UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
ClipperRealty Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. |
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
| ☐ | Fee paid previously with preliminary materials: |
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) | Amount previously paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
April 27, 201830, 2021
Dear Fellow Stockholder:Shareholder:
On behalf of the Board of Directors of Clipper Realty Inc., a Maryland corporation (the “Company”), I cordially invite you to attend our Annual Meeting of StockholdersShareholders on Tuesday,Thursday, June 12, 2018,17, 2021, at the offices of Clipper Realty Inc., at 4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219, at 11:00 a.m. (Eastern Daylight Time).
Due to the ongoing public health impact of the coronavirus (COVID-19), we will monitor the need to conduct the Annual Meeting of Shareholders solely by means of remote communication. In that event, we will announce the decision to do so in advance, and details on how to participate will be set forth in a press release issued by the Company and available on the Press Releases page of the Investors section of our website at www.clipperrealty.com. If you plan to attend the Annual Meeting of Shareholders, please check our website ten days prior to the meeting. As always, you are encouraged to vote your shares prior to the Annual Meeting of Shareholders.
The notice of meeting and Proxy Statement that follow describe the business we will consider at the meeting. We sincerely hope you will be able to attend the meeting. However,meeting; however, whether or not you are personally present, your vote is very important. We are pleased to offer multiple options for voting your shares. You may authorize a proxy to vote your shares via the Internet, byvia telephone, byvia mail or in person, as described in the Proxy Statement. Thank you for your continued support of Clipper Realty Inc.
Sincerely yours,
| Sincerely yours, | ||
| David Bistricer | |||
| Chief Executive Officer and Co-Chairman of the | |||
| Board of Directors | |||
This Proxy Statement is dated April 27, 201830, 2021, and is first being distributed to shareholders via the Internet on or about April 30, 2018.2021.
Clipper Realty Inc.
4611 Twelfth Avenue, Suite 1L
Brooklyn, New York, 11219
(718) 438-2804
NOTICE OF 20182021 ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS
Please join us for the 20182021 Annual Meeting of StockholdersShareholders (the “Annual Meeting”) of Clipper Realty Inc., a Maryland corporation. The meeting will be held at 11:00 a.m. (Eastern Daylight Time), on Tuesday,Thursday, June 12, 2018,17, 2021, at the offices of Clipper Realty Inc., at 4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219.
At the Annual Meeting, our stockholdersshareholders will consider and vote on the following matters:
(1) | The election of seven directors, each to serve until the next annual meeting of our |
(2) | The ratification of the appointment of BDO USA, LLP, as our independent registered public accounting firm for the fiscal year ending December 31, |
(3) | Any other business properly introduced at the Annual Meeting or any continuation, postponement or adjournment of the Annual Meeting. |
You must own shares of Clipper Realty Inc. common stock or special voting stock as of the close of business on April 23, 2018,22, 2021, the record date for the Annual Meeting, or hold a valid proxy from a record holder as of the record date, to attend and vote at the Annual Meeting and at any continuation, postponement or adjournment of the Annual Meeting. If you plan to attend, please bring proper photo identification and, if your shares are held in “street name” (i.e.(i.e., through a broker, bank or other nominee), a copy of a brokerage statement reflecting your stock ownership in shares of our common stock or special voting stock as of the close of business on April 23, 2018.22, 2021. Regardless of whether you will attend, please authorize your proxy electronically throughvia the Internet, byvia telephone, or by completing and mailing your proxy card, so that your votesvote can be cast at the Annual Meeting in accordance with your instructions. For specific instructions on authorizing a proxy, please refer to the instructions on the proxy card, or, if your shares are held in street name, the instructions provided by your broker, bank or other nominee. Authorizing a proxy in any of these ways will not prevent you from voting in person at the Annual Meeting if you are a stockholdershareholder of record as of the record date for the Annual Meeting or if you hold a proxy from a record holder.holder as of the record date for the Annual Meeting.
By Order of the Board of Directors,
|
Brooklyn, New YorkMichael C. Frenz
Important Notice Regarding Internet Availability of Proxy Materials for the Shareholder Meeting to be Held on June 17, 2021: As permitted by rules adopted by the United States Securities and Exchange Commission (the “SEC”), we are making this Proxy Statement and our 2020 Annual Report available to stockholders electronically via the Internet at www.proxyvote.com. On or about April 27, 201830, 2021, we will mail to most of our stockholders a notice containing instructions on how to access this Proxy Statement and our 2020 Annual Report and how to vote via the Internet or by telephone.
The notice is not a form for voting and presents only an overview of the more complete proxy materials, which contain important information and should be reviewed before voting. The notice also contains instructions on how to request a printed copy of the proxy materials. In addition, you may elect to receive future proxy materials in printed form via mail or electronically via e-mail by following the instructions included in the notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail, unless you elect otherwise.
