(1)

Represents shares of commonrestricted stock underlying awards (i) under the 2003 Incentive Plan, and (ii) under the 2009 Incentive Plan which, subject to and conditioned upon approval of the 2009 Incentive Plan by stockholders at the annual meeting of stockholders, were awarded on December 9, 2008 and will be issued as soon as may be practicablethat vest five years after the annual meeting:

•

eachdate of the executive officers named in the Summary Compensation Table;grant.



•

all current executive officers as a group;



•

all current directors who are not executive officers as a group; and



•

all full and part-time employees, including all current full and part-time officers who are not executive officers, as a group.

Name and Position		2003 Incentive Plan Dollar Value ($)(1)			2003 Incentive Plan Number of Shares(2)			2009 Incentive Plan Dollar Value ($)(1)			2009 Incentive Plan Number of Shares(2)
Patrick J. Callan, Jr. Director, President and Chief Executive Officer		$	24,391			6,385		$	21,449			5,615
Fredric H. Gould Chairman of the Board of Directors			24,391			6,385			1,203			315
Lawrence G. Ricketts Executive Vice President and Chief Operating Officer			24,391			6,385			13,809			3,615
David W. Kalish Senior Vice President and Chief Financial Officer			24,391			6,385			1,203			315
Matthew J. Gould Director and Senior Vice President			24,391			6,385			1,203			315
Executive group (10 persons)			121,954			31,925			146,592			38,375
Non-executive director group (6 persons)			—			—			57,300			15,000
Non-executive officer and employee group (39 persons)			—			—			66,659			17,450

---

(1)(2)

The value has been computed based upon $3.82$16.19 per share, the closing price for our shares of common stock on the New York Stock Exchange on April 22, 2009.January 15, 2011, the date of grant.

(2)(3)

The awards will be made by delivery of restricted stock. The compensation committee has established aIncludes the five year vesting period for the restricted stock.executive officers named above.

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        The affirmative vote of the holders of a majority of our outstanding shares of common stock present at the meeting in person or by proxy is required to adopt the One Liberty Properties, Inc. 2009 Incentive Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE PROPOSAL TO ADOPT THE ONE LIBERTY PROPERTIES, INC. 20092012 INCENTIVE PLAN. PROXIES SOLICITED BY THE BOARD OF TRUSTEESDIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY OTHERWISE.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

(PROPOSAL 3)

General

        The audit committee and the board of directors is seeking ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2009.2012. A representative of Ernst & Young LLP is expected to be present at theour annual meeting and will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

        We are not required to have our stockholders ratify the selection of Ernst & Young LLP as our independent registered public accounting firm. We are doing so because we believe it is good corporate practice. If the stockholders do not ratify the selection, the audit committee will reconsider whether or not to retain Ernst & Young LLP, but may, in its discretion, decide to retain such independent registered public accounting firm. Even if the selection is ratified, the audit committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the companyour and its stockholders.our stockholders' interests.

        The affirmative vote of the holders of a majority of our outstanding shares of common stock present at the meeting, in person or by proxy, is required to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2009.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2009. THE PERSONS NAMED IN THE PROXY CARD INTEND TO VOTE SUCH PROXY FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM UNLESS YOU INDICATE THAT YOUR SHARES SHOULD BE VOTED OTHERWISE.2012.

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Audit and Other Fees

        The following table presents the fees for professional audit services billed by Ernst & Young LLP for the services and years indicated:

		2011			2010
Audit fees(1)		$	529,104		$	590,608
Audit-related fees(2)			—			45,000
Tax fees(3)			10,250			19,848
All other fees			—			—
Total fees		$	539,354		$	655,456

---

(1)

Includes fees for the audit of our annual consolidated financial statements, for the years ended December 31, 2008

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and 2007, and fees billed for other services rendered to us by Ernst & Young LLP for each of such years:

			2008			2007
Audit fees(1)			$	373,100		$	330,000
Audit-related fees(2)				—			58,200
Tax fees(3)				14,400			8,600
	Total fees		$	387,500		$	396,800

---

(1)

Audit fees include fees for the auditreview of our annual consolidated financial statements and for review of financial statements included in our quarterly reports on Form 10-Q. Included in the audit fees for 200810-Q and 2007 are $94,500 and $105,000, respectively, for services rendered in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002.



(2)

Audit-related fees include fees for audits performed for significant property acquisitions and dispositions required by the rules and regulations of the Securities and Exchange Commission and fees related to services rendered in connection with registration statements filed with the Securities and Exchange Commission.acquisitions.



(3)

Tax fees consist of fees for tax advice, tax compliance and tax planning.

        The audit committee has concluded that the provision of non-audit services listed above is compatible with maintaining the independence of Ernst & Young LLP.

Pre-Approval Policy for Audit and Non-Audit Services

        The audit committee must pre-approve all audit and non-audit services involving our independent registered public accounting firm.

        In addition to the audit work necessary for us to file required reports under the Securities Exchange Act of 1934, as amended (i.e.(i.e., quarterly reports on Form 10-Q and annual reports on Form 10-K), our independent registered public accounting firm may perform non-audit services, other than those prohibited by the Sarbanes-Oxley Act of 2002, provided they are approved in advance by the audit committee. The audit committee approved all audit and non-audit services performed by our independent registered public accounting firm in 20082011 and 2007.2010.

Approval Process

        Annually, the audit committee reviews and approves the audit scope concerning the audit of our consolidated financial statements for that year, including the proposed audit fee associated with the audit and services in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The audit committee may, at the time it approvesreviews the proposed audit scopefees or subsequently thereafter, approve the provision of tax and other non-audit related non-audit services and the maximum expenditure which may be incurred for such tax services for such year. Any fees for the audit in excess of those approved and any fees for taxnon-audit related services in excess of the maximum established by the audit committee must receive the approval of the audit committee.

        Proposals for any other non-audit services to be performed by the independent registered public accounting firm must be approved by the audit committee.

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REPORT OF THE AUDIT COMMITTEE

        The audit committee of the board of directors is comprised of three independent directors and operates under a written charter adopted by the board of directors. The audit committee reviews the charter on an annual basis. The board of directors has reviewed Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the New York Stock Exchange listing standards definition of independence for audit committee members and has determined that each member of the audit committee is independent.was independent during his service on the committee.

