UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant
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[X]
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Filed
by a Party other than the Registrant
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule 14a-12
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Power
REIT
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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[X]
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No
fee required
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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maximum aggregate value of transaction:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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Form,
Schedule or Registration Statement No.:
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Party:
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301
Winding Road
Old
Bethpage, NY 11804
212-750-0371
www.pwreit.com
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August 31, 2018
Dear
fellow shareholder:
As previously described, our wholly owned subsidiary, Pittsburgh & West Virginia Railroad (“P&WV”), was
in active litigation with its lessee, Norfolk Southern Railway Company (“NS”) with a significant amount of time
and resources dedicated to this process since 2012. Despite our best efforts, on April 22, 2015, the court ruled against us
and awarded damages to NS of $1.00. P&WV filed an appeal of the decision but the appellate court affirmed the decision
in late 2017. At this point, the litigation is concluded and we are no longer incurring costs related thereto. The total out
of pocket cost incurred was approximately $3.7 Million with the result of the litigation establishing that P&WV can take
a tax write-off of approximately $17 million.
As the largest shareholder
of Power REIT, I am deeply disappointed with the outcome of the litigation. Having said that, I believe the value of the Net Operating
Loss established does create value to offset the expenses incurred. At this point, as described in our investor presentation,
our shares trade at a significant discount to the underlying value of our assets and should represent an attractive risk adjusted
opportunity for investment.
Power REIT continues to
explore opportunities to invest capital on a disciplined basis that is focused on our goal of creating long-term shareholder value.
Having said that, given our current stock price, we are hesitant to raise capital through an offering of common stock which limits
our activity in the near term.
We appreciate your continued
support and enthusiasm for Power REIT and look forward to a productive future as we move forward with our business plan.
Very
truly yours,
David
H. Lesser
Chairman
of the Board of Trustees
Power
REIT
301
Winding Road
Old
Bethpage, NY 11804
NOTICE
OF 2018 ANNUAL MEETING OF SHAREHOLDERS
Wednesday,
September 26, 2018, 11:00 AM (local time)
The
2018 annual meeting of holders (“shareholders”) of shares of beneficial interest, $0.001 par value (“common
shares” or “common stock”) of Power REIT (the “Company” or the “Trust”) will be held
on Wednesday, September 26, 2018 at 11:00 AM (local time) WeWork Bryant Park – 54 West 40th Street, New York, NY 10018.
The items of business are:
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(1)
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to
elect five trustees to the Trust’s Board of Trustees, to serve until the next annual meeting of shareholders and until
the successors to such trustees have been duly elected and qualified;
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(2)
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to
ratify the appointment of MaloneBailey, LLP as the Trust’s independent registered public accounting firm; and
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(3)
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to
transact such other business as may properly come before the meeting.
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These
items are more fully described in the accompanying proxy statement. The Trust’s annual report on Form 10-K for the year
ended December 31, 2017, which includes the Trust’s consolidated financial statements as of and for the year ended December
31, 2017, is being mailed with these materials.
The
Board of Trustees has fixed the close of business on August 20, 2018 as the record date for the determination of shareholders
entitled to notice of and to vote at the 2018 annual meeting and any adjournments thereof. Shareholders of record can vote their
common shares by using the Internet or telephone. Instructions for using these convenient services are set forth in the enclosed
materials. You also may vote your common shares by marking your votes on the enclosed white proxy card, signing and dating it
and mailing it in the enclosed envelope.
Your
vote is important. Please vote by using the Internet or telephone, or by marking, signing, dating and returning the enclosed white
proxy card.
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By
order of the Board of Trustees
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/s/
David H. Lesser
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David
H. Lesser
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Secretary
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August
31, 2018
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IMPORTANT
NOTICE CONCERNING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDERS MEETING TO BE HELD ON SEPTEMBER 26, 2018:
The
Trust’s proxy materials and annual report on Form 10-K for the year ended December 31, 2017
are
available at
www.proxyvote.com
.
Power
REIT
301
Winding Road
Old
Bethpage, NY 11804
PROXY
STATEMENT
2018
ANNUAL MEETING OF SHAREHOLDERS
This
proxy statement is being furnished in connection with the solicitation of proxies by the Board of Trustees of Power REIT (the
“Company”, the “Trust”, “we” or “us”) to be used at the 2018 annual meeting of
holders (“shareholders”) of shares of beneficial interest, $0.001 par value (“common shares” or “common
stock”) of the Trust, to be held on Wednesday, September 26, 2018 at 11:00 A.M. local time at WeWork Bryant Park –
54 West 40th Street, New York, NY 10018, and at any adjournments thereof. The items of business for the annual meeting are:
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(1)
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to
elect five trustees to the Trust’s Board of Trustees, to serve until the next annual meeting of shareholders and until
the successors to such trustees have been duly elected and qualified;
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(2)
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to
ratify the appointment of MaloneBailey, LLP as the Trust’s independent registered public accounting firm; and
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(3)
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to
transact such other business as may properly come before the meeting.
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This
proxy statement and the accompanying notice of annual meeting and form of proxy card are first being mailed to shareholders on
or about August 31, 2018. Our annual report on Form 10-K for the year ended December 31, 2017, which includes our consolidated
financial statements as of and for the year ended December 31, 2017, is being mailed with these materials.
The
cost of this solicitation of proxies will be borne by the Trust. Solicitations may be made by mail, telephone, facsimile or electronic
mail, and by officers of the Trust without extra compensation. The Trust will reimburse brokerage firms and other third parties
for their reasonable and customary expenses in forwarding our proxy materials to beneficial owners of our common shares.
The
Board of Trustees has fixed the close of business on August 20, 2018 as the record date (the “record date”) for the
determination of shareholders entitled to notice of and to vote at the 2018 annual meeting and any adjournments thereof. At the
close of business on the record date, there were outstanding and entitled to vote 1,827,338 of our common shares (including unvested,
restricted common shares granted pursuant to the Trust’s 2012 Equity Incentive Plan (the “Plan”) and other stock
grants, which pursuant to the terms of the grants carry voting privileges).
Quorum,
Voting Power, Effect of Abstentions, Required Votes
At
the annual meeting, the presence, in person or by proxy, of shareholders entitled to cast thirty three and one third percent (33
1/3%) of all the votes entitled to be cast at the meeting shall constitute a quorum. Each outstanding common share shall be entitled
to one vote on each matter submitted to a vote. A vote by a majority of the common shares both present, in person or by proxy,
and casting a vote shall decide a particular matter. For purposes of the foregoing, abstentions and non-votes shall not be deemed
to be votes cast, although they shall be counted for purposes of determining the existence of a quorum.
The
nominees for the Board of Trustees that receive the highest number of affirmative votes cast, up to the number of nominee slots
to be filled, shall be elected as trustees. The ratification of the appointment of MaloneBailey, LLP requires the affirmative
vote of the majority of votes cast.
Voting
Procedures
If
you hold our common shares in your own name, as a “holder of record” or “registered” holder, you may vote
your shares by appointing proxies to vote on your behalf pursuant to your instructions, through any of the following methods:
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using
the Internet, log on to
www.proxyvote.com
and follow the instructions;
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using
any touch-tone telephone, dial 1-800-690-6903 and follow the instructions; or
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marking,
signing, dating, and returning the white proxy card in the postage-paid mailing envelope provided.
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If
you are a holder or record or registered shareholder and do not appoint and instruct proxies by voting over the Internet, by telephone
or by marking, signing, dating and returning the white proxy card, then you must attend the meeting in person in order to vote.
If
you do not hold our common shares in your own name, but instead hold your interest in our shares through one or more intermediaries,
such as a bank or broker (in many cases referred to as owning shares “in street name”), then you are considered a
holder of a beneficial interest in our common shares, or a “beneficial owner”, and you will be able to vote the shares
in which you hold your interest through those intermediaries. An intermediary will forward our proxy materials to you and request
your instructions as to how to vote the shares.
