UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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x Preliminary Proxy Statement
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o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Materials Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
HMG/COURTLAND PROPERTIES, INC.
______________________________
(Exact Name of Registrant as Specified in its Charter)
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HMG/COURTLAND
PROPERTIES, INC.
1870 South
Bayshore Drive
Coconut Grove,
Florida 33133
(305) 854-6803
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD
OCTOBER 15, 2015
| TO THE SHAREHOLDERS: |
September
18, 2015
|
The
annual meeting of shareholders of HMG/Courtland Properties, Inc. (the “Company”) will be held at 10:30 A.M., on Thursday,
October 15, 2015, at the Ritz Carlton, 3300 SW 27th Avenue, Coconut Grove, Florida for the following purposes:
| I. | To
elect a Board of Directors; |
| II. | To
act upon the renewal of the Advisory Agreement between the Company and HMGA, Inc.; and |
| III. | To
transact such other business as may properly come before the meeting. |
The
record date for determining shareholders entitled to notice of and to vote at the annual meeting is September 14, 2015.
Enclosed
is a copy of the Company’s Annual Report to Shareholders (Form 10-K) for the fiscal year ended December 31, 2014.
It
is important, whether or not you plan to attend the meeting in person, that you fill in, sign and date the accompanying proxy
and return it promptly in the postage prepaid envelope which is enclosed for your convenience. The signing and mailing of the
proxy will not affect your right to vote your shares in person if you attend the meeting and desire to do so.
By
Order of the Board of Directors
Maurice
A. Wiener
President
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON OCTOBER 15, 2015.
Copies
of the Proxy Statement, Form of Proxy and our Annual Report to Shareholders are available at the home page of our website, www.hmgcourtland.com.
IMPORTANT
VOTING INFORMATION
If
you hold your shares through a broker, bank or other financial institution, the U.S. Securities and Exchange Commission (“SEC”)
has approved a New York Stock Exchange rule that changes the manner in which your vote in the election of directors will be handled
at our upcoming 2015 annual meeting of shareholders.
Shareholders
who hold Company shares through a broker, bank or other financial institution receive proxy materials and a voting instruction
form before each shareholder meeting. In the past, if you did not transmit your voting instructions before the shareholder meeting,
your broker was allowed to vote on your behalf on the election of directors and other matters considered to be routine.
Rule
for Shareholder Voting
Your
broker is no longer permitted to vote on your behalf on the election of directors unless you provide specific instructions by
completing and returning the voting instruction form. For your vote to be counted, you need to communicate your voting decisions
to your broker, bank or other financial institution before the date of the shareholder meeting.
PROXY STATEMENT
OF
HMG/COURTLAND
PROPERTIES, INC.
The accompanying
proxy is solicited by the Board of Directors for use at the annual meeting of shareholders and is being mailed with this Proxy
Statement to all shareholders on or about September 18, 2015. If a proxy card is properly signed and is not revoked by the shareholder,
the shares of common stock of the Company (the “Shares”) represented thereby will be voted at the meeting in accordance
with the instructions, if any, of the shareholder. If no contrary instructions are given, they will be voted for the election
of directors nominated by the Board of Directors and for approval of the renewal of the Advisory agreement (the “Advisory
Agreement”) between the Company and HMGA, Inc. (the “Adviser”). Any shareholder may revoke his proxy at any time
before it is voted by giving written notice of revocation to the Secretary of the Company.
Holders
of Shares of record at the close of business on September 14, 2015 are entitled to notice of and to vote at the meeting. On that
date, there were 1,035,593 Shares outstanding. Each Share is entitled to one vote on all business of the meeting. The holders
of a majority of the outstanding Shares, present in person or represented by proxy, will constitute a quorum at the meeting. Abstentions
and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented to shareholders, whereas broker non-votes are
not counted for purposes of determining whether a proposal has been approved.
As of
September 14, 2015, Transco Realty Trust (“Transco”) was the beneficial owner of 477,300 Shares, or 46% of the outstanding
Shares. The Company has been advised by its officers and nominees for directors, and their affiliated shareholders, Transco, HMGA,
Inc. and subsidiaries and T.G.I.F. Texas, Inc. (“T.G.I.F.”) that they intend to vote for the election of each of the
nominees and for the approval of the Advisory Agreement. Such shareholders own in the aggregate 631,834 shares, or 61% of the
outstanding Shares therefore, the Company is a “controlled company.” As a result, each of the nominees is expected
to be elected as a director and the Advisory Agreement is expected to be approved. As noted below, certain directors of the Company
are affiliated with principal shareholders of the Company and are principal shareholders, directors and officers of the Adviser.
See “Election of Directors” below for information concerning holders who may be deemed to own beneficially more than
5% of the outstanding Shares.
ELECTION
OF DIRECTORS
The entire
Board of Directors will be elected at the annual meeting of shareholders to serve until the next annual meeting of shareholders
and until the election and qualification of their successors. In the event any nominee should not continue to be available for
election, proxies may be voted for the election of a substitute nominee or the Board of Directors may elect to reduce the number
of directors. The Board of Directors has no reason to anticipate that any nominee will not be available for election. All of the
nominees, except Mr. Dusseau, have been elected previously by the shareholders.
