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 §240.14a-12

 

CADUS CORPORATION

(Name of Registrant as Specified In Its Charter)

 

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):
     

 

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(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-ll(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.: _________________
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(4) Date Filed: __________________

 

 

 

 

CADUS CORPORATION

767 Fifth Avenue

New York, New York 10153

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on May 24, 2017

 

To the Stockholders of Cadus Corporation:

 

Notice is hereby given that the Annual Meeting of Stockholders (the “Meeting”) of Cadus Corporation (the "Company") will be held on Wednesday, May 24, 2017, at the offices of Morrison Cohen LLP, 909 Third Avenue, 27th Floor, New York, New York 10022, at 2:30 p.m. local time.

 

The Meeting will be held for the following purposes:

 

1. To elect four directors of the Company to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified.

 

2. To approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement.

 

3. To transact such other business as may properly come before the Meeting or any and all adjournments thereof.

 

The Board of Directors of the Company fixed the close of business on April 6, 2017 as the record date for the determination of stockholders entitled to notice of and to vote at the Meeting and at any and all adjournments thereof. Consequently, only stockholders of record at the close of business on April 6, 2017 are entitled to notice of and to vote at the Meeting and at any and all adjournments thereof.

 

Enclosed with this notice and the accompanying proxy statement are the proxy card and the Company’s annual report to stockholders on Form 10-K.

 

Whether or not you plan to attend the Meeting, please complete, date and sign the enclosed proxy card, and return it promptly in the enclosed envelope to ensure your representation at the Meeting. You are cordially invited to attend the Meeting and, if you do so, you may personally vote, regardless of whether you have signed a proxy.

 

New York, New York

April 12, 2017

 

  By Order of the Board of Directors
   
  Hunter C. Gary
  President

 

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting To Be Held on May 24, 2017

 

The 2017 Notice of Annual Meeting and Proxy Statement and the Annual Report on form 10-K for the year ended December 31, 2016 are also available in the Investors Relations section of the Company’s corporate website at

http://www.CadusCorp.com

Should you need directions to attend and vote at the meeting, please call (212) 702-4300

  

 

 

 

CADUS CORPORATION

767 Fifth Avenue

New York, New York 10153

(212) 702-4300

 

 

 

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

 

 

  

This Proxy Statement and the accompanying proxy card are being furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors (the “Board”) of Cadus Corporation (the “Company), to be used at the Annual Meeting of Stockholders of the Company (the “Meeting”) to be held on Wednesday, May 24, 2017, at 2:30 p.m. local time, at the offices of Morrison Cohen LLP, 909 Third Avenue, 27th Floor, New York, New York 10022, and at any and all adjournments thereof. This Proxy Statement and the accompanying proxy card are first being mailed on or about April 12, 2017 to the holders of record, as of April 6, 2017, of the Company’s common stock, $.01 par value per share (the “Common Stock”).

 

Stockholders of the Company represented at the Meeting will consider and vote upon (i) the election of four directors to serve until the next annual meeting of stockholders or until their successors have been duly elected and qualified; (ii) advisory approval of the compensation of the Company’s named executive officers; and (iii) such other business as may properly come before the Meeting or any and all adjournments thereof. The Company is not aware of any other business to be presented for consideration at the Meeting.

 

VOTING AND SOLICITATION OF PROXIES

 

Only holders of record of shares of Common Stock at the close of business on April 6, 2017 (the “Record Date”) are entitled to vote at the Meeting. As of the Record Date, 26,288,080 shares of Common Stock were outstanding. Each stockholder is entitled to one vote for each share of Common Stock held of record on the Record Date for each proposal submitted for stockholder consideration at the Meeting. The presence, in person or by proxy, of the holders of a majority of the shares of Common Stock entitled to vote at the Meeting is necessary to constitute a quorum for the conduct of business at the Meeting. The election of each nominee for director requires a plurality of the total votes cast. Approval of the advisory vote on the compensation of the Company’s named executive and any other matter (other than the election of directors) submitted to the stockholders for their consideration at the Meeting requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the Meeting and entitled to vote on the subject matter thereof. Abstentions will be considered shares present for purposes of determining whether a quorum is present at the Meeting and, with respect to a matter other than the election of directors, will have the same effect as a vote against a motion presented at the Meeting. With respect to the election of directors, an abstention will have no effect. Broker non-votes will be considered shares present for purposes of determining whether a quorum is present at the Meeting, but will be considered as shares not entitled to vote and will, therefore, not be considered in the tabulation of votes.

 

 

 

 

All shares represented by properly executed proxies will, unless such proxies have previously been revoked, be voted at the Meeting in accordance with the directions on the proxies. A proxy may be revoked at any time prior to final tabulation of the votes at the Meeting. Stockholders may revoke proxies by written notice to the Secretary of the Company, by delivery of a proxy bearing a later date, or by personally appearing at the Meeting and casting a contrary vote. The persons named in the proxies will have discretionary authority to vote all proxies with respect to additional matters that are properly presented for action at the Meeting.

 

The executive officers and directors of the Company as a group own or may be deemed to control approximately 0.10% of the outstanding shares of Common Stock of the Company. Each of the executive officers and directors has indicated his intent to vote all shares of Common Stock owned or controlled by him in favor of the election of the nominees for the Board of Directors of the Company set forth herein and in favor of the advisory approval of the compensation of the Company’s named executives as described herein.

