WINTHROP REALTY TRUST

7 Bulfinch Place

Suite 500

Boston, Massachusetts 02114

(617) 570-4614

 

PROXY STATEMENT

FOR ANNUAL MEETING OF SHAREHOLDERS

MAY 10, 20118, 2012

______________

 

INFORMATON CONCERNING VOTING AND SOLICITATION

 

 

We are furnishing this Proxy Statement in connection with the solicitation of proxies by our Board of Trustees, which we refer to as the “Board”, for the 20112012 Annual Meeting of Shareholders to be held at the offices of Katten Muchin Rosenman LLP, 575 Madison Avenue, 15th11th Floor, New York, New York 10022, on Tuesday May 10, 20118, 2012 at 11:00 A.M., local time, and at any adjournment or adjournments thereof, which we refer to as the “Annual Meeting”.

 

In this Proxy Statement, all references to the “Trust,” “we,” “our” and “us” mean Winthrop Realty Trust, an Ohio business trust.  All references to “Shareholder” and “you” refer to a holder of record of our beneficial interests designated as common shares, par value $1.00 per share, which we refer to as Common Shares.

 

 

Pursuant to certain rules adopted by the U.S. Securities and Exchange Commission, which we refer to as the SEC, we are making this Proxy Statement, the enclosed proxy card, and our Annual Report on Form 10-K for the year ended December 31, 2010,2011, which we refer to as the Annual Report, available to our Shareholders electronically via the Internet. Accordingly, Shareholders received a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice, which was or will be sent to Shareholders on or about March 30, 201126, 2012 containing instructions on how to access this Proxy Statement and the Annual Report via the Internet and how to vote online.  If you received the Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy in the manner described in the Notice.  All Shareholders will be able to access the proxy materials on a web site referred to in the Notice and this Proxy Statement and will be able to request to receive a printed set of the proxy materials by mail or electronically, in either case, free of charge.  If you would like to receive a printed or electronic copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice. We elected to participate in the notice and access process in order to reduce the costs associated with printing and mailing documents to you and reduce the impact of the Annual Meeting on the environment.

 

 

The Board is soliciting a proxy in the form accompanying this Proxy Statement for use at the Annual Meeting, and will not vote the proxy at any other meeting. Mr. Michael L. Ashner and Ms. Carolyn Tiffany, or each acting individually, are the persons named as proxies on the proxy card accompanying this Proxy Statement, who have been selected by the Board to serve in such capacity.  Both Mr. Ashner and Ms. Tiffany are members of the Board and executive officers of the Trust.

 

 

All Shareholders as of the close of business on March 25, 2011,15, 2012, which we refer to as the Record Date, are entitled to vote at the Annual Meeting.  On the Record Date, there were issued and outstanding 27,088,34733,053,502 Common Shares.  There was no other class of securities outstanding at the Record Date entitled to vote on the matters to be voted on at the Annual Meeting.  In addition to the Common Shares, at the Record Date there were outstanding 852,0001,600,000 shares of our 9.25% Series B-1D Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, which we refer to as “Series B-1D Preferred Shares”, and 144,000 shares of our Series C Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest which we refer to as “Series C Preferred Shares.”.

 

 

 

 

 

 

 

 

 

 

 

            If you hold your Common Shares in “street name” through a broker or other nominee, you may instruct your broker to vote your Common Shares by following the instructions that the broker provides to you.  Most brokers offer voting by mail, telephone and on the Internet.  Please note that your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon.  Under the rules that govern brokers who are voting with respect to Common Shares held in street name, brokers have the discretion to vote such Common Shares on discretionary matters, but not on non-discretionary matters.  A broker “non-vote” occurs when a nominee holding Common Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.

 

 

 

If you would like to attend the Annual Meeting in person, you will need to bring your admission ticket which is the upper half of the proxy card, an account statement or other evidence acceptable to us of ownership of your Common Shares as of the close of business on the Record Date.  If you hold Common Shares in “street name” (i.e., through a bank, broker or other nominee) and wish to vote at the Annual Meeting, you will need to contact your nominee and obtain a proxy from your nominee and bring it to the Annual Meeting.

 

 

 

 

The holders of a majority of the outstanding Common Shares as of the close of business on the Record Date, present in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.  Abstentions and broker “non-votes” are included in the determination of the number of Common Shares present at the Annual Meeting for quorum purposes.