An affirmative
vote by the holders of a majority of the Shares present-in-person-or-by proxy at the Annual Meeting of Shareholders is required
for the election of each director.
Our
Board of Directors unanimously recommends that the shareholders vote for the election of all five nominees for director.
Set forth
below is certain information about each director, each nominee for director and the Shares held by all directors, executive officers
and certain other shareholders.
In determining
to nominate the five nominees for election to the Board, our Board has considered the specific experiences and attributes of each
director listed below and, based on their direct personal experience, the insight and collegiality that each of the nominees brings
to board deliberations.
Maurice
Wiener, 73, has been Chairman of the Board of Directors and the Chief Executive Officer of the Company since 1974. He has
been President since 2014. He is also the chairman of the board and chief executive officer of the Adviser, executive trustee
of Transco, and a director of T.G.I.F. Mr. Wiener has provided the strategic vision in the development of our business over the
past thirty-seven years, and his familiarity with the Company’s business gives Mr. Wiener insights and experience valuable
to his service on the Board.
Larry
Rothstein, 62, has been a director since 1998. Mr. Rothstein was President, Treasurer and Secretary of the Company from 1983
to 2014. Mr. Rothstein has been a consultant to the Adviser since 2014. From 2010 to 2013 he was also a director, president, treasurer
and secretary of the Adviser, a trustee and vice president of Transco and a vice president of T.G.I.F. Texas, Inc. Mr. Rothstein
has significant familiarity with the Company and particular knowledge of the real estate and financial industries which are important
to his service on the Board.
Walter
G. Arader, 96, has been a director since 1977. Mr. Arader has been President of Walter Arader and Associates, which is a financial
and management consulting firm for more than the past five years. He is a member of the Audit Committee of our Board. Mr. Arader’s
experience with financial and management issues, as well as his being a member of our Audit Committee, are important to his service
on the Board.
Richard
M. Wiener, 74, was elected to the Board in 2010. Mr. Wiener (who is not related to Maurice Wiener) is a practicing attorney
in New York, specializing in real estate and commercial transactions for more than twenty-five years. He has broad experience
in real estate investment, development, financing and acquisitions. Mr. Wiener’s legal background and experience, and his
long outstanding involvement in the real estate industry is valuable to his service on the Board.
Charles
M. Dusseau, 64, is involved in a variety of business ventures capitalizing on his 35 plus years of experience in business,
finance, public affairs and international trade. He is currently the Managing Member of Lexington H.I. Partners, which owns and
operates a full-service Clarion Hotel in Lexington, Kentucky. He was a Founding Director and Vice Chairman of the Bank of Coral
Gables and also served as Director and Vice Chairman of Eastern National Bank (Miami, Florida) form 1999 to 2006. In the public
sector, Mr. Dusseau served as a Secretary of Commerce for the State of Florida, and as Commissioner to Miami-Dade County (Florida).
Mr. Dusseau’s multiple experiences will bring valuable insight to the board.
Shares
Held as of September 14, 2015
Name (6)(7) | |
Shares owned by the nominee or members of his family(1) | | |
Additional Shares in which the named person has, or participates in, the voting or investment power(2) | | |
Total Shares & percent of class | |
| |
| | | |
| | | |
| | | |
| | |
Maurice Wiener | |
| 45,846 | (4) | |
| 542,030 | (3)
(5) | |
| 587,876 | | |
| 56 | % |
| |
| | | |
| | | |
| | | |
| | |
Carlos Camarotti
| |
| 8,700 | (4) | |
| 0 | | |
| 8,700 | | |
| * | |
| |
| | | |
| | | |
| | | |
| | |
Larry Rothstein
| |
| 47,900 | (4) | |
| 0 | (3) | |
| 47,900 | | |
| 4 | % |
| |
| | | |
| | | |
| | | |
| | |
Walter G. Arader
| |
| 5,058 | (4) | |
| 0 | | |
| 5,058 | | |
| * | |
| |
| | | |
| | | |
| | | |
| | |
Richard N. Wiener
| |
| 3,000 | (4) | |
| 0 | | |
| 3,000 | | |
| * | |
| |
| | | |
| | | |
| | | |
| | |
Charles M. Dusseau | |
| 0 | | |
| 0 | | |
| 0 | | |
| * | |
| |
| | | |
| | | |
| | | |
| | |
All Directors and Executive Officers as a Group
| |
| 110,504 | (4) | |
| 542,030 | (4) | |
| 654,534 | | |
| 61 | % |
| |
| | | |
| | | |
| | | |
| | |
Transco Realty Trust 1870 S. Bayshore Drive Coconut Grove, FL 33133
| |
| 477,300 | (5) | |
| | | |
| 477,300 | | |
| 45 | % |
| |
| | | |
| | | |
| | | |
| | |
Comprehensive Financial Planning, Inc. 3950 Fairlane Drive Dacula, GA 30018
| |
| 129,044 | (8) | |
| | | |
| 129,044 | | |
| 12 | % |
| |
| | | |
| | | |
| | | |
| | |
* Less Than 1% | |
| | | |
| | | |
| | | |
| | |
| (1) | Unless otherwise indicated,
beneficial ownership is based on sole voting and investment power. |
| (2) | Shares listed in this column
represent shares held by entities with which the directors or officers are associated. Directors, officers and members of their
families have no ownership interest in these shares. |
| (3) | This number includes the
number of shares held by Transco (477,300 Shares), HMGA, Inc. (54,530 shares) and T.G.I.F. (10,200 shares). Several of the directors
of the Company are directors, trustees, officers or shareholders of those firms. |
| (4) | This number includes options
granted under the 2011 Stock Option Plan. These options have been granted to Mr. M. Wiener, 10,200; Mr. Rothstein, 7,500; 5,000
to Mr. R. Wiener. Reference is made to “Compensation of Directors and Executive Officers and Other Transactions” for
further information about the 2011 Stock Option Plan. |
| (5) | Mr. Maurice Wiener owns approximately
36% direct interest in the stock of Transco and he owns an additional 27% of Transco through is ownership in HMGA Inc., of which
he owns 72%. Mr. Wiener may therefore be deemed to be the beneficial owner of the shares of the Company held by Transco and HMGA
Inc. |
| (6) | Except as otherwise set forth,
the address for these individuals is 1870 South Bayshore Drive, Coconut Grove, Florida, 33133. |
| (7) | No shares of stock of the
executive officers and directors have been pledged as collateral. |
| (8) | Comprehensive Financial Planning,
Inc. has shared investment power on all shares and sole voting power on all shares. |
For information
concerning relationships of certain directors and officers of the Company to the Adviser, see “Approval of Renewal of the
Advisory Agreement.”