ClipperRealty Inc.
4611 Twelfth Avenue,, Suite 1L
Brooklyn, New York11219
(718) 438-2804
PROXY STATEMENT
TABLE OF CONTENTS
GENERAL | 2 |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING | 2 |
PROPOSAL NO. 1 ELECTION OF DIRECTORS | 8 |
INFORMATION ABOUT THE BOARD | |
| |
BOARD STRUCTURE AND LEADERSHIP | |
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS | |
DIRECTOR INDEPENDENCE | |
BOARD MEETINGS | |
BOARD COMMITTEES | |
AUDIT COMMITTEE REPORT | |
CORPORATE GOVERNANCE | 16 |
GOVERNANCE DOCUMENTS | 16 |
CODE OF BUSINESS CONDUCT AND ETHICS | 16 |
ROLE OF THE BOARD IN RISK OVERSIGHT | 16 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | 17 |
COMMUNICATIONS WITH THE BOARD | 17 |
NOMINATION PROCESS FOR DIRECTOR CANDIDATES | 18 |
AUDIT COMMITTEE FINANCIAL EXPERIENCE | 19 |
AUDIT COMMITTEE PRE-APPROVAL POLICY | 20 |
PRINCIPAL ACCOUNTANT FEES AND SERVICES | 20 |
BOARD ATTENDANCE AT ANNUAL MEETING OF | |
| 21 |
PROPOSAL NO. 2 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 21 |
EXECUTIVE OFFICERS | 22 |
EXECUTIVE COMPENSATION | 23 |
STOCK OWNERSHIP | 29 |
PRINCIPAL | 29 |
| |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | |
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS | |
| |
OTHER MATTERS |
GENERAL
This proxy statement (the “Proxy Statement”) and accompanying proxy card are available beginning on or about April 30, 20182021, in connection with the solicitation of proxies by the Board of Directors of Clipper Realty Inc., for use at the 20182021 Annual Meeting of Stockholders,Shareholders, which we may refer to alternatively in this Proxy Statement as the “Annual Meeting.” We may refer to ourselves in this Proxy Statement alternatively as the “Company,” “we,” “us” or “our” and we may refer to our Board of Directors as the “Board.” A copy of our Annual Report to Stockholders for the 20172020 fiscal year, including audited financial statements, as amended, is being made available simultaneously with this Proxy Statement to each stockholder.
Important Notice Regarding Internet Availability of Proxy Materials for the Stockholder Meeting to be Held on June 12, 2018: The Notice of Annual Meeting of Stockholders, the Proxy Statement and our 2017 Annual Report, as amended, are available atwww.proxyvote.com.Website addresses referred to in this Proxy Statement are not intended to function as hyperlinks, and the information contained on any such website is not a part of this Proxy Statement.shareholder.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Why am I receiving these materials?
Our Board is making these materials available to you over the Internet or by delivering paper copies to you by mail in connection with Clipper Realty Inc.’s 20182021 Annual Meeting of Stockholders.Shareholders. As a stockholder,shareholder, you are invited to attend the Annual Meeting and are entitled and requested to vote on the items of business described in this Proxy Statement. This Proxy Statement includes information that we are required to provide under Securities and Exchange Commission (“SEC”) rules and is designed to assist you in voting your shares.
Why did I receive a notice in the mail regarding Internet availability of proxy materials instead of a paper copy of the proxy materials?
Pursuant to Rule 14a-16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholdersshareholders of record on or about April 30, 2018,2021, while brokers, banks and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice to the beneficial owners. All stockholdersshareholders will have the ability to access the proxy materials, including this Proxy Statement and our 20172020 Annual Report, as amended, on the website referred to in the Notice, or to request to receive a printed copy of the proxy materials. Instructions on how to request a printed copy byvia mail or electronically, including an option to request paper copies on an ongoing basis, may be found in the Notice and on the website referred to in the Notice. We intend to mail this Proxy Statement, together with a proxy card and the 2020 Annual Report, to those stockholdersshareholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.
How do I vote?
If you hold your shares as a record holder and you are viewing this Proxy Statement on the Internet, you may vote by submitting a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you.
If you plan to attend the Annual Meeting and wish to vote in person, we will give you a ballot at the Annual Meeting. However, if your shares are held in the name of your broker, bank or other nominee, and you want to vote in person, you will need to obtain a legal proxy from the institution that holds your shares.
If your shares are held in your name, there are three ways for you to authorize a proxy:
(1) | If you received a paper copy of the proxy materials |
(2) | Call 1-800-690-6903; or |
(3) | Log on to the Internet at www.proxyvote.com, and follow the instructions |
Telephone and Internet proxy authorizations will close at 11:59 p.m. (Eastern Daylight Time) on June 11, 2018.16, 2021. If you authorize a proxy, unless you indicate otherwise, the persons named as your proxies will cast your votes FOR“FOR” all of the nominees for election as directors named in this Proxy Statement, and FOR“FOR” the ratification of BDO USA, LLP (“BDO”), as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2021. The persons named as proxies will vote in their discretion on any other business properly introduced at the Annual Meeting or any continuation, postponement or adjournment of the Annual Meeting.