        The role of the audit committee is appointed by the board of directorsto select and engage our independent registered public accounting firm and to oversee and monitor, among other things, theour financial reporting process, the independence and performance of the independent registered public accounting firm and the functioning of our internal controls. It is the responsibility of management to prepare financial statements in accordance with generally accepted accounting principles and of the independent registered public accounting firm to perform an independent audit of the financial statements and to express an opinion on the conformity of those financial statements with generally accepted accounting principles.

        The audit committee met on five occasions in 2008. In performing its functions,duties, the audit committee committee:

•

met and held discussions with management, the independent registered public accounting firm and the accounting firm performing the internal control audit function on the company's behalf. The audit committee our behalf;



•

discussed with the independent registered public accounting firm the overall scope and plan for its activities and reviewed with the accounting firm performing the internal control audit function its work plan and the overall scope and plans for their respective activities.

        Management representedof its activities;



•

obtained representations from management to the audit committeeeffect that the year endyear-end consolidated financial statements were prepared in accordance with generally accepted accounting principles. The audit committee principles;



•

was advised by the independent registered public accounting firm that it would render an unqualified opinion with respect to the year-end consolidated financial statements;



•

reviewed and discussed the year end consolidated financial statements with management and the independent registered public accounting firm. The audit committee also firm;



•

discussed our internal control procedures and their evaluation of ourthe internal controls with management, the independent registered public accounting firm and the accounting firm performing the internal control audit function. The audit committee also function;



•

reviewed with management the process used for the certifications under the Sarbanes-Oxley Act of 2002 of the company'sour filings with the Securities and Exchange Commission. The audit committee met to reviewCommission;



•

reviewed the unaudited quarterly financial statements prior to filing each Form 10-Q with the Securities and Exchange Commission and reviewed eachthe scope of quarterly earnings press release prior to public release. The audit committee release;



•

discussed with the independent registered public accounting firm matters required to be discussed by the statement on Auditing Standards No. 61, as amended (Communication with Audit Committee).

        The audit committee ;



•

discussed with the independent registered public accounting firm, the registered public accounting firm's independence from usthe Company and management, and received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). Further, the audit committee ; and



•

reviewed and approved the independent registered public accounting firm's fees, both for performing audit and non-audit services, and considered whether the provision of non-audit

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services by the independent registered public accounting firm was compatible with maintaining the independent registered public accounting firm's independence and concluded that it was compatible.

        The audit committee meets with the independent registered public accounting firm and the accounting firm performing the internal control audit function, with and without management present, to discuss the results of their examinations, their evaluations of the internal controls, and the overall quality of the company'sour financial reporting.

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        Based on the reviews and discussions referred to above, the audit committee recommended that the audited financial statements for the year ended December 31, 20082011 be included in the company'sCompany's Annual Report on Form 10-K for the year ended December 31, 20082011 for filing with the Securities and Exchange Commission.

        The audit committee approved the retention of Ernst & Young LLP as independent registered public accounting firm for the fiscal year ended December 31, 20092012 after reviewing the firm's performance in 20082011 and its independence from us and management.

        The audit committee also reviewed the annual payment made by the company to Majestic Property Management Corp. under the compensation and services agreement, renegotiated such payment and other compensation under such agreement with certain of the company's part-time executive officers and reviewed its findings with respect to such payment and other compensation with the company's compensation committee.

Charles Biederman (Chairman)
James J. Burns
Joseph A. DeLuca

		Respectfully submitted.
		James J. Burns Joseph A. DeLuca Eugene I. Zuriff

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EXECUTIVE COMPENSATION

Highlights

        The following are highlights of our compensation practices; we encourage you to read the more detailed information set forth herein:

•

the compensation we pay our full-time named executive officers is generally related (though, with the exception of the RSU's, not formulaically tied to) our performance. Among other things,



-

Messrs. Callan and Ricketts were awarded increases in base salaries effective as of January 1, 2011, reflecting, among other things, their efforts with respect to our acquisition of 14 properties for an aggregate of $72.3 million and the increase of more than 75% in our stock price during 2010.



-

Messrs. Callan and Ricketts were awarded bonuses of $65,000 and $45,000 for 2011, reflecting, among other things, their efforts with respect to,



(i)

increasing revenues, net income per share, funds from operations per share and adjusted funds from operations per share from 2010 by more than $4.3 million, $0.15, $0.03 and $0.03, respectively,



(ii)

our public offering from which we received net proceeds of approximately $40.7 million, and



(iii)

the six properties we acquired in 2011 for an aggregate of approximately $28 million.



•

total compensation for our full-time named executive officers decreased slightly in 2011 from 2010;



•

all of our executive officers are employees at will—none of our officers have employment agreements;



•

there are no severance or similar arrangements for our executive officers, other than the accelerated vesting of shares of restricted stock and RSU's upon the occurrence of specified events (e.g. death, disability, retirement or a change of control);



•

there are no excise tax gross ups or similar arrangements for our executive officers;



•

the shares of restricted stock awarded to our executive officers vest (assuming continued service) approximately five years after the grant date on a "cliff-vesting" basis;



•

the RSU's awarded to our executive officers vest (assuming continued service) on a "cliff-vesting" basis approximately seven years after the grant date and only if, and to the extent that, performance metrics are satisfied—we believe that these conditions establish challenging hurdles as only 50% of the awards would have vested as of December 31, 2011; and



•

though we do not have a formal policy requiring a minimum level of stock ownership, our executive officers and directors own beneficially in the aggregate approximately 3.25 million shares or 22% of our outstanding shares.

Compensation Discussion and Analysis

        This compensation discussion and analysis describes our compensation objectives, policies and decisions as applied to the compensation provided by us in 2011 to our named executive officers in 2008.officers. This discussion and analysis focuses on the information contained in the compensation tables that follow this discussion and analysis, but also describes our historic compensation structure for our executive officers to enhance an understanding of our executive compensation disclosure. Our compensation committee oversees our

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compensation program, recommends the compensation of the executive officers employed by us on a full-time basis to our board of directors for its approval, approvesrecommends the annual fee paid by us to the chairman and vice chairman of our board of directors, and approvesrecommends the annual fees paid by us pursuant to a compensation and services agreement to Majestic Property Management Corp., an affiliated entity (hereinafter, "Majestic"("Majestic"), which results in the payment by Majestic of compensation to our part-time officers, including Fredric H. Gould, Matthew J. Gould and David W. Kalish.Kalish and Mark H. Lundy, named executive officers. Majestic is wholly-owned by Fredric H. Gould, the chairman of our board.