Broker
Non-Votes, Routine and Non-Routine Matters
If
you hold common shares through a bank or broker, the voting of the shares by the bank or broker when you do not provide voting
instructions is governed by the rules of the NYSE MKT LLC. These rules allow banks and brokers to vote such shares in their discretion
on “routine” matters. On matters considered “non-routine,” banks and brokers may not vote without your
instructions. Shares that banks and brokers are not authorized to vote are referred to as “broker non-votes.”
The
ratification of MaloneBailey, LLP as the Trust’s independent registered public accounting firm is considered a routine matter
,
so banks and brokers may vote your shares in regard to this proposal without your instructions. Accordingly, if you are a beneficial
owner and wish to have your vote on this proposal counted in a particular way, either “for”, “against”,
or as an abstention, then you must provide your voting instructions by Internet, telephone or white proxy card. If you do not,
your bank or broker may vote your shares in their discretion.
The
election of trustees is considered a non-routine matter
, and therefore banks and brokers may not vote on your behalf in the
election of trustees without your instructions. Please note that if you want your votes in the election of trustees to be counted,
you must instruct your bank or broker how to vote your shares. If you do not provide voting instructions, no votes will be cast
on your behalf in the election of trustees.
Note
that, at the annual meeting, abstentions and non-votes shall not be deemed to be votes cast, although they shall be counted for
purposes of determining the existence of a quorum.
Revocability
of Proxies
A
proxy may be revoked at any time prior to the voting thereof, by giving notice to the Secretary of the Trust in writing c/o Power
REIT, 301 Winding Road, Old Bethpage, NY 11804, or in open meeting.
Cumulative
Voting
Shareholders
of the Trust are not entitled to exercise cumulative voting rights in the election of trustees.
Notice
of Electronic Availability of Proxy Materials
As
permitted by rules of the Securities and Exchange Commission (the “SEC”), these proxy materials and our annual report
on Form 10-K for the year ended December 31, 2017 are being made available to our shareholders online, and are accessible through
www.proxyvote.com
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Trustees’
Voting Recommendations
The
Board of Trustees recommends that you vote your common shares FOR each of the Board’s four nominees that are standing for
election to the Board of Trustees (Proposal No. 1) and FOR the ratification of MaloneBailey, LLP as our independent registered
public accounting firm (Proposal No. 2).
Proposal
1: Election of Trustees
Our
Board of Trustees is currently comprised of four trustees, three of whom are independent under the rules of the NYSE MKT LLC and
under applicable rules of the SEC: Virgil E. Wenger, William S. Susman and Patrick R. Haynes, III. Our fourth trustee, David H.
Lesser, is a principal shareholder of the Company and serves as Chairman of the Board of Trustees.
Four
of the nominees for election to the Board of Trustees currently serve as trustees of the Company. Our Nominating Committee, whose
membership consists of our three independent trustees, has recommended their re-election and the Board has accepted this recommendation.
The Nominating Committee also recommended the addition of a fifth Trustee, Justinian Hobor. The Board recommends to shareholders
that they vote for all five of the nominees. If elected, the nominees would serve as trustees for a one-year term until the 2019
annual meeting of shareholders and until their successors are duly elected and qualified.
The
nominees are:
Name
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Age
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Trustee
Since
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Company
Position
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David
H. Lesser
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52
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2009*
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Chairman
of Board of Trustees
Chief
Executive Officer, Secretary, Treasurer
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Virgil
E. Wenger
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87
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1991*
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Trustee
Chairman
of Audit Committee
Member
of Nominating Committee
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William
S. Susman
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54
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2010*
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Trustee
Chairman
of Compensation Committee
Member
of Nominating Committee
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Patrick
R. Haynes, III
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34
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2011*
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Trustee
Chairman
of Nominating Committee
Member
of Audit Committee
Member
of Compensation Committee
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Justinian
R. Hobor
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35
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NA
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Trustee
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*
The nominees have been trustees of Power REIT since December 2011 and are and have been trustees of Pittsburgh & West Virginia
Railroad, a wholly owned subsidiary of Power REIT, since the dates listed in the table above.
The
following are summaries of our nominees’ biographies and experience:
David
H. Lesser
has over 30 years of experience in real estate, including substantial experience creating shareholder value in REITs.
Mr. Lesser is currently, and has been for more than the past 15 years, President of Hudson Bay Partners, LP (“HBP”),
an investment firm focused on real estate, real estate-related situations and alternative energy. Since October 2013, Mr. Lesser
has served as Chairman and CEO of Millennium Investment and Acquisition Company (ticker: SMCG). Mr. Lesser is co-founder and CEO
of IntelliStay Hospitality Management, LLC which is sponsoring investments in hotels. Mr. Lesser has previously held leadership
roles with public REITs, having served as a Senior Vice President of Crescent Real Estate Equities and as a Director of Keystone
Property Trust. Prior to his time at Crescent, Mr. Lesser was a Director of Investment Banking at Merrill Lynch & Co. within
the real estate finance group.
Since
1995, Mr. Lesser has, through HBP, invested in numerous real estate and alternative energy transactions, including a reverse merger
transaction in 1997 that led to the formation of Keystone Property Trust (NYSE: KTR) (“Keystone”). Mr. Lesser, as
president of HBP, led an investor group and structured a reverse merger transaction with American Real Estate Investment Corporation
(AMEX: REA) to ultimately form Keystone. The transaction involved an investment of $30 million of cash, the merger of a property
management company and the acquisition of a family-owned portfolio of industrial properties for ownership in the REIT. In addition
to initial structuring and equity investment by HBP, Mr. Lesser served on Keystone’s board of trustees until June 2000.
Keystone was acquired by Prologis (NYSE: PLD) in 2004 for a total enterprise value of $1.4 billion, delivering a compound annual
shareholder return of 16.5% from the initial transaction.
HBP
currently owns Intelligen Power Systems, LLC (“IPS”) which is an alternative energy business focused on the manufacturing
of cogeneration equipment and the development of distributed energy related to cogeneration, wind, solar and biofuel. HBP acquired
IPS through the bankruptcy reorganization of California-based Coast Intelligen (“Coast”), which was acquired as a
portfolio company by an affiliate of Mr. Lesser’s in 2001. As a consequence of misdeeds by Coast’s former owners and
management team, which did not involve Mr. Lesser, Coast was reorganized through a Chapter 11 bankruptcy filing, the ultimate
result of which was (i) Coast winding down its operations; and (ii) IPS, which was a subsidiary of Coast, successfully emerging
from the reorganization. IPS continues to operate today with a refocused business plan providing cogeneration and other energy
solutions to owners of real estate properties.
Mr.
Lesser holds an M.B.A. from Cornell University and a B.S. in Applied Management and Economics from Cornell University.
Mr.
Lesser has been Chairman of Power REIT’s Board of Trustees, our Chief Executive Officer since December 2011 and our Secretary
and Treasurer since February 2014. Mr. Lesser has been a trustee of Pittsburgh & West Virginia Railroad, a wholly owned subsidiary
of Power REIT (“P&WV”), from 2009 to the present, Chairman of P&WV’s Board of Trustees from December
2010 to the present and CEO of P&WV from February 2011 to the present.
We
believe that Mr. Lesser’s years of experience as a real estate investor, as a board director and in creating shareholder
value for other REITs provide significant benefits to the Company.
Virgil
E. Wenger
, CPA, is currently, and has for the past eight years been, an independent consultant who primarily works with new
startup ventures that need accounting services and financial planning assistance to determine investment and working capital needs.