 

The proxy solicitation is made by and on behalf of the Board. Solicitation of proxies for use at the Meeting may be made in person or by mail, telephone or telegram, by officers and regular employees of the Company. Such persons will receive no additional compensation for any solicitation activities. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of Common Stock beneficially owned by others to forward to such beneficial owners. The Company may reimburse persons representing beneficial owners of Common Stock for their costs of forwarding solicitation materials to such beneficial owners. The Company will bear the entire cost of the solicitation of proxies, including the preparation, assembly, printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to stockholders.

 

COMMON STOCK OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding the beneficial ownership of the Common Stock as of March 15, 2017, with respect to (i) each person known by the Company to be the beneficial owner of more than 5% of the Common Stock, (ii) each of the Company’s directors and nominees for director, (iii) each Named Executive Officer (as defined below under “EXECUTIVE COMPENSATION - Summary Compensation”) and (iv) all directors and executive officers as a group. All information is based upon ownership filings made by such persons with the Securities and Exchange Commission (the “Commission”) or upon information provided by such persons to the Company.

 

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Name and Address of Beneficial Owner (1)

  Number of Shares Amount and Nature of Beneficial Ownership     Percentage of Common Stock Owned(2)  
Carl C. Icahn
767 Fifth Avenue
New York, New York 10153
    17,824,678 (3)     67.81 %
Hunter C. Gary     --       *  
Peter S. Liebert, M.D     8,834       *  
Tara Elias Schuchts     --       *  
Jack G. Wasserman     10,000 (4)     *  
David Blitz     5,000 (4)     *  
All executive officers and directors as a group (5 persons)     23,834       0.09 %

 

 

* Less than one percent

 

(1)       Except as otherwise indicated above, the address of each stockholder identified above is c/o the Company, 767 Fifth Avenue, Suite 4700, New York, NY 10153. Except as indicated in the other footnotes to this table, the persons named in this table have sole voting and investment power with respect to all shares of Common Stock.

 

(2)       Share ownership in the case of each person listed above includes shares issuable upon the exercise of options held by such person as of March 15, 2017, that may be exercised within 60 days after such date for purposes of computing the percentage of Common Stock owned by such person, but not for purposes of computing the percentage of Common Stock owned by any other person. None of the persons listed above held options as of March 15, 2017.

 

(3)       Based on the most recent filings of SEC Form 4 and Schedule 13D by the reporting party. Includes 7,653,193 shares of Common Stock held by High River Limited Partnership and 7,538,692 shares of Common Stock held by Barberry Corp. Mr. Carl Icahn is the sole shareholder of Barberry Corp. and Barberry Corp. owns 100% of the equity in Hopper Investments L.L.C. which is the general partner of High River Limited Partnership.

 

(4)       Based on the most recent filing of SEC Form 4 by the reporting party.

 

ELECTION OF DIRECTORS

 

(Proposal 1)

 

The directors to be elected at the Meeting will serve until the next Annual Meeting of Stockholders or until their successors are duly elected and qualified. Properly executed proxies not marked to the contrary will be voted "FOR" the election to the Board of each nominee. Management has no reason to believe that any of the nominees will not be a candidate or will be unable to serve. However, in the event that any of the nominees should become unable or unwilling to serve as a director, the proxy will be voted for the election of such person or persons as shall be designated by the current directors. The nominees for the Board of the Company are as follows:

 

  Hunter C. Gary   Tara Elias Schuchts  
  Peter S. Liebert   Jack G. Wasserman  

 

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Information about the foregoing nominees is set forth under “MANAGEMENT” below.

 

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION TO THE BOARD OF ALL NOMINEES NAMED ABOVE.

 

Board Meetings, Committees and Director Independence

 

The Board held three meetings in 2016. In 2016, each director attended at least seventy-five percent (75%) of the aggregate of (i) the total number of meetings of the Board, plus (ii) the total number of meetings held by all committees of the Board on which the director served.

 

The Company does not have a policy with respect to Board members’ attendance at annual meetings of stockholders. Three members of the Board attended the Company’s last annual meeting of stockholders in January 2016.

 

Directors are elected by the stockholders of Cadus at each annual meeting of stockholders and serve until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier removal or resignation.

 

The Board has a Compensation Committee, consisting of Messrs. Liebert and Wasserman, which makes recommendations regarding salaries and incentive compensation for employees of and consultants to the Company. The Compensation Committee does not have a charter. Because in 2016, Cadus had no officers other than Hunter C. Gary, its President and Chief Executive Officer and David Blitz, who serves in a consultative capacity as the Company’s Treasurer and Secretary, the Compensation Committee held no formal meetings in 2016, but did have several informal discussions.

 

The Company does not have a separately-designated standing nominating committee or a committee performing similar functions. Because of the small size of the Board of Directors, the Board of Directors performs this function. The Board of Directors considers certain factors when selecting candidates for director positions, including, but not limited to, the current composition and diversity of skills of the Board of Directors, the expertise and experience of a director leaving the Board of Directors, and the expertise required in connection with a particular corporate need for specific skills. The Board of Directors considers the following characteristics when considering a prospective candidate for the Board: (i) a desire to serve on the Board of Directors primarily to contribute to the growth and prosperity of the Company and help create long-term value for its shareholders; (ii) business or professional knowledge and experience that will contribute to the effectiveness of the Board of Directors; (iii) the ability to understand and exercise sound judgment on issues related to the goals of the Company; and (iv) a willingness and ability to devote the time and effort required to serve effectively on the Board of Directors, including preparation for and attendance at Board meetings.