As a result
of these relationships, the persons named above may be deemed to share investment power and voting power of Shares held by each
firm with which they are associated in conjunction with a number of other persons, including in several cases, persons who are
neither directors nor officers of the Company.
Meetings of the Board
of Directors
The Board
of Directors held five meetings during 2014. During this period all of the directors of the Company attended at least 75% of the
total number of meetings of the Board and any committee of which they were a member. The Board of Directors encourages director
attendance at the Annual Meeting of the Shareholders. All of the members of the then current Board of Directors attended the 2014
Annual Meeting of the Shareholders.
Committees of the Board
of Directors
The Board
of Directors has an Audit Committee and a Stock Option Committee. The Company does not have a Compensation Committee. Messrs.
Arader and R.Wiener serve as members of the Audit Committee. The Audit Committee met three times during 2014.
Mr. Arader
served as member of the Stock Option Committee. A membership on this Committee is vacant and will be appointed at the next scheduled
board meeting. The committee is authorized to grant options to officers and key employees of the Company. The Stock Option Committee
did not meet during 2014.
Nominating
Committee
The Board
of Directors does not have a standing Nominating Committee due to the size of the Board; however, the Company’s independent directors
review and make recommendations to the Board regarding the size and composition of the Board, consider and recruit candidates
for director nominees based upon recommendations from current outside directors, members of management, outside consultants or
search firms, and shareholders; recommends on an annual basis a slate of director nominees for approval by the Board and the shareholders
and reviews our committee structure and membership. The independent directors are Messrs. Arader and Richard N. Wiener.
All independent
directors are “independent” directors as defined by the current NYSE Alternext US LLC Company Guide. The Company does
not have a Nominating Committee charter.
In evaluating
and determining whether to recommend a person as a candidate for election as a director, the independent directors’ criteria reflects
the requirements of the NYSE Alternext US LLC Company Guide rules with respect to independence and the following factors: the
needs of the Company with respect to the particular talents and experience of its directors, personal and professional integrity
of the candidate, level of education and/or business experience, broad-based business acumen, the level of understanding of the
Company’s business and the income-producing commercial properties industry, strategic thinking and a willingness to share ideas,
and diversity of experiences, expertise and background. These directors will use these and other criteria that they deem appropriate
to evaluate potential nominees and will not evaluate proposed nominees differently depending upon who has made the recommendation.
The independent
directors will consider proposed nominees whose names are submitted to them by shareholders. They have not adopted a formal process
for that consideration because they believe that this informal consideration process will be adequate. The independent directors
intend to review periodically whether a more formal policy should be adopted.
Any shareholder
who desires to recommend a nominee for director must submit a letter, addressed to Secretary, HMG/Courtland Properties, Inc.,
1870 South Bayshore Drive, Coconut Grove, Florida 33133, and which is clearly identified as a “Director Nominee Recommendation.”
All recommendation letters must identify the author as a shareholder and provide a brief summary of the candidate’s qualifications,
as well as contact information for both the candidate and the shareholder. Shareholders who wish to make a recommendation for
a nominee to be elected at the Company’s 2016 Annual Meeting must submit their recommendation by May 22, 2016, to allow for meaningful
consideration and evaluation of the nominees by the independent directors.
Leadership Structure
Mr. Maurice
Wiener, the Chief Executive Officer throughout the Company’s history, is also the Chairman of the Board. The Board has concluded,
in light of present circumstances, that this arrangement best suits the Company’s needs because of Mr. Wiener’s role
as strategic visionary and significant shareholder of the Company.