 

 

In general, a majority vote of the Common Shares permitted to be voted at the Annual Meeting are required for each Proposal.  Abstentions and broker non-votes will not be counted in determining whether or not a matter has been approved by Shareholders other than with respect to Proposal No. 2, which is a routine proposal on which a broker or other nominee is generally empowered to vote.

 

 

A proxy, in the accompanying form, which is properly executed, duly returned to us and not revoked, will be voted in accordance with the instructions contained therein and, in the absence of specific instructions, will be voted as recommended by the Board for each Proposal and in accordance with the judgment of the person or persons voting the proxies on any other matter that may be properly brought before the Annual Meeting.

 

 

You may revoke your proxy at any time before its exercise by (1) executing and submitting a later dated proxy card, (2) subsequently authorizing a proxy through the Internet or by telephone, (3) timely sending a written revocation of proxy to our Secretary at our principal executive office, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114, or (4) attending the Annual Meeting and voting in person.

 

Attendance at our Annual Meeting will not constitute a revocation of a proxy unless you affirmatively indicate at our Annual Meeting that you intend to vote your Common Shares in person by completing and delivering a written ballot.

 

 

We have hired Mackenzie Partners, Inc. to solicit proxies.  In addition to solicitation by mail, by telephone and by e-mail or the Internet, arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to their principals and we may reimburse them for their expenses in so doing.  If you hold Common Shares in “street name” (i.e., through a bank, broker or other nominee), you will receive instructions from your nominee which you must follow in order to have your proxy authorized or you may contact your nominee directly to request these instructions.

 

 

We will bear the cost of preparing, printing, assembling and mailing the Notice, the proxy card, Proxy Statement and other materials that may be sent to Shareholders in connection with this solicitation.  We may also reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses incurred in forwarding solicitation materials to the beneficial owners of Common Shares held of record by such persons.

 

 

In order to be eligible for inclusion in our proxy materials for the 20122013 Annual Meeting of Shareholders, any Shareholder proposal to take action at such meeting must be received at our principal executive office located at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114, Attn:  Secretary, no later than January 11, 2012.10, 2013.  Any such proposals shall be subject to the terms of our Declaration of Trust, Bylaws and the requirements of the proxy rules adopted by the SEC under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act.

 

The Board will review any Shareholder proposals that are timely submitted and will determine whether such proposals meet the criteria for inclusion in the proxy solicitation materials or for consideration at the 20122013 Annual Meeting of Shareholders.  In addition, the persons named in the proxies retain the discretion to vote proxies on matters of which we are not properly notified at our principal executive offices on or before 60 days prior to the 20122013 Annual Meeting of Shareholders, and also retain such authority under certain other circumstances.

 

 

It means that you have multiple accounts at the transfer agent and/or with brokers.  Please complete and return all proxy cards to ensure that all your Common Shares are voted.

 

 

 

PROPOSAL NO. 1

ELECTION OF TRUSTEES

 

 

The Board currently consists of seven members, all of whom are elected by the holders of Common Shares.  The Board has determined, in accordance with our Declaration of Trust, to increase the number of members of the Board to eight persons.  Accordingly, Shareholders will be voting at the Annual Meeting for seveneight persons, that constitutes all of the members of the Board, to serve for a term of one year and until their respective successors shall have been elected and shall qualify.  The Board has nominated Michael L. Ashner, Arthur Blasberg, Jr., Howard Goldberg, Thomas F. McWilliams, Lee Seidler, Carolyn Tiffany and Steven Zalkind for re-election as Trustees.Trustees and has nominated Scott Rudolph for election to the Board to fill the vacancy created by the increase in the number of members of the Board.  No other persons have been proposed for nomination to serve as a Trustee.

 

Shareholders do not have cumulative voting rights with respect to the election of Trustees.  It is the intention of the persons named in the enclosed Proxy Card to vote such proxy "FOR" the election of the named nominees for Trustee unless authorization is withheld on the Proxy Card.  Should any nominee be unable or unwilling to serve as a Trustee, which is not anticipated, it is intended that the named proxies will vote for the election of such other person or persons as they, in their discretion, may choose.  Each of the nominees has represented that they are willing to serve as a Trustee if elected.

 

 

 

 

 

 

 

 

 

 

The Board unanimously recommends a vote “FOR” the election of Messrs. Ashner, Blasberg, Goldberg, McWilliams, Rudolph, Seidler and Zalkind and Ms. Tiffany to the Board.  Unless otherwise indicated, the accompanying form of proxy will be voted for the nominees listed above.

