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. )
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SANTA FE FINANCIAL CORPORATION
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(Name
(Name of Registrant as Specified inIn Its Charter)
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SANTA FE FINANCIAL CORPORATION
10940 WILSHIRE BLVD., SUITE 2150
LOS ANGELES, CALIFORNIACA 90024
(310) 889-2500
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 24, 2011
21, 2013
To The Shareholders of Santa Fe Financial Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Santa Fe Financial Corporation ("Santa Fe" or the "Company") will be held on February 24, 201121, 2013 at 10:30 A.M. at the Hilton San Francisco Financial District, 750 Kearny Street, San Francisco, CA 94108 for the purpose of considering and acting on the following:
(1) To elect three Directors to serve until the next Annual Meeting or
until their successors have been duly elected and qualified.
(2) To ratify the Audit Committee's appointment of Burr Pilger Mayer,
Inc. as the Company's independent registered public accounting firm
for the fiscal year ending June 30, 2011;
(3) To approve, in a non-binding vote, the compensation of our named
executive officers;
(4) To determine, in a non-binding vote, whether a shareholder vote to
approve our named executive officer compensation should occur every
one, two or three years; and
(5) To consider and act upon any other matters that may properly come
before the meeting or any adjournments thereof.
(1) | To elect three Directors to serve until the next Annual Meeting or until their successors shall have been duly elected and qualified; |
(2) | To ratify the retention of Burr Pilger Mayer, Inc. as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2013; |
(3) | To transact such other business as may properly come before the meeting, or any postponements or adjournments thereof. |
The Board of Directors has fixed the close of business on January 11, 20112013 as the record date for determining the shareholders having the right to vote at the meeting or any adjournmentsadjournment thereof.
Your proxy is important to us whether you own a few or many shares. Please complete, sign, date and promptly return the enclosed proxy in the self-
addressed,self-addressed, postage-paid envelope provided. Return the proxy even if you plan to attend the meeting. You may always revoke your proxy and vote in person.
Dated: January 18, 2013
By Order of the Board of Directors, | |
Michael G. Zybala | |
Secretary |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on February 21, 2011
By Order2013. The Company’s Proxy, Proxy Statement and Annual Report on Form 10-K for the fiscal year ended June 30, 2012 are also available on the Santa Fe page of the Board of Directors,
/s/ Michael G. Zybala
Michael G. Zybala
Secretary
_____________________________________________________________________________
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 24, 2011. THE COMPANY'S
PROXY STATEMENT AND ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JUNE 30, 2010 ARE ALSO AVAILABLE ON SANTA FE FINANCIAL CORPORATION'S PARENT
COMPANY'S WEBSITE AT WWW.INTERGROUPCORPORATION.COM.
SANTA FE FINANCIAL CORPORATION
10940 WILSHIRE BLVD., SUITE 2150
LOS ANGELES, CALIFORNIACA 90024
(310) 889-2500
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 24, 2011
21, 2013
The Board of Directors of Santa Fe Financial Corporation (the "Company" or "Santa Fe") is soliciting proxies in the form enclosed with this statement in connection with the Annual Meeting of Shareholders to be held on February 24,
201121, 2013 or at any adjournment or adjournments thereof.
This Proxy Statement and the accompanying Proxy are first being sent to Shareholders on or about January 24, 2011.23, 2013. Only shareholders of record at the close of business on January 11, 20112013 are entitled to notice of, and to vote at, the Annual Meeting.
If you give us a proxy, you can revoke it at any time before it is used. To revoke it, you may file a written notice revoking it with the Secretary of the Company, execute a proxy with a later date or attend the meeting and vote in person.
You may vote at the Annual Meeting only shares that you owned of record on January 11, 2011.2013. There were 1,241,810 shares of common stock outstanding on that date. A majority, or 620,906 shares will constitute a quorum for the transaction of business at the meeting. Each share is entitled to one vote on each matter to be presented at the meeting. The affirmative vote of the holders of the majority of the shares of the Company's stock present or represented at the meeting and entitled to vote is required to elect directors and ratify or approve the other proposals being voted on at this time.
In addition to mailing this material to shareholders, the Company has asked banks and brokers to forward copies to persons for whom they hold stock of the Company and to request authority for the execution of proxies. The Company will reimburse banks and brokers for their reasonable out-of-pocket expenses in doing so. Officers of the Company may, without being additionally compensated, solicit proxies by mail, telephone, telegram or personal contact. All proxy soliciting expenses will be paid by the Company. The Company does not expect to employ anyone else to assist in the solicitation of proxies.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's bylaws set the number of directors at three. We propose to elect three directors, each to hold office until the next Annual Meeting of Shareholders and until his or her successor is elected and qualified. The Board of Directors has nominated John V. Winfield, John C. Love and William J. Nance. The persons named in the enclosed form of proxy will vote for the election of the nominees listed below unless you instruct otherwise, or a nominee is unable or unwilling to serve. The Board of Directors has no reason to believe that any nominee will be unavailable. However, in that event, the proxy may vote for another candidate or candidates nominated by the Board of Directors. Any shareholder executing the enclosed form of proxy may withhold authority to vote for any one or more nominee by so indicating in the manner described in the form of proxy.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the Directors and Executive Officers of the Company. There is no relationship by blood, marriage or adoption among the Directors and Officers. All Directors serve one year terms with their terms expiring at the Annual Meeting. All Officers of the Company are elected or appointed by the Board of Directors and hold office until the Annual Meeting or until replaced at the discretion of the Board.
Shares of | ||||||||||||||||
Common Stock | ||||||||||||||||
Position with | Director | Beneficially Owned | Percent of | |||||||||||||
Name | Age | The Company | Since | on January 11, 2013 | Class(1) | |||||||||||
John V. Winfield | 66 | Chairman, President and Chief Executive Officer | 1995 | 1,043,7472) | 84.0 | % | ||||||||||
William J. Nance | 69 | Director | 1996 | 0(3) | 0.0 | % | ||||||||||
John C. Love | 72 | Director | 1998 | 0(3) | 0.0 | % | ||||||||||
Michael G. Zybala | 60 | Vice President, Secretary and General Counsel | N/A | 0 | 0.0 | % | ||||||||||
David T. Nguyen | 39 | Treasurer and Controller | N/A | 0 | ||||||||||||
All of the above as a group | 1,043,747 | 84.0 | % |
___________________________
(1) Based on 1,241,810 shares of common stock issued and outstanding as of January 11, 2011.
2013.