REPORT
OF THE AUDIT COMMITTEE
The primary
purpose of the Audit Committee is to assist the Board of Directors in monitoring the integrity of our financial statements, our
independent auditor’s qualifications and independence, the performance of our independent auditors, and our compliance with legal
and regulatory requirements. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). The Board of Directors has determined that each member of the Audit Committee,
Messrs. Arader and R.Wiener, is (1) an “audit committee financial expert,” as that term is defined in Item 407(d)(5)(i)
of Regulation S-K of the Exchange Act, and (2) “independent” as defined by the NYSE Alternext US LLC Company Guide and
Section 10A(m)(3) of the Exchange Act. The committee operates pursuant to a charter that was last amended by the Board on June
16, 2003. The Audit Committee charter may be found on our website, www.hmgcourtland.com.
Management
is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial
reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable
laws and regulations. The independent auditors for the Company’s 2014 fiscal year, Cherry, Bekaert, L.L.P. (“CB”), were
responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted
auditing standards.
In performing
its oversight role, the Audit Committee has, among other things covered in its charter, reviewed and discussed the audited financial
statements with management and the independent auditors. The committee has also discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as currently
in effect. The committee has received the written disclosures and the letter from the independent auditors required by Independence
Standards Board Standard No.1, Independence Discussions with Audit Committees, as currently in effect. The committee has
also considered whether the provision of non-audit services by the independent auditors is compatible with maintaining the auditors’
independence and has discussed with the auditors the auditors’ independence.
Based
on the reviews, reports and discussions described in this Report, and subject to the limitations on the role and responsibilities
of the committee referred to in this Report and in the charter, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
The members
of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not necessarily experts
in the fields of accounting or auditing, nor with respect to auditor independence. Members of the committee rely without independent
verification on the information provided to them and on the representations made by management and the independent auditors. Accordingly,
the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations, efforts and discussions
referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally
accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles
or that CB is in fact “independent.”
Members of the Audit Committee:
Walter G. Arader
Richard N. Wiener
INDEPENDENT
PUBLIC ACCOUNTANTS
CB has
been serving as our independent accountants. In performing its oversight role and as part of its regular process of recommending
an independent auditor to the Board of Directors, the Audit Committee is in the process of reviewing whether to retain CB as our
independent accounting firm for the 2015 fiscal year. Such review has not been completed and no recommendation has been made to
the Board of Directors for the selection of the Company’s independent auditors for 2015. A representative of CB is not expected
to be present at the Annual Meeting. The Audit Committee pre-approved all services rendered to the Company by its independent
accountants.
The aggregate
fees billed by the Company’s accounting firm for the years ended December 31, 2014 and December 31, 2013 are as follows:
Fees
of Accountants
| |
Aggregate Amount Billed | | |
Share of Total | |
| |
December 31,
2014 | | |
December 31,
2013 | | |
December 31,
2014 | | |
December 31,
2013 | |
Audit fees, including review of quarterly financial statements | |
$ | 47,000 | | |
$ | 45,000 | | |
| 39 | % | |
| 62 | % |
| |
| | | |
| | | |
| | | |
| | |
Tax fees (consists of fees related to tax compliance and planning) | |
| 84,000 | | |
| 28,000 | | |
| 61 | % | |
| 38 | % |
| |
| | | |
| | | |
| | | |
| | |
Total Fees | |
$ | 131,000 | | |
$ | 73,000 | | |
| 100 | % | |
| 100 | % |
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Executive
officers receive no cash compensation from the Company in their capacity as executive officers. Executive officers are eligible
to receive stock options pursuant to the 2011 Stock Option Plan.
Compensation of Directors.
The following table summarizes director’s compensation for the year ended December 31, 2014:
Director | |
Annual
Fee | | |
Board
Meeting
Fee | | |
Committee
Meeting
Fee | | |
Total
Compensation | |
Maurice Wiener | |
$ | 17,100 | | |
$ | 3,750 | | |
$ | — | | |
$ | 20,850 | |
Larry Rothstein | |
| 14,500 | | |
| 3,750 | | |
| 1,500 | | |
| 19,750 | |
Walter Arader | |
| 12,000 | | |
| 3,000 | | |
| 2,250 | | |
| 17,250 | |
Harvey Comita | |
| 12,000 | | |
| 3,000 | | |
| 3,000 | | |
| 18,000 | |
Richard Wiener | |
| 12,000 | | |
| 3,750 | | |
| 750 | | |
| 16,500 | |
Totals | |
$ | 67,600 | | |
$ | 17,250 | | |
$ | 7,500 | | |
$ | 92,350 | |
Annual director’s fees are
paid at the beginning of each quarter and board and committee meeting fees are paid for each meeting a director attends. The annual
fee for outside directors is $12,000 per year plus meeting fees of $750 per meeting. For the year ended December 31, 2014, Maurice
Wiener and Larry Rothstein each receive, respectively, $5,000 and $2,500, in director fees per year from Courtland Investment,
Inc. included in the amounts above.
Outstanding Equity Awards
to Executive Officers.
The following table summarizes
all outstanding equity awards to the Company’s executive officers as of December 31, 2014.