        Historically, including in 2008, weBackground

        We have had two categories of officers: (i) officers who devote their full business time to our affairs,affairs; and (ii) officers who devote their business time to us on a part-time basis. TheOur full-time officers who devote their full business time to our affairsand employees are compensated directly and solely by us. Prior to 2007, the basic compensation (base salary, bonus, if any,us and perquisites) of certain of our part-time officers who perform primarilyand employees are compensated by Majestic which provides to us, pursuant to the compensation and services agreement, the services of other personnel (including executive, administrative and legal, accounting and accountingclerical personnel) performing services on our behalf, was allocatedbehalf. In consideration for providing services and the services of such personnel, we paid Majestic a fee of $2,725,000 for 2011. Majestic may earn a profit from payments made to it under the agreement. In addition, under this agreement, we paid the chairman of our board $250,000 in 2011 and made an additional payment to Majestic of $175,000 in 2011 for our share of all direct office expenses, including rent, telephone, computer services, internet usage and supplies. The amount of annual payments to be made by us and other affiliated entities pursuant to a sharedMajestic under the compensation and services agreement are negotiated annually by our audit committee and certain officers (including officers who did not allocate any of their compensation to usMajestic and officers whose compensation was allocated to us) received compensation from Majestic, whose gross revenues include fees paidat other times as may be determined by us for services performed on our behalf (property management, sales and lease consulting and brokerage services, mortgage brokerage services and construction supervisory services, among other services provided).audit committee.

        All of our full-time and part-time officers and other employees, including employees of affiliated companies who perform services for us on a part-time basis, receive annual restricted stock awards approved by the compensation committee and the board of directors.

Named Executive Officers

        In 2006, in connection with a review of our allocation methods and our related party transactions with affiliated entities, our audit committee recommended to our compensation committee and board of directors a change in the manner in which compensation is paid to those officers (and employees) who perform services for us on a part-time basis, including legal and accounting services, as well as a change in the manner in which any affiliated entity, primarily Majestic, is compensated for services performed on our behalf. The services provided by Majestic to us included billing and collection of rent and additional rent and property management services, property acquisition review and analysis, troubled tenant evaluations, sales and lease consulting and brokerage services, consulting services in respect to mortgage financings and construction supervisory services. The audit committee recommended changes to the manner in which compensation is paid to part-time officers and employees and the manner in which Majestic is compensated for services performed on our behalf because, in its view, the changes would simplify our compensation structure, limit the need for the audit committee, the internal auditor and the independent auditor to review the allocations and limit potential conflict issues which may arise as a result of related party transactions. The audit committee, the compensation committee and the board of directors were of the opinion that it was desirable for us to maintain the services of those officers who perform services for us on a part-time basis, as well as the services of Majestic, which performs necessary services on our behalf.

        In order to effectuate our audit committee's recommendation, we entered into an agreement with Majestic, effective as of January 1, 2007, under which Majestic assumed our obligations to make payments under the shared services agreement and agreed to provide to us the services of all executive, administrative, legal, accounting and clerical personnel that had previously been utilized by us on a part-time basis and for which we paid, as reimbursement, an allocated portion of the payroll expenses of such personnel in accordance with a shared services agreement. Since Majestic now provides such

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personnel for us, we no longer incur any allocated payroll expense and the payroll expenses of such executives and part-time employees is allocated to Majestic. Under the terms of the agreement, Majestic also agreed to continue to provide to us the property management services, property acquisition, sales and lease consulting and brokerage services, consulting services in respect to mortgage financings, and construction supervisory services that it provided to us in the past and we, therefore, do not incur any fees or expenses for such services, except for the annual fee referred to below. As consideration for providing the services of such personnel to us, and for providing property management services, property acquisition, sales and lease consulting and brokerage services, consulting services in respect to mortgage financings and construction supervisory services, we agreed to pay to Majestic a fee of $2,025,000 for 2008. Majestic may earn a profit from payments under the agreement. Majestic credits against the fee due to it any management or other fees received by it from any of our joint ventures (except for fees paid by the tenant-in-common on a property located in Los Angeles, CA). In addition, under the agreement, we agreed to pay compensation to the chairman of our board of $250,000 per annum and to make an additional payment to Majestic of $175,000 in 2008 for our share of all direct office expenses, including rent, telephone, computer services, internet usage, etc., previously allocated under the shared services agreement and since 2007 allocated to Majestic. The annual payments made by us to Majestic are to be reviewed and renegotiated by our audit committee and Majestic annually and at other times as may be determined by our audit committee.

        For the year ended December 31, 2008, ourOur named executive officers are Patrick J. Callan, Jr., president (chiefand chief executive officer effective January 1, 2008) and Lawrence G. Ricketts, Jr., executive vice president (chiefand chief operating officer, effective January 1, 2008), both of whom devote their full time to our affairs, and Fredric H. Gould, chairman of our board, (chief executive officer through December 31, 2007), David W. Kalish, a senior vice president and chief financial officer, and Matthew J. Gould,Mark H. Lundy, a senior vice president and secretary, who devote time to our affairs on a part-time basis.

Say-on-Pay

        In reviewing our compensation philosophy and practices and in approving base salaries for 2012 and bonuses paid for services rendered in 2011, the compensation committee was aware of the results of our June 2011 "say-on-pay" vote in which approximately 83% of the shares actually voted on such proposal voted to approve our executive compensation practices, and viewed such results as generally supportive of our compensation philosophy, practices and determinations.

Objectives of our Compensation Program

        The overridingA principal objective of our compensation program for full-time officers is to ensure that the total compensation paid to such officers is fair reasonable and competitive. The compensation committee believes that relying on this principalprinciple will permit us to both retain and motivate ourthese officers. With respect to our part-time executive officers, the compensation committee must be satisfied that such officers provide us with sufficient time and attention to fully meet our needs and fully perform their duties on our behalf. The compensation committee has considered this issue and is of the opinion that our part-time executive officers perform valuable services on our behalf, devote sufficient time and attention to our business needs, are able to fully meet

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our needs and that this arrangement does not adversely affect their ability to perform their duties effectively on our behalf. The compensation committee is of the opinion that our part-time officers perform valuable services on our behalf, are not distracted by their activities on behalf of affiliated entities and the performance of activities on behalf of affiliated entities does not adversely affect their ability to perform duties on our behalf.effectively. The compensation committee is also of the opinion that utilizing the services of various senior officers with diverse skills on a part-time basis enables us to benefit from a greater degree of executive experience and competence than an organization of our size could otherwise afford.