 

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The Board of Directors will consider stockholder nominations for directors timely given in writing to the Company prior to the annual meeting of stockholders. To be timely, the stockholder’s nomination must be delivered, to the attention of the President of the Company, within the time permitted for submission of a stockholder proposal as described in the Company’s proxy statement and filings with the Securities and Exchange Commission. Such notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residential address of each such person, (ii) the principal occupation or employment of such person, (iii) the number of shares of the Company that are beneficially owned by such person and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and (b) as to the stockholder giving the notice (i) the name and address of such stockholder and (ii) the number of shares of the Company that are beneficially owned by such stockholder (and, if the stockholder is not a record holder of the shares, verification of ownership from the record holder). The President of the Company will forward such notice on to one or more of the directors for screening and review and such director’s or directors’ determination whether to recommend that the full Board of Directors consider the nomination contained in such notice.

 

In the ordinary course, absent special circumstances or a change in the criteria for Board membership, the Board of Directors may renominate incumbent directors who continue to be qualified for Board service and are willing to continue as directors.

 

The Company does not have a separately-designated standing audit committee or a committee performing similar functions. The entire Board of Directors of the Company acts as the audit committee. The Board of Directors of the Company has determined that it does not have an "audit committee financial expert" as such term is defined in the rules adopted by the Securities and Exchange Commission requiring companies to disclose whether or not at least one member of the audit committee is an "audit committee financial expert." The Board of Directors believes that the aggregate technical, commercial and financial experience of its members, together with their knowledge of the Company, provides the Board with the ability to monitor and direct the goals of the Company and to protect the best interests of its shareholders and that its members are fully qualified to monitor the performance of management, the public disclosures by the Company of its financial condition and performance, the Company's internal accounting operations and its independent auditors. In addition, the Board of Directors is authorized to engage independent financial consultants, auditors and counsel whenever it believes it is necessary and appropriate to do so.

 

Each non-employee director receives $6,000 in annual compensation, payable quarterly in arrears, and the lead independent director receives an additional $1,500 in annual compensation.

 

Cadus has the following directors: Hunter C. Gary, Peter S. Liebert, Tara Elias Schuchts and Jack G. Wasserman, who is also the lead independent director. Each of the directors, other than Hunter C. Gary, meets the standards for independence set forth in the Nasdaq Listing Rules. The entire Board of Directors of the Company acts as the audit committee. Each of the directors, except for Hunter C. Gary, meets the standards for independence for audit committee members set forth in the Nasdaq Listing Rules.

 

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Stockholder Communications with the Board of Directors

 

Although the Company does not have a formal procedure for shareholder communication with the Board, the Company’s Board of Directors has always been, and will remain, open to communications from the Company's stockholders. In general, members of the Board and the Chief Executive Officer are accessible by mail in care of the Company. Any matter intended for the Board, or for any individual member or members of the Board, should be directed to the Company's Chief Executive Officer with a request to forward the communication to the intended recipient. Such communications will be screened by the Chief Executive Officer for appropriateness before either forwarding to or notifying the members of the Board of receipt of a communication. Please note that the foregoing procedure does not apply to (i) stockholder proposals pursuant to Exchange Act Rule 14a-8 and communications made in connection with such proposals or (ii) service of process or any other notice in a legal proceeding. For information concerning stockholder proposals, see “Stockholder Proposals for 2018 Annual Meeting.”

 

MANAGEMENT

 

Information with respect to the executive officers, directors and nominees for director of the Company as of March 15, 2017 is set forth below:

 

Name   Age   Position
Hunter C. Gary**     42   Director, President and Chief Executive Officer
Peter S. Liebert, M.D.**(1)     81   Director
Tara Elias Schuchts**     53   Director
Jack G. Wasserman**(1)(2)     80   Director
David Blitz     85   Treasurer and Secretary

 

 

**Nominee for election to the Board

(1) Member of the Compensation Committee.

(2) Lead independent director.

 