Executive Officer | |
Number of Options | | |
|
Exercise Price | | |
Expiration Date |
Maurice Wiener | |
| 9,500 | | |
| $17.84 per share | | |
August 25, 2016 |
Maurice Wiener | |
| 700 | | |
| $19.50 per share | | |
August 25, 2016 |
Stock
Options. The Company’s 2011 Stock Option Plan (the “Plan”), which was approved by the shareholders on August
25, 2011. The Plan provides for the grant of options to purchase up to 120,000 shares of the Company’s common stock to the
officers and directors of the Company. In 2011 options were granted to all officers and directors to purchase an aggregate of
102,000 common shares at no less than 100% of the fair market value at the date of grant. Options are not transferrable and expire
on August 25, 2016 or upon termination of employment, except to a limited extent in the event of retirement, disability or death
of the grantee.
The Plan,
which permits the grant of qualified and non-qualified options, and is intended to provide incentives to the directors and employees
(the “employees”) of the Company, as well as to enable the Company to obtain and retain the services of such employees.
The Plan is administered by a Stock Option Committee (the “Committee”) appointed by the Board of Directors. The Committee
selects those key officers and employees of the Company to whom options for shares of common stock of the Company shall be granted.
The Committee determines the purchase price of shares deliverable upon exercise of an option; such price may not, however, be
less than 100% of the fair market value of a share on the date the option is granted. Payment of the purchase price may be made
in cash or Company stock. Shares subject to an option may be purchased by the optionee within five years from the date of the
grant of the option. However, options automatically terminate if the optionee’s employment with the Company terminates other than
by reason of death, disability or retirement. Further, if, within one year following exercise of any option, an optionee terminates
his employment other than by reason of death, disability or retirement, the shares acquired upon exercise of such option must
be sold to the Company at a price equal to the lesser of the purchase price of the shares or their fair market value.
Section
16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Exchange Act requires the Company’s directors and
executive officers to file with the Securities and Exchange Commission initial reports of beneficial ownership and reports of
change in beneficial ownership of the Company’s Shares. Such officers and directors are required by SEC regulations to furnish
to the Company copies of all Section 16(a) reports that they file. Based solely on a review of the copies of such forms furnished
to the Company, or written representations that no other reports were required, the Company believes that during 2014, its officers
and directors complied with all applicable Section 16(a) filing requirements.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The following
discussion describes the organizational structure of the Company’s subsidiaries and affiliates.
Transco Realty Trust (“Transco”)
Transco
is a 45% shareholder of the Company and Mr. Maurice Wiener is its executive trustee and holds approximately 36% of its stock.
HMGA, Inc. (the “Adviser”)
and Subsidiaries
The day-to-day
operations of the Company are handled by the Adviser. Reference is made to “Approval of Advisory Agreement” below for
further information about the duties and remuneration of the Adviser. The Adviser is 72% owned by Mr. Maurice Wiener, its chairman
and chief executive officer. The Adviser also owns approximately 5% of the Company and approximately 37% of Transco.
Courtland Investments,
Inc. (“CII”)
The Company
holds a 95% non-voting interest and Masscap Investment Company (“Masscap”) holds a 5% voting interest in CII. In May
1998, the Company and Masscap entered into a written agreement in order to confirm and clarify the terms of their previous continuing
arrangement with regard to the ongoing operations of CII, all of which provide the Company with complete authority over all decision
making relating to the business, operation, and financing of CII consistent with the Company’s status as a real estate investment
trust.
T.G.I.F. Texas, Inc. (“T.G.I.F.”)
CII owns
approximately 49% of the outstanding shares of T.G.I.F. In June 2014, CII sold 39,000 shares of stock in T.G.I.F. to HMG Advisory
Newco, a wholly owned subsidiary of the Adviser. Mr. Maurice Wiener is a director and Chairman of T.G.I.F. and owns, directly
and indirectly, approximately 18% of the outstanding shares of T.G.I.F. T.G.I.F. also owns 10,000 shares of the Company.
The following
discussion describes all material transactions, receivables and payables involving related parties. The Company believes that
all of the transactions described below were on terms as favorable to the Company as comparable transactions with unaffiliated
third parties.
The Adviser
As of
December 31, 2014, the Company owes the Adviser approximately $54,000 in incentive fees from capital gains on sales of real estate
interests. This amount was paid in April 2015.
The Adviser
leases its executive offices from CII pursuant to a lease agreement. This lease agreement is at the going market rate for similar
property and calls for base rent of $48,000 per year payable in equal monthly installments. Additionally, the Adviser is responsible
for all utilities, maintenance, and security expenses relating to the leased premises. The lease expires in November 2015, with
two one-year extension options available.
South Bayshore Associates
(“SBA”)
SBA was
a joint venture in which Transco and the Company held interests of 25% and 75%, respectively. The sole major asset of SBA was
a $300,000 demand note from Transco. In 2013, Transco paid off the demand note.
The Company
also held a demand note from SBA bearing interest at the prime rate plus 1% with an outstanding balance as of December 31, 2013,
of approximately $905,000, in principal and accrued interest. Interest payments of $309,000 were made in 2013. Accrued and unpaid
interest is not added to the principal. In 2014 SBA was dissolved and the note payable to the Company of $905,000 was distributed
75% to the Company and 25% to Transco. Transco repaid its portion of the note ($226,157) in June 2014. Because the Company consolidates
SBA, the note payable and related interest income is eliminated in consolidation.