 

PROPOSAL NO. 2

SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

At the recommendation of the Audit Committee, the Board has selected PricewaterhouseCoopers LLP, which we refer to as PwC, to serve as the independent registered public accounting firm of the Trust for its fiscal year ending December 31, 2011.2012.

 

During our past two fiscal years, there were: (i) no disagreements with PwC our independent registered public accounting firm for the years ended December 31, 20102011 and 2009,2010, on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to PwC’s satisfaction, would have caused them to make reference to the subject matter in connection with its report on the Trust’s financial statements for such year; and (ii) no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended.  Further, PwC’s report on our consolidated financial statements as of and for the years ended December 31, 20102011 and 20092010 did not contain any adverse opinion or a disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

 

Although Shareholder ratification of the Board’s action in this respect is not required, the Board considers it desirable for Shareholders to pass upon the selection of the independent registered public accounting firm and, if the Shareholders disapprove of the selection, the Board would consider other firms for selection as the independent registered public accounting firm for the current fiscal year.

 

It is expected that representatives of PwC will be present either in person or by telephone conference at the Annual Meeting.

 

Aggregate fees billed to us for the year ended December 31, 20102011 and 20092010 represents fees billed by PwC for audit, audit related fees and tax matters.

 

 

 

 

 

 

The Board unanimously recommends a vote “FOR” the ratification of the election of PwC to serve as the independent registered public accounting firm of the Trust for its fiscal year ending December 31, 2011.

 

 

We have a policy of requiring that the Audit Committee pre-approve all audit and non-audit services provided to us by the independent registered public accounting firm.  During 2010,2011, the Audit Committee approved all of the fees paid by us to PwC.

 

 

EXECUTIVE OFFICERS

 

All officers serve at the discretion of the Board.  Set forth below is certain information regarding our executive officers at March 15, 20112012 (biographical information with respect to Mr. Ashner and Ms. Tiffany is set forth above on pages 5 and 6):

 

 

Mr. Braverman currently serves as our Executive Vice President.  Mr. Braverman previously served as our President and as a Trustee.  Mr. Braverman also currently serves as the Executive Vice President of Winthrop Realty Partners, L.P., a real estate investment and management company, a position he has held since January 1996.  Mr. Braverman served as a director and President of Newkirk until it was merged into Lexington and as a director and Executive Vice President of each Shelbourne Entity from August 2002 until their liquidation in April 2004.

 

Mr. Staples has been our Chief Financial Officer since January 8, 2004.  Mr. Staples has been with Winthrop Realty Partners, L.P. since 1994 and has served as its Chief Financial Officer since January 1999.  He also served as the Chief Financial Officer of Newkirk until December 31, 2006 when it was merged into Lexington. Mr. Staples also served as Assistant Treasurer of the Shelbourne Entities from August 2002 until their liquidation in April 2004. Mr. Staples is a certified public accountant.

 

Mr. Alba was appointed our Chief Investment Officer in October 2005 and Secretary in May 2007.  He has served as a Vice President of Winthrop Realty Partners, L.P. since January 1998 where his responsibilities included asset management and investment analysis.

 

 

As described in our corporate governance guidelines, the Board is permitted to select its Chairman and our Chief Executive Officer in the manner it considers in our best interests at any given point in time.  In this regard, the Board believes that the questions of whether the Chairman of the Board and the Chief Executive Officer should be separate, and if separate, whether the Chairman of the Board should be an outside Trustee or an inside Trustee, should be addressed from time to time as circumstances require.  At present, the Board believes that the combination of these two roles provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy.  During Mr. Ashner’s tenure, the Board has been satisfied with the Chief Executive Officer performing the functions of the Chairman of the Board because Mr. Ashner has been able to utilize his in-depth knowledge and perspective gained in running the company to effectively and efficiently recommend Board meeting agenda, lead Board discussions on critical issues and create a vital link among the Board, management and Shareholders.  Mr. Ashner fulfills his Chairman responsibilities through close interaction with the Lead Independent Trustee, Committee Chairs and other Board members.

 

 

 

To further ensure balance, the Board determined in 20102011 that the Trust should have a Lead Independent Trustee who is elected annually by the independent members of the Board.  The duties of the Lead Independent Trustee include:

 

 

Mr. Goldberg has been elected by the independent Trustees to serve as Lead Independent Trustee.

