746 for calendar year 2003. The employee may also become entitled to a bonus for each calendar year based on a formula relating to the Company's earnings, which bonus is limited to a maximum amount of 33 1/3% of his annual basic compensation for that year. The agreement also provides for retirement benefits commencing at age 69 (or four years after retirement which ever is later) in the annual amount of $29,000, subject to increases based on 50% of any increase in the cost of living subsequent to the first year of retirement. The Company also has employment agreements with Steven Baruch, Executive Vice President of the Company, and Thomas Viertel, Executive Vice President and Chief Financial Officer of the Company, that each extend to December 31, 2005 and provide for annual compensation of $189,316 for calendar year 2003. Mr. Baruch and Mr. Viertel may also become entitled to a bonus for each calendar year based on a formula relating to the Company's earnings, which bonus is limited to a maximum amount of 33 1/3% of the annual basic compensation for the year. Each of the agreements also provides for retirement benefits commencing at age 69 (or four years after retirement, whichever is later) in the annual amount of $29,000, subject to increases based on 50% of any increase in the cost of living subsequent to the first year of retirement. The Company's employment agreements with Mr. Baruch and Mr. Viertel permit them to spend a reasonable amount of their time during normal business hours on matters related to Scorpio Entertainment, Inc., a company which is engaged in theatrical productions, so long as the time and effort for Scorpio Entertainment, Inc. does not conflict or interfere with the performance of their duties for the Company and they diligently perform their duties for the Company to the satisfaction of the Board of Directors. (See Certain Transactions below.) The Company also has an employment agreement with Elizabeth Delgado, the Company's Treasurer, that extends through December 31, 2004 and provides for annual compensation of $112,984 for calendar year 2003. The employment agreement provides for a retirement period that commences at age 65 with annual cash benefits during retirement equal to the sum of (a) 23.6% plus (b) 2.6% for each year of employment subsequent to December 31, 1994, up to a maximum of 60% of the average of the three highest annual salary rates paid during employment, provided that such annual benefits shall not exceed $50,046 per annum, and provided further that any payments to be made under the retirement provisions of the employment agreement shall be reduced dollar for dollar by any amounts payable to the employee as a participant under the Company's Defined Benefit Pension Plan. Annual cash retirement benefits payable by the Company to Ms. Delgado under such employment agreement cannot be less than $48,896, but could be higher depending upon future rates of compensation and the terms of any subsequent employment agreement. During the retirement periods under the above agreements, the employees will also be entitled to the continuation of certain life, group health and disability insurance benefits. None of the employment contracts described above provide death benefits for the recipients or for funding by Presidential of the anticipated retirement benefits. COMPENSATION OF DIRECTORS The Company pays each Director (other than Jeffrey F. Joseph, who is the President of the Company, Robert E. Shapiro, who is the Chairman of the Board of Directors of the Company, and Joseph Viertel, who is the Chairman of the Executive Committee of the Board of Directors of the Company) $11,000 per annum, plus $1,500 for each meeting of the Board of Directors or Committee thereof attended and $625 for each meeting of the Audit Committee for the review of the Company's unaudited quarterly financial statements attended, plus reimbursement of expenses. A portion of the above described directors fees is paid by the issuance of 1,000 shares of the Company's Class B Common Stock to each Director. The Company ordinarily does not pay any other compensation to Directors for their services as Directors. Presidential also has employment agreements with two directors (who were executive officers of the Company prior to their retirement) providing for stipulated annual payments for life (plus continuation of life, 7 group health and disability insurance benefits). The annual cash retirement benefits paid under these contracts in 2002 (including insurance premiums) were as follows:
ANNUAL CASH RETIREMENT BENEFIT (SUBJECT TO INCREASE NAME AND AGE POSITION WITH PRESIDENTIAL FOR INFLATION) - -------------------------------------- ---------------------------------- ---------------------------- Robert E. Shapiro (85)................ Director and Chairman of the Board $196,939 of Directors. Retired as President in 1992. Joseph Viertel (87)................... Director and Chairman of the 179,743 Executive Committee. Retired as President in 1987.
