Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Gyrodyne Company of America, Inc.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
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GYRODYNE COMPANY OF AMERICA, INC.
102 FLOWERFIELD
SAINT JAMES, NEW YORK 11780
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON
NOVEMBER 11, 2004
TO THE SHAREHOLDERS OF GYRODYNE COMPANY OF AMERICA, INC.
NOTICE IS HEREBY GIVEN, pursuant to the Bylaws, that the Annual Meeting of
Shareholders (the "Annual Meeting") of Gyrodyne Company of America, Inc. (the
"Company"), will be held at Flowerfield Celebrations, Mills Pond Road, Saint
James, New York 11780, on Thursday, November 11, 2004 at 11:00 o'clock in the
forenoon, Eastern Time.
The purpose of the Annual Meeting is to consider and vote upon the following
matters:
1. To elect three (3) directors to a three year term of office, and one
(1) director to a one year term of office; or until their successors
shall be duly elected and qualified;
2. To ratify the engagement of Holtz Rubenstein Reminick LLP, independent
accountants, as auditors of the Company and its subsidiaries for the
Fiscal Year ending April 30, 2005; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. By order of the Board of Directors, only Shareholders
of Record at the close of business September 24, 2004 are entitled to notice of
and to vote at the Annual Meeting, or any adjournment thereof. Enclosed in this
mailing are the Notice of the 2004 Annual Meeting of Shareholders, Proxy
Statement, Proxy Card and Attendance Registration.
To obtain an admittance card for the Meeting, please complete the enclosed
Attendance Registration form and return it with your Proxy Card. If your shares
are held by a bank or broker, you may obtain an admittance card by returning the
Attendance Registration form they forwarded to you. If you do not receive an
Attendance Registration form, you may obtain an admittance card by sending a
written request, accompanied by proof of share ownership, to the undersigned.
For your convenience, we recommend that you bring your admittance card to the
Annual Meeting so you can avoid registration and proceed directly to the Annual
Meeting. However, if you do not have an admittance card by the time of the
Annual Meeting, please bring proof of share ownership to the registration area
where our staff will assist you.
By Order of the Board of Directors,
Peter Pitsiokos, Corporate Secretary
October 13, 2004
YOUR VOTE IS IMPORTANT
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. HOWEVER,
WE ENCOURAGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE PROXY IN THE ENCLOSED
ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. GIVING YOUR
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING,
BUT WILL HELP ASSURE A QUORUM AND AVOID FURTHER PROXY SOLICITATION COSTS.
ATTENDANCE AT THE ANNUAL MEETING IS LIMITED TO SHAREHOLDERS, THEIR PROXIES AND
INVITED GUESTS OF THE COMPANY. FOR IDENTIFICATION PURPOSES, "STREET NAME"
SHAREHOLDERS WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING STOCK
OWNERSHIP AS OF THE RECORD DATE.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
GENERAL
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors (the "Board") of Gyrodyne Company of America, Inc.
(the "Company") for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held November 11, 2004 at 11:00 a.m., Eastern Time at
Flowerfield Celebrations, Mills Pond Road, Saint James, New York 11780 and at
any and all adjournments thereof.
VOTING SECURITIES AND PROXIES
The Board has fixed the close of business on September 24, 2004 as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting. The securities which may be voted
at the Annual Meeting consist of shares of common stock, par value $1.00 per
share, of the Company (the "Common Stock"). Holders of Common Stock are entitled
to one vote per share. Shareholders do not have cumulative voting rights. It is
necessary for a quorum that record holders of a majority of the shares be
represented by proxy or in person at the Annual Meeting. The number of shares of
Common Stock, the Company's only authorized class of stock, outstanding on the
Record Date was 1,168,241. This Proxy Statement and the enclosed proxy card were
mailed starting on or about October 13, 2004.
Proxies solicited by the Board will be voted in accordance with the instructions
given therein. Where no instructions are indicated, proxies will be voted "FOR"
the election of the nominees for director. Directors shall be elected by a
plurality of the votes cast. The appointment of independent accountants will be
ratified by a majority of the votes cast. If you do not return your duly signed
proxy card, your shares cannot be voted unless you attend the Annual Meeting and
vote in person or present a duly signed proxy at the Annual Meeting. Proxies
solicited hereby will be tabulated by inspectors of election designated by the
Board of Directors, who will not be directors or officers of the Company. After
the final adjournment of the Annual Meeting, the proxies will be returned to the
Company for safekeeping.
Management does not know of any other matters that may be presented. If any
other matters properly come before the Annual Meeting or adjournments thereof,
the persons named in the enclosed proxy will vote on such matters in accordance
with their best judgment pursuant to the discretionary authority included in the
proxy.
The cost of soliciting proxies will be paid by the Company. In addition to
solicitation by mail, officers, directors, and regular employees of the Company
may, without compensation other than their regular compensation, solicit proxies
by telephone, by fax or in person. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward solicitation materials to
their principals and the Company will reimburse the expense of so doing. In
addition, Mackenzie Partners Inc., a proxy solicitation firm, will assist the
Company in soliciting proxies for the Annual Meeting and will be paid a fee of
$5,000 plus out-of-pocket expenses.