If your shares are held in the name of your broker, bank or other nominee, you should receive separate instructions from the holder of your shares describing how to provide voting instructions.
Even if you plan to attend the Annual Meeting, we recommend that you authorize a proxy in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.
Can I vote my shares by completing and returning the Notice?
No. The Notice will, however, provide instructions on how to vote byvia the Internet, byvia telephone, byvia requesting and returning a paper proxy card or voting instruction card, or byvia submitting a ballot in person at the Annual Meeting.
Where and when is the Annual Meeting?
The Annual Meeting will be held at 11:00 a.m. (Eastern Daylight Time) on Tuesday,Thursday, June 12, 201817, 2021, at the offices of Clipper Realty Inc., at 4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219.
What is the purpose of the Annual Meeting of Stockholders?
At the Annual Meeting, stockholders will vote upon matters described in the Notice of Annual Meeting and this Proxy Statement, including the election of directors and the ratification of the selection of BDO USA LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.
Who can attend the Annual Meeting?
All of our stockholdersshareholders as of the close of business on April 23, 2018,22, 2021, the record date for the Annual Meeting, or individuals holding their duly appointed proxies, may attend the Annual Meeting. You should be prepared to present proper photo identification for admittance. Authorizing a proxy in response to this solicitation will not affect a stockholder’sshareholder’s right to attend the Annual Meeting and to vote in person. Please note that if you hold your shares in “street name” (that is, through a broker, bank or other nominee), you will need to provide proof of beneficial ownership as of April 23, 2018,22, 2021, such as a copy of a brokerage statement reflecting your stock ownership as of April 23, 2018,22, 2021, or a copy of the Notice of Internet Availability of Proxy Materials or voting instruction form provided by your broker, banker or other nominee, or other similar evidence of ownership, as well as your photo identification, to gain admittance to the Annual Meeting.
What am I voting on?is the purpose of the Annual Meeting?
At the Annual Meeting, you may consider and vote on:
(1) | the election of seven directors; |
(2) | the ratification of the appointment of BDO USA, LLP, as our independent registered public accounting firm for the fiscal year ending December 31, |
(3) | any other business properly introduced at the Annual Meeting. |
What are the Board’sBoard’s recommendations?
The Board recommends a vote:
● |
|
● |
|
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board as noted immediately above, and in their discretion on any other business properly introduced at the Annual Meeting.
Who may vote?
You may vote if you owned shares of our common stock or special voting stock at the close of business on April 23, 2018,22, 2021, which is the record date for the Annual Meeting. As of April 23, 2018,22, 2021, we had 17,812,75516,063,228 shares of common stock and 26,317,396 shares of special voting stock outstanding, for an aggregate of 44,130,15142,380,624 shares of voting stock.stock outstanding. Holders of our special voting stock and common stock vote together as a single class on all matters on which our common stockholdersshareholders are entitled to vote. Each share of our common stock and each share of our special voting stock is entitled to one vote.
Who counts the votes?
A representative of Broadridge Financial Solutions will tabulate the votes and a representative of the Company will act as the independent inspector of the election.
What is a quorum for the Annual Meeting?
The presence in person or by proxy of stockholdersshareholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting on any matter will constitute a quorum at the Annual Meeting.quorum. As of April 23, 2018,22, 2021, there were 44,130,15142,380,624 shares of voting stock outstanding, comprised of 17,812,75516,063,228 shares of common stock and 26,317,396 shares of special voting stock. Accordingly, holders of 22,065,07621,190,313 shares of voting stock must be present in person or by proxy at the Annual Meeting to constitute a quorum. No business may be conducted at the Annual Meeting if a quorum is not present.
If a quorum is not present at the Annual Meeting, the Chairman of the meeting may adjourn the Annual Meeting to another date, time or place, not later than 120 days after the original record date of April 23, 2018,22, 2021, without notice other than announcement at the Annual Meeting. We may also postpone the Annual Meeting to a date that is not later than 120 days after the original record date or cancel the Annual Meeting by making a public announcement of the postponement or cancellation before the time scheduled for the Annual Meeting. In the event of a postponement, the original record date of April 22, 2021, shall continue to apply unless the meeting is postponed to a date that is more than 120 days after the original record date.
What vote is required to approve an item of business at the Annual Meeting?
In the election of directors, you may vote “FOR” or “AGAINST”“WITHHOLD” with respect to each of the director nominees. In tabulating the voting results for the election of directors, only votes “FOR” director nominees are counted. “WITHHOLD” votes will not have an effect on the outcome of the election of directors.