(2) John V. Winfield is the sole beneficial owner of 49,400 shares of common stock. The InterGroup Corporation ("InterGroup") is the beneficial owner of 944,379994,347 shares of common stock. As the President, Chairman of the Board and a 60.2%62.8% shareholder of InterGroup, Mr. Winfield has voting and dispositive power with respect to the shares of Santa Fe owned of record and beneficially by InterGroup.
(3) William J. Nance is a 2.4% beneficial shareholder of InterGroup as well as a Director thereof. John C. Love is also a Director of InterGroup and a 0.9% beneficial shareholder of InterGroup.
Security Ownership of Management in Subsidiary
As of January 11, 2011,2013, Santa Fe was the record and beneficial owner of 505,437 shares of the common stock of Portsmouth Square, Inc. (Portsmouth"(Portsmouth”) and Santa Fe'sFe’s parent company, InterGroup was the record owner of 86,00091,862 shares of Portsmouth, representing approximately 80.5%81.3% of the outstanding
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2 |
Business Experience:
The principal occupation and business experience during the last five years for each of the Directors and Executive Officers of the Company are as follows:
John V. Winfield-- Mr. Winfield was first elected to the Board in May of 1995 and currently serves as the Company's Chairman of the Board, President and Chief Executive Officer, having been appointed as such in April 1996. Mr. Winfield is also the Chairman of the Board, President and Chief Executive Officer of the Company's subsidiary, Portsmouth, having held those positions since May of 1996. Mr. Winfield is Chairman of the Board, President and Chief Executive Officer of The InterGroup Corporation ("InterGroup"(“InterGroup”), a public company, and has held those positions since 1987. Mr. Winfield'sWinfield also serves as Chairman of the Board of Comstock Mining, Inc. (NYSE MKT: LODE), a public company in which he was elected a Director on June 23, 2011. Mr. Winfield’s extensive experience as an entrepreneur and investor, as well as his managerial and leadership experience from serving as a chief executive officer and director of public companies, led to the Board'sBoard’s conclusion that he should serve as a director of the Company.
William J. Nance -- Mr. Nance was first elected to the Board in May of 1996.
Mr. Nance is also a director of Portsmouth. Mr. Nance is the President and
CEO of Century Plaza Printers, Inc., a company he founded in 1979. He has
also served as a consultant in the acquisition and disposition of multi-
family and commercial real estate. Mr. Nance is a Certified Public
Accountant and, from 1970 to 1976, was employed by Kenneth Leventhal &
Company where he was a Senior Accountant specializing in the area of REITS
and restructuring of real estate companies, mergers and acquisitions, and all
phases of real estate development and financing. Mr. Nance is also Director
of InterGroup, a public company, and has held such position since 1984. Mr.
Nance also serves as a director and Chairman of the Board of Comstock Mining,
Inc. (formerly Goldspring, Inc.), a public company. Mr. Nance's extensive
experience as a CPA and in numerous phases of the real estate industry, his
business and management experience gained in running his own businesses, his
service as a director and audit committee member for other public companies
and his knowledge and understanding of finance and financial reporting, led
to the Board's conclusion that he should serve as a director of the Company.
John C. Love -- Mr. Love was appointed a Director of the Company on March 5, 1998. Mr. Love is an international hospitality and tourism consultant. He is a retired partner in the national CPA and consulting firm of Pannell Kerr Forster and, for the last 30 years, a lecturer in hospitality industry management control systems and competition & strategy at Golden Gate University and San Francisco State University. He is Chairman Emeritus of the Board of Trustees of Golden Gate University and the Executive Secretary of the Hotel and Restaurant Foundation. Mr. Love is also a Director of Portsmouth, having first been appointed in March 1998 and a Director of InterGroup, having first been appointed in January 1998. Mr. Love'sLove’s extensive experience as a CPA and in the hospitality industry, including teaching at the university level for the last 30 years in management control systems, and his knowledge and understanding of finance and financial reporting, led to the Board'sBoard’s conclusion that he should serve as a director of the Company.
William J. Nance -- Mr. Nance was first elected to the Board in May of 1996. Mr. Nance is also a director of Portsmouth. Mr. Nance is the President and CEO of Century Plaza Printers, Inc., a company he founded in 1979. He has also served as a consultant in the acquisition and disposition of multi-family and commercial real estate. Mr. Nance is a Certified Public Accountant and, from 1970 to 1976, was employed by Kenneth Leventhal & Company where he was a Senior Accountant specializing in the area of REITS and restructuring of real estate companies, mergers and acquisitions, and all phases of real estate development and financing. Mr. Nance is also Director of InterGroup, and has held such position since 1984. Mr. Nance also serves as a director of Comstock Mining, Inc. Mr. Nance’s extensive experience as a CPA and in numerous phases of the real estate industry, his business and management experience gained in running his own businesses, his service as a director and audit committee member for other public companies and his knowledge and understanding of finance and financial reporting, led to the Board’s conclusion that he should serve as a director of the Company.
Michael G. Zybala -- Mr. Zybala was appointed as Vice President and Secretary of the Company on February 20, 1998. He is also Vice President, Secretary and General Counsel of Portsmouth. Mr. Zybala is an attorney at law and has served as the Company's General Counsel since 1995 and has represented the Company as its corporate counsel since 1978. Mr. Zybala also serves as Assistant Secretary and counsel to InterGroup and has held those positions since January 1999.
David T. Nguyen --– Mr. Nguyen was appointed as Treasurer of the Company on February 27, 2003. Mr. Nguyen also serves as Treasurer of InterGroup and Portsmouth, having been appointed to those positions on February 26, 2003 and February 27, 2003, respectively. Mr. Nguyen is a Certified Public Accountant and, from 1995 to 1999, was employed by PricewaterhouseCoopers LLP where he was a Senior Accountant specializing in real estate. Mr. Nguyen has also served as the Company's Controller from 1999 to December 2001 and from December 2002 to present.
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Family Relationships: There are no family relationships among directors, executive officers, or persons nominated or chosen by the Company to become directors or executive officers.
Involvement in Certain Legal Proceedings: No director or executive officer, or person nominated or chosen to become a director or executive officer, was involved in any legal proceeding requiring disclosure.
BOARD AND COMMITTEE INFORMATION
Board of Directors:
Santa Fe is an unlisted company and a Smaller Reporting Company under rules and regulations of the Securities and Exchange Commission ("SEC"(“SEC”). The majority of its Board of Directors consists of "independent"“independent” directors as independence is defined by the applicable rules and regulations of the SEC and NASDAQ. The Board of Directors held four meetings during the 20102011 Fiscal Year (in person, telephonically or by written consent). No Director attended (whether in person, telephonically, or by written consent) less than 75% of all meetings held during the period of time he or she served as Director during the 20102012 Fiscal Year.