Any shareholder executing the enclosed proxy has the right to revoke it at any
time prior to its exercise by delivering to the Company a written revocation or
a duly executed proxy bearing a later date, or by attending the Annual Meeting
and voting in person. However, if you are a shareholder whose shares are not
registered in your own name, you will need appropriate documentation from your
record holder to attend the Annual Meeting and to vote personally at the Annual
Meeting.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
IN THIS PROXY STATEMENT
This Proxy Statement and the documents incorporated by reference into this Proxy
Statement contain forward-looking statements about Gyrodyne within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements containing the words
"believes," "anticipates," "estimates," "expects," "intends," "plans," "seeks,"
"will," "may," "should," "would," "projects," "predicts," "continues" and
similar expressions or the negative of these terms constitute forward-looking
statements that involve risks and uncertainties. We intend such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995,
and are including this statement for purposes of invoking these safe harbor
provisions. Such statements are based on current expectations and are subject to
risks, uncertainties and changes in condition, significance, value and effect.
Such risks, uncertainties and changes in condition, significance, value and
effect could cause Gyrodyne's actual results to differ materially from those
anticipated events. Except as may be required under federal law, we undertake no
obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur.
2
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD
ELECTION OF DIRECTORS
(Proposal 1)
The By-Laws of the Company provide that there shall be not less than three (3),
nor more than nineteen (19), directors. The Board of Directors of the Company
consists of seven (7) directors and is divided into three (3) classes of
directors serving staggered terms of office with each class to consist, as
nearly as possible, of one-third of the total number of directors constituting
the entire Board of Directors. Upon the expiration of the term of office for a
class of directors, the nominees for that class are elected for a three (3) year
term to serve until the election and qualification of their successors. At the
meeting, three (3) directors of the Company are to be elected to three-year
terms, and one (1) director of the Company is to be elected to a one-year term,
each to serve until his or her successor is elected and has qualified. The Board
of Directors of the Company has nominated the following persons to three (3)
year terms: Ronald J. Macklin, Philip F. Palmedo and Stephen V. Maroney, and has
nominated Elliot H. Levine to a one (1) year term. All of the nominees are
members of the present Board of Directors of the Company, with terms expiring at
the meeting. Each properly executed proxy received will be voted for the
election of the four (4) nominees named below as directors to serve until the
designated Annual Meeting of Shareholders shown below or until their respective
successors shall be elected and shall qualify. The nominees have consented to be
named as nominees in the Proxy Statement and to serve as directors if elected.
Should any nominee become unable or unwilling to accept a nomination or
election, the persons named in the enclosed proxy will vote for the election of
a nominee designated by the Board.
Information concerning the nominees and continuing directors of the Company,
showing the year when first elected as a director of the Company, the age,
principal occupation and principal affiliations, is as follows. Unless otherwise
indicated, each of the following persons has held his or her present position
for the last five years.
Nominees
--------
Term Expiring in 2007
Ronald J. Macklin Assistant General Counsel, Keyspan Corporate Services, a wholly
Director since 2003 owned subsidiary of Keyspan Corporation, October 2003 to present;
Age: 42 various positions within the Office of General Counsel of Keyspan
Corporate Services, 1991 to October 2003
Term Expiring in 2007
Philip F. Palmedo Chairman of the Board, International Resources Group; Director,
Director since 1996 EHR Investments; President, Palmedo Associates; Director,
Age: 70 Stony Brook Foundation
Term Expiring in 2007
Stephen V. Maroney President, CEO and Treasurer of the Company, March 14, 1999 to pre
Director since 1996 sent; Director of real estate development for the Company, June 1996
Age: 62 to March 1999; former President of Extebank, a Long Island based
commercial bank
Term Expiring in 2005
Elliot H. Levine Senior member, Levine & Seltzer LLP
Age: 51 Mr. Levine was recommended to the Board of Directors for nomination by
Mr. Bruce Sherman, a beneficial owner of morn than 5% of the Company's Common
Stock. The nominating committee accepted Mr. Levine's nomination and recommended
Mr. Levine to the Board for election at the Meeting.
3
Continuing Directors
--------------------
Term Expiring in 2005
Robert H. Beyer Consultant, retired Naval Air Systems Command Engineer, retired
Director since 1977 Captain, United States Naval Reserves, retired Technical
Age: 71 Representative for the Company's former helicopter subsidiary
Term Expiring in 2006
Richard B. Smith Senior Vice President for Private Banking, Suffolk County National
Director since 2002 Bank, May 2000 to present; District Manager for Private Banking,
Age: 50 Key Bank, January 1989 to May 2000; Mayor of the Incorporated
Village of Nissequogue, New York; Trustee of Smithtown
Historical Society
Term Expiring in 2006
Paul L. Lamb Chairman of the Board of Directors of the Company
Director since 1997 Partner, Lamb & Barnosky, LLP
Age: 59
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES FOR
DIRECTOR. THIS IS IDENTIFIED AS ITEM 1 ON THE ENCLOSED PROXY CARD.