He also serves as chief financial officer for two private companies: Shareholder Intelligence Services, a provider of information
to publicly traded client companies concerning shareholder ownership, broker activity and related analytics; and Econergy Corporation,
a manufacturer and marketer of proprietary air conditioning systems. Mr. Wenger was previously a partner at Ernst & Young
LLP for over 25 years. He is a graduate of the University of Kansas, with a B.S. in Business Administration, and of the Harvard
Business School Advanced Management Program.
Mr.
Wenger has been a trustee and Power REIT’s Audit Committee Chairman since December 2011 and has been a member of the Nominating
Committee since August 2012. Mr. Wenger has been a trustee of P&WV from 1991 to the present and was P&WV’s Audit
Committee Chairman from 2005 to December 2011.
We
believe that Mr. Wenger’s many years of experience at Ernst & Young LLP, significant financial expertise and leadership
as Chairman of the Audit Committee provide significant benefits to the Company.
William
S. Susman
has over 25 years of investment banking experience, including significant experience in the transportation and railroad
industry. As the former head of Merrill Lynch’s Transportation and Consumer Group, Mr. Susman advised numerous railroad
clients, including Burlington Northern, CSX, Kansas City Southern, Norfolk Southern Railways, TMM and Union Pacific. Mr. Susman
is currently founder and CEO of a boutique investment advisory firm, Threadstone Advisors. Prior to founding Threadstone Advisors,
he was President of Financo, an investment bank focused on retail and consumer goods, where he worked from 2004-2011. Mr. Susman
began his investment banking career at Salomon Brothers, in their transportation group. Mr. Susman sits on the boards of two private
companies: Preferred Fragrances and Jonathan Adler Enterprises. Mr. Susman is a graduate of the University of Michigan, with a
B.S. in Business Administration and a Masters from the Kellogg Graduate School of Management at Northwestern University.
Mr.
Susman has been a trustee and Power REIT’s Compensation Committee Chairman since December 2011 and has been a member of
the Nominating Committee since August 2012. Mr. Susman has been a trustee of P&WV from May 2011 to the present and was P&WV’s
Compensation Committee Chairperson from August 2011 to December 2011.
We
believe that Mr. Susman’s understanding of business, finance and the railroad industry, acquired through over 20 years of
investment banking experience, and his leadership as Chairman of the Compensation Committee and in regard to governance matters,
provide significant benefits to the Company.
Patrick
R. Haynes, III
is co-founder and President of IntelliStay Hospitality Management, LLC which is sponsoring investments in hotels
.
Mr. Haynes was previously employed
by Alliance Partners HSP (“Alliance”), an opportunistic real estate investment
venture backed by the family offices of Jay Shidler and Clay Hamlin and based in Philadelphia, PA. Mr. Haynes opened the New York
City office for Alliance in 2014 and ran all opportunistic acquisitions for greater New York City Area. Prior to joining Alliance
in 2013, Mr. Haynes had founded his own real estate investment business in Washington, D.C and Mr. Haynes worked for the Rockefeller
Group Investment Management Corp. (“RGIM”) from 2010 to 2012. At RGIM he was responsible for the financial analysis
for RGIM’s corporate acquisitions and direct real estate investments and supported institutional fundraising and business
development. Mr. Haynes began his career at Lehman Brothers in the Real Estate Private Equity Group where he performed financial
analysis, market research and due diligence for over $2.0 billion in potential real estate acquisitions across all asset classes
nationally. Mr. Haynes also worked on the successful management buyout of Lehman’s equity funds’ advisory business,
responsible for the management of approximately $18 billion in real estate assets globally. Mr. Haynes remained with the go forward
venture created by the fund’s management, Silverpeak Real Estate Partners, until joining RGIM.
Mr.
Haynes received a BA in U.S. History from Brown University
Mr.
Haynes has been a trustee and a member of Power REIT’s Audit and Compensation Committees since December 2011 and Chairman
of the Power REIT’s Nominating Committee since August 2012. Mr. Haynes has been a trustee of P&WV from May 2011 to the
present and was a member of P&WV’s Compensation Committee from August 2011 to December 2011 and a member of P&WV’s
Audit Committee from 2010 to December 2011.
We
believe that Mr. Haynes’ experience and contacts in real estate and his experience in transaction structuring and private
equity provide significant benefits to the Company.
Justinian
R. Hobor
has served as a portfolio manager for Elk Lake, LLC since July 2017. Prior to his current position, Mr. Hobor was
an investment advisor with Caldwell Securities, Inc. In addition, he co-founded in 2008 and serves as a managing member of Roundwood
Capital, LLC, an investment partnership. Mr. Hobor’s focus is on small, illiquid companies going through atypical situations
such as litigation, going-private transitions, and liquidations. Previously he worked at Capital Counsel, LLC, and at Northern
Trust. Mr. Hobor is a graduate from Chicago-Kent where he received a Juris Doctor degree and from Shimer College where he received
a B.A. in Social Sciences.
We
believe that Mr. Hobor’s experience as an investor, his legal education as well as his ownership of stock in the Company
provide significant benefits to the Company.
In
summary, the nominees have experience and skills in, and industry contacts relevant to, providing leadership to REITs, sourcing
and structuring investments and raising and investing capital. The Trust believes these skills, relevant work experiences and
contacts will significantly benefit shareholders as the Trust implements its business plan.
Trustee
Compensation
In
August 2012, pursuant to the Plan, each independent trustee was granted an option to acquire 2,000 of our shares at an exercise
price of $7.96. The options vested in three equal installments over three years. In May 2013, pursuant to the Plan, each Trustee
was granted 400 shares of restricted common stock vesting quarterly in equal installments commencing with the second quarter of
2013. In June 2014, pursuant to the Plan, each independent Trustee was granted 500 shares of restricted common stock vesting quarterly
in equal installments commencing with the second quarter of 2014. In September 2015, pursuant to the Plan, each independent Trustee
was granted 500 shares of restricted common stock vesting of which 75% vested during 2015 and 25% vested during the first quarter
of 2016. In May 2016, each independent Trustee who served a full year was granted 600 shares of restricted common stock of which
75% vested during 2016 and 25% vested during the first quarter of 2017 and Justinian Hobor who served for approximately three
quarters of the year was granted 450 shares with two thirds vesting during 2016 and one third vesting during the first quarter
of 2017. In May 2017, each independent Trustee was granted 600 shares of restricted common stock of which 75% vested during 2017
and 25% vested during the first quarter of 2018. Other than the option grants and the restricted stock grants, there are currently
no other compensation arrangements with any of the independent trustees. Compensation of our independent trustees for the fiscal
year ending December 31, 2017, is listed in the table below. The Trust has a policy to reimburse reasonable expenses of Trustees.
During 2017 there were no such reimbursements.
Trustee
Name
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Fees
Earned or Paid in Cash
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Stock
Awards
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Option
Awards
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Non-Equity
Incentive
Plan
Compensation
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Non-Qualified
Deferred Compensation Earnings
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All
Other
Compensation
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Total
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Wenger,
Susman, Haynes, Hobor
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$
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-
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$
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4,134
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$
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-
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$
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-
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$
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-
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$
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-
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$
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4,134
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The
compensation provided to Mr. Lesser, the Chairman of the Board of Trustees and also an officer of the Trust, is detailed in the
table under “Executive Officer – Executive Officer Compensation”, below.
THE
BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THE
ELECTION
OF EACH OF THE FOUR NOMINEES AS TRUSTEES OF THE TRUST
ADDITIONAL
DISCLOSURE RELATING TO OUR
TRUSTEES,
EXECUTIVE OFFICER AND CORPORATE GOVERNANCE
Corporate
Governance
Overview
In
accordance with our Declaration of Trust and Bylaws, our Board of Trustees elects the Chairman of the Board and our executive
officers, and each of these positions may be held by the same or separate persons. Our corporate governance guidelines do not
include a policy on whether the role of the Chairman and Chief Executive Officer should be separate or, if not, whether a lead
independent trustee is to be elected. From February 2011, Mr. Lesser, the Chairman of our Board of Trustees, has also served as
our Chief Executive Officer. We believe that this arrangement is suitable for a company of our size. The Board of Trustees shall
review the need for any changes to these arrangements from time to time in light of the Trust’s changing business needs.