Board Leadership Structure
The Chairman of the Board, Mr. Winfield, also serves as our Chief Executive Officer. The Board believes that combining the Chairman and Chief Executive officer roles is the most appropriate structure for the Company at this time because (i) this structure has had a longstanding history with the Company, which the Board believes has served our stockholders well through many economic cycles and business challenges; (ii) the Board believes Mr. Winfield’s unique business experience and history with the Company makes it appropriate for him to serve in both capacities; and (iii) the Board believes its corporate government processes and committee structures preserve Board independence by insuring independent discussions among directors and independent evaluation of, and communications with, members of senior management such that separation of the Chairman and Chief Executive Officer roles is unnecessary at this time.
The Board of Directors has not established a formal process for security holders to send communications to the Board of Directors and the Board has not deemed it necessary to establish such a procedure at this time. Historically, almost all communications that the Company receives from security holders are administrative in nature and are not directed to the Board of Directors. If the Company should receive a security holder communication directed to the Board of Directors, or to an individual director, said communication will be relayed to the Board of Directors or the individual director as the case may be.
The Company does not have any formal policy with regard to board members attendance at annual meetings of shareholders but encourages each director to attend said meetings. All of the Company'sCompany’s directors attended the fiscal 20092011 annual meeting of shareholders.
Committees:
Santa Fe has established two standing committees, a Securities Investment Committee and an Audit Committee. The Company does not have any standing nominating or compensation committees of the Board of Directors. Executive compensation is determined by the independent members of the Board. New director nominations, if any, will be considered and determined by the Board of Directors. The Company has no policy with regard to consideration of any director candidates recommended by security holders. As a small business issuer that has approximately 80.0%84% of its voting securities controlled by one shareholder, the Company has not deemed it appropriate to institute such a policy.
On March 17, 1998, the Company established a Securities Investment Committee
to establish guidelines and to review the Company's investment policies. The
Committee consists of all the members of the Board, with Mr. Winfield serving
as Chairperson. During fiscal 2010, the Securities Investment Committee held
three meetings, in person, telephonically or by written consent with, all
members attending each meeting.
Audit Committee.Santa Fe is an unlisted company and a Smaller Reporting Company under SEC rules. The Company'sCompany’s Audit Committee is currently comprised of Messrs. Nance (Chairperson) and Love, each of whom are independent directors as independence is defined by the applicable rules and regulations of the SEC and NASDAQ, and as may be modified or supplemented. Each of these directors also meets the audit committee financial expert test.test based on their qualifications and business experience discussed above. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: the financial reports provided by the Company to any governmental body or the public; the Company'sCompany’s system of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Company'sCompany’s auditing, accounting and financial processes generally. The Audit Committee is responsible for the selection and retention of the Company'sCompany’s independent registered public accounting firm. The Audit Committee held fivesix meetings during the 2010 Fiscal Year. 2012 fiscal year.
The Company'sCompany’s Board of Directors has adopted a written charter for the Audit Committee. ACommittee, a copy of that written charter, as amended, is attachedposted on the Santa Fe page of its parent company’s website www.intgla.com.
Securities Investment Committee.On March 17, 1998, the Company established a Securities Investment Committee to establish guidelines and to review the Company’s investment policies. The Committee consists of all the members of the Board, with Mr. Winfield serving as AppendixChairperson. During fiscal 2012, the Securities Investment Committee held three meetings, in person, telephonically or by written consent with, all members attending each meeting.
Code of Ethics.
The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics is posted on the Santa Fe page of its parent company’s website atwww.intgla.com. The Company will provide to this proxy statement.
any person without charge, upon request, a copy of its Code of Ethics by sending such request to: Santa Fe Financial Corporation, Attn: Treasurer, 10940 Wilshire Blvd., Suite 2150, Los Angeles, CA 90024. The Company will promptly disclose any amendments or waivers to its Code of Ethics on Form 8-K and will post such information on its website.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company'sCompany’s officers and directors, and each beneficial owner of more than ten percent of the Common Stock of the Company, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten-percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by the Company, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that during fiscal 20102012 all filing requirements applicable to its officers, directors, and greater than ten-percent beneficial owners were complied with.
4
EXECUTIVE COMPENSATION
As a Smaller Reporting Company, Santa Fe has no compensation committee. Executive Officer compensation is set by independent members of the Board of Directors. The Board seeks to design and set compensation to attract and retain highly qualified executive officers and to align their interests with those of long-term owners of the Company. The Board has not engaged any compensation consultants in determining the amount or form of executive or director compensation, but does review and monitor published compensation surveys and studies. The Board may delegate to the Company'sCompany’s Chief Executive Officer the authority determine the compensation of certain executive officers.
Santa Fe has no stock option plan or stock appreciation rights for its executive officers. The Company has no pension or long-term incentive plans. There are no employment contracts between Santa Fe and any executive officer, and there are no termination-of-employment or change-in-control arrangements.
The following table provides certain summary information concerning compensation awarded to, earned by, or paid to the Company'sCompany’s principal executive officer and other named executive officers of the Company whose total compensation exceeded $100,000 for all services rendered to the Company for each of the Company'sCompany’s last two competed fiscal years ended June 30, 20102012 and 2009.2011. No stock awards, long-term compensation, options or stock appreciation rights were granted to any of the named executive officers during the last two fiscal years.
SUMMARY COMPENSATION TABLE
Annual Compensation | ||||||
Name and | Fiscal | All Other | ||||
Principal Position | Year | Salary | Bonus | Compensation | Total | |
John V. Winfield | 2012 | $ 267,000(1) | - | $ 43,000(2) | $ 310,000(1) | |
Chairman; President | 2011 | $ 267,000(1) | - | $ 43,000(2) | $ 310,000(1) | |
and Chief Executive Officer | ||||||
Michael G. Zybala | 2012 | $ 126,000 | $ 12,000 | - | $ 138,000(3) | |
Vice President, Secretary | 2011 | $ 122,000 | - | - | $ 122,000(3) | |
and General Counsel | ||||||
David T. Nguyen | 2012 | $ 90,000 | $ 10,000 | - | $ 100,000(4) | |
Treasurer and Controller | 2011 | $ 90,000 | - | - | $ 90,000(4) | |
(Principal Financial Officer) | ||||||
(1)Includes salary and director'sdirector’s fees received from the Company'sCompany’s subsidiary, Portsmouth, in the amounts of $133,000$134,000 for each of the fiscal years ended June 30, 20102012 and 20092011 and directors fees in the amount of $6,000 per year paid by Santa Fe. Does not include salary compensation received from Santa Fe'sFe’s parent corporation, InterGroup, of $255,000 for each of the fiscal years ended June 30, 20102012 and June 30, 2009.