--------------------------------------------------------------------------------
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table contains common stock ownership information for persons
known by the Company to "beneficially own" 5% or more of the Company's common
stock, par value $1.00 per share (the "Common Stock"), as of September 24, 2004.
In general, beneficial ownership includes those shares that a person has the
power to vote, sell or otherwise dispose of. Beneficial ownership also includes
that number of shares which an individual has the right to acquire within 60
days (such as stock options) of the date this table was prepared. Two or more
persons may be considered the beneficial owner of the same shares. We obtained
the information provided in the following table from filings with the SEC and
from the Company. In this Proxy Statement, "voting power" is the power to vote
or direct the voting of shares, and "investment power" includes the power to
dispose or direct the disposition of shares.
Type of Number of Percent of
Name and Address Ownership shares Owned Class
Bruce Sherman (A)
8889 Pelican Bay Blvd., Suite 500 Beneficial 200,507 17.16%
Naples, Florida 34108
Gerard Scollan (B) Beneficial 108,776 9.31%
80 Browns River Road
Sayville, NY 11782
Kellogg/Everest (C)
14 Wall Street, 27th Floor Beneficial 92,296 7.90%
New York, NY 10005
Private Capital Management, LP
8889 Pelican Bay Blvd., Suite 500 Beneficial 77,105 6.60%
Naples, Florida 34108
Gyrodyne Company of America, Inc. (D) Beneficial 72,580 6.21%
St. James, NY 11780
(A) Includes the 77,105 shares held by Private Capital Management, LP's
clients and managed by Private Capital Management, LP. Mr. Sherman is the
CEO of Private Capital Management, LP and in this capacity he exercises
shared dispositive and shared voting power with regard to the shares held
by Private Capital Management, LP. Mr. Sherman disclaims beneficial
ownership of the 77,105 shares held by Private Capital Management, LP's
clients and disclaims the existence of a group.
(B) Includes 102,241 shares of Company Stock held by Lovin Oven Catering of
Suffolk, Inc, of which Mr. Scollan is the majority shareholder.
(C) As of the close of business on August 30, 2004, Kellogg Capital Group, LLC
and Everest Special Situations Fund, L.P. filed a joint Amended Schedule
13D with the Securities and Exchange Commission in which both companies
may be deemed to own beneficially in the aggregate 92,296 shares of
Gyrodyne stock.
(D) Since the Company has the authority to direct HSBC Bank, USA, the Trustee
of the Gyrodyne Pension Plan, to vote the securities of the Company held
by the Pension Fund, Gyrodyne Company of America, Inc. has been listed
above as the beneficial owner of the 72,580 shares held by HSBC Bank, USA
as Trustee for the Gyrodyne Pension Fund. The Board of Directors intends
to instruct the trustees of the Pension Fund to vote "FOR" the election of
the nominees for director and "FOR" ratification of the appointment of
independent auditors.
5
Security Ownership of Directors, Executive Officers and Nominees
The following table sets forth as of September 24, 2004 the outstanding voting
securities beneficially owned by the directors and executive officers
individually and the number of shares owned by directors and executive officers
as a group. Except as otherwise indicated, each person and each group shown in
the table has sole voting and investment power with respect to the shares of
Common Stock listed next to their name.
Amount and Nature of Percentage of
Name & Positions with Beneficial Ownership Common Stock
the Company Owned (A)
Stephen V. Maroney, President, CEO, Treasurer and Director 94,573 (B) 7.61%
Peter Pitsiokos, Exec. Vice President, Secretary & General Counsel 39,675 (C) 3.33%
Robert H. Beyer, Director 15,263 (D) 1.30%
Paul L. Lamb, Chairman of the Board of Directors 22,864 (E) 1.95%
Ronald J. Macklin, Director -0- *
Philip F. Palmedo, Director 14,124 (F) 1.20%
Richard B. Smith, Director 1,000 *
Elliot H. Levine, Director-Nominee [-0-] [*]
All Directors, Director-Nominees and Executive
Officers as a Group (Eight (8) Persons) 187,499 15.84%
* Less than one percent of the total shares of outstanding stock.
(A) For a definition of "beneficial ownership" see "Principal Shareholders."
(B) Includes 74,155 shares issuable upon the exercise of stock options to
purchase Company Stock which are exercisable within sixty (60) days of
September 24, 2004.
(C) Does not include his wife's and minor children's ownership of 1,089 shares
in which he denies any beneficial interest. Includes 21,841 shares issuable
upon the exercise to purchase Company Stock which are exercisable within
sixty (60) days of September 24, 2004.
(D) Does not include his wife's ownership of 1,801 shares in which he denies
any beneficial interest. Includes 4,125 shares issuable upon the exercise
of stock options to purchase Company Stock which are exercisable within
sixty (60) days of September 24, 2004.