 

As noted previously, five of the seven current Trustees and fivesix of the seveneight nominees for election as Trustee are independent and all members of the Audit Committee, Compensation Committee, Conflicts Committee, and Nominating and Governance Committee are independent Trustees.  In addition, our current policy regarding the receipt and dissemination of Shareholder communications allows our Shareholders to communicate directly with any or all of our Trustees.  Further, in addition to formal Board meetings, management holds monthly informal informational calls with the Board at which updates on company matters are provided.

 

Based on the foregoing, the Board believes that its existing leadership structure provides for an appropriate balance that best serves us and our Shareholders. The Board will periodically review its leadership structure to ensure that it remains the optimal structure for us and our shareholders.

 

 

The Board acknowledges its responsibility for reviewing the process for assessing the major risks facing us and the options for their mitigation.  Trustees are entitled to rely on management and the advice of our outside advisors and auditors, but must at all times have a reasonable basis for such reliance.  This responsibility is addressed in a number of ways.  First, our Audit Committee on a quarterly basis reviews and discusses with management, our internal auditor and our independent registered public accounting firm our major risk exposures and the policies management has implemented to monitor such exposures, including our financial risk exposures and risk management policies.  Second, we have adopted a Corporate Compliance and Business Ethics Compliance Program which established an Ethics and Compliance Committee, consisting of our President, Chief Financial Officer, Internal Auditor, Human Resources Director, and general counsel, or such persons who effectively serve in such capacities or perform the roles attendant thereto.  The Ethics and Compliance Committee conducts an annual compliance risk assessment to include consideration of compliance risk-related information otherwise identified through operation of the Corporate Compliance and Business Ethics Compliance Program (such as information from internal audit reports; reports of possible violations; and issues raised in connection with training sessions).  The Ethics and Compliance Committee also incorporates information about the changing nature of our business (such as the development of new services, the acquisition of new business, the entry into a new venture, the imposition of new requirements, or the entry into new geographical markets) into the risk assessments.  The results of these reviews are reported directly to Audit Committee and the Board.  Third, our Board further oversees risk through provisions of our Declaration of Trust, By-laws and general corporate governance policies which provide that (i) each of our Board Committees consist solely of Trustees who qualify as “independent” under the requirements of the New York Stock Exchange, (ii) a majority of our Trustees qualify as independent, (iii) Board approval is required for any acquisition or disposition in excess of $10,000,000 and (iv) approval of our Conflicts Committee is required for approval of any transactions involving a conflict of interest, or potential thereof.

 

 

 

During 2010,2011, the Board met or acted through written consent 1621 times.  Each of the Trustees attended either in person or telephonically 75% or more of the aggregate number of meetings of the Board and Board committees on which such Trustee served in 2010.2011.  It is the policy of the Board to have all members of the Board in attendance at the Annual Meeting, or if unavailable to attend in person, to make arrangement, if possible, to participate by telephone or video conference.  All members of the Board attended in person the 20102011 Annual Meeting of Shareholders.

 

 

Our Declaration of Trust and our By-laws give the Board the authority to delegate its powers to a committee appointed by the Board.  All committees are required to conduct meetings and take action in accordance with the directions of the Board and the provisions of our By-laws. The Board has appointed four standing committees: an audit committee, a compensation committee, a nominating and corporate governance committee, and a conflicts committee.  Certain of the committees' principal functions are described below.

 

 

The Audit Committee:

 

 

 

The current members of the Audit Committee are Messrs. Blasberg, Goldberg and Seidler.  Mr. Seidler serves as the Audit Committee Chairman. The Audit Committee meets periodically throughout the year both through formal meetings and written consents as well as through informal discussions as necessary.  During the 20102011 fiscal year, the Audit Committee met four times.  All members of the Audit Committee attended either in person or by telephone conference call all meetings of the Audit Committee.  Representatives of PwC, our independent registered public accounting firm for the year ended December 31, 2010,2011, attended all meetings of the Audit Committee.  The Audit Committee met on March 1, 2011February 28, 2012 with representatives of PwC to discuss our 20102011 consolidated financial statements.