Hunter C. Gary became a director of Cadus in February 2014 and President and Chief Executive Officer of Cadus in March 2014. Mr. Gary has served as Senior Vice President of Icahn Enterprises L.P. (“IEP”), a master limited partnership and diversified holding company engaged in ten primary business segments which include investment, automotive, energy, gaming, railcar, mining, food packaging, metals, real estate and home fashion, since November 2010. At IEP, Mr. Gary is responsible for monitoring portfolio company operations, implementing operational value enhancement as well as leading a variety of operational activities for IEP which focus on a variety of areas including, technology, merger integration, supply chain, organization transformation, real estate, recruiting and executive compensation. Mr. Gary has served as President of IEP’s Real Estate segment since November 2013 and has led the information technology and cybersecurity group at IEP since September 2015 while serving as President of Sfire Technology LLC (f.k.a. IEH Technology LLC) since December 2015. Prior to Cadus and IEP, Mr. Gary had been employed by Icahn Associates Corporation, an affiliate of IEP, in various roles since June 2003, most recently as the Chief Operating Officer of Icahn Sourcing LLC (n.k.a. Insight Portfolio Group LLC). From 1997 to 2002, Mr. Gary worked, most recently as a Managing Director, at Kaufhof Warenhaus AG, a former subsidiary of the Metro Group which was acquired by Hudson’s Bay Company. Mr. Gary has been a director of: The Pep Boys – Manny, Moe & Jack (“PBYS”), an automotive parts installer and retailer, since February 2016; IEH Auto Parts LLC (“IEHAP”), a distributor of automotive aftermarket parts, since June 2015; Ferrous Resources Limited (“Ferrous”), an iron ore mining company, since June 2015; Herbalife Ltd. (“HLF”), a nutrition company, since April 2014; PSC Metals Inc. (“PSC”), a metal recycling company, since May 2012; XO Holdings (“XO”), a competitive provider of telecom services, since September 2011; Tropicana Entertainment Inc. (“TPCA”), a company that is primarily engaged in the business of owning and operating casinos and resorts, since March 2010; and WestPoint Home LLC, a home textiles manufacturer, since June 2007. Mr. Gary has also been a member of the Executive Committee of ACF Industries LLC (“ACF”), a railcar manufacturing company, since July 2015. Mr. Gary was previously a director of: Federal-Mogul Holdings Corporation (“FDML”), a supplier of automotive powertrain and safety components, from October 2012 to February 2016; Voltari Corporation (“VLTC”), a mobile data services provider, from October 2007 to September 2015; American Railcar Industries, Inc. (“ARI”), a railcar manufacturing company, from January 2008 to June 2015; and Viskase Companies Inc. (“VKSC”), a meat casing company, from August 2012 to June 2015. ACF, ARI, Cadus, FDML, Ferrous, IEHAP, IEP, PBYS, PSC, TPCA, VKSE, VLTC, WPH and XO each are indirectly controlled by Carl C. Icahn. Mr. Icahn also has a non-controlling interest in HLF through the ownership of securities. Mr. Gary received his Bachelor of Science degree with senior honors from Georgetown University as well as a certificate of executive development from Columbia Graduate School of Business. The Board of Directors has concluded that Mr. Gary should serve as a director of Cadus because of his experience with respect to real estate matters along with his extensive experience in dealing with operations and oversight matters for a variety of companies, which, in addition to his experience as a director of various companies, enables him to advise the Board of Directors of Cadus on a range of matters including operations and oversight.

 

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Peter S. Liebert, M.D., M.B.A., became a director of Cadus in April 1995. Dr. Liebert has been a pediatric surgeon in private practice since 1968. He served as Chief of Pediatric Surgery at the White Plains Hospital Center in White Plains, New York from 1998 to 2005 and at the Stamford Hospital in Stamford, Connecticut from 2002 to 2015. He is a past president of the Westchester County Surgical Society. He is also a past president of the Westchester County Medical Society and is currently Chairman of its Finance Committee. He is a physician member of the Westchester County Board of Health and is Chairman of its Nominating Committee. He is a founder and the Chairman of the Board of RxVitamins, Inc., a vitamin and supplement company with international sales in Europe, Asia, South America, and the Middle East. He is the sole author of a standard textbook in pediatric surgery and is a member of the editorial board of The Journal of Pediatric Surgery. Dr. Liebert served as a director of ImClone Systems Incorporated, a biotechnology company, from October 2006 to November 2008. Dr. Liebert holds an M.D. from Harvard University Medical School, an M.B.A. with Honors in finance and healthcare management from the Hagan School of Business at Iona College in New Rochelle, New York, and a B.A. cum laude from Princeton University. He is currently a member of the graduate school faculty at Iona College as Adjunct Assistant Professor of Management. The Board of Directors has concluded that Dr. Liebert should serve as a director of Cadus because of his experience on the Board of Directors of Cadus and as a director of another public company.

 

Tara Elias Schuchts has served as a director of Cadus since April 2016. She is a real estate agent with over 25 years of experience, who specializes in high-end residential properties in South Florida. Since 2011, she has served as a Realtor Associate of Douglas Elliman Real Estate (“Douglas Elliman”) and was ranked #6 in Florida real estate sales by Douglas Elliman in 2012 as well as named by them as a “Top Producer” for 2013. Prior to that, she was a Realtor Associate at Coldwell Banker Residential Real Estate (f.k.a Wimbish Realtors and Riteway Realtors) from 1993 until 2011, where she was ranked in the top 4% of Coldwell Banker’s real estate professionals worldwide for 2003. In 1991, Mrs. Elias Schuchts received her real estate license from the Florida Real Estate Commission. Tara Elias Schuchts received a B.A. in Communications from Southern Methodist University. The Board of Directors has concluded that Ms. Schuchts should serve as a director of Cadus because of her experience with the South Florida residential real estate market.