To be elected as a director (Proposal No. 1), a nominee must receive a plurality of all the votes cast in the election of directors. A plurality means that the seven persons receiving the highest number of affirmative “FOR” votes at the Annual Meeting will be elected.
For the ratification of the appointment of BDO USA, LLP, as our independent registered public accounting firm for fiscal year 2018,2021 (Proposal No. 2), you may vote “FOR,” “AGAINST,” or “ABSTAIN.” If you electThe affirmative vote of a majority of the votes cast on the proposal is required to abstain from voting on any of these proposals, the abstention will have the same effect as an “AGAINST” vote with respect to such proposal.
To ratify the appointment of BDO USA, LLP, as our independent registered public accounting firm (Proposal No. 2),firm. If you elect to abstain from voting on this proposal, the affirmativeabstention will have no effect on the result of the vote, although your shares will be considered present for determining the presence of a majority of the votes cast on the proposal is required.quorum, with respect to this proposal.
If you are a stockholdershareholder of record as of the record date for the Annual Meeting and you authorize a proxy (whether byvia Internet, telephone or mail) without specifying a choice on any given matter to be considered at thisthe Annual Meeting, the proxy holders will vote your shares according to the Board’s recommendation on that matter. If you are a stockholdershareholder of record as of the record date for the Annual Meeting and you fail to authorize a proxy or vote in person, assuming that a quorum is present at the Annual Meeting, it will have no effect on the result of the vote on any of the matters to be considered at the Annual Meeting.
What is a broker non-vote?
If you hold your shares through a broker, bank or other nominee, under the rules of the New York Stock Exchange (“NYSE”), your broker, bank or other nominee may not vote with respect to certain proposals unless you have provided voting instructions with respect to that proposal. A “broker non-vote” results when a broker, bank or other nominee properly executes and returns a proxy but indicates that the nominee is not voting with respect to a particular matter because the nominee has not received voting instructions from the beneficial owner. A broker non-vote is not considered a vote cast on a proposal; however, stockholdersshareholders delivering a properly-executed broker non-vote will be counted as present for purposes of determining whether a quorum is present.
If you hold your shares in a brokerage account, then, under NYSE rules and Maryland law:
● | With respect to Proposal No. 1 (Election of Directors), your broker, bank or other nominee is not entitled to vote your shares on this matter if no instructions are received from you. Broker non-votes will have no effect on the election of directors. |
● | With respect to Proposal No. 2 (Ratification of Independent Registered Public Accounting Firm), your broker is entitled to vote your shares on this matter if no instructions are received from you. |
Because an abstention is not a vote cast, if you instruct your proxy or broker to “abstain” on any matter, it will have no effect on the vote on any of the matters to be considered at the Annual Meeting. However, you will still be counted as present for purposes of determining whether a quorum is present.
Can I revoke my proxy?
Yes, if your shares are held in your name, you can revoke your proxy by:
● | filing written notice of revocation with our Secretary before our Annual Meeting at the address shown on the front of this Proxy Statement or at our Annual Meeting; |
● | signing a proxy bearing a later date; or |
● | voting in person at the Annual Meeting. |
Attendance at the Annual Meeting will not, by itself, revoke a properly-executed proxy. If your shares are held in the name of your broker, bank or other nominee, please follow the voting instructions provided by the holder of your shares regarding how to revoke your proxy.
What happens if additional matters are presented at the Annual Meeting?
Other than the two proposals described in this Proxy Statement, we are not aware of any business that may properly be brought before the Annual Meeting. If any other matters are properly introduced for a vote at the Annual Meeting and if you properly authorize a proxy, the persons named as proxy holders will vote in their discretion on any such additional matters. As of the date of this Proxy Statement, our Board is not aware of any other individual who may properly be nominated for election as a director at the Annual Meeting or of any nominee who is unable or unwilling to serve as a director. If any nominee named in this Proxy Statement is unwilling or unable to serve as a director, our Board may nominate another individual for election as a director at the Annual Meeting, and the persons named as proxy holders will vote for the election of any substitute nominee.
Who pays for this proxy solicitation?
We will bear the expense of preparing, printing and mailing this Proxy Statement and the proxies we solicit. Proxies may be solicited by mail, by telephone, personal contact and electronic means and may also be solicited by directors and officers in person, byvia the Internet, byvia telephone, or byvia facsimile transmission, without additional remuneration.
We will also request brokerage firms, banks, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares of our common stock or special voting stock as of the record date and will reimburse them for the cost of forwarding the proxy materials in accordance with customary practice. Your cooperation in promptly voting your shares and submitting your proxy byvia the Internet, byvia telephone, or byvia completing and returning the enclosed proxy card (if you received your proxy materials in the mail), will help to avoid additional expense.