Courtland Investments,
Inc. (“CII”)
The Company
holds a demand note due from its 95%-owned consolidated subsidiary, CII, bearing interest at the prime rate plus 1% with an outstanding
balance of $1,000,000 as of December 31, 2014 and 2013, respectively. There were no principal repayments or advances relating
to this note during 2014. Repayments from CII to the Company during 2013 were $222,000 and advances from the Company to CII during
2013 were $130,000. CII is a consolidated subsidiary of the Company and the note payable and related interest is eliminated in
consolidation.
In 1986,
CII acquired from the Company the rights to develop the marina at Grove Isle for a promissory note of $620,000 payable at an annual
rate equal to the prime rate. The principal is due on demand. Interest payments are due annually in January. In April 2013, CII
paid the outstanding principal and interest on this note, and there are no amounts outstanding as of December 31, 2013. Because
the Company consolidates CII, the note payable and related interest income is eliminated in consolidation.
T.G.I.F. Texas, Inc. (“T.G.I.F.”)
As of
December 31, 2014 and 2013, CII owed approximately $2,100,000 and $2,503,000, respectively, to T.G.I.F. All advances between CII
and T.G.I.F. are due on demand and bear interest at the prime rate. All interest due has been paid. Mr. Maurice Wiener received
consulting and director’s fees from T.G.I.F of approximately $23,000 for the years ended December 31, 2014 and 2013, respectively.
Also, as of December 31, 2014 T.G.I.F. owned 10,000 shares of the Company which were purchased in 1996 at the market value. In
March 2015, T.G.I.F. purchased an additional 200 shares of the Company at the market value. In 2014 and 2013, T.G.I.F. declared
and paid a cash dividend of $.07 per share. CII’s portion of this dividend was approximately $196,000 each year. As of December
31, 2014 and 2013, T.G.I.F. had amounts due from Mr. Wiener in the amount of approximately $707,000. These amounts bear interest
at the prime rate and principal and interest are due on demand. All interest due has been paid.
APPROVAL
OF RENEWAL OF THE ADVISORY AGREEMENT
The
Advisory Agreement. At the 2014 Annual Meeting of Shareholders, the Advisory agreement (the “Advisory Agreement”)
between the Company and HMGA, Inc. (the “Adviser”) was renewed for a one-year term expiring on December 31, 2015. On
September 18, 2014, the shareholders approved the renewal and amendment of the Advisory Agreement between the Company and the
Adviser for a term commencing January 1, 2015 and expiring December 31, 2015. The Adviser’s current regular compensation
is $55,000 per month on $660,000 annually. The renewal and amendment was approved unanimously by the directors unaffiliated with
the Adviser.
Under
the terms of the Advisory Agreement, the renewal must be approved by the holders of a majority of the Shares. If the shareholders
approve the Advisory Agreement, it will be renewed for a one-year term.
The Adviser
is majority owned by Mr. Maurice Wiener. The officers and directors of the Adviser are as follows: Maurice Wiener, Chairman of
the Board and Chief Executive Officer, Alan Finkelstein, Director and Carlos Camarotti, Vice President Finance and Assistant Secretary.
The following
description of the Advisory Agreement contains a summary of its material terms.
General
Provisions. The Advisory Agreement is not assignable without the consent of the unaffiliated directors of the Company
and the Adviser. The Advisory Agreement provides that officers, directors, employees and agents of the Adviser or of its affiliates
may serve as directors, officers or agents of the Company.
Duties
of Adviser. The Adviser in performing its duties under the Advisory Agreement is at all times subject to the supervision
of the directors of the Company and has only such authority as the directors delegate to it as their agent. The Adviser counsels
and presents to the Company investments consistent with the objectives of the Company and performs such research and investigation
as the directors may request in connection with the policy decisions as to the type and nature of investments to be made by the
Company. Such functions include evaluation of the desirability of acquisition, retention and disposition of specific Company assets.
The Adviser also is responsible for the day-to-day investment operations of the Company and conducts relations with mortgage loan
brokers, originators and servicers, and determines whether investments offered to the Company meet the requirements of the Company.
The Adviser provides executive and administrative personnel, office space and services required in rendering such services to
the Company. To the extent required to perform its duties under the Agreement, the Adviser may deposit into and disburse from
bank accounts opened in its own name any money on behalf of the Company under such terms and conditions as the Company may approve.
Allocation
of Expenses. Under the Advisory Agreement, the Adviser pays: all salary and employment expenses of its own personnel and
of the officers and employees of the Company who are affiliates of the Adviser; all of the administrative, rent and other office
expenses (except those relating to a separate office, if any, maintained by the Company) relating to its services as Adviser;
and travel (to the extent not paid by any party other than the Company or the Adviser) and advertising expenses incurred in seeking
investments for the Company.