CERTAIN TRANSACTIONS Presidential currently has loans outstanding to certain affiliates of Ivy Properties, Ltd. (collectively "Ivy") as more fully described in the table set forth below. Ivy is owned by Thomas Viertel, Steven Baruch and Jeffrey Joseph (the "Ivy Principals"). Mr. Joseph is currently the President and a Director of Presidential and is a nominee for Director. Mr. Viertel is currently an Executive Vice President and the Chief Financial Officer of Presidential and is the son of Joseph Viertel, a Director of Presidential, and a nephew of Robert E. Shapiro, also a Director of Presidential. Steven Baruch is currently an Executive Vice President of Presidential and is a cousin of Robert E. Shapiro and Joseph Viertel. Pdl Partnership, a partnership which is wholly owned by the Ivy Principals, currently owns 198,735 shares of the Company's Class A Common Stock. As a result of the ownership of these shares by Pdl Partnership, together with the ownership of an aggregate of 24,601 additional shares of Class A Common Stock individually by the Ivy Principals, Pdl Partnership and the Ivy Principals have beneficial ownership of an aggregate of approximately 47% of the outstanding shares of Class A Common Stock of the Company, which class of stock is entitled to elect two-thirds of the Board of Directors of the Company. By reason of such beneficial ownership, the Ivy Principals are in a position substantially to control elections of the Board of Directors of the Company. The Board of Directors has adopted a resolution pursuant to which Presidential will not make any loan to Ivy nor enter into any other material transaction with Ivy unless such transaction is unanimously approved by the Directors of Presidential who are not otherwise affiliated with Presidential or Ivy (with no more than one abstention). 8 The following table sets forth information with respect to all outstanding loans to Ivy at December 31, 2001 and December 31, 2002:
ORIGINAL LOAN BASIC DATE ADVANCED DESCRIPTION INTEREST RATE 12/31/02 12/31/01 - ---- ---------- ------------------------------ -------------- ---------- ---------- 1981 $5,285,000 UTB Associates, a partnership 11.8 to 25.33% $ 376,904 $ 393,729 in which Presidential owned a 66 2/3% interest, sold an apt. property in New Haven, CT to Ivy for long-term, non-recourse purchase money notes. 1984 4,305,500 Sale by Presidential to Ivy of 6.00% 830,927 857,856 50% interest in a partnership which owns an apartment complex in Alexandria, VA (Overlook loan).(1) 1991 526,454 UTB End Loans: Purchase money Various 118,681 118,681 notes on co-op apts. These notes were transferred to Presidential as part of the Ivy settlement. 1991 155,084 Consolidated Loans: Replaced Chase Prime 0 8,733 previously defaulted loans.(2) ---------- ---------- Total Loans 1,326,512 1,378,999 Less: Discounts 105,669 108,451 Deferred gain on Overlook 830,927 857,856 loan ---------- ---------- Net Carrying Value $ 389,916 $ 414,692 ========== ==========
- --------------- (1) The Overlook loan, which is a nonrecourse loan resulting from the sale by the Company to Ivy in 1984 of an apartment property, is secured by a mortgage note (the "Collateral Security") with an outstanding principal balance of $830,927 at December 31, 2002. All interest and principal collected by Ivy on the Collateral Security is paid to Presidential in reduction of current interest, previously deferred interest or principal. This note was paid in full subsequent to year end. (2) As part of the Settlement Agreement effectuated in November, 1991 between the Company and Ivy, certain of Presidential's outstanding nonrecourse loans to Ivy (most of which had previously been written down to zero) were modified and consolidated into two nonrecourse loans (collectively, the "Consolidated Loans") which currently have an aggregate outstanding principal balance of $4,770,050 and a net carrying value of zero. Presidential does not expect to recover any material principal amounts on these notes. However, to the extent that Presidential does receive payments, such payments will be applied to unpaid and unaccrued interest and recognized as income. In 1996 Presidential and the Ivy Principals agreed to modify the Settlement Agreement to provide that the Ivy Principals will make payments on the Consolidated Loans in an amount equal to 25% of the operating cash flow (after provision for certain reserves) of Scorpio Entertainment, Inc., a company owned by two of the Ivy Principals which acts as a producer of theatrical productions. As a result of this modification, Presidential received $195,819 of interest on the Consolidated Loans during 2002. As described under Renumeration of Executive Officers and Directors above, the Company made an aggregate of $367,500 of loans in 1999 to Jeffrey Joseph, Thomas Viertel and Steven Baruch in connection with their exercise of stock options. COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors of Presidential has an Executive Committee, an Audit Committee, a Compensation and Pension Committee and an Unaffiliated Director Committee. The Board of Directors does not have a nominating committee. 