        We have historically experienced an extremely low level of officer and employee turnover. Fredric H. Gould, Matthew J. Gould and David W. Kalish and Mark H. Lundy each has been an officer with us for over 1820 years and Lawrence G. Ricketts, Jr. has been employed by us for approximately 10thirteen years. Patrick J. Callan, Jr. has been a member of our board of directors for seveneight years, and has been our president for in excess of threeover five years and our chief executive officer for over four years.

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Compensation Setting Process

Full-time Officers

        Our compensation committee refers to the compensation survey prepared for the National Association of Real Estate Investment Trusts (NAREIT) to understand the base salary, bonus, long-term incentives and total compensation paid by other REITs to their officers to assist it in providing a fair reasonable and competitive compensation package to our full-time officers. Although there are many REITs engaged in acquiringthe ownership and managingmanagement of real estate, portfolios, there are few equity REITs which have a market capitalization comparable to ours. As a result, the NAREIT compensation survey, although informative, does not provide information which is directly applicable to us. Accordingly, weus, does provide informative data for the compensation committee to use in its deliberations. We determine compensation for our full-time officers, including our full-time named executive officers on a case-by-case basis. In addition, from time to timebasis and our compensation committee retains an independent compensation consultantdecisions are subjective. Other than with respect to provide the committee with an analysis of the compensation paid to our executive officers in comparison to a selected peer group (see "Compensation Consultant" below). We have not to date utilized performance targets. However, the committee has commenced the process for establishing performance goals for the grant ofRSU's, which are performance based awards which will be madeissued in 2009 to be effective in 2010.2010, we do not use formal performance targets.

        In determining compensation for 2008,2011, the recommendations of Fredric H. Gould, chairman of our board, (formerly chief executive officer), played a significant role in the compensation-settingcompensation setting process since, as the chairman of the board, he wasis aware of each officer's duties and responsibilities and was most qualified to assess the level of each officer's performance. The chairman of our board, prior to making recommendations to the compensation committee concerning each full-time officer's compensation, consulted with certainother senior officers.executive officers, including our president and chief executive officer. During the process, they considered our overall performance for the immediately preceding fiscal year, including rental income,total revenues, funds from operations, net income and cash distributionsdividends paid to stockholders.stockholders, performance of our common stock and acquisition and financing activities were taken into consideration. None of these measures of performance was given more weight than any other and they were used to provide an overall view of our performance for the preceding year.other. The chairman of the board and other senior officers also assessed each individual's performance in such year, which assessment was highly subjective. Positively impacting the compensation decisions with respect to our full-time named executive officers for 2008 was the recognition of certain corporate accomplishments in 2007, including increases in rental income and funds from operations. Also taken into consideration was the fact that, although we had a decline in net income year over year, the decline was due primarily to gains in 2006 on the disposition of real estate by unconsolidated joint ventures, offset by mortgage prepayment premiums required as part of these sales. During this process, the chairman of our board proposed to the compensation committee with respect to each full-time named executive officer, a base salary for the 2008 calendar year,2011, a bonus applicable to the 2007 calendar year (paid2010 and payable in 2008)2011 and the number of shares of restricted stock to be awarded to each individual full-time named executive officer. At its annual compensation committee meeting, the compensation committee reviewed these recommendations. The compensation committee has discretion to accept, reject or modify the recommendations. The final decisionrecommendations by the compensation committee on compensation matters relatedwith respect to all officers was reported to the board of directors, which approved the actionsrecommendations of the committee.

Part-time Officers

        We believe that utilizingusing part-time officers pursuant to the shared services agreement through December 31, 2006, and, since January 1, 2007 pursuant to the compensation and services agreement enables us to benefit from access to, and the services of, a group of senior officers with experience and knowledge in real estate ownership, operations and management and finance, legal, accounting and tax matters that an organization our size could not otherwise afford. Our chairman, in consultation with certain of our part-time senior officers, determines the total annual base compensation, bonus, if any, and perquisites to be paid by all parties to the shared services agreement to our part-time officers.

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        Pursuantperquisites to be paid in the compensation and services agreement, Majestic assumed our obligations under the shared services agreement, and agreedaggregate to provide to us the services of all affiliated executive, administrative, legal, accounting and clerical personnel that we previously used on a part-time basis. For 2007 and 2008, the portion of our part-time officers' compensationofficers by all entities which was allocated to us in prior years pursuant to the sharedare provided services agreement, and would have been allocated to us in 2007 and 2008 if the compensation and services agreement was not in effect, was allocated to Majestic. The terms of the compensation and services agreement were negotiated by our audit committee, approved by our compensation committee and our board of directors and the agreement was effective as of January 1, 2007. For 2006, the audit committee reviewed the amount of compensation ofsuch officers.

        Our part-time officers allocated to us to determine if the allocation process was performed in accordance with the shared services agreement, and the compensation committee reviewed the reasonableness of the compensation allocated to us. For 2006, the audit committee, as a result of inquiries of the testing procedures of the independent registered public accounting firm and the accounting firm performing our internal audit function determined that each part-time officer's compensation was properly allocated to us in accordance with the shared services agreement. The fee paid to Majestic in 2008 and 2007 under the compensation and services agreement was negotiated by the audit committee and management of Majestic and approved by our compensation committee and board of directors. The compensation committee was advised of the total compensation received by each part-time officer from Majestic and other affiliated entities in 2008 and 2007.

Compensation Consultant

        In October 2008, our compensation committee engaged an independent compensation consultant, FPL Associates L.P., a nationally recognized compensation consulting firm specializing in the real estate industry. FPL Associates L.P. has no relationship with us or any of our affiliates, except that it was also retained in 2008 as the independent compensation consultant for BRT Realty Trust, which may be deemed an affiliate of ours. The primary purpose of the engagement was for the compensation consultant to conduct a comprehensive benchmarking analysis for our senior executives, to enable our compensation committee to determine if the compensation of our senior executive officers is fair and reasonable and to assist our compensation committee in making any necessary adjustments to the compensation components. The compensation consultant reviewed the compensation of seven of our senior executive officers, including our named executive officerschairman, also receive compensation from other than Matthew J. Gould. Matthew J. Gould was not included in the compensation consultant's study since nonebusiness entities, most of his basic compensation (salarywhich are owned or bonus) is paidcontrolled by us or allocatedour chairman, for services rendered to Majestic. (Matthew J. Gould participates in distributions made by Majestic—see "Summary Compensation Table" and "Certain Relationships and Related Transactions.")