The Company
is required to pay all expenses of the Company not assumed by the Adviser, including, without limitation, the following: (a) the
cost of borrowed money; (b) taxes on income, real property and all other taxes applicable to the Company; (c) legal, accounting,
underwriting, brokerage, transfer agent’s, registrar’s, indenture trustee’s, listing, registration and other fees, printing, engraving,
and other expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange
listing of the Company’s securities; (d) fees and expenses of Advisers and independent contractors, consultants, managers and
other agents employed directly by the Company; (e) expenses connected with the acquisition, disposition or ownership of mortgages
or real property or other investment assets, including, to the extent not paid by any party other than the Company or the Adviser,
but not limited to, costs of foreclosure, costs of appraisal, legal fees and other expenses for professional services, maintenance,
repairs and improvement of property, and brokerage and sales commissions, and expenses of maintaining and managing real property
equity interests; (f) the expenses of organizing or terminating the Company; (g) all insurance costs (including the cost of directors’
liability insurance) incurred in connection with the protection of the Company’s property as required by the directors; (h) expenses
connected with payment of dividends or interest or distributions in cash or any other form made or caused to be made by the directors
to holders of securities of the Company, including a dividend reinvestment plan, if any; (i) all expenses connected with communications
to holders of securities of the Company and the other bookkeeping and clerical work necessary in maintaining relations with holders
of securities, including the cost of printing and mailing checks, certificates for securities and proxy solicitation materials
and reports to holders of the Company’s securities; (j) to the extent not paid by borrowers from the Company, the expenses of
administering, processing and servicing mortgage, development, construction and other loans; (k) the cost of any accounting, statistical,
or bookkeeping equipment necessary for the maintenance of the books and records of the Company; (1) general legal, accounting
and auditing fees and expenses; (m) salaries and other employment expenses of the personnel employed by the Company who are not
affiliates of the Adviser, fees and expenses incurred by the directors, officers and employees in attending directors’ meetings,
and fees and travel and other expenses incurred by the directors and officers and employees of the Company who are not affiliates
of the Adviser. Expenses relating to the grant of options to all directors, officers and key employees of the Company under a
plan approved by the shareholders of the Company are borne by the Company.
Remuneration
of the Adviser. For services rendered under the Advisory Agreement that was in effect during 2014, the Adviser was entitled
to receive as regular compensation a monthly fee equal to the sum of (a) $55,000 (equivalent to $660,000 per year) and (b) 20%
of the amount of any unrefunded commitment fees received by the Company with respect to mortgage loans and other commitments which
the Company was not required to fund and which expired within the next preceding calendar month. For the years ended December
31, 2014 and 2013, the Company and its subsidiaries incurred Adviser Fees of approximately $714,000 and $3,116,000, respectively,
of which $660,000 and $1,020,000 represented regular compensation for 2014 and 2013, respectively. In 2014 and 2013, the Adviser
Fees included $54,000 and $2,096,000 in incentive fee compensation, respectively. The Adviser will continue to receive the incentive
compensation outlined below.
The Advisory
Agreement also provides that the Adviser shall receive incentive compensation for each fiscal year of the Company equal to the
sum of (a) 10% of the realized capital gains (net of accumulated net realized capital losses) and extraordinary nonrecurring items
of income of the Company for such year, and (b) 10% of the amount, if any, by which Net Profits of the Company exceed 8% per annum
of the Average Net Worth of the Company. “Net Profits” is defined as the gross earned income of the Company for such
period (exclusive of gains and losses from the disposition of assets), minus all expenses other than non-cash charges for depreciation,
depletion and amortization and the incentive compensation payable to the Adviser, and minus all amounts expended for mortgage
amortization on long-term mortgage indebtedness, excluding extraordinary and balloon payments. “Average Net Worth” is
defined as the average of the amount in the shareholders’ equity accounts on the books of the Company, plus the accumulated non-cash
reserves for depreciation, depletion and amortization shown on the books of the Company, determined at the close of the last day
of each month for the computation period.
If and
to the extent that the Company requests the Adviser, or any of its directors, officers, or employees, to render services for the
Company, other than those required to be rendered by the Adviser under the Advisory Agreement, such additional services are to
be compensated separately on terms to be agreed upon between such party and the Company from time to time, which terms must be
fair and reasonable and at least as favorable to the Company as similar arrangements for comparable transactions of which the
Company is aware with organizations unaffiliated with the Adviser.
Set forth below is the aggregate
compensation paid to the Adviser during the two fiscal years ended December 31, 2014 and 2013.
Form
of Compensation | |
Amount | |
| |
2014 | | |
2013 | |
Regular
Compensation | |
$ | 660,000 | | |
$ | 1,020,000 | |
Incentive
Compensation | |
| 54,000 | | |
| 2,096,000 | |
Total | |
$ | 714,000 | | |
$ | 3,116,000 | |
Brokerage
Fees Paid the Adviser. Under the Advisory Agreement, the Adviser and its affiliates are prohibited from receiving from
the Company any brokerage or similar fees for the placement of mortgages or other investments with the Company. However, the Adviser
and its affiliates can receive normal brokerage commissions from borrowers in connection with transactions involving the Company,
provided that such commissions are fully disclosed to all directors of the Company and the directors approve of the transaction
and that such commissions (which to the extent paid by the borrower and retained by the Adviser or its affiliates may reduce the
yield to the Company) are fair and reasonable and in accord with the prevailing rates in the locality in which the transaction
is consummated for the type of conditions, receive normal brokerage commissions from sellers, buyers, lessees and other parties
with whom the Company engages in transactions.