Where can I find corporate governance materials?
Our Corporate Governance Guidelines, andour Code of Business Conduct and Ethics, and the charters for theour Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee and Investment Committee, are available on the Leadership and Governance page of the Investor RelationsInvestors section onof our website at www.clipperrealty.com. The Company’s website address provided above and elsewhere in this Proxy Statement is not intended to function as a hyperlink, and the information on the Company’s website is not and should not be considered part of this Proxy Statement and is not incorporated by reference herein.
NO PERSON IS AUTHORIZED ON OUR BEHALF TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS WITH RESPECT TO THE PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION AND/OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL UNDER NO CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROXY STATEMENT.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, our shareholders will elect seven directors to serve until our next annual meeting of shareholders or until their respective successors are elected and qualified. The Board seeks directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. In nominating candidates, the Board considers a diversified membership in the broadest sense, including persons diverse in experience, gender and ethnicity. The Board does not discriminate on the basis of race, color, national origin, gender, religion, disability or sexual preference. Our director nominees were nominated by the Board based on the recommendation of the Nominating and Corporate Governance Committee. They were selected on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, their ability to make independent analytical inquiries, financial literacy, mature judgment, high performance standards, familiarity with our business and industry, and an ability to work collegially. We also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. All nominees are presently directors of Clipper Realty Inc. and each of the nominees has consented, if elected as a director, to serve until his term expires.
Your proxy holder will cast your votes “FOR” each of the Board’s nominees, unless you instruct otherwise. If a nominee is unable to serve as a director, your proxy holder will vote for any substitute nominee proposed by the Board.
Name | Age | Position | Director Since | |||
David Bistricer | 71 | Co-Chairman of the Board, Chief Executive Officer | 2015 | |||
Sam Levinson | 47 | Co-Chairman of the Board, Chairman of the Investment Committee | 2015 | |||
Howard M. Lorber † | 72 | Director, Chairman of the Audit Committee and the Compensation Committee | 2015 | |||
Richard N. Burger † | 70 | Director | 2018 | |||
Robert J. Ivanhoe † | 68 | Director, Chairman of the Nominating and Corporate Governance Committee | 2015 | |||
Harmon S. Spolan † | 85 | Director | 2018 | |||
Roberto A. Verrone | 52 | Director | 2015 |
† Independent within the meaning of the NYSE listing standards.
David Bistricer has been the managing member of Clipper Equity LLC (“Clipper Equity”), which owns interests in and controls and manages entities that own interests in multi-family and commercial properties in the New York metropolitan area (as more fully described under the heading “Certain Relationships and Related Party Transactions”), for more than 10 years. From January 1999 through February 2011, he served as Co-Chairman of the Board of Directors of Coleman Cable, Inc. (Nasdaq: CCIX), a manufacturer of wire and cable. He was previously Co-Chairman of the Board of Directors of Riblet Products Corporation from January 1987 until its merger with Coleman Cable, Inc., in 2000. Mr. Bistricer also was the managing member of Berkshire Capital LLC and Morgan Capital, real estate investment firms that are no longer active, for more than 10 years. He has also been the managing member and investor in a number of real estate investments unrelated to those of the Company, principally in the New York City area, since approximately 1978. Mr. Bistricer brings to our Board industry experience, leadership abilities and strategic insight that make him a valuable asset as Co-Chairman.
Sam Levinson is the Chief Investment Officer at Glick Family Investments, a private family office located in New York, New York, where he has overseen private equity investments since 2004. He was a member of the Board of Directors of Stonegate Mortgage Corporation (NYSE: SGM) from 2016 until its acquisition by Home Point Financial in May 2018, serving as Chairman of the Compensation Committee. Mr. Levinson served as a director of Canary Wharf Group, a U.K. property developer and manager of over 16 million square feet of Class A office and retail space, from 2004 until its sale in 2015, including as a member of the Operating Committee and Chairman of the Audit Committee. Mr. Levinson also served as a non-executive director of: Songbird Estates, Canary Wharf Group’s holding company, from 2004 to 2015; American European Group Insurance Company since 2006; and Dynasty Financial Partners, LLC, which provides investment and technology platforms for independent financial, investment, and wealth management advisors, since 2011. Additionally, Mr. Levinson served as a director of Coleman Cable, Inc., from 2005 until its sale in 2014, and of West Coast Bancorp of Portland, Oregon, from February 2011 until its sale in April 2016. Mr. Levinson’s wife is the niece of David Bistricer. We believe Mr. Levinson is qualified to serve as Co-Chairman of our Board because he is a seasoned executive and director with numerous years of experience in the financial and real estate industries.