 

The Board has concluded that each member of the Audit Committee is “financially literate” as such term is defined in the listing standards of the New York Stock Exchange and that Mr. Seidler, the chairman of the Audit Committee, and Mr. Blasberg meet the SEC definition of "audit committee financial expert."  We are currently in compliance with the listing requirements of the New York Stock Exchange relating to audit committee qualification, and the Board has determined that its Audit Committee possesses sufficient financial expertise to effectively discharge its obligations.

 

 

 

 

The Compensation Committee:

 

 

 

The current members of the Compensation Committee are Messrs. McWilliams, Seidler and Zalkind.  Mr. Zalkind serves as the chairman of the Compensation Committee.  The Compensation Committee met twice during the 20102011 fiscal year.

 

 

The Nominating and Corporate Governance Committee:

 

 

 

 

The current members of the Nominating and Corporate Governance Committee consisted of Messrs. Goldberg, McWilliams and Zalkind.  Mr. Goldberg serves as the chairman of the Nominating and Corporate Governance Committee.  The Nominating and Corporate Governance Committee met oncetwice during the 20102011 fiscal year.

 

 

The Conflicts Committee:

 

 

 

The Conflicts Committee consists of all non-management Trustees of the Board.  Mr. McWilliams serves as the chairman of the Conflicts Committee.  The Conflicts Committee acted through unanimous written consent once during the 20102011 fiscal year.

 

 

 

As a result of this review, the Board affirmatively determined that each of Messrs. Blasberg, Goldberg, McWilliams, Rudolph, Seidler and Zalkind are independent of the Trust and its management in accordance with Section 303A.02(a) and (b) of the listing standards of the New York Stock Exchange.  Mr. Ashner and Ms. Tiffany are not considered independent because they serve as our executive officers as well as their ownership interest in FUR Advisors.  See “Certain Relationships and Related Transactions” below.

 

 

The Nominating and Corporate Governance Committee will consider written recommendations from Shareholders for nominees to the Board.  A Shareholder who wishes to recommend a person to the Nominating and Corporate Governance Committee for nomination by the Trust must submit a written notice by mail to the Nominating and Corporate Governance Committee c/o the Trust’s Secretary, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114.  Such a written recommendation must be received no later than 120 days in advance of the annual meeting of Shareholders and should include the information required by ARTICLE I, Section 7 of the Trust’s Bylaws including (i) the candidate’s name, business address and other contact information, (ii) a complete description of the candidate’s qualifications, experience, background and compensation (if any) from the Trust, as would be required to be disclosed in the Proxy Statement pursuant to Regulation 14A of the Exchange Act, and (iii) a signed statement by the candidate in which he or she consents to being named in the Proxy Statement as a nominee and to serve as a Trustee if elected.

 

 

The Nominating and Corporate Governance Committee recommends nominees for election to the Board based on a number of criteria including:

 

 

There are no differences in the manner in which the Nominating and Corporate Governance Committee evaluate a candidate who is recommended for nomination for membership on the Board by a Shareholder.  The Nominating and Corporate Governance Committee has not received any recommended nominations from Shareholders in connection with the Annual Meeting.

 

The Nominating and Corporate Governance Committee identifies potential nominees for Trustee through a variety of business contacts, including current executive officers, Trustees and Shareholders.  The Nominating and Corporate Governance Committee may, to the extent it deems appropriate, retain a professional search firm and other advisors to help identify potential nominees for Trustee.

 

The Nominating and Corporate Governance Committee evaluates candidates to the Board by reviewing their biographical information and qualifications.  If the Nominating and Corporate Governance Committee determines that a candidate is qualified to serve on the Board, such candidate is interviewed by the Lead Independent Trustee, at least one member of the Nominating and Corporate Governance Committee and the Chief Executive Officer.  Members of the Board also have an opportunity to interview qualified candidates.  As described above, the Nominating and Corporate Governance Committee will also consider candidates recommended by Shareholders.  The Nominating and Corporate Governance Committee then determines, based on the background information and the information obtained in the interviews, whether to recommend to the Board that the Trust nominate a candidate for approval by the Shareholders to fill a Board position.  With respect to an incumbent Trustee whom the Nominating and Corporate Governance Committee is considering as a potential nominee for re-election, the Nominating and Corporate Governance Committee reviews and considers the incumbent Trustee’s service to the Trust during his or her term, including the number of meetings attended, level of participation, and overall contribution to the Trust in addition to such person’s biographical information and qualifications.  The Nominating and Governance Committee gives consideration to a wide range of diversity factors as a matter of practice when evaluating candidates to the Board and incumbent Trustees, but the Committee does not have a formal policy regarding Board diversity.