2011.
(2)During fiscal 20102012 and 2009,2011, the Company and Portsmouth also paid combined annual premiums of $42,500,$43,000, for each respective year, for split dollar whole life insurance policies, owned by, and the beneficiary of which is, a trust for the benefit of Mr. Winfield'sWinfield’s family. Portsmouth'sPortsmouth’s share of those premiums was $17,000 per year. These policies were obtained in December 1998 and provide for an aggregate death benefit of $2,500,000. The Company has a secured right to receive, from any proceeds of the policy, reimbursement of all premiums paid prior to any payments to the beneficiary.
(3)Includes salary and bonus paid by Portsmouth in the aggregate amount of $105,000$113,000 for fiscal year ended June 30, 20102012 and $94,800salary of $98,000 for fiscal year ended June 30, 2009.2011. Does not include $31,250$55,000 and $27,000$31,000 paid by Santa Fe'sFe’s parent company, InterGroup, for fiscal years 20102012 and 2009,2011, respectively.
(4)Includes salary and bonus paid by Portsmouth in the amount of $45,000$50,000 for each of
the fiscal yearsyear ended June 30, 20102012 and salary in the amount of $45,000 for fiscal year ended June 30, 2009.2011. Does not include $90,000$100,000 paid by Santa Fe'sFe’s parent company, InterGroup, for each of fiscal years 2010year 2012 and 2009.
5
Santa Fe has no stock option plan or stock appreciation rights$90,000 for its
executive officers. The Company has no pension or long-term incentive plans.
There are no employment contracts between Santa Fe and any executive officer,
and there are no termination-of-employment or change-in-control arrangements.
On July 18, 2003,fiscal year 2011.
In fiscal year ended June 30, 2004, the disinterested members of the BoardBoards of Directors of the Company and its subsidiary, Portsmouth, established a performance based compensation program for the Company'sCompany’s CEO
John V. Winfield, to keep and retain his services as a direct and active manager of the Company'sCompany’s securities portfolio. The Company's previous
experience and results with outside money managers was not acceptable.
Pursuant to the current criteria established by the Board, Mr. Winfield was beis entitled to performance based compensation for his management of the Company'sCompany’s securities portfolio equal to 20% of all net investment gains generated in excess of an annual return equal to the performancePrime Rate of Interest (as published in the S&P 500 Index.Wall Street Journal) plus 2%. Compensation amounts will beare calculated and paid quarterly based on the results of the Company'sCompany’s investment portfolio for that quarter. Should the Company have a net investment loss during any quarter, Mr. Winfield would not be entitled to any further performance-based compensation until any such investment losses are recouped by the Company. On February 26, 2004, the Board of Directors
amended the performance threshold to require an annualized return equal to
the Prime Rate of Interest (as published in the Wall Street Journal) plus 2%
instead of the S&P 500 Index, effective with the quarterly period commencing
January 1, 2004. This change was made to make the Company's plan be
consistent with that established by its parent company, InterGroup. This performance based compensation program may be further modified or terminated at the discretion of the Board. Norespective Boards of Directors. The Company’s CEO did not earn any performance based compensation was paid
for fiscalthe years ended June 30, 2010 or 2009.
2012 and 2011.
Outstanding Equity Awards at Fiscal Year End.
The Company did not have any outstanding equity awards at the end of its fiscal year ended June 30, 2012 and has no equity compensation plans in effect.
6 |
Internal Revenue Code Limitations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"“Code”), provides that, in the case of a publicly held corporation, the corporation is not generally allowed to deduct remuneration paid to its chief executive officer and certain other highly compensated officers to the extent that such remuneration exceeds $1,000,000 for the taxable year. Certain remuneration, however, is not subject to disallowance, including compensation paid on a commission basis and, if certain requirements prescribed by the Code are satisfied, other performance based compensation. NoFor fiscal years 2012 and 2011, no compensation paid by the Company to its CEO or other executive officers was subject the deduction disallowance prescribed by Section 162(m) of the Code.
Outstanding Equity Awards at
SHAREHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
At its Fiscal Year End.2010 Annual Meeting of Shareholders held on February 24, 2011, the Company submitted to its shareholders two proposals regarding executive compensation. The Company did not have any outstanding equity awardsfirst proposal to approve, in a non-binding vote, the compensation of the Company’s named executive officers was approved by the shareholders, having received more than 99% of the shares voted at the endmeeting in favor of its
fiscal year ended June 30, 2010the proposal. The second proposal was to determine, in a non-binding vote, whether a shareholder advisory vote to approve the compensation of the Company’s executive officers should occur every one, two or three years. The shareholders overwhelmingly voted in favor of three years as the frequency in which the Company should have an advisory vote on executive compensation with more than 98% percent of the shares voted at the meeting being in favor of three years. The Compensation Committee and has no equity compensation plansthe Board of Directors have considered the guidance provided by these advisory votes and have set three years as the frequency in effect.
which it will have a non-binding vote on executive compensation.
DIRECTOR COMPENSATION
The bylaws of Santa Fe permit directors to be paid a fixed sum for attendance at each meeting of the Board or a stated salary as director. Each director is paid a fee of $1,500 per quarter for a total annual compensation of $6,000. This policy has been in effect since July 1, 1985. Members of the Company'sCompany’s Audit Committee also receive a fee of $500 per quarter. Directors and Committee members are also reimbursed for their out-of-pocket travel costs to attend meetings. The Board will review and may adjust Director and Committee Compensation from time to time to assure that the Company can continue to attract and retain qualified directors.
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The following table provides information concerning compensation awarded to, earned by, or paid to the Company'sCompany’s directors for the fiscal year ended June 30, 2010.
Fees Earned
or Paid All Other
Name in Cash Compensation Total
- ----------------- ----------- ------------ -------
John C. Love $ 46,000(1) - $46,000
William J. Nance $ 46,000(1) - $46,000
John V. Winfield(2)
- ------------------
2012.