Board
of Trustees
Our
Board of Trustees takes an active role in overseeing the management of our risks. The Board regularly reviews information regarding
our liquidity, operations and investment activities, as well as the risks associated with each. The Board is responsible for overseeing
the implementation of our investment strategy, the principal goal of which is to enhance long-term shareholder value through increases
in earnings, cash flow and net asset value. Currently, each investment transaction is approved by the Board. In the future, the
Board may establish an investment committee consisting of trustees to oversee our investment activities, including the review
and approval of specific transactions.
The
Board held two scheduled meetings during 2017. On three other occasions during the year, the trustees, after conferring individually
or via writing, adopted Board resolutions by a majority of votes via written consent. The independent trustees met in executive
session during 2017; all of the independent trustees were in attendance during this session. All of our trustees attended the
2017 annual meeting of shareholders.
Board
Committees
Our
Board of Trustees has three committees: an Audit Committee, a Compensation Committee and a Nominating Committee. Each of the three
committees consists solely of independent trustees in accordance with the NYSE American Company Guide.
Audit
Committee
Our
Audit Committee has been established in accordance with section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange
Act”) and consists of two independent trustees, each of whom the Board of Trustees has determined is “financially
literate” and “independent” under the rules of the NYSE American Company Guide: Virgil E. Wenger and Patrick
R. Haynes, III. Mr. Wenger serves as chairman of the Audit Committee and the Board of Trustees has determined that Mr. Wenger
meets the definition of “audit committee financial expert,” as defined in applicable SEC rules. Pursuant to its charter,
the Audit Committee, among other purposes, serves to assist the Board of Trustees in overseeing:
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the
integrity of our financial statements;
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our
compliance with legal and regulatory requirements and ethical behavior;
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the
retention of independent public auditors, including oversight of their performance, qualifications and independence, as well
as the terms of their engagement;
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our
accounting and financial reporting processes, internal control systems and internal audit function, as applicable;
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our
monitoring of compliance with laws and regulations and our code of business conduct and ethics; and
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our
investigation of any employee misconduct or fraud.
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During
2017, the Audit Committee on four occasions, after conferring individually or via writing, took action by written consent. The
Audit Committee’s charter is available on the Trust’s website at: www.pwreit.com.
Report
of the Audit Committee
The
Audit Committee hereby reports as follows:
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1.
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Management
has the primary responsibility for the Trust’s financial statements and reporting process, including its system of internal
accounting controls. The Audit Committee, in its oversight role, has reviewed and discussed the audited financial statements
with the Trust’s management.
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2.
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The
Audit Committee has discussed with the Trust’s independent audit firm the overall scope of, and plans for, its audits. The
Audit Committee discussed with the independent audit firm to discuss the Trust’s financial reporting process in addition to
other matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards,
Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T, as may be modified
or supplemented.
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3.
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The
Audit Committee has received the written disclosures and the letter from MaloneBailey, LLP required by applicable requirements
of the PCAOB concerning independence, and has discussed with MaloneBailey, LLP, its independence.
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4.
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Based
on the matters and discussions referred to in paragraphs (1) through (3) above, the Audit Committee has recommended to the
Board of Trustees, and the Board has approved, that the audited financial statements be included in the Trust’s annual
report on Form 10-K for the year ended December 31, 2017, for filing with the Securities and Exchange Commission.
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5.
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After
considering MaloneBailey LLP’s experience and independence, the Audit Committee recommends that the Trust (a) retain
MaloneBailey LLP as the Trust’s independent audit firm to perform the audit of the financial statements as of and for
the year ending December 31, 2018 and (b) submit to shareholders the ratification of MaloneBailey LLP, as the Trust’s
independent audit firm at the 2018 annual meeting.
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Virgil
E. Wenger (chair)
Patrick
R. Haynes, III
Compensation
Committee
Our
Compensation Committee consists of two independent trustees: William S. Susman and Patrick R. Haynes, III. Mr. Susman serves as
chairman of the Compensation Committee. The Compensation Committee, among other purposes, serves to:
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establish
and periodically review the adequacy of the compensation plans for our executive officers and other employees;
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review
the performance of executive officers and adjust compensation arrangements as appropriate;
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establish
compensation arrangements for our non-executive trustees; and
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evaluate
and make grants under the Trust’s 2012 Equity Incentive Plan and other stock grants pursuant to authority delegated
to it by the Board of Trustees;
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review
and monitor management developments and succession plans and activities.
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During
2017, the Compensation Committee met once and on one other occasion during the year, after conferring individually or via writing,
took one additional action by written consent. All of the Compensation Committee members were in attendance at the meeting. The
Compensation Committee does not have a formal charter.
Nominating
Committee
The
Nominating Committee is chaired by Patrick R. Haynes, III with Virgil E. Wenger and William S. Susman serving as members. The
Nominating Committee evaluates potential nominees to serve as trustees and makes recommendations to the Board of Trustees for
inclusion in the Trust’s annual proxy statement.
Trustee
Nomination Process
The
Nominating Committee is responsible for developing and evaluating potential trustee candidates for consideration in the event
of a vacancy on the Board of Trustees, and making nominee recommendations to the Board of Trustees. The Nominating Committee seeks
candidates for election and appointment that possess the integrity, leadership skills and competency required to direct and oversee
the Trust’s management in the best interests of its shareholders, customers and employees, as well as the communities it serves
and other affected parties. Nominee candidates must be willing to regularly attend committee and Board of Trustees meetings, to
develop a strong understanding of the Trust, its businesses and its requirements, to contribute his or her time and knowledge
to the Trust and to be prepared to exercise his or her duties with skill and care. In addition, each candidate should have an
understanding of relevant governance concepts and the legal duties of a trustee of a public company.
To
propose a nominee, shareholders may contact the Nominating Committee Chairman, the Chairman of the Board or the Company’s
Secretary by writing to them care of the Trust at its principal executive offices. Such correspondence should include a detailed
description of the proposed nominee’s qualifications and a method to contact the nominee if the Nominating Committee so
chooses. Candidates viewed by the Nominating Committee as qualified and suitable for service as a trustee will be contacted to
determine interest in being considered to serve on the Board of Trustees and, if interested, will be interviewed and have their
qualifications established and considered.
The
Nominating Committee recommended nominees to the Board for inclusion within Proposal 1 of the proxy statement for the 2018 Annual
Meeting of Shareholders. The Nominating Committee has established a charter outlining its purpose and the practices it follows.
The charter is available on the Trust’s website at
www.pwreit.com
.
Code
of Business Conduct and Ethics
The
Trust has a Code of Business Conduct and Ethics, with which all officers and trustees must comply. A copy is appended at the end
of this proxy statement. In addition, the code may be viewed on our website at
www.pwreit.com
, and printed copies may be
requested by writing to us at 301 Winding Road, Old Bethpage, NY 11804, Attention: Investor Relations.
Executive
Officer
The
Trust is managed by David H. Lesser, the Trust’s Chief Executive Officer, with oversight from its Board of Trustees.