 

In evaluating candidates to the Board, the Nominating and Corporate Governance Committee also takes into account the skill sets that are needed to balance and complement the skill sets of other candidates and members of the Board, and the skills and expertise of a candidate that facilitate the Trust’s compliance with the rules of the SEC and New York Stock Exchange.

 

 

Shareholders and any other interested party wishing to communicate with the Board may do so in one of four ways:  in person at our annual Shareholders meeting: by mail: by telephone: or via the internet.  Any Shareholder can mail correspondence to any Trustee, or the Board as a whole, by addressing it to our outside general counsel, Post Heymann & Koffler, LLP, Two Jericho Plaza, Wing A, Suite 211, Jericho, New York 11753, Attention:  David J. Heymann.  After the mail is opened and screened for security purposes, it will be logged in, and (other than mail that Mr. Heymann determines to be trivial or obscene) then forwarded to the particular Trustee identified, or the Board as a whole, as requested in the Shareholder's correspondence.  Trivial items will be delivered to the Trustees at the next scheduled Board meeting.  Obscene items will not be forwarded.

 

 

 

 

 

The current non-officer Trustees, Messrs. Blasberg, Goldberg, McWilliams, Seidler and Zalkind, each receive $45,000 annually for their services as Trustees, $500 for each Board or committee meeting they attend in person, and $250 for each Board or committee meeting they attend telephonically.  In addition, each member of the Audit Committee (other than the chairman) receives $10,000 annually for serving on the Audit Committee and the chairman of the Audit Committee receives an additional $30,000 annually.  For serving as Lead Independent Trustee, Mr. Goldberg receives $25,000 annually.  Trustees who are also our officers receive no compensation for serving on the Board.  However, all Trustees are reimbursed for travel expenses and other out-of-pocket expenses incurred in connection with their service on the Board and its committees.

 

CODE OF ETHICS

 

 

AUDIT COMMITTEE REPORT

 

The Audit Committee is responsible for providing independent, objective oversight of the Trust’s accounting functions and internal controls.  The Audit Committee is comprised of three Trustees, each of whom is “independent” as defined by the existing New York Stock Exchange listing rules and SEC rules.  Members of the Audit Committee must also satisfy the independence requirements of Section 10A(m)(3) of the Exchange Act.

 

Management is responsible for the Trust’s internal controls and financial reporting process.  The Trust’s independent registered public accounting firm is responsible for performing an independent audit of the Trust’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and to issue a report thereon.  The Audit Committee’s responsibility is to monitor and oversee these processes.

 

 

The Audit Committee has reviewed and discussed the Trust’s audited consolidated financial statements for the fiscal year ended December 31, 2010,2011, with the Trust’s management, and also has discussed with PwC,PricewaterhouseCoopers LLP (“PwC”), the matters required to be discussed by Statement on Auditing Standards No. 61 (AICPA, Professional Standards, Vol. 1, AU Section 380) as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.  The Audit Committee has received both the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with PwC that firm’s independence.

 

Based on the Audit Committee’s discussions with management, the Trust’s internal auditor and PwC, the Audit Committee recommended to the Trust’s Board of Trustees that the Trust’s audited consolidated financial statements for the fiscal year ended December 31, 20102011 be included in the Trust’s Annual Report on Form 10-K as filed with the SEC in March 2011.2012.

 

Members of the Audit Committee

Lee Seidler (Chairman)

Arthur Blasberg, Jr.

Howard Goldberg

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

 

We do not provide any remuneration to our executive officers and do not have any direct employees.  We retain FUR Advisors to provide substantially all of our asset management, accounting and investor services.  Information relating to fees paid to FUR Advisors is set forth under “Certain Relationships and Related Transactions” below.

 

At present, the Compensation Committee reviews annually the terms of the advisory agreement with FUR Advisors to determine their consistency with market terms and whether the retention of an outside advisor is more favorable to us than retaining direct employees.  The Compensation Committee reviews the fees payable to FUR Advisors in comparison to the general and administration costs of other public real estate investment trusts.  Based on its review, the Compensation Committee recommended to the Board that the advisory agreement with FUR Advisors be renewed.