9 The members of the Executive Committee are Jeffrey F. Joseph, Robert E. Shapiro and Joseph Viertel. The function of the Executive Committee is to make general and specific recommendations to the Board of Directors with respect to matters to be considered by the Board. The Executive Committee meets monthly and from time to time as required by the business of Presidential. The members of the Audit Committee are Richard Brandt, Mortimer Caplin and Robert Feder. The function of the Audit Committee is to review the policies and procedures adopted by the Company and its independent public accountants with respect to the financial reporting by the Company. Each member of the Audit Committee is independent (as defined in Section 121A of the American Stock Exchange listing standards). The Board of Directors of the Company has adopted a written Charter for the Audit Committee. The Audit Committee Report dated March 26, 2003 is attached as Exhibit A to this Proxy Statement. The Audit Committee held four meetings during the Company's last fiscal year. The members of the Compensation and Pension Committee are Richard Brandt, Mortimer Caplin and Robert Feder. The function of the Compensation and Pension Committee is to recommend guidelines and specific compensation levels to the Board of Directors of the Company for the executive officers of the Company. The Compensation and Pension Committee held three meetings during the Company's last fiscal year. The members of the Unaffiliated Director Committee are Richard Brandt, Mortimer Caplin and Robert Feder. The function of the Unaffiliated Director Committee is to review and vote upon any material transaction with Ivy Properties, Ltd. or any of its affiliates. The Company will not enter into any material transaction with Ivy or any affiliate of Ivy unless the members of the Unaffiliated Director Committee unanimously approve the transaction, with no more than one abstention. The Unaffiliated Director Committee did not hold any meetings during the Company's last fiscal year. The Board of Directors of the Company held four meetings during the Company's last fiscal year. All of the directors attended all of the meetings in 2002 of the Board of Directors and the committees of which they were members except that Robert Shapiro was absent from one meeting of the Board of Directors because of illness. INDEPENDENT PUBLIC ACCOUNTANTS Deloitte & Touche, LLP, who, with their predecessor companies, have been the independent public accountants for Presidential and its predecessor companies since 1960, will have representatives present at the Annual Meeting of Stockholders who will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions. Deloitte & Touche, LLP has advised the Company that neither it nor, to the best of its knowledge, any of its members has any direct or material indirect financial interest in the Company nor has it had any connection during the past five years with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or employee other than as independent auditors for the Company. AUDIT FEES The aggregate fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte") for professional services rendered for the audit of the Company's annual financial statements for the fiscal year ended December 31, 2002 and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q for that fiscal year were $84,500. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES Deloitte did not provide the Company with any professional services for information technology services relating to financial information systems design and implementation for the fiscal year ended December 31, 2002. 10 ALL OTHER FEES The aggregate fees billed by Deloitte for services rendered to the Company, other than the services described above under "Audit Fees" and "Financial Information Systems Design and Implementation Fees" for the fiscal year ended December 31, 2002 were $31,100, including audit-related services of $13,000, for audits of certain subsidiaries, and $18,100 for non-audit services, primarily for income tax return preparation and advice. The Audit Committee has determined that the aggregate fees billed to the Company by Deloitte for fiscal year 2002 for non-audit services has not affected Deloitte's independence. OTHER MATTERS At the date of this Proxy Statement, the only proposals which the management intends to present at the meeting are those set forth in the Notice of the Annual Meeting of Stockholders. Management knows of no other matter which may come before the meeting, but if any other matters properly come before the meeting, it is intended that proxies in the accompanying forms will be voted thereon in accordance with the judgment of the person or persons voting the proxies. PROPOSALS FOR 2004 ANNUAL MEETING OF STOCKHOLDERS Shareholder proposals for the 2004 Annual Meeting of Stockholders must be received by the Secretary at the corporate offices of Presidential, 180 South Broadway, White Plains, New York 10605, no later than December 26, 2003 for inclusion in the Proxy Statement for the 2004 Annual Meeting of Stockholders. COST OF SOLICITATION The cost of soliciting proxies in the accompanying forms has been or will be borne by the Company. In addition to solicitation by mail, solicitations may be made by telephone calls by existing employees of the Company. IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. IF YOU ARE UNABLE TO BE PRESENT IN PERSON, YOU ARE REQUESTED TO SIGN THE ENCLOSED PROXY OR PROXIES AND RETURN SAME IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE. A STOCKHOLDER EXECUTING AND RETURNING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY, BY SUBMISSION OF ANOTHER PROXY BEARING A LATER DATE, OR BY ATTENDING THE MEETING AND REQUESTING TO VOTE IN PERSON. April 27, 2003 11 EXHIBIT A PRESIDENTIAL REALTY CORPORATION AUDIT COMMITTEE REPORT In accordance with its written charter adopted by the Board of Directors (Board), the Audit Committee of the Board (Committee) assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company. During fiscal year 