DIRECTOR COMPENSATION TABLE
Name | Fees Earned or Paid in Cash | All Other Compensation | Total | |||
John C. Love | $46,000(1) | - | $46,000 | |||
William J. Nance | $46,000(1) | - | $46,000 | |||
John V. Winfield(2) | - | - | - |
(1) Mr. Love and Mr. Nance also serve as directors of the Company'sCompany’s subsidiary, Portsmouth. Amounts shown include $8,000 in regular board and audit committee fees paid by Santa Fe and $8,000 in regular board and audit committee fees paid by Portsmouth. These amounts also include $30,000 in special hotel committee fees and meeting fees paid to Mr. Love and Mr. Nance by Portsmouth related to the oversight of its hotelHotel asset.
(2)As an executive officer, Mr. Winfield director'sWinfield’s directors fees are reported in the Summary Compensation Table.
7 |
Change in Control or Other Arrangements
Except for the foregoing, there are no other arrangements for compensation of directors and there are no employment contracts between the Company and its directors or any change in control arrangements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of January 11, 2011,2013, Santa Fe and InterGroup owned 80.5%81.3% of the common stock of Portsmouth, and InterGroup and John V. Winfield, in the aggregate, owned approximately 80.0%84% of the voting stock of Santa Fe. All of the Company'sCompany’s Directors serve as directors of InterGroup and all three of the Company'sCompany’s Directors serve on the Board of Portsmouth.
John V. Winfield, the Company'sCompany’s Chairman and President, Michael G. Zybala, the Company'sCompany’s Vice President, Secretary and General Counsel, and David T. Nguyen, the Company'sCompany’s Treasurer and Controller also serve as officers of InterGroup and Portsmouth. Santa Fe and Portsmouth share corporate office space with Santa Fe'sFe’s parent company, InterGroup. Since all three companies share the same office space, Mr. Winfield, Mr. Zybala and Mr. Nguyen can allocate their time between the different companies more efficiently on an as needed basis. Certain costs and expenses, primarily administrative salaries, rent and insurance, are allocated among the Company, its subsidiary, Portsmouth, and parent InterGroup based on management'smanagement’s estimate of the pro rata utilization of resources. During the fiscal years ended June 30, 20102012 and 2009,2011, the Company and Portsmouth made payments to InterGroup of approximately $144,000 for administrative costs and reimbursement of direct and indirect costs associated with the management of the Companies and their investments, including the partnership asset.
As Chairman of the Securities Investment Committee, the Company'sCompany’s President and Chief Executive officer, John V. Winfield, directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Mr. Winfield also serves as Chief Executive Officer and Chairman of Portsmouth and InterGroup and oversees the investment activity of those companies. Depending on certain market conditions and various risk factors, the Chief Executive Officer, his family, Portsmouth and InterGroup may, at times, invest in the same companies in which the Company invests. The Company encourages such investments because it places personal resources of the Chief Executive Officer and his family members, and the resources of Portsmouth and InterGroup, at risk in connection with investment decisions made on behalf of the Company.
7
In December 1998, Board of Directors authorized the Company to obtain whole life insurance and split dollar insurance policies covering the Company'sCompany’s President and Chief Executive Officer, Mr. Winfield. During fiscal years 20102012 and 2009,2011, the Company paid annual premiums of $25,500 for the split dollar whole life insurance policy, owned by, and the beneficiary of which is, a trust for the benefit of Mr. Winfield'sWinfield’s family. The Company has a secured right to receive, from any proceeds of the policy, reimbursement of all premiums paid prior to any payments to the beneficiary. During fiscal 20102012 and 2009,2011, Portsmouth paid annual premiums of $17,000 for a split dollar policy also covering Mr. Winfield. The premiums associated with that spilt dollar policy are considered additional compensation to Mr. Winfield.
There are no other relationships or related transactions between the Company and any of its officers, directors, five-percent security holders or their families which require disclosure.
Director Independence
Santa Fe is an unlisted company and a Smaller Reporting Company under the rules and regulations of the Securities and Exchange Commission ("SEC"(“SEC”). With the exception of the Company'sCompany’s President and CEO, John V. Winfield, all of Portsmouth'sSanta Fe’s Board of Directors consists of "independent"“independent” directors as independence is defined by the applicable rules and regulations of the SEC and NASDAQ.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
JOHN V. WINFIELD, JOHN C. LOVE AND WILLIAM J. NANCE AS DIRECTORS OF THE COMPANY
8
8 |
PRINCIPAL HOLDERS OF EQUITY SECURITIES
The following table shows, as of January 11, 2011,2013, the Common Stock owned by every person owning of record (other than securities depositories), or known by the Company to own beneficially, more than 5% of its outstanding common shares. Any voting securities owned by directors or director nominees are also disclosed under Election of Directors herein.
Name and Address of | Amount and Nature of | |
Beneficial Owner | Beneficial Ownership(1) | Percent of Class(2) |
The InterGroup Corporation | 994,347 | 80.0% |
10940 Wilshire Blvd., Suite 2150 | ||
Los Angeles, CA 90024 | ||
John V. Winfield | 49,400 | 4.0% |
10940 Wilshire Blvd., Suite 2150 | ||
Los Angeles, CA 90024 | ||
The InterGroup Corporation and | 1,043,747(3) | 84.0% |
John V. Winfield as a group |
(1) Unless otherwise indicated, and subject to applicable community property laws, each person has sole voting and investment power with respect to the shares beneficially owned.
(2) Percentages are calculated on the basis of 1,241,810 shares of Common Stock issued and outstanding as of January 11, 20112013 plus any securities that the person has a right to acquire within 60 days pursuant to options, warrants, conversion privileges or other rights.
(3) Based on their Statement on Schedule 13D (Amendment No. 6) dated June 13,
2001, GPG and its wholly-owned subsidiary AMI claim shared power to vote, or
to direct the vote, and to dispose of, or to direct the disposition of the
shares of Santa Fe's Common Stock owned of record by AMI.
(4) Pursuant to a Voting Trust Agreement dated June 30, 1998, InterGroup has the power to vote the 49,400 shares of Common Stock owned by Mr. Winfield. As President, Chairman of the Board and a 60.2%62.8% beneficial shareholder of InterGroup, Mr. Winfield has voting and dispositive power over the shares owned of record and beneficially by InterGroup.
As of January 11, 2011,2013, there were 1,241,810 shares of the Company's Common Stock outstanding, which were held by approximately 220230 shareholders of record, with a total of approximately 420445 shareholders, including beneficial owners.
Securities Authorized for Issuance Under Equity Compensation Plans.
Santa Fe has no securities authorized for issuance under equity compensation
plans.