 

If we were to retain our executive officers directly, the Compensation Committee would, in making its compensation recommendations to the Board likely consider (1) the potential holding periods of our assets, (2) the number of individual investments held by us, (3) the amount of asset management required with respect to our assets, (4) our overall investment prospects and our short and long-term business plan, and (5) with respect to a specific executive officer, such officer's responsibilities, experience and overall performance.  The Compensation Committee would further seek to attract and retain highly qualified executives and to motivate them to work together as a team to maximize our financial performance on an annual and long-term basis thereby resulting in increase shareholder value.

 

 

 

From March 2005 to May 2007, no share option or share grant plans were in effect pursuant to which we could issue options.  In May 2007, our Shareholders approved the Winthrop Realty Trust 2007 Long Term Incentive Plan pursuant to which share options or share grants can be granted.  No such share options or share grants have been granted under the plan.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee is comprised entirely of independent Trustees.  The Compensation Committee has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

Members of the Compensation Committee

Steven Zalkind (Chairman)

Thomas F. McWilliams

Lee Seidler

 

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

There were no relationships among members of the Compensation Committee, members of the Board or our executive officers who served during our 20102011 fiscal year that require disclosure under Item 407(e)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended.  All current members of the Compensation Committee are considered independent under our Corporate Governance Guidelines.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information as of March 15, 20112012 (except as otherwise indicated) regarding the ownership of our Common Shares by (i) each person who is known to us to be the beneficial owner of more than 5% of the outstanding Common Shares, (ii) each Trustee and Trustee nominee, (iii) each executive officer named herein, and (iv) all current executive officers and Trustees as a group.  Except as otherwise indicated, each such Shareholder has sole voting and investment power with respect to the Common Shares beneficially owned by such Shareholder.  As of March 15, 2011,2012, there were 27,088,34733,053,502 Common Shares outstanding.

 

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, Trustees and persons who beneficially own greater than 10% of a registered class of our equity securities to file certain reports which we refer to as “Section 16 Reports” with the SEC with respect to ownership and changes in ownership of our Common Shares and other equity securities.  Based solely on our review of the Section 16 Reports furnished to us as well as written representations from certain reporting persons, our officers, Trustees and greater than 10% beneficial owners, such persons have complied with all Section 16(a) requirements applicable to them.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

FUR Advisors administers our business pursuant to the terms of an advisory agreement.  FUR Advisors is controlled by and partially owned by our executive officers.  Pursuant to the terms of the advisory agreement, FUR Advisors is responsible for providing asset management services to us and coordinating with our Shareholdershareholder transfer agent and property managers.  For providing these services, FUR Advisors is entitled to receive a base management fee and, if upon the return to Shareholders of threshold amount, an incentive fee.

 

Effective January 1, 2009 the calculation of the base management fee was amended to provide that (i) all Common Shares and Series B-1 Preferred Shares then issued and outstanding would be valued at a price of $11.00 per Common Share and $25.00 per Series B-1 Preferred Share, (ii) any additional future conversions, redemptions or repurchases of the Series B-1 Preferred Shares would not reduce the base equity for purposes of the base management fee calculation and (iii) any future issuances of common shares or preferred shares will increase the equity as per the existing agreement for purposes of the base management fee calculation.  Effective January 1, 2010, the Advisory Agreementadvisory agreement was amended so that the determination of the issuance price of Common Shares reverted back to the pre 2009pre-2009 definition such that the quarterly fee is to be calculated on the actual issuance price of Common Shares instead of a fixed price for Common Shares issued prior to January 1, 2009.  This change resulted in an increase without giving effect to any additional shares issuances, to the annual advisory fee payable toAdditionally, FUR Advisors receives a fee equal to 0.25% of approximately $2,100,000 over what would have beenany equity contribution by an unaffiliated third party to a venture managed by the Trust.  The management fee paid withoutby the amendment, which increaseTrust for third party equity contributions amounted to $49,000 for the year ended December 31, 2011.  There was phasedno fee for third party equity contributions in with 54% of the increase being paid during 2010.  The full impact of the increase will be recognized in 2011.2010 and 2009.