Name
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Age
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Officer
Since
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Company
Positions
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David
H. Lesser
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52
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2011
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Chairman
of the Board of Trustees
Chief
Executive Officer, Secretary, Treasurer
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Executive
Officer Compensation
The
Trust does not have an employment agreement with Mr. Lesser. In 2012, pursuant to the Plan, Mr. Lesser was awarded 20,000 shares
of restricted stock and an option to acquire 100,000 shares at an exercise price of $7.96. Both the restricted stock grant and
the option grant vested annually in equal installments over three years commencing on the first anniversary of the grant. In 2014,
pursuant to the Plan, Mr. Lesser was awarded 40,000 shares of restricted stock which vests monthly over a three year period commencing
with the second quarter of 2014. In 2015, pursuant to the Plan, Mr. Lesser was awarded 9,400 shares of restricted stock which
vests monthly over a three year period commencing with the third quarter of 2015. In 2016, Mr. Lesser was awarded 40,000 shares
of restricted stock which vests monthly over a three year period commencing with the second quarter of 2016. In 2017, Mr. Lesser
was awarded 40,000 shares of restricted stock which vests monthly over a three year period commencing with the second quarter
of 2017. The restricted stock grants provide for voting rights and dividends during the vesting period. The assumptions used to
value the grants are described in footnote 9 to the Trust’s audited financial statements included in the Trust’s annual report
on Form 10-K for the year ended December 31, 2017, distributed along with this proxy statement.
Compensation
for our principal executive officers for the two fiscal years ending December 31, 2017 is set forth in the table below.
Name
and Principal Positions
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Year
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Salary
($)
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Bonus
($)
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Stock
Awards ($)
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Option
Awards ($)
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All
Other Compensation ($)
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Total
($)
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David
H. Lesser, Chairman and CEO
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2016
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$
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-
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$
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-
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$
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200,000
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$
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-
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$
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-
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$
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200,000
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David
H. Lesser, Chairman and CEO
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2017
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$
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-
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$
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-
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$
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275,600
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$
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-
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$
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-
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$
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275,600
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(1)
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Restricted
Stock Awards granted and the assumptions used in the valuation of such awards are discussed
in footnote 9 to the Trust’s audited financial statements included in the Trust’s
annual report on Form 10-K for the year ended December 31, 2017, distributed along with
this proxy statement.
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Outstanding
Equity Awards
The
following table sets forth outstanding option equity awards granted to the Trust’s principal executive officer as of December
31, 2017:
Name
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Number
of shares underlying earned, unexercised options (exercisable)
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|
Number
of shares
underlying
earned,
unexercised
options (unexercisable)
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Number
of shares underlying unearned, unexercised options
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Option
exercise
price ($)
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Option
expiration date
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David
H. Lesser, Chairman and CEO
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100,000
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100,000
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0
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$
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7.96
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8/13/2022
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The
following table sets forth outstanding restricted stock awards granted to the Trust’s principal executive officer as of
December 31, 2017:
Name
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Number
of earned shares (unvested)
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|
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Market
value of earned shares (unvested) ($) (1)
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Number
of unearned shares (unvested)
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|
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Market
or payout value of unearned shares (unvested) ($)
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David
H. Lesser,
Chairman and CEO
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63,113
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$
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383,588
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-
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$
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-
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(1)
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Based
on stock price as of the date of the grant.
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Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table sets forth the securities authorized for issuance under the Plan, as of December 31, 2017:
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Number
of securities to be issued upon exercise of outstanding options, warrants and rights
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Weighted
average exercise price of outstanding options, warrants and rights
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Number
of securities remaining available for future issuance under Plan (excluding securities in first column)
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Equity
compensation plans approved by security holders
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100,000
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7.96
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0
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Equity
compensation plans not approved by security holders
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n/a
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n/a
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n/a
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Total
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100,000
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|
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7.96
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0
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(1)
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The
Plan contains an “evergreen” provision that automatically adjusts the number
of shares available for future issuance, as provided in Section 4 of the Plan (subject
to certain adjustments) as follows: the number of shares of Stock which shall be made
available for issuance under the Plan shall be increased by the positive number of shares
equal to the lesser of: (i) (A) 10% of the Company’s outstanding shares of Stock,
calculated on a fully diluted and consolidated basis, less (B) the sum of (1) the aggregate
number of shares remaining available for issuance under the Plan as of such date, plus
(2) the aggregate number of shares subject to outstanding Awards and unvested shares
of Restricted Stock or other unvested equity compensation granted under the Plan as of
such date, or (ii) a lesser amount determined by the Compensation Committee. For clarity,
if the amount determined in the formula in the preceding sentence is negative, the number
of shares available for issuance shall neither be increased nor decreased.
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For
more information concerning the Plan and other stock based compensation, see the Trust’s audited financial statements included
in the Trust’s annual report on Form 10-K for the year ended December 31, 2017, distributed along with this proxy statement.
COMPENSATION
DISCUSSION AND ANALYSIS
The
Trust’s compensation program is designed to incentivize key individuals to provide services of value to the Trust, including
services in the long-term interest of the Trust. Over the last few years, the Trust has focused on minimizing cash compensation
and providing incentive compensation in the form of option and restricted stock grants. The compensation program has consisted
primarily of occasional option grants and restricted stock grants to our Independent trustees and occasional option grants and
restricted stock grants to our CEO. The Trust believes this approach provides the Trust with increased flexibility to vary the
amounts and types of compensation paid to the Trust’s executive officer, to serve the goals of:
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more
strongly aligning the interests of the Trust and the interests of its executive officers
and trustees, among others, in support of our business expansion and improvement plans;
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rewarding
our executive officers in proportion to the increased duties we are imposing on them
and the increased levels of performance we are requiring of them; and
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rewarding
our executive officers and trustees, among others, if and when they achieve substantial
successes in expanding and improving our business and prospects, including, without limitation,
by creating long-term shareholder value by increasing funds from operations (“FFO”)
and dividends per share through accretive acquisitions of energy and transportation infrastructure.
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In
furtherance of these compensation goals, the Compensation Committee approved certain stock grants during 2017. See the “Trustee
Compensation” table and the “Executive Officer Compensation” table, above, for further information as to these
grants and our compensation amounts generally.
securities
OWNERSHIP
The
following table sets forth certain information regarding the beneficial ownership and voting power of our common shares as of
June 30, 2018, by: (i) each person who owns more than 5% of our shares and who has filed a Schedule 13D with the SEC that is publicly
available to the Trust and others at
www.sec.gov
, (ii) each of our trustees and executive officers and (iii) all of our
trustees and executive officers as a group. Unless otherwise indicated, the business address of each person listed is c/o Power
REIT, 301 Winding Road, Old Bethpage, NY 11804. Unless otherwise indicated, all shares are owned directly, and the indicated person
has sole voting and investment power.
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Owned
at June 30, 2018
|
|
Name
of Shareholder
|
|
Number
of
Shares
|
|
|
%
of Outstanding
Shares
(4)
|
|
David
H. Lesser
(1) (2)
|
|
|
418,522
|
|
|
|
22.90
|
%
|
Virgil
E. Wenger
|
|
|
4,600
|
|
|
|
0.25
|
%
|
William
S. Susman
|
|
|
5,000
|
|
|
|
0.27
|
%
|
Patrick
R. Haynes, III
|
|
|
5,937
|
|
|
|
0.36
|
%
|
Justinian
Hobor
(3)
|
|
|
50,773
|
|
|
|
2.78
|
%
|
All
trustees and executive officers as a group
(1) - (4)
|
|
|
532,793
|
|
|
|
26.56
|
%
|
(1)
Mr. Lesser has beneficial ownership of 418,522 shares: 328,284 directly (including restricted stock and option equity grants (vested
and unvested) under the Trust’s 2012 Equity Incentive Plan), 90,238 through Hudson Bay Partners LP. A non qualified stock
option to acquire 100,000 common shares (“Option”) and 20,000 (1) restricted shares of common stock (“Restricted
Stock”) were awarded on August 13, 2012, pursuant to the Trust’s 2012 Equity Incentive Plan. The Option and Restricted
Stock awards vest in three equal annual installments beginning with the first anniversary of the respective grants. The Options
have a 10-year term and a strike price equal to the closing price of the stock on August 13, 2012. On June 30, 2014, 40,000 restricted
shares of common stock (“Restricted Stock”) were granted to David H. Lesser pursuant to the Trust’s 2012 Equity
Incentive Plan. The Restricted Stock award vests over three years in 12 equal quarterly installments beginning with Q2 2014. On
June 30, 2014, 40,000 restricted shares of common stock were granted to David H. Lesser pursuant to the Trust’s 2012 Equity
Incentive Plan which vests over three years in 12 equal quarterly installments beginning with Q2 2014. On September 10, 2015,
9,400 restricted shares of common stock which vests over twelve quarterly periods beginning with September 30, 2015. On May 5,
2016 Mr. Lesser was granted 40,000 shares as compensation which vests quarterly over three years with the first vesting to occur
on June 30, 2016. On May 30, 2017 Mr. Lesser was granted 40,000 shares as compensation which vests quarterly over three years
with the first vesting to occur on June 30, 2017.