(E) Includes 13,747 shares of Company stock held by Lamb & Barnosky, LLP Profit
Sharing Trust. Mr. Lamb is a Trustee of the Profit Sharing Trust and a
partner in Lamb & Barnosky, LLP. Includes 4,125 shares issuable upon the
exercise of stock options to purchase Company Stock which are exercisable
within sixty (60) days of September 24, 2004.
(F) Does not include his wife's ownership of 2,750 shares in which he denies
any beneficial interest. Includes 4,125 shares issuable upon the exercise
of stock options to purchase Company Stock which are exercisable within
sixty (60) days of September 24, 2004.
6
INFORMATION ABOUT THE BOARD OF DIRECTORS AND MANAGEMENT
DIRECTOR COMPENSATION
Directors who are full-time salaried employees of the Company are not
compensated for their service on the Board or any committee. Non-employee
directors are paid an annual fee of $12,000.00, $1,000.00 for each director's
meeting attended, $500.00 for each committee meeting attended and travel and
lodging expenses where appropriate. All compensation is paid in cash. There was
no additional compensation paid by the Company to any other director for Fiscal
Years 2004 or 2003. Beginning in Fiscal Year 2005, the Company began paying an
additional fee of $2,000.00 per month to the Chairman of the Board of Directors.
Non-Employee Director's Stock Option Plan
The Company adopted a non-qualified stock option plan for all non-employee
directors of the Company in October 1996. Each non-employee director was granted
an initial 2,500 options on the date of adoption of the plan. These options were
exercisable in three equal annual installments commencing on the first
anniversary date subsequent to the grant. Additionally, each non-employee
director was granted 1,250 options on each January 1, 1997 through 2000,
respectively. These additional options are exercisable in full on the first
anniversary date subsequent to the date of grant.
A summary of the Company's various fixed stock option plans as of April 30, 2004
and 2003, and changes during the years then ended is presented below:
Years Ended April 30,
------------------------------------------------------------
2004 2003
-------------------------- --------------------------
Weighted Weighted
Average Average
Exercise Exercise
Fixed Stock Options Shares Price Shares Price
------------------- ----------- --------- ---------- ---------
Outstanding, beginning of year 174,740 $ 15.28 142,340 $ 15.13
Granted 38,500 16.87 41,800 15.70
Exercised (38,670) 12.62 (1,700) 10.74
Canceled (9,920) 14.91 (7,700) 13.97
------------ ----------
Outstanding, end of year 164,650 16.30 174,740 15.28
=========== ==========
Options exercisable at year end 164,650 16.30 174,740 15.28
=========== ==========
Weighted average fair value of
options granted during the year $ 5.31 $ 5.56
========= =========
7
The following table summarizes information about stock options outstanding at
April 30, 2004:
Options Outstanding Options Exercisable
---------------------------------------------- -------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Price Outstanding Life Price Outstanding Price
------------------- ----------- -------------- ------------- --------------- -----------
$13.46-14.86 24,150 1.42 $13.95 24,150 $13.95
$15.46-16.87 108,600 3.49 $16.23 108,600 $16.23
$18.16-19.10 31,900 1.11 $18.33 31,900 $18.33
Shares reserved for future issuance at April 30, 2004 are comprised of the following:
Shares issuable upon exercise of stock options under the
Company's Non-Employee Director Stock Option Plan 31,625
Shares issuable upon exercise of stock options under
the Company's stock incentive plan 133,025
-------
164,650
=======
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
Attendance
There were 11 regular and special meetings of the Board of Directors during
Fiscal Year 2004. Each Director attended at least 75% of the aggregate number of
meetings of the Board of Directors and each committee of the Board on which such
Director served during Fiscal Year 2004.
Independence
The majority of the members of the Board of Directors are independent directors
as defined by the listing requirements of The NASDAQ Stock Market.
Committees
The Board of Directors of the Company has established the following committees:
The Executive Committee currently consists of two non-employee members and Mr.
Maroney. Directors presently serving on the Executive Committee include Mr. Lamb
(Chairman), Mr. Maroney and Mr. Palmedo. The Executive Committee exercises all
the authority of the Board of Directors in the management and business affairs
of the Company during the intervals between meetings of the Board except with
respect to certain matters that by statute may not be delegated by the Board of
Directors. The committee did not meet during FY 2004.
The Audit Committee meets with the Company's independent auditors annually to
review financial results, audited financial statements, internal financial
controls and procedures and audit plans and recommendations. The Audit Committee
also recommends the selection, retention or termination of the Company's
independent auditors, approves services to be provided by the independent public
accountants and evaluates the possible effect the performance of such services
will have on the accountants' independence. The Company has adopted a written
charter for the Audit Committee, a copy of which is attached hereto as an
exhibit. All of the members of the Audit Committee are independent directors as
defined by the listing requirements of The NASDAQ Stock Market. The Board has
de-
8
termined that Mr. Smith qualifies as an "audit committee financial expert" as
a result of relevant experience. The Audit Committee met four (4) times during
Fiscal Year 2004 and its current members include Mr. Smith, Mr. Palmedo and Mr.