9
9 |
PROPOSAL 2
Ratification of the Appointment of
Independent Registered Public Accounting Firm
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed the firm of Burr Pilger Mayer, Inc. ("BPM"(“BPM”, formerly Burr, Pilger & Mayer LLP) as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending June 30, 2011.2013. BPM has served as the Company'sCompany’s independent registered public accounting firm since October 23, 2007. Although the action of shareholders in this matter is not required, the Audit Committee believes it is appropriate to seek shareholder ratification of this appointment. Ratification requires the affirmative vote of a majority of the shares represented and voted at the Annual Meeting.
We expect that a representative of Burr Pilger Mayer, Inc. will be present at the Annual Meeting to respond to appropriate questions from Shareholders, and we will provide this representative with an opportunity to make a statement if he or she desires to do so.
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SEC UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
AUDIT COMMITTEE REPORT
The Audit Committee'sCommittee’s responsibilities are described in a written charter adopted by the Board of Directors, which is attached as Appendix A to this
Proxy Statement.Directors. The Audit Committee primary duties and responsibilities are to: serve as an independent and objective party to monitor the Company'sCompany’s financial reporting process and internal control system; appoint and approve the compensation of the Company'sCompany’s independent registered public accounting firm; review and appraise the audit efforts of the Company'sCompany’s independent registered public accounting firm; and provide an open avenue of communications among the independent registered public accounting firm, financial and senior management, and the Board of Directors. During fiscal year ended June 30, 2010,2012, the Company retained Burr Pilger Mayer, Inc. ("BPM"(“BPM”) as its independent registered public accounting firm to provide audit and audit related services. All fees and expenses paid to BPM were approved by the Audit Committee.
The Audit Committee reviewed and discussed the audited financial statements with management and BPM, and management represented to the Audit Committee that the consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. The discussions with BPM also included the matters required by Statement on Auditing Standards No. 114 (AICPA,Professional Standards,Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board (United States) in Rule 3200T regarding "Communication“Communication with Audit Committees."
”
The Audit Committee has also received the written disclosures and the letter from BPM required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant'saccountant’s communications with the Audit Committee concerning independence, which was also discussed with BPM.
Based on the Audit Committee'sCommittee’s review of the audited financial statements, and the review and discussions with management and BPM referred to above, the Audit Committee recommended to the Company'sCompany’s Board of Directors that the audited financial statements be included in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended June 30, 20102012 for filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE:
WILLIAM J. NANCE, CHAIRPERSON
JOHN C. LOVE
10
10 |
Audit Fees:
Fees
The aggregate fees billed for each of the last two fiscal years ended June 30, 20102012 and 20092011 for professional services rendered by Burr Pilger Mayer, Inc., the independent registered public accounting firm for the audit of the Company'sCompany and its consolidated subsidiary’s annual financial statements and review of financial statements included in the Company'sCompany’s Form 10-Q reports or services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years, were as follows:
Fiscal Year
-------------------------
2010 2009
-------- --------
Audit Fees $156,000 $156,000
Audit Related Fees - -
Tax Fees - -
All Other Fees - -
-------- --------
Total: $156,000 $156,000
======== ========
Fiscal Year | ||||||||
2012 | 2011 | |||||||
Audit Fees | $ | 156,000 | $ | 186,000 | ||||
Audit Related Fees | - | - | ||||||
Tax Fees | - | - | ||||||
All Other Fees | - | - | ||||||
TOTAL: | $ | 156,000 | $ | 186,000 |
Audit Committee Pre-Approval Policies
The Audit Committee shall pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm, subject to any de minimus exceptions that may be set for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the completion of the audit. The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Committee at its next scheduled meeting. All of the services described herein were approved by the Audit Committee pursuant to its pre-approval policies.
None of the hours expended on the independent registered public accounting firm'sfirms’ engagement to audit the Company'sCompany’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the independent registered public accounting firm'sfirm’s full-time permanent employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
“FOR”
RATIFICATION OF THE APPOINTMENT OF BURR PILGER MAYER, INC.
AS THE COMPANY'SCOMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANING FIRM.
11
PROPOSAL NO. 3
NON-BINDING VOTE ON EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which was added by the Dodd-
Frank Wall Street and Consumer Protection Act (the "Dodd Frank Act") and the
related rules of the SEC, we are including in these proxy materials a
separate resolution subject to shareholder vote to approve, in a non-binding
vote, the compensation of our named executive officers as disclosed on pages
5 to 7. The text of the resolution in respect of Proposal No. 3 is as
follows:
"Resolved, that the shareholders approve, in a non-binding vote,
the compensation of the Company's named executive officers as
disclosed on Pages 5 to 7 in the Proxy Statement relating to the
Company's Fiscal 2010 Annual Meeting to be held on February 24,
2011."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
PROPOSAL NO. 4
NON-BINDING VOTE ON THE FREQUENCY OF SHAREHOLDER VOTES
ON EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which was added by the Dodd-
Frank Wall Street and Consumer Protection Act (the "Dodd Frank Act") and the
related rules of the SEC, we are including in these proxy materials a
separate resolution subject to shareholder vote to recommend, in a non-
binding vote, whether a non-binding shareholder vote to approve the
compensation of our named executive officers (that is similar to the non-
binding vote in Proposal 3) should occur every one, two or three years. The
text of the resolution with respect of Proposal 4 is as follows:
"Resolved, that the shareholders recommend, in a non-binding
vote, whether a non-binding shareholder vote to approve the
compensation of the Company's named executive officers should
occur every one, two or three years"
In considering their vote, shareholders may wish to review the information
presented in connection with Proposal 3 and the information on the Company's
compensation policies and decisions regarding named executive officers as
disclosed on pages 5 to 7. In addition, shareholders should note the
following:
* A triennial policy would permit shareholders and directors to
evaluate the effects of our compensation program on long-term
performance and would help align "say on pay" with the goal of
avoiding short-term focus in corporate governance and executive
pay arrangements.
* In addition, the triennial approach would allow shareholders to
engage in a more thoughtful analysis and voting by providing
more time between votes to gage executive officer performance.
For these reasons, we believe that a three-year time horizon is appropriate
in order to provide shareholders with a more comprehensive view of whether or
named executive officer compensation programs are achieving their objectives.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "THREE YEARS"
WITH RESPECT TO HOW FREQUENTLY A NON-BINDING SHAREHOLDER VOTE TO APPROVE
THE COMPENSATION OF OUR EXECUTIVE OFFICERS SHOULD OCCUR.