2002, the Committee met four times and discussed the interim financial information contained in each quarterly earnings announcement with the Chief Executive Officer, Chief Financial Officer, Treasurer and independent auditors prior to public release. In discharging its oversight responsibility as to the audit process, the Committee obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors' independence consistent with Independence Standards Board Standard No. 1, "Independence Discussions with Audit Committees,"; discussed with the auditors any relationships that may impact their objectivity and independence and satisfied itself as to the auditors' independence. The Committee also discussed with management and the independent auditors the quality and adequacy of the Company's internal controls and the internal audit function's organization, responsibilities, budget and staffing. The Committee reviewed with the independent auditors their audit plans, audit scope, and identification of audit risks. The Committee discussed and reviewed with the independent auditors all communications required by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, as amended, "Communication with Audit Committees" and, with and without management present, discussed and reviewed the results of the independent auditors' examination of the financial statements. The Committee reviewed the audited financial statements of the Company as of and for the fiscal year ended December 31, 2002, with management and the independent auditors. Management has the responsibility for the preparation of the Company's financial statements and the independent auditors have the responsibility for the examination of those statements. Based on the above-mentioned review and discussions with management and the independent auditors, the Committee recommended to the Board that the Company's audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2002, for filing with the Securities and Exchange Commission. The Committee also recommended the reappointment of the independent auditors and the Board concurred in such recommendation. Richard Brandt, Chairman Mortimer Caplin Robert Feder Date: March 26, 2003 (CLASS A SHARES) PRESIDENTIAL REALTY CORPORATION 180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605 MANAGEMENT PROXY The undersigned hereby appoints JEFFREY F. JOSEPH and THOMAS VIERTEL, as Proxies, each with the power to appoint his substitute, and hereby authorizes them to appear and vote all of the shares of Class A stock standing in the name of the undersigned on April 22, 2003, at the Annual Meeting of Stockholders of Presidential Realty Corporation to be held at the Marriott Residence Inn, 5 Barker Avenue, White Plains, New York, on June 12, 2003 at 2:00 P.M., New York time, and at any and all adjournments thereof, and the undersigned hereby instructs said attorneys to vote as designated on reverse: THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS (CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE) ----------- SEE REVERSE SIDE ----------- PLEASE MARK YOUR A [X] VOTES AS IN THIS EXAMPLE
FOR ALL NOMINEES LISTED AT WITHHOLD AUTHORITY RIGHT: (EXCEPT AS MARKED TO TO VOTE FOR ALL NOMINEES THE CONTRARY BELOW) LISTED AT RIGHT 1. ELECTION OF DIRECTORS [ ] [ ] NOMINEES: ROBERT FEDER, JEFFREY F. JOSEPH, ROBERT E. SHAPIRO, JOSEPH VIERTEL
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below. ________________________________________________________________________________ 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments thereof. MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ] The undersigned hereby acknowledges receipt of the Proxy Statement dated April 27, 2003 THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. SIGNATURE(S)_______________________________________ DATED: ______________ , 2003 Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. (CLASS B SHARES) PRESIDENTIAL REALTY CORPORATION 180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605 MANAGEMENT PROXY The undersigned hereby appoints JEFFREY F. JOSEPH and THOMAS VIERTEL, as Proxies, each with the power to appoint his substitute, and hereby authorizes them to appear and vote all of the shares of Class B stock standing in the name of the undersigned on April 22, 2003, at the Annual Meeting of Stockholders of Presidential Realty Corporation to be held at the Marriott Residence Inn, 5 Barker Avenue, White Plains, New York, on June 12, 2003 at 2:00 P.M., New York time, and at any and all adjournments thereof, and the undersigned hereby instructs said attorneys to vote as designated on reverse: THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS (CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE) ----------- SEE REVERSE SIDE ----------- PLEASE MARK YOUR A [X] VOTES AS IN THIS EXAMPLE
FOR ALL NOMINEES LISTED AT WITHHOLD AUTHORITY RIGHT: (EXCEPT AS MARKED TO TO VOTE FOR ALL NOMINEES THE CONTRARY BELOW) LISTED AT RIGHT 1. ELECTION OF DIRECTORS [ ] [ ] NOMINEES: RICHARD BRANDT, MORTIMER M. CAPLIN
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below. ________________________________________________________________________________ 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments thereof. MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ] The undersigned hereby acknowledges receipt of the Proxy Statement dated April 27, 2003 THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. SIGNATURE(S)_______________________________________ DATED: ______________ , 2003 Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. -----END PRIVACY-ENHANCED MESSAGE-----