Howard M. Lorber is President and Chief Executive Officer and member of the Board of Directors of Vector Group Ltd. (NYSE: VGR) and Chairman of Douglas Elliman Realty, LLC, a majority-owned subsidiary of Vector Group, which operates the largest residential brokerage company in the New York City metropolitan area and the fourth-largest in the United States. Mr. Lorber has been with Vector Group and its diversified interests since 1994. Mr. Lorber is also Executive Chairman of the Board of Directors of Nathan’s Famous, Inc. (NASDAQ: NATH), a licensor, wholesaler and retailer of products related to Nathan’s World Famous Beef Hot Dogs; a director of United Capital Corp., a real estate investment and diversified manufacturing company; Vice Chairman of the Board of Directors of Ladenburg Thalmann Financial Services Inc. (NYSEMKT: LTS), a broker-dealer; and, until November 2016, Chairman of Morgans Hotel Group Co. Mr. Lorber holds Bachelor of Arts, Master of Science and Honorary Doctorate degrees from Long Island University. Mr. Lorber brings to our Board his valuable expertise in the real estate and investment industries, including more than 25 years of experience serving on the board of a preeminent New York real estate company.
Richard N. Burger served as Chief Financial Officer, Executive Vice President, Secretary and Treasurer of Coleman Cable, Inc., from 1999 to 2013, after joining its predecessor company as Chief Financial Officer in 1996. Previously, he served as President and Chief Executive Officer of Burns Aerospace Corporation, a subsidiary of Eagle Industries, Inc., a manufacturer of aircraft equipment. He is a former member of the Board of Directors of A.M. Castle & Co., a provider of metals, services and supply chain solutions. Mr. Burger holds a Master of Business Administration degree from the University of Baltimore and a Bachelor of Science degree from Towson University. Mr. Burger brings to our Board valuable expertise as an experienced executive.
Robert J. Ivanhoe is Chair of the 300+ lawyer Global Real Estate Practice and Co-Chair of the REIT group at Greenberg Traurig LLP, where he has worked since 1996. He concentrates his practice in sophisticated real estate structures, financings, workouts, restructurings, acquisitions and dispositions of all asset classes of real estate. Mr. Ivanhoe is actively involved in real estate industry current affairs and is regularly asked to write and lecture on industry topics. He has been recognized by Chambers and Partners USA, The New York Observer and Real Estate New York as one of the leading real estate attorneys in New York City and throughout the United States. He has represented numerous nationally recognized owner/developer and institutional lender/investor clients domestically and internationally for more than 30 years. Mr. Ivanhoe is a member of Greenberg Traurig LLP’s Executive Committee, Board of Directors and Operating Committee. Mr. Ivanhoe holds a Juris Doctorate degree from American University Washington College of Law and a Bachelor of Arts degree from Johns Hopkins University. Mr. Ivanhoe brings to our Board valuable expertise in the real estate industry.
Harmon S. Spolan is currently of counsel to Cozen O’Connor, a law firm headquartered in Philadelphia, Pennsylvania, where he has practiced since 1999; previously, he served as Chair of the firm’s Financial Services Practice Group. Prior to joining Cozen, Mr. Spolan served as President of Jefferson Bank, a commercial bank in Philadelphia, for 22 years. Mr. Spolan currently serves as a member of the Board of Directors and the Audit Committee for American European Insurance Group, and as a member of the Credit Committee for the Alesco securities division of Cohen & Company. Previously, he served as a member of the Board of Directors and the Audit Committee for Coleman Cable, Inc., and Atlas Energy. Mr. Spolan holds a Juris Doctorate degree from the Temple University School of Law and a Bachelor of Arts degree from Temple University. Mr. Spolan brings to our Board valuable expertise as an experienced executive.
Roberto A. Verrone is a founder and principal owner of Iron Hound Management Company, which provides advisory and capital placement services in the commercial real estate industry. Mr. Verrone began his career at Bear Stearns in 1990, which included time in the Commercial Real Estate Group. In 2001, he joined Wachovia Corporation following the merger of First Union and Wachovia, and in 2002 he became manager of Wachovia’s Large Loan Group. Prior to founding Iron Hound in early 2009, Mr. Verrone also served as Co-Head of Wachovia’s Real Estate Group, where he was responsible for managing approximately 600 employees and oversaw a debt portfolio valued in excess of $80 billion. Mr. Verrone holds a Bachelor of Arts degree from Moravian College. Mr. Verrone brings to our Board valuable expertise in the commercial real estate industry, in which he has more than 25 years of experience.
Recommendation of the Board of Directors:
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE ELECTION OF THE SEVEN NOMINEES NAMED ABOVE.