        Prior to commencing its benchmarking analysis, the compensation consultant and management discussed and agreed upon a methodology for determining the comparative peer groups. Based upon such discussions it was determined to use two peer groups as follows:entities.

•

A Full-Time Peer Group; to be used for executives who dedicate all, or substantially all, of their business time to our affairs. The Full Time Peer Group includes public REITs active in the net lease space; public real estate companies comparable in size to us (measured by market and total capitalization); and/or public real estate companies located in New York. The Full Time Peer Group selected for benchmarking purposes consists of eleven public real estate companies with a market capitalization which is generally larger than our capitalization. The compensation consultant noted in its report to the compensation committee that none of the specific peer group companies are a perfect match to us, due to our small size position among our most direct peers.



•

A Shared Peer Group; to be used for executives who dedicate a portion of their business time to our affairs and who also dedicate time to affiliated companies (primarily BRT Realty Trust, a

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public company engaged in mortgage originations). The Shared Peer Group exude similar characteristics as described for the Full Time Peer Group and include public REITs focused on the debt side of the business and consists of six public equity REITs and six public debt REITs that are comparable to us in terms of focus, size and/or geographic location. The market capitalization of the peer group companies is generally larger than our capitalization.

•

The following is the full-time peer group companies used by the consultant:

Agree Realty Corporation		National Retail Properties, Inc.
AmReit		Ramco-Gershenson Properties Trust
CapLease, Inc.		Realty Income Corporation
Getty Realty Corp.		Urstadt Biddle Properties, Inc.
Lexington Realty Trust		W.P. Carey & Co. LLC.
Lodgian, Inc.

•

The following is the shared peer group companies used by the consultant:

CapLease, Inc.		Arbor Realty Trust, Inc.
Cousins Properties Incorporated		CapitalTrust, Inc.
Getty Realty Corp.		iStar Financial Inc.
Lexington Realty Trust		New York Mortgage Trust, Inc.
Urstadt Biddle Properties, Inc.		NorthStar Realty Financing Corp.
W.P. Carey and Co. LLC		RAIT Financial Trust.

        The compensation consultant used the 25^th percentile as the market comparison in its conclusions because of our relatively smaller size compared to the peer group companies. The compensation consultant also used a plus/minus 15% threshold to define "in line" (competitive) with the market. Based on its benchmarking analysis, the compensation consultant advised that in 2008: (i) the compensation paid by us to Patrick J. Callan, Jr., our president and chief executive officer, is slightly above the 25^th percentile, (ii) the compensation paid by us to Lawrence G. Ricketts, Jr., our executive vice president and chief operating officer, is in line with or slightly below the 25^th percentile, (iii) the compensation of part-time senior executives (including Fredric H. Gould, chairman of the board and David W. Kalish, a senior vice president and chief financial officer) paid by us or allocated to Majestic is below the 25^th percentile, (iv) the total compensation paid to Fredric H. Gould (including all compensation paid by affiliated companies), and the total compensation paid to part-time senior executives by us and affiliated companies (including David W. Kalish) is above the 25^th percentile and (v) the equity awards we provide to all of our officers are a smaller portion of total compensation compared to our peers.

Components of Executive Compensation

Full-time Officers

        The principal elements of our compensation program for our full-time officers are:

•

base salary;



•

annual bonus;



•

long-term equity incentive in the form of restricted stock;stock and long-term equity incentives in the form of RSU's; and



•

special benefits and perquisites.

        Additional benefits and perquisites which are provided(e.g., contributions to our full-time executive officers consist of:

•

defined contribution plan, additional disability insurance;



•

insurance, an automobile allowance;allowance and

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•

automobile maintenance and repairs.repairs).

        Base salary and annual bonus are cash-based, while long-term equity and long-term equity incentives consistconsists of restricted stock awards.awards and RSU's, respectively. In determining compensation, the compensation committee does not have a specific allocation goal between cash and equity-based compensation.

Part-time Officers

        In 2008,2011, except for the $250,000 annual compensation we paid to the chairman of our board pursuantand the $100,000 paid to the compensation and services agreement,vice chairman of our board, the only form of direct compensation we provided to our part-time officers was the granting of long-term equity incentives in the form of restricted stock awards. For services rendered to us, our part-time officers are compensated by Majestic, which was paid a fee of $2,025,000 (including $6,000 by one of our joint venture partners, but excluding$2,725,000 (excluding $175,000 as reimbursement for our share of direct office expenses) in 20082011 pursuant to the compensation and services agreement. The compensation committee was advised of the amount allocated by each part-time officer to Majestic for service rendered on our behalf and the total compensation received by each part-time officer in 2008 from Majestic and other affiliated companies.

Base Salary

        Base salary is the basic, least variable form of compensation for the job an officer performs and provides each officer with a guaranteed monthly income.

        Full-time Officers:    Base salaries of full-time officers are targeted to be competitive with the salaries paid to officers at other REITs with a market capitalization similar to ours. Any increase in base salary is determined on a case by case basis, is not formula based upon a structured formula and is based upon, among other considerations (i) our performance in the preceding fiscal year, (ii) such officer's current base salary, (iii) amounts paid by peer group companiesother REITs for officers performing substantially similar functions, (iv) years of service, (v) current job responsibilities, (vi) the individual's performance and (vii) the recommendation of the chairman of the board.board and other senior executive officers.

        Part-time Officers:    The portionbase salary of our part-time officers' base salary, which would have been allocated to us in 2008 pursuant to the shared services agreement, has been assumed by Majestic pursuant to the compensation and services agreement andofficers is paid by Majestic.Majestic and its affiliates. Since the annual fee paid to Majestic wasis approved by the audit and compensation committeecommittees and the board of directors, the compensation committee doesis not reviewinvolved in determining the base salaries of our part-timethese officers.