Macklin.
The Executive Compensation Committee consists entirely of non-employee directors
and oversees the Company's compensation and benefit policies and programs. It
recommends to the Board annual salaries, bonuses and other benefits for elected
officers. The Committee met once in Fiscal Year 2004 and its members currently
include Mr. Beyer, Mr. Palmedo (Chairman) and Mr. Macklin.
The Nominating Committee consists entirely of non-employee directors and
recommends guidelines to the Board regarding the size and composition of the
Board and criteria for the selection of nominees. It also recommends the slate
of director nominees to be included in the Proxy Statement and recommends
candidates for vacancies which may occur. The Nominating Committee has a written
charter, which is available on the Company's website, www.gyrodyne.com. Each
member of the Nominating Committee is an independent director as defined by the
listing standards of The NASDAQ Stock Market. The Nominating Committee will
accept for consideration stockholders' nominations for directors if made in
writing. The nominee's written consent to the nomination and sufficient
background information on the candidate must be included to enable the Committee
to make proper judgments as to his or her qualifications. Nominations must be
addressed to the Secretary of the Company at the Company's headquarters and must
be received no later than the deadline for submissions of stockholders proposals
in order to be considered for the next annual election of directors. The
Nominating Committee believes that having directors with relevant experience in
business and industry, government, education and other areas is beneficial and
the Committee seeks to monitor the skills and experience of the Company's
directors. All identified candidates, including shareholder-proposed candidates,
are evaluated by the Committee using generally the same methods and criteria,
although those methods and criteria are not standardized and may vary from
time-to-time. The Committee met once during FY 2004 and its members currently
include Mr. Smith and Mr. Beyer.
Communication with the Board of Directors
The Board does not currently provide a process for shareholders to send
communications to the Board or any of the directors. The Company believes that
senior management, as opposed to individual directors, provides the public voice
of the Company, and that shareholders can effectively communicate with the
Company by contacting the management of the Company through either regular mail,
email or in person. Shareholders also have meaningful access to the Board
through the shareholder proposal process, which is described below.
Board Attendance Policy
The Company encourages, but does not require, all of its directors to attend
annual shareholders meetings of the Company. Last year all of the directors were
in attendance at the annual meeting of the Company's shareholders.
9
REPORT OF THE AUDIT COMMITTEE
Pursuant to newly adopted rules by the Securities and Exchange Commission (the
SEC) and the National Association of Securities Dealers, Inc. (the NASD), the
Audit Committee of Gyrodyne Company of America, Inc. has issued the following
report and affirmed that:
(i) All financial reports (Form 10-QSB and 10-KSB) issued subsequent to March
15, 2001 are reviewed by both the Company's independent auditors and the members
of this committee prior to filing such reports with the SEC.
(ii) Audited financial statements have been reviewed and discussed with
management.
(iii) We have reviewed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 pertaining to communications
with Audit Committees.
(iv) We have received from the auditors written disclosures regarding the
auditors' independence as required by Independence Standards Board Standard No.
1 and we have discussed their independence with respect to the Company with
them.
(v) Based on the review and discussion referred to above, we have recommended
that the audited financial statements be included in the Company's Annual Report
on Form 10-KSB for the most recent fiscal year.
(vi) All of the members of the Company's Audit Committee qualify as being
independent as defined in the applicable listing standards issued by the NASD.
(vii) The Board of Directors has adopted a written charter for the Audit
Committee.
Members of the Committee
Richard B. Smith (Chairman)
Philip F. Palmedo
Ronald J. Macklin
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Peter Pitsiokos, age 45, has served as Executive Vice President, Secretary,
General Counsel and Chief Compliance Officer of the Company since November 1992.
Mr. Pitsiokos was formerly the Executive Assistant District Attorney in Suffolk
County, New York. He also served as the Assistant Director of Economic
Development and the Director of Water Resources in the Town of Brookhaven.
EXECUTIVE COMPENSATION
The following table sets forth cash and non-cash compensation for the fiscal
years ended April 30, 2004, April 30, 2003 and April 30, 2002 awarded to or
earned by Stephen V. Maroney, the Company's President and Chief Executive
Officer, and Peter Pitsiokos, the Company's Executive Vice President and
Secretary. No other officer's total annual salary and bonus for fiscal year end
April 30, 2004 was in excess of $100,000.
10
SUMMARY COMPENSATION TABLE
Long term Compensation
Annual Compensation Awards Pay outs
------------------------------------------------------------------------
Securities
Other Annual Restricted Underlying LTIP
Name and Salary Bonus Compensation Stock Options/LSARs Payout All Other
Principal Position Year ($) ($) ($) (A) Award ($) (#) ($) Compensation
------------------------------------------------------------------------------------------------------------------------------
Stephen V. Maroney
President & CEO 2004 209,500 0 49,628(B) 0 17,500 0 0
2003 209,500 0 22,422(B) 0 20,355 0 0
2002 190,750 0 0 0 13,750 0 0
Peter Pitsiokos
Exec.V.P. and Secretary 2004 152,500 0 70,188(C) 0 13,500 0 0
2003 148,990 0 17,797(C) 0 13,945 0 0
2002 123,128 0 0 0 14,300 0 0
(A) The Company has concluded that aggregate amounts of personal benefits
to any of the current executives does not exceed the lesser of $50,000
or 10% of compensation and bonuses reported above for the named
executive officers, and that the information set forth in tabular form
above is not rendered materially misleading by virtue of the omission
of such personal benefits.