 

The incentive fee entitles FUR Advisors to receive (a) an amount equal to 20% of all distributions paid on our Common Shares after December 31, 2003 in excess of the Threshold Amount, hereinafter defined, and, (b) upon the termination of the advisory agreement, an amount equal to 20% of our “liquidation value” in excess of the Threshold Amount at the termination date.  As defined in the advisory agreement, the Threshold Amount is equal to (x) $71,300,000, increased by the net issuance price of all of our Common Shares, with an adjustment for preferred shares converted, issued after December 31, 2003, and decreased by the redemption price of all our Common Shares redeemed after December 31, 2003, plus (y) a return on the amount, as adjusted, set forth in (x) equal to 7% per annum compounded annually.  AsAt December 31, 2010,2011 the Threshold Amountthreshold amount required to be distributed before any incentive fee would be payable to FUR Advisors was approximately $468,193,000,$560,871,000, which was equivalent to $16.58 for each of our$16.97 per diluted Common Shares on a fully diluted basis.Share.  The incentive fee is reduced by any direct damages to us if the advisory agreement is terminated by us for cause.  No incentive fee was payable during the year ended December 31, 2010.2011.  If the Advisory Agreement were terminated, the actual incentive fee payable would be based on an appraised valuation or the liquidation proceeds received for our assets, which may be substantially in excess of the amount calculated based on the market price of the Common Shares.

 

FUR Advisors is also entitled to receive property and construction management fees at commercially reasonable rates as determined by the Compensation Committee and independent Trustees.

 

Winthrop Management L.P., an affiliate of FUR Advisors and our executive officers, provides property management responsibilities for certain of our properties.  Pursuant to the terms of the property management agreement, Winthrop Management L.P. receives a fee equal to 3% of the monthly revenues of such properties.

 

 

 

WRP Sub-Management LLC, which we refer to as “WRP Sub-Management”, an affiliate of FUR Advisors, has been retained to provide accounting, collateral management and loan brokerage services to Lex-Win Concord LLC, which we refer to as Concord, and its subsidiaries.  WRP Sub-Management received reimbursement of direct and indirect expenses totaling $0, $716,000, $1,108,000 and $1,402,000$1,108,000 for the years ended December 31, 2011, 2010 2009 and 2008,2009, respectively, in accordance with the terms of the agreement.  Of these amounts, $0, $259,000, $511,000, and $526,000$511,000 were paid to reimburse it for costs associated with providing accounting and other “back-office” services for the benefit of Concord, which we refer to as the “Affiliate Amount”.  Because the Trust pays an advisory fee to FUR Advisors whereas the other member in Concord does not, the advisory fee payable to FUR Advisors by the Trust is reduced by 50% of the Affiliate Amount to ensure equal treatment of the Trust with respect to the reimbursements paid by Concord.  For the years ended December 31, 2011, 2010 2009 and 2008,2009, the Trust received and utilized a credit of $0, $129,000, $255,000 and $263,000,$255,000, respectively, against the base management fee.

 

During 2010,2011, we entered into the following transaction with Concord Debt Holdings LLC, which we refer to as Concord, and CDH CDO LLC, which we refer to as CDH CDO, entities in which we hold a one-third interest:

SHAREHOLDER PROPOSALS

 

Any Shareholder proposals intended to be presented at the 20122013 Annual Meeting of Shareholders must be received by us for inclusion in our Proxy Statement and form of proxy relating to that meeting on or before January 11, 2012.10, 2013.  In addition, under our By-laws, Shareholders must comply with specified procedures to nominate persons for election as Trustees or introduce an item of business at an annual meeting.  Trustee nominations or an item of business to be introduced at an annual meeting must be submitted in writing and received by us not less than 120 days in advance of an annual meeting.  To be in proper written form, a Shareholder’s notice must contain the specific information required by our By-laws.  A copy of our By-laws, which specifies the advance notice procedures, can be obtained from us by request to the Trust’s Secretary and are also available on the Trust’s web-site in the Governance section under By-Laws.  Any Shareholder who wishes to submit a Shareholder proposal, should send it to, Winthrop Realty Trust, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114, Attention:  Trust’s Secretary.

 

MISCELLANEOUS

 

As of the date of this Proxy Statement, the Board does not know of any other matter to be brought before the Annual Meeting.  However, if any other matters not mentioned in the Proxy Statement are brought before the Annual Meeting or any adjournments thereof, the persons named in the enclosed Proxy or their substitutes will have discretionary authority to vote proxies given in said form or otherwise act, in respect of such matters, in accordance with their best judgment.

 

 

It is important that proxies be returned promptly or that you vote by telephone or the internet.  Shareholders are, therefore, urged to fill in, date, sign and return the Proxy immediately. No postage need be affixed if mailed in the enclosed envelope in the United States.