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Bonus

        Full-time Officers:    We provide the opportunity for our full-time officers to earn an annual cash bonus. We provide this opportunity both to reward our personnel for past performance and to motivate and retain talented people.them. We recognize that annual bonuses are almost universally provided by other companies with which we might compete for talent. In view of the fact that only two of our named executive officers devote their full-time to our affairs, annual cash bonuses for such named executive officers are determinedrecommended on a case-by-case basis by ourthe Chairman of the Board to compensation committee. During the process, we consideredconsider our overall performance for the immediately preceding fiscal year, including rental income,revenues, funds from operations, net income and cash distributionsdividends paid to stockholders.stockholders and the performance of our common stock. None of these measures of performance is given more weight than any other and they are used to provide an overall view of our performance for the preceding year. Once it has approveddetermined the annual bonus to be paid to each named executive officer, the compensation committee presents its recommendations to the board of directors for theirits approval. Based on our present structure and the small number of full-time officers, our compensation committee has not adopted formulas or performance goals to determine cash bonuses for our officers.

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        Part-time Officers:    The portion of our part-time officers' annual bonus, if any, which would have been allocated to us in 2008 pursuantbe paid to any part-time officer is the shared services agreement, has been assumed byresponsibility of Majestic pursuant to the compensation and services agreement. Since the annual fee paid to Majestic wasis approved by the audit and compensation committeecommittees and the board of directors, the compensation committee doesis not reviewinvolved in determining the bonus, if any,bonuses paid to part-time officers.

Long-term Equity and Long-term Equity Incentive Awards

        We provide the opportunity for our full-time and part-time officers to receive long-term equity incentive awards. Ourand long-term equity incentive awards. These compensation program isprograms are designed to recognize responsibilities, reward performance, motivate future performance, align the interests of our officers with those of our stockholders and retain our officers. The compensation committee reviews long-term equity incentives for all our employees, including part-time officers and employees of affiliates who perform services for us, at its regularly scheduled annual meeting (usually held in December of each year) and makes recommendations to our board of directors for the grant of equity awards.awards for all our employees, including part-time officers and employees. In determining the long-term equity and long-term equity incentive compensation component,components, the compensation committee considers all factors it deems to be relevant, factors, including our performance and individual performance. Existing stock ownership levels are not a factor in award determinations. All outstanding equity awards arewere granted under either our stockholder approved 2003 Incentive Plan or 2009 Incentive Plan.

        In 2010, we issued RSU's for the first time. Each RSU entitles the recipient to one share of common stock upon vesting. Assuming continued service, vesting occurs on June 30, 2017 if and to the extent pre-established market (i.e.total average annual stockholder return) or performance (i.e., average annual return on capital) conditions are met. See "Outstanding Equity Awards at Fiscal Year End." Further, at least 50% of the shares that are issued pursuant to vested RSU's must be retained until 2020 and the shares may be subject to a "clawback" in the event of a restatement of the financial statements. We initiated the use of RSU's as an element of our long-term equity compensation program with the expectation that in light of the long vesting period and the need to satisfy market and/or financial performance conditions, these awards would further align the interests of our executive officers with our stockholders and reward long-term market and financial performance.

        We do not have a formal policy with respect to whether equity compensation should be paid in the form of stock options, or restricted stock. Prior to 2003, we awarded stock options rather than restricted stock butor RSU's. We generally grant restricted stock awards which vest after five years of service and in 2003 a decision was made2010, also granted RSU's that vest after seven years of service if , and to grant only restricted stock.the extent, specified performance or market conditions are met. The compensation committee generally believes that restricted stock awards and RSU's are more effective than options in achieving our compensation objectives, as restrictedobjectives. Restricted stock has a greater retention value than options because of its five-year cliff vesting requirement and, because before vesting, cash dividends are paid on all outstanding restricted stock as an additional element of compensation. RSU's provide an additional incentive component to equity based awards in that the units only vest if, and to the extent,

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performance or market conditions are satisfied. Restricted stock and RSU's align the interests of our officers with our stockholders and because fewer shares are normally awarded it isthan in connection with the grant of options, they are potentially less dilutive. Additionally, before vesting, cash dividends to stockholders

        Generally, our equity compensation grants are paid on all outstanding awardsmade in January or February of restricted stock as an additional element of compensation.

        All the restricted stock awards granted to date contain a five-year "cliff" vesting requirement. The compensation committee believes that restricted stock awards with five-year "cliff" vesting provide a strong retention incentive and better aligns the interests of our officers with those of our stockholders. We view our capital stock as a valuable asset that should be awarded judiciously.

each year. We do not have a formal policy on timing equity compensationthese grants in connection with the release of material non-public information and in view of the five yearfive-year and seven-year "cliff" vesting requirement,requirements with respect to restricted stock awards and RSU's, respectively, we do not believe such a formal policy is necessary. In December, our board of directors, upon the compensation committee's recommendation, generally approves the granting of equity awards effective on or about the last business day in February of the following year. In December 2007, our board of directors, upon the compensation committee's recommendation, set the grant date for our restricted stock incentive awards effective on February 28, 2008.

        The amount of restricted stock recommended by theOur compensation committee for approval by the board of directors in December 2007 to be granted effective February 28, 2008 was related to the number of shares of our common stock issued and outstanding at the time the awards were approved byhas reviewed our compensation committee. The aggregate restricted stock authorized in December 2007policies and awarded by us in February 2008, 50,550 shares, was approximately 0.5% of our issued and outstanding shares of common stock as of December 31, 2007.

Chairman ofpractices to ascertain if the Board's Compensation

risks arising from such policies or practices are reasonably likely to have a materially adverse effect on us. The compensation and services agreement, which was approved bycommittee concluded that while our audit committee and board of directors in 2007, provides that we pay Fredric H. Gould,compensation program takes into account our performance, the chairman of our board, annual compensation for his services to us. Our chairmanprogram does not receive any additional direct compensation from us, other than anyencourage excessive or unnecessary risk-taking and our policies and practices achieve a balance between annual performance and long-term equity awards granted to him by our board of directors based upon our compensation committee's recommendation. Our chairman also receives compensation fromgrowth.

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Majestic. In 2008, we paid our chairman compensation of $250,000 and granted 3,000 shares of restricted stock to him valued at $52,500 ($17.50 per share) on the date of the grant. In 2008, our chairman also received compensation of $264,100 from Majestic. For additional information regarding compensation of our chairman, see the "Summary Compensation Table," below.