12
11 |
OTHER BUSINESS
As of the date of this statement, management knows of no business to be presented at the meeting that is not referred to in the accompanying notice. As to other business that may properly come before the meeting, it is intended that the proxies properly executed and returned will be voted in respect thereof at the discretion of the person voting the proxies in accordance with the best judgment of the person voting the proxies.
SHAREHOLDER PROPOSALS
It is presently anticipated that the fiscal 20112013 Annual Meeting of Shareholders will be held on or around February 23, 2012.20, 2014. Any shareholder proposals intended to be considered for inclusion in the proxy statement and form of proxy for presentation at the fiscal 20112013 Annual Meeting must be received by the Company no later than October 23, 2011. The proposalSeptember 26, 2013. In addition, all proposals must be in accordancecomply with the provisions of Rule 14a-8 promulgated byadopted under Section 14(a) of the Securities and Exchange Commission underact, as amended (the“Exchange Act”), which lists the Securities Actrequirements for inclusion of 1934.shareholder proposals in company-sponsored proxy materials. Any proposals must be submitted in writing to the following address: Michael G. Zybala, Secretary, Santa Financial Corporation, 10940 Wilshire Blvd., Suite 2150, Los Angeles, CA 90024. It is suggested that the proposal be submitted by certified mail -– return receipt requested.
ANNUAL REPORT ON FORM 10-K
The Annual Report on Form 10-K for the 2010 fiscal year ended June 30, 2012 accompanies this proxy statement, but is not deemed a part of the proxy solicitation material. A copy of the Company'sCompany’s Form 10-K for the fiscal year ended June 30, 2010,2012, as required to be filed with the Securities and Exchange Commission, excluding exhibits, will be mailed to shareholders without charge upon written request to: Michael G. Zybala, Secretary, Santa Fe Financial Corporation, 10940 Wilshire Blvd., Suite 2150, Los Angeles, CA 90024. Such request must set forth a good-faith representation that the requesting party was either a holder of record or a beneficial owner of the common stock of the Company on January 11, 2011.2013. The Company'sCompany’s Form 10-K and other reports are also available on the Santa Fe page of its parent company’s website atwww.intgla.comand through the Securities and Exchange Commission's world-wide-web
site (http://www.sec.gov).
By Order of the Board of Directors
SANTA FE FINANCIAL CORPORATION
Michael G. Zybala
Secretary
Commission’s websitewww.sec.gov.
By Order of the Board of Directors | |
SANTA FE FINANCIAL CORPORATION | |
Michael G. Zybala | |
Secretary |
Dated: Los Angeles, California
January 21, 2011
13
APPENDIX A
SANTA FE FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
(As Amended January 13, 2011)
Purpose:
- -------
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its responsibility of overseeing management's conduct
of the Company's financial reporting process, the Company's systems of
internal accounting and financial controls, and the annual independent audit
of the Company's financial statements.
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention and shall have full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and
the Committee are in place to represent the Company's shareholders, and the
Company's independent registered public accounting firm is ultimately
accountable to the Board and the Committee as such representatives of
shareholders. It is the responsibility of the Committee to maintain free and
open means of communication between the Board, the Company's independent
registered public accounting firm and the financial management and internal
auditors of the Company.
The Committee shall review the adequacy of this Charter on an annual basis.
Membership:
- ----------
The Committee shall be comprised of "independent" directors that meet the
composition requirements as defined by the rules of the Securities and
Exchange Commission ("SEC") and the NASDAQ Stock market LLC ("NASDAQ") as may
be modified and supplemented from time to time. Accordingly, all of the
members of the Committee will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company;
2. Are not affiliates of the Company;
3. Do not receive any compensation from the Company other than in the
capacity as director; and
4. Who are financially literate or who become financially literate
within a reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will be an audit committee
financial expert as defined by the Securities and Exchange Commission.
The members of the Committee shall be elected by the Board at the annual
meeting of the Board and shall serve until their successors shall be duly
elected and qualified. Unless a Chairman of the Committee is elected by the
full Board, the members of the Committee may designate a Chairman of the
Committee by majority vote of the full Committee Membership.
Meetings:
- --------
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. Minutes of each meeting
of the Committee should be recorded by the Secretary to the Committee.
Approval by a majority of the members present at a meeting at which a quorum
is present shall constitute approval by the Committee. The Committee may also
A-1
act by unanimous written consent without a meeting. As part of its job to
foster open communication, the Committee should meet at least annually with
management and the Company's independent registered public accounting firm in
separate executive sessions to discuss any matters that the Committee or each
of these groups believe should be discussed privately. In addition, the
Committee or at least its Chairman should meet with the Company's independent
registered public accounting firm and management quarterly to review the
Company's financials consistent with #2 below. The Committee may request any
officer or employee of the Company or the Company's outside counsel or the
Company's independent registered public accounting firm to attend a meeting
of the Committee or to meet with any members of, or consultants to, the
Committee.
Key Responsibilities:
- --------------------
The Committee's job is one of oversight, and it recognizes that the Company's
management is responsible for preparing the Company's financial statements
and that the Company's independent registered public accounting firm is
responsible for auditing those financial statements pursuant to professional
standards. Additionally, the Committee recognizes that financial management
has more time, knowledge and detailed information about the Company than do
Committee members. Consequently, in carrying out its oversight
responsibilities, the Committee is not providing any expert or special
assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set
forth as a guide with the understanding that the Committee may diverge from
this guide as appropriate given the circumstances.
1. The Committee shall review with management and the Company's
independent registered public accounting firm the audited financial
statements to be included in the Company's Annual Report on Form 10-K (or the
Annual Report to Shareholders if distributed prior to the filing of the Form
10-K) prior to the filing of the Form 10-K or, if deemed appropriate, prior
to any year-end earnings release. The Committee shall review and consider
with the Company's independent registered public accounting firm all matters
required to be discussed by Statement on Auditing Standards ("SAS") No. 114
(AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the
Public Company Accounting Oversight Board (United States) in Rule 3200T
regarding "Communication with Audit Committees."
2. As a whole, or through the Committee chair, the Committee shall
review with the Company's independent registered public accounting firm the
Company's interim financial results to be included in the Company's quarterly
reports to be filed with Securities and Exchange Commission and the matters
required to be discussed by SAS No. 114 with respect to quarterly financial
statements. Such review will occur prior to the Company's filing of the Form
10-Q or, if deemed appropriate, prior to any quarterly earnings releases.
3. Review disclosures made to the Committee by the Company's CEO and
CFO during their certification process for the Form 10-K and Form 10-Q about
any significant deficiencies in the design or operation of internal controls
or material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company's internal controls.