(2)
In addition to the shareholdings disclosed above, the MEL Generation Skipping Trust, a trust set up for the children of David
H. Lesser, (the “MEL Trust”) owns 33,875 common shares of the Trust. MEL Trust also owns 9,600 of Power REIT 7.75%
Preferred Stock Series A which are not entitled to vote at the 2017 annual meeting of shareholders. Mr. Lesser disclaims any beneficial,
pecuniary or residual interest in the shares owned by the MEL Trust, does not serve as trustee of the MEL Trust and does not have
the power to revoke the MEL Trust.
(3)
Mr. Hobor has beneficial ownership of 50,773 shares: 7,704 directly; 10,000 held by Roundwood Capital, LLC, an investment company
co-managed by Mr. Hobor; and 33,069 shares where Mr. Hobor has limited power of attorney to executed transactions on behalf of
clients.
(4)
The number of shares reported and the denominator used to calculate the “% of Outstanding Shares” includes restricted
stock grants. Each restricted stock grant confers voting and dividend privileges during its vesting period.
COMPLIANCE
WITH Section 16(
a
)
Beneficial Ownership Reporting
Section
16(a) of the Exchange Act requires that our executive officers and trustees, and persons who own more than 10% of a registered
class of our equity securities, file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and, in our
case, the NYSE American. Executive officers, trustees and greater than 10% shareholders are required by the SEC to furnish us
with copies of all Forms 3, 4 and 5 that they file. Based on our review of such copies, we believe that our current executive
officers, trustees and greater than 10% shareholders complied with all Section 16(a) filing requirements applicable to them with
respect to transactions during 2017.
Related
Party Transactions
The
Trust and its subsidiaries have hired Morrison Cohen, LLP (“Morrison Cohen”) as their legal counsel with respect to
general corporate matters and the litigation with NSC. The spouse of the Trust’s Chairman, CEO, Secretary and Treasurer
is a partner at Morrison Cohen. During the six months ending June 30, 2018 and 2017, Power REIT (on a consolidated basis) paid
$0 and 6,700 in legal fees and costs to Morrison Cohen in connection with various legal matters, including the litigation with
NSC.
A
wholly-owned subsidiary of HBP provides the Trust and its subsidiaries with office space at no cost. Effective September 2016,
the Board of Directors approved reimbursing an affiliate of HBP $1,000 per month for administrative and accounting support based
on a conclusion that it would pay more for such support from a third party. A total of $12,000 was paid pursuant to this arrangement
during 2017.
Under
the Trust’s Declaration of Trust, the Trust may enter into transactions in which trustees, officers or employees have a
financial interest; provided however, that in the case of a material financial interest, the transaction shall be disclosed to
the Board of Trustees or the transaction shall be fair and reasonable. After consideration of the conditions and terms of the
retention of Morrison Cohen and the payment to an affiliate of HBP for accounting and administrative support, the independent
trustees approved the hiring of Morrison Cohen as legal counsel and approved the agreement with the affiliate of HBP described
above, finding the aforementioned arrangements to be fair and reasonable and in the interest of the Trust.
PROPOSAL
2: RATIFICATION OF INDEPENDENT AUDIT FIRM
The
firm of MaloneBailey LLP has served as the Trust’s independent registered public accounting firm since January 20, 2015,
and has audited the Trust’s consolidated financial statements as of and for the year ended December 31, 2017 included in
the Trust’s annual report on Form 10-K mailed with this proxy statement. The Board of Trustees seeks ratification of the
decision to retain MaloneBailey LLP as the Trust’s independent registered public accounting firm.
A
representative of MaloneBailey LLP will be in attendance at the annual meeting via conference call to respond to appropriate questions
and to make a statement if they desire to do so.
Audit
Fees
As
previously disclosed in our public filings effective January 20, 2015, the Trust retained MaloneBailey, LLP as its independent
registered public accounting firm. The Trust paid MaloneBailey, LLP. $37,000 and $51,000 for professional services rendered in
the six months ended June 30, 2018 and 2017, respectively, related to the annual audit of the Trust’s financial statements
and the inclusion of financial statements and other financial information in the Trust’s quarterly reports on Form 10-Q,
registration statements and other submissions to the SEC.
Tax
Fees
The
Trust has engaged BDO USA LLP to prepare its 2017 and 2016 tax returns. The trust paid BDO USA LLP $0 and $7,175 for professional
services rendered in the six month ended June 30, 2018 and 2017, respectively.
Other
Fees
Other
than the fees described above, there were no payments made to MaloneBailey LLP, A.C., during 2016 or 2015, including payments
whose disclosure is called for under Items 9(e)(2) and (4) of the SEC’s Schedule 14A.
Audit
Committee Pre-Approval of Services to be Provided by Independent Auditor
Our
policies and procedures require our Audit Committee to review and approve in advance all engagements for services to be rendered
by the Trust’s independent auditors. In the case of any non-audit services proposed to be rendered by the Trust’s
independent auditors, that review includes consideration by the Audit Committee as to whether the provision of such services would
be compatible with maintaining the auditors’ independence.
All
of the engagements for services rendered in 2017 and 2016 by the Trust’s independent auditors were pre-approved by the Audit
Committee.
THE
BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE TO RATIFY MALONEBAILEY LLP AS THE TRUST’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
OTHER
MATTERS
Principal
Executive Offices
The
Trust’s principal executive offices are located at 301 Winding Road, Old Bethpage, NY 11804.
Other
Matters to Come Before the 2018 Annual Meeting
No
matters are planned to be presented for action at the annual meeting other than as set forth in this proxy statement. If other
matters properly come before the meeting, the persons named as proxies in the accompanying white proxy card will vote all the
proxies given to them as a consequence of proxy solicitations made by the Board of Trustees pursuant to this proxy statement as
recommended by the Board of Trustees or, if no such recommendation is given, in their own discretion.
Shareholder
Proposals and Nominations for the 2019 Annual Meeting
Any
shareholder proposal that, pursuant to Rule 14a-8 under the Exchange Act, is to be considered for inclusion in our proxy materials
for the next annual meeting of shareholders, in 2017, must be received by the Trust no later than January 15, 2019. Proposals
should be sent via registered, certified or express mail to our principal executive offices.
In
addition, Qualified Shareholders (as defined below) who wish to propose a nominee to the Board of Trustees or propose any other
business to be considered by the shareholders (other than a shareholder proposal included in our proxy materials pursuant to Rule
14a-8 under the Exchange Act) must comply with the advance notice provisions and other requirements of Article III, Section 13
of our Bylaws, which are on file with the SEC and may be obtained from the SEC’s website or from us upon written request.