(B) In Fiscal Year 2004, Mr. Maroney exercised 4,125 options and received
an equal number of shares with a value of $49,628. In Fiscal Year 2003,
Mr. Maroney received 1,430 shares from stock awards granted with a
value of $22,422.
(C) In Fiscal Year 2004, Mr. Pitsiokos exercised 6,600 options with SAR's
and received 2,922 shares with a value of $70,188. In Fiscal Year 2003,
Mr. Pitsiokos received 1,135 shares from stock awards granted with a
value of $17,797.
11
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Company's executive compensation program is administered by the Executive
Compensation Committee of the Board. The Committee reviews and recommends
compensation for executive officers. The Committee's recommendations are
considered by the Board's non-employee directors.
The goal of the Company's Executive Compensation Committee is to ensure that an
appropriate relationship exists between executive compensation and the creation
of shareholder value, while at the same time motivating and retaining key
employees. Salary guidelines for executive officers are established by comparing
responsibilities of the position to similar positions in other comparable
companies. The Company has long believed in the importance of aligning the
interests of executives and shareholders through stock ownership by key
employees. The primary components of compensation, base salary and stock option
awards are designed to accomplish the Committee's goals.
The Committee evaluates management based on the Company's financial and
non-financial performance recognizing that land and property management
constitute the major portion of the Company's business activities.
Comparisons of the Company's compensation levels with those of similar land
management and property rental organizations are extremely limited and primarily
based on estimates since most are privately owned and not required to make
public disclosures. In light of these estimations, it is the Committee's opinion
that the Company's level of overall compensation is competitive and in the low
to mid range on a comparative basis.
It is the position of both the Executive Compensation and the Stock Option
Committees that management's performance can best be evaluated based on its
ability to formulate, oversee and administer corporate strategy, which itself is
the product of Board action and direction. For the foreseeable future, that
strategy is to focus primarily on continued progress in the real estate
operation, principally the development of Flowerfield.
In establishing the compensation for Messrs. Maroney and Pitsiokos, the
Committee observes the policy set forth above for Executive Officers. No
specific weighting is applied to the various factors in determining total
compensation.
MEMBERS OF THE COMMITTEE
Philip F. Palmedo (Chairman)
Robert H. Beyer
Ronald J. Macklin
Employment Contracts
Effective January 23, 2003, the Company entered into amended and restated
employment agreements with Stephen V. Maroney as President, Chief Executive
Officer, and Treasurer and Peter Pitsiokos as Executive Vice President,
Secretary, and General Counsel. Their annual salaries are currently at $209,500
and $152,500, respectively. The terms of the agreements were extended from one
to three years, contain evergreen provisions, and provide for severance payments
equivalent to three years' salary in the event of a change in control. Both
agreements were attached as Exhibit 10, Material Contracts, in the 10-QSB dated
January 31, 2003.
1993 Stock Incentive Plan
In 1993, the shareholders adopted a stock incentive plan (the "Plan") under
which participants may be granted Incentive Stock Options ("ISOs"),
Non-Qualified Stock Options ("NQSOs") or Stock Grants. The purpose of the Plan
is to promote the overall financial objectives of the Company and its
shareholders by motivating those persons selected to participate in the Plan to
achieve growth in shareholder value and retain the association of those
individuals who are instrumental in achieving this growth. Such options or
grants become exercisable at various intervals based upon vesting schedules as
determined by the Stock Option Committee. The options expire between October
2004 and May 2008. There are no remaining shares or rights available for
issuance under this plan. No options or SARs were issued during the last fiscal
year.
12
AGGREGATED OPTION/LSAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/LSAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/LSAR's at Options/LSAR's at
Acquired on Value April 30, 2004 April 30, 2004 ($)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------- -------- ------------------------- -------------------------
- -
Stephen V. Maroney President 74,155/0 $888,400/$0
and CEO
- -
Peter Pitsiokos 39,685/0 $473,326/$0
Exec. V.P. and Secretary
Incentive Compensation Plan
The Company has an incentive compensation plan for all full-time employees and
members of the Board in order to promote shareholder value. The benefits of the
incentive compensation plan are realized only upon a change in control of the
Company. Change in control is defined as the accumulation by any person, entity
or group of 30% or more of the combined voting power of the Company's voting
stock or the occurrence of certain other specified events. In the event of a
change in control, the Company's plan provides for a cash payment equal to the
difference between the plan's "establishment date" price of $15.39 per share and
the per share price of the Common Stock on the closing date, equivalent to
100,000 shares of Common Stock. The payment amount would be distributed to
eligible participants based upon their respective weighted percentages (ranging
from .5% to 18.5%).