 

Jack G. Wasserman has served as a director of Cadus since May 1996 and as the lead independent director of its Board of Directors since March 2014. Mr. Wasserman is an attorney and a member of the Bars of New York, Florida, and the District of Columbia. From 1966 until 2001 he was a senior partner of Wasserman, Schneider, Babb & Reed, a New York-based law firm, and its predecessors. Since September 2001 Mr. Wasserman has been engaged in the practice of law as a sole practitioner. Since 1993 he has been a director of Icahn Enterprises G.P., Inc. (formerly American Property Investors, Inc.), the general partner of Icahn Enterprises L.P. (formerly American Real Estate Partners, L.P.). Mr. Carl C. Icahn controls Icahn Enterprises G.P. and its subsidiaries. Since Icahn Enterprises L.P. owns the Tropicana hotels and casinos, Mr. Wasserman has been licensed by the gaming regulators of the states of New Jersey, Nevada, Indiana, Louisiana and Mississippi. On March 11, 2004, Mr. Wasserman was appointed to the Board of Directors of Triarc Companies, Inc. and was elected to the Board in June 2004; in 2008 Triarc acquired Wendy’s Inc. and changed its name to Wendy’s/Arby’s Group Inc. which, in turn, became The Wendy's Company after its sale of Arby's in 2011. Thereafter, Mr. Wasserman served until June 2015 as a director and member of Wendy’s audit and compensation committees and as chairman of its ERISA committee. Mr. Wasserman received a B.A. from Adelphi University, a J.D. from Georgetown University Law Center, and a Graduate Diploma from Johns Hopkins University School of Advanced International Studies in Bologna, Italy. In 2007 he received a professional Certificate in Financial Analysis from New York University’s School of Continuing and Professional Studies. The Board of Directors has concluded that Mr. Wasserman should serve as a director of Cadus because of his considerable experience as a lawyer and experience as a director of public companies.

 

David Blitz became Treasurer and Secretary of Cadus in May 2004. From May 2004 until March 2014, he also served as acting President and Chief Executive Officer of Cadus. Mr. Blitz, a certified public accountant, is a retired partner of Deloitte & Touche, was employed by Joel Popkin & Co., P.C. from January 1990 until November 2015, and following Citrin Cooperman’s acquisition of Joel Popkin & Co. in November 2015 was employed by Citrin Cooperman until March 2016. Mr. Blitz, as an employee of Joel Popkin & Co., P.C. and subsequently, has been performing Cadus Corporation's internal accounting since March 2000. He earned his B.A. in Economics from Brooklyn College.

 

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EXECUTIVE COMPENSATION

 

Summary Compensation

 

The following table sets forth certain information concerning the compensation paid or accrued by Cadus for services rendered to Cadus in all capacities for the fiscal years ended December 31, 2016 and 2015, by (i) all individuals serving as Cadus’s principal executive officer or principal financial officer, or acting in a similar capacity, (ii) the three most highly compensated executive officers other than the executive officers in clause (i), who were serving as executive officers at the end of such fiscal year and (iii) up to two additional most highly compensated executive officers who would have otherwise been included in clause (ii) but for the fact that they were not serving as executive officers at the end of such fiscal year (collectively, the “Named Executive Officers”):

 

Summary Compensation Table For 2016 and 2015 Fiscal Years

 

Name and Principal Position Year   Salary ($)   Bonus ($)    

All Other
Compensation ($)

   

Total ($)

 
Hunter C. Gary (1)     2016        $ 200,000       --       --     $ 200,000  
President and Chief Executive Officer     2015        $ 200,000       --       --     $ 200,000  
David Blitz (2)     2016        $ 25,000       --       --     $ 25,000  
Treasurer and Secretary     2015        $ 25,000       --       --     $ 25,000  

 

 

(1) Mr. Hunter C. Gary, from his appointment in March 2014, has served as President and Chief Executive Officer of the Company at the rate of $200,000 per annum. According to Mr. Gary’s employment agreement with the Company, any bonus to Mr. Gary will be determined from time to time by the Company’s Board of Directors in its sole discretion.

(2) Mr. David Blitz had served as the Company’s acting President and Chief Executive Officer, Treasurer and Secretary from May 2004 until March 2014 at the rate of $25,000 per annum. From March 2014, when Hunter C. Gary was appointed President and Chief Executive Officer of the Company, Mr. Blitz has continued to serve as the Company’s Treasurer and Secretary at the rate of $25,000 per annum.

 

Grants of Plan Based Awards

 

There were no grants by Cadus of awards to Named Executive Officers during the fiscal year ended December 31, 2016.

 

Outstanding Equity Awards at Fiscal Year-End

 

No Named Executive Officer had any outstanding Cadus equity awards as of December 31, 2016.

 

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Option Exercises and Stock Vested

 

During the fiscal year ended December 31, 2016, no Named Executive Officer exercised any stock option, stock appreciation right or similar instrument and no Cadus stock (including any restricted stock, restricted stock unit or similar instrument) vested for any Named Executive Officer.

 

Director Compensation

 

The following table sets forth certain information concerning the compensation paid or accrued by Cadus for services rendered to Cadus by its directors (other than directors who are also Named Executive Officers) in all capacities for the fiscal year ended December 31, 2016:

 

Director Compensation Table for 2016 Fiscal Year

 

Name   Fees Earned or Paid
in Cash ( $) (1)
    All Other
Compensation ($)
    Total ($)  
James R. Broach   $ 1,500       --     $ 1,500  
Peter S. Liebert   $ 6,000       --     $ 6,000  
Tara Elias Schuchts   $ 4,500             $ 4,500  
Jack G. Wasserman   $ 7,500       --     $ 7,500  

 

 

(1) In 2016, each non-employee director received $6,000 in annual compensation, with $1,500 in additional annual compensation paid to the lead independent director.