These provisions require that nominations and proposals of business for the 2019 annual meeting must be received by the Trust
no earlier than December 15, 2018 and no later than January 15, 2019. Such nominations or proposals of business should be sent
via registered, certified or express mail to our principal executive offices. A “Qualified Shareholder” is a shareholder
or shareholders who collectively have held both investment and voting control over at least five percent (5%) of the shares of
the Trust for at least three consecutive years and have been acting in concert over that time period; who are shareholders of
record at the time their advance notice is delivered to the Trust and at the time of the annual meeting; who are entitled to vote
at the meeting; and who have complied in all respects with the procedures set forth in Article III, Section 13 of our Bylaws.
Householding
of Proxy Materials
If
you and other residents at your mailing address own shares in street name, your broker or bank may have sent you a notice that
your household will receive only one annual report and proxy statement. This practice is known as “householding.”
If you did not respond that you did not want to participate in householding, then you were deemed to have consented to householding,
and your broker or bank will be sending only one copy of our annual report and proxy statement to your address. You may revoke
your consent to householding at any time by sending your name, the name of your brokerage firm and your account number to Broadridge
Financial Solutions Inc., 51 Mercedes Way, Edgewood, NY 11717. In all events, if you did not receive an individual copy of this
proxy statement or our annual report, and wish to do so, we will send you such a copy or copies if you send a written request
to us at our principal executive offices, Attention: Investor Relations, or telephone us at (212) 750-0371. If your household
is receiving multiple copies of our annual report and proxy statement, you can request householding by contacting us in the same
manner.
Additional
Copies of Materials
Additional
copies of this proxy statement and our annual report on Form 10-K for the year ended December 31, 2017 will be furnished without
charge upon written request to our principal executive offices, Attention: Investor Relations.
Shareholder
Communications
Shareholders
may communicate with the Board of Trustees or an individual trustee by sending their communications in writing care of Power REIT
at 301 Winding Road, Old Bethpage, NY 11804. All such communications will be forwarded to the respective trustee or trustees to
whom such communications are addressed.
Annual
Report
On
March 23, 2018, the Trust filed with the SEC its annual report on Form 10-K for the year ended December 31, 2017. Such annual
report is available from the SEC’s website at
www.sec.gov
and from our website at
www.pwreit.com
. If desired,
a hard copy is available to shareholders, without charge, upon written request to our principal executive offices, Attention:
Investor Relations.
IN
CONNECTION WITH THE SOLICITATION OF PROXIES BY THE BOARD OF TRUSTEES, YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS
PROXY STATEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROXY STATEMENT OR, WHERE
INFORMATION RELATES TO ANOTHER DATE SET FORTH IN THIS PROXY STATEMENT, AS OF THAT DATE.
APPENDIX
CODE
OF BUSINESS CONDUCT AND ETHICS
INTRODUCTION
This
Code of Business Conduct and Ethics covers a wide range of business practices and procedures. It does not cover every issue that
may arise, but it sets out basic principles to guide officers and trustees of the Trust. All of our officers and trustees must
conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The Trust currently has no employees.
However, should the Trust’s operations require employees in the future, this Code of Conduct and Ethics will apply to any
and all employees.
If
a law conflicts with a policy in this Code, you must comply with the law; however, if a local custom or policy conflicts with
this Code, you must comply with the Code. If you have any questions about these conflicts, you should ask the chief executive
officer how to handle the situation.
Those
who violate the standards in this Code will be subject to disciplinary action which may include immediate termination. If you
are in a situation which you believe may violate or lead to a violation of this Code, follow the procedures described in Sections
11 and 12 of this Code.
1.
ETHICAL CONDUCT AND LEGAL COMPLIANCE
Obeying
the law, both in letter and in spirit, is the foundation on which the Trust’s ethical standards are built. All officers
and trustees must obey the laws of the United States and the cities and states in which we operate. Although not all officers
and trustees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from
counsel or others.
Beyond
compliance with laws, the Trust requires that all its officers and trustees act in a manner which meets the highest standards
of ethical behavior. The honesty and integrity of our business conduct must not be compromised. The Trust will not condone ethical
violations for the sake of personal gain, personal advantage, expediency, or perceived business advantage.
2.
ACCOUNTING AND AUDITING MATTERS
The
Trust’s requirement that officers and trustees follow the highest ethical standards applies directly to all actions which
involve business accounting, financial reporting, internal accounting controls, auditing matters, and public disclosure obligations
in filings with the Securities and Exchange Commission and all public communications by the Trust.
The
Trust requires honest and accurate recording and reporting of information in order to make responsible business decisions.
All
of the Trust’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately
reflect the Trust’s transactions and must conform both to applicable legal requirements and to the Trust’s system
of internal controls.
Business
records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate
characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal
reports. Records should always be retained or destroyed according to the Trust’s record retention policies. In accordance
with those policies, in the event of litigation or governmental investigation please consult the chief executive officer or counsel.
The
Audit Committee of the Trust has adopted special procedures for the receipt, retention, and treatment of complaints regarding
accounting, internal accounting controls, or auditing matters. These procedures are set out in Sections 11 and 12 of this Code.
3.
CONFLICTS OF INTEREST
Conflicts
of interest are prohibited as a matter of Trust policy, except as (i) waived by the Board pursuant to Section 10 below; or (ii)
in the case of transactions involving the Trust and its directors, officers, employees or agents, those transactions that are
approved pursuant to the procedures contained in the Trust’s Amended and Restated Articles, including any subsequent amendments
thereto.
A
conflict of interest exists when a person’s private interest may or does interfere with the interests of the Trust. A conflict
can arise when an officer or trustee takes actions or has interests that may make it difficult to perform his or her Trust work
objectively and effectively. Conflicts of interest may also arise when an officer or trustee, or member of his or her family,
receives improper personal benefits as a result of his or her position with the Trust.
It
is almost always a conflict of interest for an officer or director of the Trust to work simultaneously for a competitor, customer
or supplier as an employee, consultant, or board member. The best policy is to avoid any direct or indirect business connection
with our competitors, customers or suppliers, except on our behalf.
Conflicts
of interest may not always be clear-cut, so if you have a question, you should consult with the chief executive officer, the Trust’s
counsel or the chairman of the Audit Committee. Any officer or trustee who becomes aware of a conflict or potential conflict should
bring it to the attention of the chief executive officer or chairman of the Audit Committee or follow the procedures described
in Section 11 of this Code.
Officers
and trustees owe a duty to the Trust to advance its legitimate interests when the opportunity to do so arises. In particular:
(i)
No payments, loans, employment or promises of employment, investment opportunities, vacation trips, gifts or entertainment (other
than entertainment conforming to generally accepted business practices or gifts of nominal value not reasonable calculated to
influence a decision) may be offered to or accepted by any officer or trustee or a relative of such a person as a condition of
the initial or continued engagement of a consultant, broker, vendor or third party working for the Trust.
(ii)
No payments (other than fees for services), loans, employment or promises of employment, investment opportunities, vacation trips,
gifts or entertainment (other than entertainment conforming to generally accepted business practices or gifts of nominal value
not reasonably calculated to influence a decision) may be offered to or accepted by any consultant, broker, vendor, government
official or a relative of such third party in connection with any services being performed for the Trust.
(iii)
No officer or trustee may recommend any third party for work for the Trust where the third party’s compensation is paid
on the basis of any kickback or fee sharing arrangement with the officer or trustee, nor may an officer or trustee recommend any
third party without full disclosure and written approval by the chief executive officer, if such third party has any familial
or pre-existing monetary relationship with the officer or trustee or if such officer or trustee has an equity or stock ownership
position in such third party.
(iv)
No employee shall, in his capacity as an employee, make any loan, donation, contributions or payment to a political party, candidate,
or political action committee, for or on behalf of the Trust, nor shall an employee of the Trust reimburse any individual who
does. (Nothing contained in this tenet shall prohibit an employee from taking any of the above actions in his or her name, provided
that the action is exclusively on the employee’s own accord and is not an indirect means of accomplishing one of the prohibited
actions)
(v)
No employee shall use or appropriate materials, property, equipment, systems and procedures (if proprietary in nature) owned by
the Trust for his or her own personal financial gain except to the extent necessary for the performance of his or her duties for
the Trust.