13
TRANSACTIONS WITH CERTAIN RELATED PERSONS
There were two transactions in the current year and one in the prior year
involving officers, directors or beneficial owners of more than 5% of the
Company's common stock, or any relative or spouse of the foregoing persons, that
had a direct or indirect interest in any transaction involving the Company or
its subsidiaries which exceeded $60,000. The Company currently has a mortgage
receivable in the principal amount of $1,800,000 due from Gerard Scollan, a
former tenant and current beneficial owner of more than five percent of the
Company's Common Stock. The mortgage bears interest at 5% annually and the
Company received $90,000 in interest during the current fiscal year and less
than $60,000 in the prior fiscal year. The Company believes that the terms of
the mortgage are no less favorable to the Company than could have been obtained
from an unaffiliated third party.
Mr. Paul L. Lamb, Chairman of the Board of Directors, is a partner in the law
firm of Lamb & Barnosky, LLP, which performs legal services for the Company and
is paid its usual and customary fees for those services. In Fiscal Year 2004,
total fees paid to Lamb & Barnosky, LLP were $228,962 and in Fiscal Year 2003
total fees paid amounted to $119,201.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's directors,
executive officers and any person holding more than ten percent of the Company's
Common Stock file with the SEC reports of ownership changes, and that such
individuals furnish the Company with copies of the reports.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, the Company believes
that none of the executive officers or directors were late in filing any
required Forms 3 or Forms 4 with the SEC for fiscal year 2004. A review of prior
year filings indicates that no 10% holder of Gyrodyne Common Stock failed to
file timely reports.
14
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 2)
The Board of Directors, upon the recommendation of the Audit Committee,
comprised entirely of outside directors, has appointed Holtz Rubenstein Reminick
LLP ("HR") of 125 Baylis Road, Melville, New York 11747, as independent public
accountants of the Company and its subsidiaries for the current Fiscal Year, and
to perform such other professional services, if any, as may be required of them.
The appointment of HR has been ratified by the shareholders every year since
1990. The Board is requesting ratification of HR as independent public
accountants. This firm has no financial interest in the Company or any
connection with the Company other than as auditors and independent public
accountants.
In the event the proposal is defeated, the adverse vote will be considered a
direction to the Board to select other independent public accountants for the
next fiscal year. However, because of the expense and difficulty of making any
substitution of independent public accountants after the beginning of a fiscal
period, it is contemplated that the appointment for 2005 will be permitted to
stand unless the Board finds other reasons for making the change.
Audit Fees. Audit fees with out of pocket expenses billed or expected to be
billed to the Company by HR for the audit of the Company's financial statements
for the fiscal year ended April 30, 2004 and for reviews of the Company's
financial statements included in the Company's quarterly reports on Form 10-QSB
for the last fiscal year totaled $40,000 and for Fiscal Year 2003 totaled
$38,500.
Audit-Related Fees. Audit-related fees, consisting of aggregate fees billed for
assurance and related services that are reasonably related to the performance of
the audit or review of the Company's financial statements that are not reported
under "Audit Fees" totaled $8,800 in Fiscal Year 2004 and totaled $11,575 for
Fiscal Year 2003.
Tax Fees. Aggregate fees billed for professional services rendered for tax
compliance, tax planning and tax advice totaled $13,100 in Fiscal Year 2004 and
$12,000 in Fiscal Year 2003.
All Other Fees. No other fees were billed or expected to be billed to the
Company by HR for other products and services provided during the two last
fiscal years.
Representatives of HR are expected to be present at the Annual Meeting, will be
given an opportunity to make a statement if they desire to do so and are
expected to be available at a designated time during the meeting to respond to
appropriate questions.
The Audit Committee reviews each proposed engagement to determine whether the
provision of services is compatible with maintaining the independence of the
independent auditors. All of the fees shown above were pre-approved by the Audit
Committee.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
THIS IS IDENTIFIED AS ITEM 2 ON THE ENCLOSED PROXY CARD.
--------------------------------------------------------------------------------
15
FINANCIAL STATEMENTS
Accompanying this Proxy Statement is the Annual Report for the latest Fiscal
Year ended April 30, 2004 which includes audited Balance Sheets and Statements
of Income and Cash Flow for each of the two most recent fiscal years.
2005 STOCKHOLDER'S PROPOSALS
If a shareholder wishes to have a particular proposal considered by the Board
for inclusion in the Company's Proxy Statement for an Annual Meeting of
Shareholders, the shareholder must satisfy the requirements set by the SEC in
its proxy rules. The particular proxy rule, Rule 14a-8, requires that
shareholders submit their proposals in writing to the Company at least 120 days
before the anniversary date of the proxy statement mailing date for the prior
year's annual meeting. Thus, Shareholders who wish to submit their proposals for
inclusion in the Company's proxy statement for next year's annual meeting (in
2005) must deliver such proposals to the Corporate Secretary on or before June
14, 2005. The notice must clearly identify the proposal, contain a brief
supporting statement and all required information about the proposing
shareholder, and otherwise satisfy the SEC's rule. Proposals should be addressed
to the Secretary of the Company, Gyrodyne Company of America, Inc., 102
Flowerfield, Saint James, New York 11780.