 

Compensation Committee Interlocks and Insider Participation

 

The Company’s Compensation Committee is composed of Peter Liebert and Jack G. Wasserman. Neither Mr. Liebert nor Mr. Wasserman is or was an officer or employee of the Company.

 

Compensation Discussion and Analysis

 

Introduction

 

The Compensation Committee of the Board of Directors of Cadus is responsible for determining and administering the Company’s compensation policies for the remuneration of Cadus’ officers. The Compensation Committee annually evaluates individual and corporate performance from both a short-term and long-term perspective. In 2016, Cadus had no officers other than Hunter C. Gary, its President and Chief Executive Officer from March 2014 with a salary of $200,000 per annum, and David Blitz, who served in a consultative capacity as the Company’s President and Chief Executive Officer, Treasurer and Secretary until Mr. Gary’s appointment as President and Chief Executive Officer in March 2014 and thereafter as the Company’s Treasurer and Secretary, in each case, at the rate of $25,000 per annum. Accordingly, the following report of the Compensation Committee is not entirely applicable to calendar year 2016 but is presented for an historical perspective.

 

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Philosophy

 

Cadus’ executive compensation program historically has sought to encourage the achievement of business objectives and superior corporate performance by the Cadus’ executives. The program enables Cadus to reward and retain highly qualified executives and to foster a performance-oriented environment wherein management’s long-term focus is on maximizing stockholder value through equity-based incentives. The program calls for consideration of the nature of each executive’s work and responsibilities, unusual accomplishments or achievements on the Company’s behalf, years of service, the executive’s total compensation and the Company’s financial condition generally.

 

Executive Compensation

 

Cash-Based Compensation . Base salary represents the primary cash component of an executive employee’s compensation, and is determined by evaluating the responsibilities associated with an employee’s position at the Company and the employee’s overall level of experience. In addition, the Committee, in its discretion, may award bonuses.

 

Compensation of the Chief Executive Officer

 

The philosophy, factors and criteria of the Compensation Committee generally applicable to the Company’s officers have historically been applicable to the Chief Executive Officer. However, in 2014, the Company’s then acting President and Chief Executive Officer, David Blitz, served on a consultative basis until March 2014 at the rate of $25,000 per annum. In March 2014, David Blitz resigned as President and Chief Executive Officer, and the Company’s Board of Directors appointed Hunter C. Gary, then a director of the Company, as the Company's President and Chief Executive Officer with a salary of $200,000 per annum. According to Mr. Gary’s employment agreement with the Company, any bonus to Mr. Gary will be determined from time to time by the Company’s Board of Directors in its sole discretion. Mr. Gary has not received any bonus or any equity-based compensation. Since March 2014, David Blitz has continued to serve in a consultative capacity as the Company’s Treasurer and Secretary at the rate of $25,000 per annum..

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Since January 1, 2015, except for transactions in respect of the brokerage services of Bayswater Brokerage Florida LLC as described below, the Company has not been a participant in any transaction with a “related person” (as defined in Item 404 of Regulation S-K) where the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, nor is any such transaction currently proposed. The Company recognizes that related person transactions can present potential or actual conflicts of interest. Accordingly, if a proposed transaction appears to or does involve a related person, and the amount involved exceeds $60,000, the transaction must be presented to the Board of Directors for its review and approval or ratification. The Board of Directors may retain and pay such independent advisors as it deems necessary to properly evaluate the proposed transaction, including, without limitation, outside legal counsel and financial advisors to determine the fair value of the transaction. Related party transactions where the amount involved does not exceed $60,000 do not require formal Board of Directors approval, but must be disclosed to the Board of Directors. The foregoing procedures are designed to ensure that transactions with related persons are fair to the Company and in the Company’s best interests.

 

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Bayswater Brokerage Florida LLC (“Bayswater”) is providing brokerage services to the Company. Carl C. Icahn, indirectly the controlling shareholder of Cadus, is also indirectly the principal shareholder of Bayswater; Jack Wasserman, a director and the lead independent director of Cadus is a director of Bayswater’s indirect parent; and Hunter C. Gary, a director and President and Chief Executive Officer of Cadus, is a senior vice president of Bayswater’s indirect parent and Vice President, Secretary and Treasurer of Bayswater. Barberry Corp., of which Carl Icahn is the sole shareholder, is a significant shareholder of Cadus. Pursuant to an agreement between Barberry Corp. and Cadus, to the extent Bayswater receives any compensation for such brokerage services, Barberry Corp. will make capital contributions to Cadus for the full amount of any such compensation received by Bayswater. Barberry Corp. will not be issued stock of the Company or any other consideration in connection with any such capital contributions. In connection with closings for the acquisition of residential properties in 2014, Bayswater received an aggregate of $728,900 in respect of brokerage services provided to Cadus, and capital contributions for this amount were made to Cadus by Barberry Corp. Bayswater did not receive any amounts from Cadus in respect of brokerage services in 2015 and 2016.