(vi)
In short, the purpose of business entertainment and gifts in a commercial setting is to create goodwill and sound working relationships,
not to gain unfair advantage with customers. No gift or entertainment should be offered, given, provided or accepted by any Trust
employee, family member of an employee unless it: (1) is not a cash gift, (2) is consistent with customary business practices,
(3) is not excessive in value, (4) cannot be construed as a bribe and is not reasonably calculated to influence a decision and
(5) does not violate any laws or regulations. Please discuss with the chief executive officer any gifts or proposed gifts which
you are not certain are appropriate.
(vii)
No officer or trustee shall purchase or obtain any goods or services from any of the Trust’s vendors or suppliers without
the prior written approval of the chief executive officer or chairman committee.
4.
INSIDER TRADING
Officers,
trustees and employees who have access to confidential information are not permitted to use or share that information for stock
trading purposes or for any other purpose except the conduct of our business and in strict conformance with all applicable laws
and SEC regulations. All non-public information for personal financial benefit or to tip others who might make an investment decision
on the basis of this information is not only unethical but also illegal. If you have any questions or concerns, please consult
the Company’s Audit Committee or the Trust’s corporate counsel.
5.
COMPETITION AND FAIR DEALING
We
seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through
unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained
without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited.
Each officer and trustee should endeavor to respect the rights of and deal fairly with the Trust’s customers, suppliers,
competitors and employees. No unfair advantage should be taken of anyone through manipulations, concealment, abuse of privileged
information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
6.
DISCRIMINATION, HARASSMENT AND RETALIATION
This
policy prohibits discrimination against any person who provides information to a federal regulatory or law enforcement agency,
a member of Congress or any committee of Congress, or to the chief executive officer concerning conduct which the employee reasonably
believes constitutes a violation of securities laws or any provision of federal law relating to fraud against shareholders.
No
officer or trustee may retaliate against an individual for bringing a complaint of discrimination or for participating in an investigation
or proceeding involving a complaint of discrimination.
No
one may take any action harmful to any person for providing to a law enforcement officer any truthful information relating to
the commission or possible commission of any federal offense.
7.
CONFIDENTIALITY
Officers
and trustees must maintain the confidentiality of the information entrusted to them or its customers, except when disclosure is
authorized by the chief executive officer or required by law. Confidential information includes all non-public information that
might be of use to competitors, or harmful to the Trust or its customers, if disclosed. It also includes information that suppliers
and customers have entrusted to us. The obligation to preserve confidential information continues even after employment or trustee
service ends.
8.
PROTECTION AND PROPER USE OF TRUST ASSETS
Officers
and trustees should endeavor to protect the Trust’s assets and ensure their efficient use. Theft, carelessness and waste
have a direct impact on the Trust’s profitability. Any suspected incident of fraud or theft should be immediately reported
for investigation.
The
obligation of officers and trustees to protect the Trust’s assets includes the Trust’s proprietary information. Proprietary
information includes business, marketing and service plans, records, salary information and any unpublished financial data and
reports. Unauthorized use or distribution of this information would violate Trust policy. It could also be illegal and result
in civil or even criminal penalties.
9.
PAYMENTS TO GOVERNMENT PERSONNEL
It
is strictly prohibited to make illegal payments to government officials of any country. In addition, the U.S. Government has a
number of laws and regulations regarding business gratuities which may be accepted by U.S. Government personnel. The promise,
offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules
would not only violate Trust policy but could also be a criminal offense. State and local governments, as well as foreign governments,
may have similar rules.
10.
WAIVERS OF THE CODE OF BUSINESS CONDUCT
Any
waiver of this Code for executive officers or trustees may be made only by the Board and will be promptly disclosed as required
by law or stock exchange regulation.
11.
REPORTING/INVESTIGATION PROCEDURES
Any
officer or trustee who reasonably believes that there has been a material violation of this Code of Conduct should report it immediately
to the chief executive officer and Audit Committee. The investigation will be handled discreetly and appropriately, and the information
will be disclosed to others only on a need to know basis and as required by law. There will be no adverse action taken against
anyone who reports violations of the Code of Conduct or who participate in the investigation. If the investigation leads to a
conclusion that a material violation of the Code of Conduct has occurred, the Trust will take appropriate corrective action which
may include removal from a position as trustee or officer.
The
Trust recognizes the potentially serious impact of a false accusation. This Code of Conduct requires officers and trustees to
act responsibly in making complaints. Making a complaint without a good faith basis is itself an ethical violation.
12.
SPECIAL PROCEDURES FOR REPORTING/INVESTIGATING COMPLAINTS REGARDING ACCOUNTING, INTERNAL ACCOUNTING CONTROLS, AND AUDIT MATTERS
Any
officer or trustee who reasonably believes that there has been a material violation of the Code caused by questionable accounting
or auditing matters has the right to submit a confidential, anonymous complaint to the Audit Committee. The complaint should be
made in written form and provide sufficient information so that a reasonable investigation can be conducted.
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WHITE
PROXY CARD
VOTE
BY INTERNET:
www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59P.M. Eastern
Time the day before the 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your white proxy
card in hand when you access the website and then follow the instructions to obtain your records and to create an electronic
voting instruction form.
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POWER
REIT
C/O
Broadridge Financial Services, Inc.
P.O.
Box 1342
Brentwood,
NY 11717
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ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our Company in mailing proxy materials, you can consent to receive all
future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree
to receive or access proxy materials electronically in future years.
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VOTE
BY PHONE: 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the day
before the cut-off date or meeting date. Have your white proxy card in hand when you call and then follow the instructions.
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VOTE
BY MAIL
Mark,
sign and date your white proxy card and return it in the postage-paid envelope we have provided, or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS
WHITE PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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The
Board of Trustees recommends you vote “FOR ALL” of the following:
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For
All
[ ]
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Withhold
All
[ ]
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For
All
Except
[ ]
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To
withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of
the withheld nominee(s) on the line below.
_________________________________
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┐
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1. Election
of Trustees
Nominees:
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01) David
H. Lesser
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02) Virgil
E. Wenger
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03) Patrick
R. Haynes, III
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04) William S. Susman
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05) Justinian Hobor
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2. Ratification
of appointment of MaloneBailey LLP as
the
Trust’s independent registered public accounting firm.
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For
[ ]
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Against
[ ]
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Abstain
[ ]
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NOTE:
Such other business as may properly come before the meeting or any adjournment thereof.
WHITE
PROXY CARD
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Please
sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please
give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name, by authorized officer.
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owner)
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Date
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IMPORTANT
NOTICE CONCERNING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDERS MEETING TO BE HELD ON SEPTEMBER 26, 2018:
The
notice of annual meeting, proxy statement and annual report on Form 10-K of Power REIT are available at
www.proxyvote.com
.
POWER
REIT
Annual Meeting of Shareholders
September 26, 2018 at 11:00 AM (local time)
This proxy is solicited by the Board of Trustees
The
undersigned hereby appoints Patrick Haynes and William Susman, and each of them, with power to act without the other and with
power of substitution, as proxies and attorneys-in-fact, and hereby authorizes them to represent and vote, as provided on the
other side hereof, all the common shares of Power REIT (the “Trust”) which the undersigned is entitled to vote and,
in their discretion, to vote upon such other business as may properly come before the annual meeting of shareholders of the Trust
to be held on September 26, 2018 at 11:00 AM local time., or any adjournment thereof (the “Meeting”), with all powers
which the undersigned would possess if present at the Meeting.
THIS
WHITE PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE
BUT THE CARD IS SIGNED, THIS WHITE PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2
AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Continued
and to be signed on reverse side
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