Executive Benefits and Perquisites

        Full-time Officers:    We provide our full-time officers with a competitive benefits and perquisites program. We recognize that similar benefits and perquisites are commonly provided at other companies with which we might compete for talent. We review our benefits and perquisites program periodically to ensure it remains fair to our officers and employees and supportable to our stockholders.employees. For 2008,2011, the benefits and perquisites we provided to our officers were a small percentage of the compensation provided by us to them. The benefits and perquisites we may provide to our full-time executive officers, in addition to the benefits and perquisites we provide to all our full time employees, consist of an automobile allowance, payments for automobile maintenance and repairs, or payment of the premium for additional disability insurance.

        Part-time Officers:    Our chairman of the board, in consultation with certain part-time senior officers, determines the perquisites of our part-time officers. The portion of our part-time officers' perquisites, which was previously allocated to us pursuant to the shared services agreement, is paid, effective as of January 1, 2007, by Majestic in accordance with the compensation and services agreement. Since the annual fee we paidpay to Majestic wasis approved by theour audit and compensation committeecommittees and theour board of directors, the compensation committee does not reviewapprove the perquisites of our part-time officers.

Employment and Severance andAgreements; Post Employment Benefits; Change of Control Agreements

        NeitherNone of our named executive officers nor our employees have employment or severance agreements with us. They are "at will" employees who serve at the pleasure of our board of directors.

        Except for provisions for accelerated vesting of awards of our restricted stock in a "change of control" transaction, weWe do not provide for any post-employment benefits to our named executive officers other than (i) their right to the vested portion of the pension or other similar plan in which they participate and (ii) the accelerated vesting of our restricted stock awards and RSU's.

        Generally, in the event of death, disability (i.e., the inability to engage in gainful activity due to a life threatening or long lasting mental or physical impairment) or retirement (with respect to restricted stock awarded pursuant to our 2009 Incentive Plan, having reached the age of 65 and worked for us for at least ten consecutive years), such person's shares of restricted stock vest fully and a pro-rata portion (giving effect to, among other things, the amount of time between the grant and the triggering event) of their RSU's will vest if and to the extent the applicable performance or market conditions are met as of June 30, 2017. In addition, upon a change of control, protection to our officers, directors or employees. Under the terms(i) shares of each restricted stock awardsvest fully and (ii) the RSU's vest fully if such change occurs after June 30, 2015 and, if on or prior to June 30, 2015, a pro-rata portion (giving effect to, among other things, the amount of time between the grant and such event) vests, in each case, without regard to satisfaction of market or performance conditions. Subject to the specific terms and conditions of the applicable plan and award agreement, accelerated vesting occurs with respecta change of control is generally deemed to each person who has been awarded restricted stockoccur if, (i) any person corporation or other entity purchases our stock for cash, securities or other consideration pursuant to a tender offer or an exchange offer, without the prior consent of our board, or (ii) any person, corporation or other entity shall becomebecomes the "beneficial owner" (as such term is defined in Rule 13-d-3 under the Securities and Exchange Act of 1934, as amended), directly or indirectly, of our securities representing 20%25% or more of the combined voting power of our then outstanding securities, ordinarily having(ii) the right to votecompletion of a business combination or sale of all or substantially all of our assets or (iii) there is a change in the electioncomposition of a majority of our board of directors, other than changes approved by incumbent directors.

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        We provide for the partial vesting of RSU's (subject to the satisfaction of performance or market conditions at June 30, 2017) and full vesting of restricted stock awards upon death and disability, because these events are completely outside of the control of our executives and in such circumstance, we believe that it would be unfair for our executives to forfeit the compensation and benefits that to which they otherwise would have been entitled. We provide for the partial vesting of RSU's (subject to the satisfaction of performance or market conditions at June 30, 2017) and full vesting of restricted stock awards upon retirement as we believe it runs contrary to the retention and reward of long-term equity and long term equity incentive awards to compel an executive to choose between retirement and the loss of all unvested awards. We differentiate between RSU's (i.e., partial vesting) and restricted stock awards (i.e.full vesting) because of the additional incentive component of the RSU's.

        We provide for accelerated vesting upon a change in control (on a single trigger basis) because, depending on the structure of the transaction, continuing such awards may unnecessarily complicate a potentially beneficial transaction. Among other things, it may not be possible to replace these awards with comparable awards of the acquiring company's stock and it would not be fair to our executives to lose the benefit of these awards. In addition, the acceleration of vesting aligns the interests of executives in a potential change in control transaction approvedwith those of our stockholders, by motivating them to work towards the completion of the transaction. Because in a change of control it may be impossible to determine whether the market or performance vesting conditions applicable to RSU's are met as of June 30, 2017, we have instead applied a service based measure allowing for partial vesting if the change of control occurs before July 1, 2015 and for full vesting if it occurs after such date.

Chairman of the Board's Compensation

        In 2011 we paid and in 2012 we intend to pay our chairman $250,000 for serving in such capacity. Our chairman does not receive any additional direct compensation from us, other than any long-term equity and long-term equity incentive awards granted to him by our board of directors.directors based upon our compensation committee's recommendation. Our chairman may also receive compensation from Majestic and its affiliates. Effective April 1, 2012, the compensation and services agreement was amended to eliminate any obligation to compensate our chairman pursuant to such agreement. For additional information regarding compensation of our chairman, see "Summary Compensation Table".

Deductibility of Executive Compensation

        Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a limitation on the deductibility of certain non-cash compensation in excess of $1 million earned by each of the chief executive officer and the four other most highly compensated officers of publicly held companies. In 2008,2011, all compensation paid to our full-time officers was deductible by us. The compensation committee intends to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable. The compensation committee has not adopted a formal policy that requires all compensation paid to the officers to be fully deductible.

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Analysis

Base Salary and Bonus

        In accordance with the compensation setting process described above, the following base salaries and bonuses were approved as follows for our full-time named executive officers:officers in 2011 and 2010:

Name		2007 Base Salary ($)(1)			2008 Base Salary ($)(1)			Percentage % Salary Increase			2007 Bonus ($)(2)			2008 Bonus ($)(2)			Percentage % Bonus Increase
Patrick J. Callan, Jr.			375,000			400,000			6.67			200,000			210,000			5.00
Lawrence G. Ricketts, Jr.			205,000			230,000			12.20			25,000			35,000			40.00

Name		2011 Base Salary ($)(1)			2010 Base Salary ($)(1)			Percentage (%) Salary Increase			2011 Bonus ($)(2)			2010 Bonus ($)(3)			Percentage (%) Bonus Increase
Patrick J. Callan, Jr.(4)			635,000			607,000			4.6			65,000			45,000			44.4
Lawrence G. Ricketts, Jr			280,000			252,000			11.1			45,000			35,000			28.6

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(1)

The compensation committee and board of directors determined 20072011 base salary in December 20062010 and 20082010 base salary in December 2007.2009. Messrs. Callan's and Ricketts' base salary for 2012, which was determined in December 2011, is $660,000 and $320,000, respectively.