4. The Committee shall:
(a) request from the Company's independent registered public
accounting firm annually written disclosures and a letter
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant's
communications with the Audit Committee concerning independence.
(b) discuss with the Company's independent registered public
accounting firm any disclosed relationships or services which
may impact that firm's objectivity or independence; and
(c) recommend that the Board take appropriate action in response
to the Company's independent registered public accounting firm's
report to satisfy itself of that firm's independence.
A-2
5. The Committee shall have the sole authority to appoint or replace
the Company's independent registered public accounting firm (subject, if
applicable, to shareholder ratification). The Committee shall be directly
responsible for the compensation and oversight of the work of the Company's
independent registered public accounting firm (including resolution of
disagreements between management and the Company's independent registered
public accounting firm regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work. The Company's
independent registered public accounting firm shall report directly to the
Committee.
6. The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the company by its independent registered public accounting firm, subject to
the de minimus exceptions for non-audit services described in Section 10A
(i)(1)(B) of the Exchange Act which are approved by the Committee prior to
the completion of the audit. The Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including
the authority to grant preapprovals of audit and permitted nonaudit services,
provided that decisions of such subcommittee to grant preapprovals shall be
presented to the full Committee at its next scheduled meeting.
7. Review and discuss quarterly reports from the Company's independent
registered public accounting firm:
(a) All critical accounting policies and practices to be
used.
(b) All alternative treatments of financial information
within generally accepted accounting principles that have
been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the
treatment preferred by the independent registered public
accounting.
(c) Other material written communications between the
independent registered public accounting firm and management,
such as any management letter or schedule of unadjusted
differences.
8. Periodically consult with the Company's independent registered
public accounting firm, out of the presence of management, about internal
controls and the fullness and accuracy of the organization's financial
statements.
9. Recommend to the Board policies for the Company's hiring of
employees or former employees of the independent registered public accounting
firm who participated in any capacity in the audit of the Company.
10. Discuss with management the Company's use of "pro forma" or
"adjusted" non-GAAP information, as well as financial information and
earnings guidance provided to analysts and rating agencies. Such discussion
may be done generally (consisting of discussing the types of information to
be disclosed and the types of presentations to be made).
11. Establish regular and separate systems of reporting to the
Committee by each of management, the independent registered public accounting
firm, and the internal accountants regarding any significant judgments made
in management's preparation of the financial statements, and the view of each
as to appropriateness of such judgments.
12. Following completion of the annual audit, review separately with
each of management and the independent registered public accounting firm any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management and the
independent registered public accounting firm in connection with the
preparation of the financial statements.
A-3
14. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
15. Establish, review, and update periodically a Code of Ethical
Conduct, and ensure that management has established a system to enforce this
Code.
16. Review and approve any transactions between the Company and its
officers, directors or 5% shareholders.
17. The Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding, as determined by
the Committee, for payment of compensation to the Company's independent
registered public accounting firm for the purpose of rendering or issuing an
audit report and to any advisors employed by the Committee.
Reporting Responsibilities:
- --------------------------
The Committee shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the Company's annual
proxy statement.
The Committee shall prepare such other reports for the full Board of
Directors and others as it shall deem necessary to discharge its
responsibilities under this Charter.
A-4
Form of Proxy
- -----------------------------------------------------------------------------
Proxy - SANTA FE FINANCIAL CORPORATION
- -----------------------------------------------------------------------------
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 24, 2011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John V. Winfield and Michael G. Zybala, and
each of them, the attorneys, agents and proxies of the undersigned, with full
powers of substitution to each, to attend and act as proxy or proxies of the
undersigned at the Annual Meeting of Shareholders of Santa Fe Financial
Corporation to be held at the Hilton San Francisco Financial District, 750
Kearny Street, San Francisco, CA 94108 on Thursday, February 24, 2011 at 10:30
a.m., and at any and all adjournments thereof, and to vote as specified herein
the number of shares which the undersigned, if personally present, would be
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS, "FOR" PROPOSALS 2 AND 3, AND "THREE YEARS
FOR PROPOSAL 4. THE PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF
NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3, AND "THREE
YEARS FOR PROPOSAL 4.
The undersigned hereby ratifies and confirms all that the attorneys and
proxies, or any of them, or their substitutes shall lawfully do or cause to be
done by virtue hereof, and hereby revokes any and all proxies heretofore given
by the undersigned to vote at the meeting. The undersigned acknowledges receipt
of the Notice of Annual Meeting and the Proxy Statement accompanying such
notice.
PLEASE SIGN AND DATE ON REVERSE SIDE
Using a BLACK INK pen, mark your votes with an X as shown in this
example. Please do not write outside the designated areas. [X]
ANNUAL MEETING PROXY CARD
Please fold along the perforation, detach and return the bottom portion in the
enclosed envelope.
- -----------------------------------------------------------------------------
A. Proposals - The Board of Directors recommends a vote FOR all the nominees
listed and FOR Proposals 2 and 3 and THREE YEARS for Proposal 4.
1. Election of Directors: For Withhold For Withhold
01 - John V. Winfield [ ] [ ] 02 - John C. Love [ ] [ ]
03 - William J. Nance [ ] [ ]
2. Ratification of the Retention of Burr For Against Abstain
Pilger Mayer, Inc. as the independent
registered accounting firm for the Company [ ] [ ] [ ]
for the fiscal year ending June 30, 2011.
3. To approve, by non-binding vote, the For Against Abstain
compensation of the named executive
officers. [ ] [ ] [ ]
4. To recommend, by non-binding vote, the 1 Yr. 2 Yrs. 3 Yrs. Abstain
frequency of shareholder votes on
named executive officer compensation. [ ] [ ] [ ] [ ]
5. OTHER BUSINESS. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting and at
any and all adjournments thereof. The Board of Directors at present knows
of no other business to be presented by or on behalf of the Company or the
Board of Directors at the meeting.
B. Non-Voting Items
Change of Address - Please print new address below. Meeting Attendance
Mark box to the
[ ] right if you plan [ ]
[ ] to attend the
[ ] Annual Meeting
C. Authorized Signatures - This section must be completed for your vote to be
Counted - Date and Sign Below
Please date this proxy card and sign exactly as your name appears on this card.
Joint owners should each sign personally. Corporate proxies should be signed by
an authorized officer. Executors, administrators, trustees, etc., should give
their full titles.
Date (mm/dd/yyyy) - Please print date below.
[ / / ]
[ ]
Signature 1 - Please keep signature within the box.
[ ]
[ ]
Signature 2 - Please keep signature within the box.
[ ]
[ ]
18, 2013