INFORMATION ABOUT THE BOARD
PROPOSAL NO. 1NOMINEES FOR ELECTION TO THE BOARD
At the Annual Meeting, our stockholders will elect seven directors to serve until our next annual meeting of stockholders or until their respective successors are elected and qualified. The Board seeks directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. In nominating candidates, the Board considers a diversified membership in the broadest sense, including persons diverse in experience, gender and ethnicity. The Board does not discriminate on the basis of race, color, national origin, gender, religion, disability or sexual preference. Our director nominees were nominated by the Board based on the recommendation of the Nominating and Corporate Governance Committee. They were selected on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, their ability to make independent analytical inquiries, financial literacy, mature judgment, high performance standards, familiarity with our business and industry, and an ability to work collegially. We also believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. All nominees are presently directors of Clipper Realty Inc. and each of the nominees has consented, if elected as a director, to serve until his term expires.
Your proxy holder will cast your votes for each of the Board’s nominees, unless you instruct otherwise. If a nominee is unable to serve as a director, your proxy holder will vote for any substitute nominee proposed by the Board.
The Board of Directors unanimously recommends that the stockholders vote “FOR” the seven nominees listed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
† Independent within the meaning of the NYSE listing standards.
David Bistricer has been the managing member of Clipper Equity, Inc. (“Clipper Equity”), which controls and manages entities that own interest in multi-family and commercial properties in the New York metropolitan area (as more fully described in Certain Relationships and Related Party Transactions) for more than 10 years. From January 1999 through February 2011, he served as Co-Chairman of the Board of Directors of Coleman Cable Inc. (NASDAQ: CCIX), a manufacturer of wire and cable. He was previously Co-Chairman of Riblet Products Corporation from January 1987 until its merger with the Coleman Cable Inc. in 2000. Mr. David Bistricer has also been the managing member of Berkshire Capital LLC and Morgan Capital, real estate investment firms that are no longer active, for more than 10 years. He has also been the managing member and investor in a number of real estate investments unrelated to those of the Company, principally in the New York City area, since approximately 1978. Mr. David Bistricer brings to our Board industry experience, leadership abilities and strategic insight that make him a valuable asset as Co-Chairman.
Sam Levinson is the Chief Investment Officer at Glick Family Investments, a private family office located in New York, New York, where he has overseen private equity investments since 2004. He was a member of the Board of Directors of Stonegate Mortgage Corporation (NYSE: SGM) from 2016 until its acquisition by Home Point Financial in May 2017, serving as Chairman of the Compensation Committee. Mr. Levinson has served as a director of Canary Wharf Group, a U.K. property developer and manager of over 16 million square feet of Class A office and retail space, since 2004, including as a member of the Operating Committee and Chairman of the Audit Committee. Mr. Levinson has also served as a non-executive director of Songbird Estates, Canary Wharf Group’s holding company, since 2004; of American European Group Insurance Company since 2006; and of Dynasty Financial Partners, LLC, which provides investment and technology platforms for independent financial, investment, and wealth management advisors, since 2011. Additionally, Mr. Levinson served as a director of Coleman Cable Inc. from 2005 until its sale in 2014 and of West Coast Bancorp of Portland, Oregon from February 2011 until its sale in April 2016. Mr. Levinson’s wife is the niece of David Bistricer. We believe Mr. Levinson is qualified to serve as a Co-Chairman of our Board because he is an experienced executive and director with numerous years of experience in the financial and real estate industries.
Howard M. Lorber is President and Chief Executive Officer and member of the Board of Directors of Vector Group Ltd. (NYSE: VGR) and Chairman of Douglas Elliman Realty, LLC, a majority-owned subsidiary of Vector Group, which operates the largest residential brokerage company in the New York City metropolitan area and the fourth-largest in the United States. Mr. Lorber has been with Vector Group and its diversified interests since 1994. Mr. Lorber is also Executive Chairman of the Board of Directors of Nathan’s Famous, Inc. (NASDAQ: NATH), a licensor, wholesaler and retailer of products related to Nathan’s World Famous Beef Hot Dogs; a director of United Capital Corp., a real estate investment and diversified manufacturing company; Vice Chairman of the Board of Directors of Ladenburg Thalmann Financial Services Inc. (NYSEMKT: LTS), a broker-dealer; and, until November 2016, Chairman of Morgans Hotel Group Co. Mr. Lorber holds Bachelor of Arts, Master’s of Science and Honorary Doctorate degrees from Long Island University. Mr. Lorber brings to our Board his valuable expertise in the real estate and investment industries, including more than 25 years of experience serving on the board of a preeminent New York real estate company.