(2)

TheReflects the bonuses paid in 2012 for 2007 and 2008services rendered in 2011. These bonuses were approvedrecommended by the compensation committee and approved by the board of directors asin December 2011.

(3)

Reflects the bonuses paid in 2011 for services rendered in 2010. These bonuses were recommended by the compensation committee and approved by the board of directors in December 20062010.

(4)

The salary and 2007, respectively,bonus paid to Mr. Callan in 2010 have been reclassified to conform to the presentation for 2011.

        Based on the individual performance of Messrs. Callan and Ricketts in 2010 and in light of, among other things, our acquisition of 14 properties for $72.3 million and the bonus amounts correspond to performanceincrease of more than 75% in 2006 and 2007, respectively.

        Theour stock price during 2010, the compensation committee concluded that an increase in base salary for Patrick J. Callan, Jr. and Lawrence G. Ricketts, Jr.2011 was appropriate. In recommending bonuses for 2011 (which were paid in 2012 for services rendered during 2011), and the increasecompensation committee viewed as positives the estimated increases from the prior year of approximately $0.13 in their respective bonuses were duenet income per share, $0.03 per share in part to increases in our rental income (14.3%), andeach of funds from operations (36%)and adjusted funds from operations, the six properties acquired in 2007 compared to 2006. These increases were also due to2011 for an evaluationaggregate of approximately $28 million and the individual performancefollow on public offering from which we received net proceeds of each of them in 2007.approximately $40.7 million.

        In 2008,2011, the total compensation of Patrick J. Callan, Jr., our president and chief executive officer, is .96%was 80.8% greater (slightly less than 2x) than the total compensation of Lawrence G. Ricketts, Jr., our executive vice president and chief operating officer. We have not adopted a policy with regard to the relationship of compensation among our executive officers or other employees. The compensation committee considered the differential in compensation and, basedBased upon their respective responsibilities and experience, it was concluded that the differential was appropriate.

Long-term Equity and Equity Incentive Awards

        We believe that our long-term equity and equity incentive compensation program,programs, using restricted stock awards with five-year cliff vesting provides motivationand RSU's with seven-year cliff vesting, is an appropriate incentive for our officers and is a beneficial retention tool. We are mindful of the potential dilution and compensation cost associated with awarding shares of restricted stock and RSU's and, therefore our policy is to minimize dilution. In 2008,2011, we awarded 74,040 shares of restricted stock with an aggregate grant date fair value of $1,198,708—such shares represented 0.51% of our issued and outstanding shares at December 31, 2011. In the five years ended December 31, 2011, we awarded an aggregate of 50,550 shares representing .5% of our issued and outstanding shares. In the past five years, we have awarded an aggregate of 228,275551,715 shares of common stock (including 200,000 RSU's), representing an average of .46%0.82% per annum of our outstanding shares of common stock.stock as of the respective year ends. We believe the cumulative effect of the awards is not overly dilutive and has created significant incentiveincentives for our officers and employees.

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        After reviewing the aggregate compensation received by our full-time named executive officers, our performance in 2007,2011, and the performance and responsibilities of each named executive officer, and taking into account our policy of minimizing stockholder dilution, in 20082012 we awarded 6,00012,500 shares of restricted stock to Patrick J. Callan, Jr., 5,00010,000 shares of restricted stock to Lawrence G. Ricketts, Jr., and 3,0007,400 shares of restricted stock to each of David W. Kalish, Fredric H. Gould David W. Kalish and Matthew J. Gould.Mark H. Lundy. Generally, all of such shares vest in full, assuming continued employment, in 2017.

        We intend to continue to award restricted stock as we believe (i) restricted stock awards align management's interests and goals with stockholders' interests and goals and (ii) officers and employees are more desirous of participating in a restricted stock award program and, therefore, it is an excellent motivator and employee retention tool.

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Equity Compensation Policies

We dohave not havemade any policy regarding ownership requirements for officersdetermination as to whether we will award any RSU's or directors. In view ofstock options in the fact that all of our officers and directors own our shares of common stock (and many of our officers hold a significant number of shares of our common stock), we do not believe there is a need to adopt of a policy regarding ownership of shares of our common stock by our officers and directors.future.

Perquisites

        The perquisites we provide to our full-time officers account forrepresent a small percentage of the compensation paid by us to these officers. We believe that such perquisites are competitive and appropriate.

SeveranceEmployment and Change of ControlSeverance Agreements

        We do not enter into employment agreements severance agreements or change of controlseverance agreements with any of our officers or employees as we believe such agreements are not beneficial to us, and that we can provide sufficient motivation to officers by using other types of compensation.

Potential Payments upon Termination of Employment or Change of ControlPost-Employment Benefit Programs

        Except for provisions for accelerated vestingThe following table sets forth the value (based on our stock price of $16.50 per share as of December 30, 2011) of equity awards that would vest upon the occurrence of our restricted stock in a "change of control" transaction, we do not provide for any severance, termination or change of control payment or protection to our officers, directors or employees. Accordingly, upon a change of control, the restricted stock issued to our officers, directors, employees and consultants would automatically vest. This is the only automatic compensation benefit our officers would receive in a change of control transaction. In the event that a change of control occurredspecified events as of December 31, 2008,2011:

Equity Ownership Policy

        We do not have any policy regarding ownership requirements for officers or directors. In view of the fact that our executive officers and directors as a group own approximately 3.25 million shares of

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common stock representing 22% of our stock on December 31, 2008, would have been as follows:

(1)

The closing price on the New York Stock Exchange foroutstanding shares, we do not believe there is a shareneed to adopt a policy regarding ownership of shares of our common stock on December 31, 2008 was $8.80.

COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION

        The compensation committee of the board of directors has reviewed the Compensation Discussion and Analysis set forth herein, and discussed it with management, and based on such review and discussions, recommends to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Eugene Zuriff (Chairman)
J. Robert Lovejoy
Charles Biederman