 

In March 2014, the Company’s Board of Directors appointed Hunter C. Gary, a director of the Company, as the Company's President and Chief Executive Officer with a salary of $200,000 per annum. According to Mr. Gary’s employment agreement with the Company, any bonus to Mr. Gary will be determined from time to time by the Company’s Board of Directors in its sole discretion. Mr. Gary has not received any bonus or any equity-based compensation.

 

In May 2004, the Board of Directors appointed David Blitz the acting President, Chief Executive Officer, Treasurer and Secretary of the Company at the rate of $25,000 per annum for the interim period during which the Company continued its search for a new Chief Executive Officer. In 2013, the Company paid $25,000 to Mr. Blitz in such capacities. From March 2014, when Hunter C. Gary was appointed President and Chief Executive Officer of the Company, Mr. Blitz has continued to serve as the Company’s Treasurer and Secretary at the rate of $25,000 per annum. Mr. Blitz is a former employee of Citrin Cooperman (which acquired in November 2015 Joel Popkin & Co., P.C., Mr. Blitz’s prior employer) and continues to perform the Company’s internal accounting as he has done since March 2000. The Company paid Citrin Cooperman $5,000 for such accounting services in 2016.

 

Report of the Board of Directors in Lieu of Report of an Audit Committee

 

The Company does not have an audit committee and the Board has not adopted a written charter for an audit committee. The entire Board of Directors of the Company acts as the audit committee. The members of the Board of Directors are Hunter C. Gary, Peter S. Liebert, Tara Elias Schuchts and Jack G. Wasserman.

 

The Board of Directors has reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2016 and management’s assessment of the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2016 with both management and the Company’s independent registered public accounting firm , Baker Tilly Virchow Krause, LLP (the “Auditors”). The Board also discussed with the Auditors the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees.

 

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The Board received the written disclosures and the letter from the Company’s Auditors, required by applicable requirements of the Public Company Accounting Oversight Board regarding the Auditors’ communication with the Board concerning independence; and has discussed with the Auditors their independence.

 

The following table sets forth the aggregate fees incurred by the Company for the services of its principal accountants in 2016 and 2015:

 

    2016     2015  
Audit Fees   $ 62,684     $ 58,465  
Audit-Related Fees   $ --     $ --  
Tax Fees   $ --     $ --  
All Other Fees   $ --     $ --  

 

Audit fees consist of services rendered to the Company for the audit of the Company’s annual consolidated financial statements, reviews of the Company’s quarterly financial statements and related services.

 

The Company’s policy is that, before accountants are engaged by the Company to render audit or non-audit services, the engagement is approved by Cadus’ Board of Directors. Cadus’ Board of Directors approved Baker Tilly Virchow Krause, LLP’s engagement as the Company’s independent registered accounting firm for the fiscal year ending December 31, 2016 before Baker Tilly Virchow Krause, LLP was so engaged. All of the 2016 services described above were approved by the Board of Directors.

 

The Board of Directors has considered the compatibility of fees paid to its principal accountants in connection with its principal accountants’ independence.

 

Based on the foregoing review and discussions, the Board of Directors approved that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 to be filed with the Securities and Exchange Commission.

 

By the Board of Directors:

 

Hunter C. Gary

Peter S. Liebert

Tara Elias Schuchts

Jack G. Wasserman

 

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INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

 

On April 6, 2017, the Company was informed by Baker Tilly Virchow Krause, LLP (“Baker Tilly”) of Baker Tilly’s decision to decline to stand for reappointment as independent registered accountants for the Company for the current fiscal year. The Company is in the process of selecting another independent accounting firm for the current fiscal year.

 

The principal accountant’s reports of Baker Tilly on the financial statements of the Company as of and for the years ended December 31, 2016 and December 31, 2015 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

 

During the years ended December 31, 2016 and December 31, 2015 and through April 6, 2017, there were no disagreements with Baker Tilly on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to Baker Tilly’s satisfaction would have caused Baker Tilly to make reference thereto in connection with its reports on the financial statements for such years. During the years ended December 31, 2016 and December 31, 2015 and from December 31, 2016 through April 6, 2017, there were no reportable events of the types described in Item 304(a)(1)(v) of Regulation S-K.

 

Representatives of Baker Tilly have advised that they will be present at the Meeting and the Company expects that representatives of the independent accounting firm to be selected for the current year will also be present at the Meeting. The representatives of Baker Tilly and the independent accounting firm to be selected for the current year will be afforded an opportunity to make a statement and will be available to respond to appropriate inquiries from stockholders.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers, and persons who own more than ten percent of the Common Stock to file with the Securities and Exchange Commission initial reports of beneficial ownership on Form 3 and reports of changes in beneficial ownership on Form 4 or Form 5. Reporting persons are required to furnish the Company with copies of all such forms that they file. To the Company’s knowledge, based solely on a review of copies of such filed reports furnished to the Company, all of the Company’s directors, officers and greater than ten percent beneficial owners made all required filings during or with respect to fiscal year 2016 in a timely manner.

 

BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

 

The Company’s chief executive officer is a director, but does not act as a chairman of the Board of Directors. The Company’s Board of Directors does not include a chairman, but does include a lead independent director who, in consultation with the chief executive officer, prepares the agendas for meetings of the Board of Directors, presides at meetings of the Board of Directors, is apprised of inquiries from shareholders and, when necessary and appropriate, is involved in responding to any such inquiries. The lead independent director may also request that certain documents be sent to all other directors, and is responsible for signing engagement letters for accountants, auditors, legal counsel, and such other persons as the Company or the Board of Directors may engage.