Management
of the Adviser. Set forth below are the names, offices with the Adviser and principal occupations of the current executive
officers and directors of the Adviser.
Name
and Offices
with the Adviser |
|
Principal Occupation |
|
|
|
Maurice
Wiener
Chairman of the Board of
Directors and Chief Executive Officer |
|
See
“Election of Directors.” |
Carlos
Camarotti
Vice President-Finance and
Assistant Secretary |
|
Vice
President and Assistant
Secretary of the Adviser |
An affirmative
vote by the holders of a majority of the Shares entitled to vote at the Annual Meeting of Shareholders is required for approval
of the Advisory Agreement.
Our
Board of Directors unanimously recommends that the shareholders approve the renewal of the Advisory Agreement.
SOLICITATION
OF PROXIES
The cost
of soliciting proxies will be borne by the Company. In addition to the use of the mails, proxies may be solicited by directors,
officers and employees of the Company personally, by telephone, by electronic mail or by telegraph.
OTHER
BUSINESS
The Board
of Directors is not aware of any business other than those items referred to above to be presented for action at the meeting.
However, should any other matters requiring a vote of the shareholders arise, the agents named in the accompanying proxy will
vote in accordance with their own best judgment.
PROPOSALS
FOR NEXT YEAR’S MEETING
Shareholder
proposals intended to be presented in the Company’s proxy materials for the next Annual Meeting of Shareholders must be received
by May 22, 2016, and must satisfy the requirements of the proxy rules promulgated by the Securities and Exchange Commission.
A shareholder who wishes to make a proposal at the next Annual Meeting of Shareholders without including the proposal in the Company’s
proxy statement must notify the Company by July 17, 2016. If a shareholder fails to give notice by this date, then the persons
named as proxies in the proxies the Company solicits for the next Annual Meeting of Shareholders will have discretionary authority
to vote on the proposal.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
Shareholders
and other interested parties may communicate with the Board of Directors or with the independent directors as a group by sending
correspondence, in care of the Company’s Secretary, HMG/Courtland Properties, Inc., 1870 South Bayshore Drive, Coconut Grove,
Florida 33131, with an instruction to forward the communication to the particular director or directors. The Company’s Secretary
will promptly forward all such shareholder communications to that director or directors.
HOUSEHOLDING
INFORMATION
The SEC
adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements
and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement and
annual report addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially
means extra convenience for shareholders and cost savings for companies.
The Company
and a number of brokers with accountholders who are shareholders of the Company will be “householding” the Company’s
proxy materials and annual report. As indicated in the notice previously provided by the Company and these brokers to the Company’s
shareholders, a single proxy statement and annual report will be delivered to multiple shareholders sharing an address unless
contrary instructions have been received from an affected shareholder. Once you have received notice from the Company or your
broker that it or they will be “householding” communications to your address, “householding” will continue
until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding”
and would prefer to receive a separate proxy statement or annual report, please contact the Company at the address or telephone
number appearing on the first page of this proxy statement, directing your request to the attention of the Secretary, or notify
your broker.
Shareholders
who currently receive multiple copies of the proxy statement or annual report at their address and would like to request “householding”
of their communications should contact the Company at the address appearing on the first page of this proxy statement, directing
the request to the attention of the Secretary, or should contact their broker.
A copy of
the Annual Report on Form 10-K for the year ended December 31, 2014 including financial statements and schedules thereto, filed
with the Securities and Exchange Commission, may be obtained by shareholders without charge upon written request to: Secretary,
HMG/Courtland Properties, Inc., 1870 South Bayshore Drive,
Coconut Grove,
Florida 33133
YOU CAN SAVE
YOUR COMPANY ADDITIONAL EXPENSE BY SIGNING AND
RETURNING
YOUR PROXY AS PROMPTLY AS POSSIBLE
FORM OF PROXY
Please date,
sign and mail your
proxy card back
as soon as possible!
Annual Meeting
of Shareholders
HMG/COURTLAND
PROPERTIES, INC.
October 15, 2015
Please Detach
and Mail in the Envelope Provided
x | Please
mark your |
| votes
as in this sample |
|
|
For |
Withheld |
Nominees: |
M. Wiener |
|
For
|
Against
|
Abstain
|
1. |
Election of Directors |
o |
o |
|
L.
Rothstein
W. Arader
R. Wiener
C. Dusseau |
2.
Approval of renewal of the Advisory Agreement between Company and HMGA, Inc. |
o |
o |
o |
FOR
except vote withheld from the following nominees:
___________________________ |
|
|
|
|
|
|
|
3. In
their discretion, upon such other matters as may properly come before the meeting or any adjournment thereof, all in accordance
with the Company’s Proxy Statement, receipt of which is hereby acknowledged.
|
This
proxy when properly executed will be voted in accordance with the above instructions. In the absence of such specifications
this proxy will be voted FOR Proposals 1 and 2. |
PLEASE
MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
Signature(s)
__________________________________________________ Date
__________________________________
Note:
(Please sign exactly as your name appears. Persons signing as executors, trustees, guardians, etc. please so indicate when signing.)
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