In order for a shareholder nomination or proposal to be raised from the floor
during the 2005 Annual Meeting of Shareholders, the Company By-laws require that
written notice thereof must be received by the Company not less than 120 days
nor more than 150 days before the anniversary date of the prior year's annual
meeting (there are special rules if the current year's meeting date is changed
by more than 30 days from the prior year's meeting date or the number of
directors are changed). For the 2005 Annual Meeting of Stockholders, the written
notice must be given not later than July 14, 2005 and no earlier than June 14,
2005. The shareholder's written notice must contain (i) all information relating
to any nominees proposed by the shareholder that is required to be disclosed in
solicitations of proxies pursuant to Regulation 14A under the Securities
Exchange Act of 1934 and Rule 14a-11 thereunder, (ii) a brief description of any
proposals sought to be presented for a vote at the Meeting, (iii) the
shareholder's name and record address and (iv) the class and number of shares of
Company Common Stock that is beneficially owned. Shareholders proposing nominees
for election to the Board of Directors must have continuously held at least
$2,000 in market value, or 1%, of the Company's outstanding Common Stock
entitled to vote for at least one year by such date of giving of notice or be
entitled to cast votes with respect to at least 5% of the outstanding Common
Stock. Nominations and proposals should be submitted in writing to the Secretary
of the Company, Gyrodyne Company of America, Inc., 102 Flowerfield, Saint James,
New York 11780, who will submit them to the Board for its consideration.
BY ORDER OF THE BOARD OF DIRECTORS
Peter Pitsiokos
Corporate Secretary
16
GYRODYNE COMPANY OF AMERICA, INC.
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall be composed of non-employee directors who
are independent of the management of the corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment as a committee member.
Statement of Policy
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
o Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations
of the independent auditors.
o Review with the independent auditors and financial and accounting
personnel, the adequacy and effectiveness of the accounting and
financial controls of the corporation, and elicit any recommendations
for the improvement of such internal control procedures or particular
areas where new or more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
o Review quarterly and annual financial statements contained in the
annual report to shareholders with management and the independent
auditors to determine that the independent auditors are satisfied with
the disclosure and content of the financial statements to be presented
to the shareholders. Any changes in accounting principles should be
reviewed.
o Provide sufficient opportunity for independent auditors to meet with
the members of the Audit Committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
o Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each committee meeting with, the
Board of Directors.
o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose
if, in its judgment, that is appropriate.
Appendix 1
GYRODYNE COMPANY OF AMERICA, INC.
Revocable Proxy
PROXY/AUTHORIZATION AND DIRECTION FOR EXECUTION
OF PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby designates Stephen V. Maroney and Peter Pitsiokos, and
each of them, their true and lawful agents and proxies with full power of
substitution in each, to represent the undersigned at the Annual Meeting of
GYRODYNE COMPANY OF AMERICA, INC. to be held at the Company's Flowerfield
Complex, St. James, New York 11780 on Thursday, November 11, 2004 at 11:00 A.M.,
and any adjournment thereof, and revoking all proxies heretofore given, as
designated hereon. As to any other matter, the proxies shall be authorized to
vote in accordance with their best judgment. This proxy shall remain in effect
for a period of one year from its date.
SIGN BELOW - Please sign exactly as your name appears hereon. If shares are
registered in more than one name, all should sign but if one signs, it binds the
others. When signing as attorney, executor, administrator, agent, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by an authorized per-son. If a partnership, please sign
partnership name by an authorized person.
Dated _____________________________ Signature_____________________________
Signature_____________________________
THIS PROXY/AUTHORIZATION AND DIRECTION FOR EXECUTION OF PROXY, IF PROPERLY
EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE FOR A PROPOSAL, THE
SHARES WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
Receipt of the Proxy Statement and Annual Report is hereby acknowledged.
A vote FOR Item 1 is recommended by the Board of Directors.
Proposal 1: To elect three directors to serve for a term 1: [ ] FOR
of three years and one director to serve
for a term of one year and until their [ ] WITHHELD
successors shall be elected and shall
qualify:
Philip F. Palmedo Term Expiring 2007
Stephen V. Maroney Term Expiring 2007
Ronald J. Macklin Term Expiring 2007
Elliot H. Levine Term Expiring 2005
To withhold authority to vote for any nominee(s), line through or otherwise
strike out the name of such nominee(s).
A vote FOR Item 2 is recommended by the Board of Directors.
Proposal 2: To ratify the engagement of Holtz 2: [ ] FOR
Rubenstein Reminick LLP as Certified [ ] AGAINST
Public Accountants for the current [ ] ABSTAIN
fiscal year.