 

The Board of Directors takes an active role in risk oversight related to the Company and much of this role has been in overseeing the protection of the Company's intellectual property, the development and implementation of cash management policies, and the acquisition of residential properties in connection with the development of its real estate business.

 

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ADVISORY VOTE TO APPROVE THE COMPENSATION

OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

AS DISCLOSED IN THIS PROXY STATEMENT

 

(Proposal 2)

 

The Company is providing its stockholders with an opportunity to approve or not approve, on an advisory, non-binding basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement. This proposal, which is often referred to as a “say-on-pay” proposal, is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

 

This vote is not intended to address any particular component of any compensation package, but rather the overall compensation of the Company’s named executive officers and the Company’s compensation philosophy, policies and practices, as disclosed under the “Executive Compensation” section of this Proxy Statement. The Company has two officers: (i) its President and Chief Executive Officer and (ii) its Treasurer and Secretary who serves in a consultative capacity. The Company urges stockholders to read the section on Executive Compensation, including the Compensation Discussion and Analysis and the compensation table. The approval or disapproval of this proposal by the stockholders will not require the Board of Directors or the Compensation Committee to take any action regarding the Company’s executive compensation practices. The final decision on the compensation and benefits of the Company’s executive officers and on whether, and if so, how, to address any shareholder disapproval remains with the Board of Directors and the Compensation Committee. Although this resolution is non-binding, the Board of Directors will review and consider the voting results when making future executive compensation decisions. The affirmative vote of a majority of the votes properly cast on this proposal at the Annual Meeting is required to approve the proposal.

 

RESOLUTION TO APPROVE THE COMPENSATION

OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

 

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation table and narrative discussion is hereby APPROVED.

 

THE BOARD RECOMMENDS THAT YOU VOTE

FOR THE RESOLUTION APPROVING THE COMPENSATION

OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

 

STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING

 

Stockholders who wish to present proposals at the 2018 annual meeting of stockholders and who wish to have their proposals presented in the proxy statement distributed by the Board in connection with such annual meeting must submit their proposals in writing, to the attention of the President of the Company, on or before December 13, 2017. If the date of next year’s annual meeting of stockholders is changed by more than 30 days from the date of this year’s meeting, then the deadline is a reasonable time before the Company begins to print and mail proxy materials. In addition, if the Company receives notice of a shareholder proposal after February 26, 2018, it will be considered untimely pursuant to Rules 14a-4(c) under the Securities Exchange Act of 1934, and the persons named in the proxies solicited by the Board of Directors for the 2018 annual meeting may exercise discretionary voting power with respect to the proposal. If the date of next year’s annual meeting of stockholders has been changed by more than 30 days from the date of the 2017 annual meeting, written notice of a shareholder proposal must be received by the Company a reasonable time before the Company begins to print and mail proxy materials for next year’s annual meeting of stockholders to be considered timely pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934.

 

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ADDITIONAL INFORMATION

 

The Company’s Annual Report, including certain financial statements, is being mailed concurrently with this Proxy Statement to all persons who were stockholders of record at the close of business on April 6, 2017, which is the record date for voting purposes. The Annual Report does not constitute a part of the proxy soliciting material.

 

Upon the written request of any stockholder, the Company will provide, without charge, a copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Written requests for such report should be directed to the Company, 767 Fifth Avenue, New York, New York 10153.

 

GENERAL

 

The Board knows of no other matters which are likely to be brought before the Meeting. If, however, any other matters are properly brought before the Meeting, the persons named in the enclosed proxy or their substitutes shall vote thereon in accordance with their judgment pursuant to the discretionary authority conferred by the form of proxy.

  

  By Order of the Board of Directors
   
  Hunter C. Gary
  President

 

New York, New York

April 12, 2017

 

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ANNUAL MEETING OF STOCKHOLDERS OF CADUS CORPORATION May 24, 2017 NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL : Copies of the Notice of Annual Meeting and Proxy Statement, Proxy Card and Annual Report on Form 10-K are available in the Investors Relations section of Cadus Corporation’s corporate website at http://www.caduscorp.com Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach and mail in the e nvelope provided 20430000000000000000 8 052417 THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL LISTED NOMINEES IN PROPOSAL 1 AND A VOTE “FOR” PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE Election of Directors: O Hunter C. Gary O Peter S. Liebert O Tara Elias Schuchts O Jack G. Wasserman 2. Proposal to approve, on a non-binding advisory basis, the compensation of the Company's named executive officers as disclosed in this proxy statement. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED PREPAID ENVELOPE OR DELIVER TO: American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, New York 11219. FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: NOMINEES:

 

 

 

PROXY CADUS CORPORATION Annual Meeting of Stockholders May 24, 2017 at 2:30 PM THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD The undersigned hereby appoints Hunter C. Gary and/or Jack G. Wasserman as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of the Common Stock of Cadus Corporation held of record by the undersigned on April 6, 2017 at the Annual Meeting of Stockholders to be held on May 24, 2017 or at any adjournment thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. THIS PROXY IS CONTINUED ON THE REVERSE SIDE.