Robert J. Ivanhoe is Chair of the 300+ lawyer Global Real Estate Practice and Co-Chair of the REIT group at Greenberg Traurig LLP, where he has worked since 1996. He concentrates his practice in sophisticated real estate structures, financings, workouts, restructurings, acquisitions and dispositions of all asset classes of real estate. Mr. Ivanhoe is actively involved in real estate industry current affairs and is regularly asked to write and lecture on industry topics. He has been recognized by Chambers and Partners USA, The New York Observer and Real Estate New York as one of the leading real estate attorneys in New York City and throughout the United States. He has represented numerous nationally-recognized owner/developer and institutional lender/investor clients domestically and internationally for more than 30 years. Mr. Ivanhoe is a member of Greenberg Traurig LLP’s Executive Committee, Board of Directors and Operating Committee. Mr. Ivanhoe holds a Bachelor of Arts degree from Johns Hopkins University and a Juris Doctorate from American University Washington College of Law. Mr. Ivanhoe brings to our Board valuable expertise in the real estate industry.
Roberto A. Verrone is a founder and principal owner of Iron Hound Management Company, which provides advisory and capital placement services in the commercial real estate industry. Mr. Verrone began his career at Bear Stearns in 1990, which included time in the Commercial Real Estate Group. In 2001, he joined Wachovia Corporation following the merger of First Union and Wachovia, and in 2002 he became manager of Wachovia’s Large Loan Group. Prior to founding Iron Hound in early 2009, Mr. Verrone also served as Co-Head of Wachovia’s Real Estate Group, where he was responsible for managing approximately 600 employees and oversaw a debt portfolio valued in excess of $80 billion. Mr. Verrone received a Bachelor of Arts degree from Moravian College. Mr. Verrone brings to our Board his valuable expertise in the commercial real estate industry, in which he has more than 23 years of experience.
Harmon S. Spolan is currently of counsel to Cozen O’Connor, a law firm headquartered in Philadelphia, Pennsylvania, where he has practiced since 1999; previously, he served as Chair of the firm’s Financial Services Practice Group. Prior to joining Cozen, Mr. Spolan served as President of Jefferson Bank, a commercial bank in Philadelphia, for 22 years. Mr. Spolan currently serves as a member of the Board and the Audit Committee for American European Insurance Group, and as a member of the Credit Committee for the Alesco securities division of Cohen & Company. Previously, he served as a member of the Board and the Audit Committee for both Coleman Cable, Inc. and Atlas Energy. Mr. Spolan holds a Juris Doctorate degree from the Temple University School of Law and a Bachelor of Arts degree from Temple University. Mr. Spolan brings to our Board valuable expertise as an experienced executive.
Richard N. Burger served as Chief Financial Officer, Executive Vice President, Secretary and Treasurer of Coleman Cable, Inc., from 1999 to 2013, after joining its predecessor company as Chief Financial Officer in 1996. Previously, he served as President and Chief Executive Officer of Burns Aerospace Corporation, a subsidiary of Eagle Industries, Inc., a manufacturer of aircraft equipment. He is a former member of the Board of A.M. Castle & Co., a provider of metals, services and supply chain solutions. Mr. Burger holds a Master’s of Business Administration degree from the University of Baltimore and a Bachelor of Science degree from Towson University. Mr. Burger brings to our Board valuable expertise as an experienced executive.
BOARD STRUCTURE AND LEADERSHIP
We have structured our corporate governance in a manner that we believe closely aligns our interests with those of our stockholders.shareholders. Notable features of our corporate governance structure include the following:
● | our Board is not classified, with each of our directors subject to re-election annually; |
● | of the seven persons who serve on our Board, our Board has determined that |
● | three of our directors qualify as an “audit committee financial expert” as defined by the SEC; and |
● | we do not have a |
Our directors stay informed about our business by attending meetings of our Board and its committees, and through supplemental reports and communications. Our independent directors meet regularly in executive sessions without the presence of our corporate officers or non-independent directors.
Our Board is currently co-chaired by David Bistricer and Sam Levinson. Our Board believes that Messrs. Bistricer’sBistricer and Levinson’s service as our Co-Chairmen is in the best interests of our Company and our stockholdersshareholders, because they possess detailed and in-depth knowledge of the issues, opportunities and challenges we face, and because they are best positioned to develop agendas that ensure that our Board’s time and attention is focused on the most critical matters. Our Board believes that their roles as Co-Chairmen enable decisive leadership, ensure clear accountability and enhance our ability to communicate our message and strategy clearly and consistently to stockholders,shareholders, employees and tenants.
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
Our non-management independent directors typically meet or are offered the opportunity to meet without management present each time the full Board or a Board committee convenes for a regularly scheduled meeting. If the Board convenes for a special meeting, the non-management independent directors will meet in executive session if circumstances warrant. We currently do not have a lead independent director. Our independent directors have selected Mr. Lorber to preside over executive sessions of the Board.
The Board welcomes communications from stockholders. For information on how toshareholders. To communicate with our independent directors, please refer to the information set forth under the heading “-Communications“Corporate Governance—Communications with the Board.”
DIRECTOR INDEPENDENCE
On an annual basis, the Board, with the assistance of, and upon recommendation of, the Nominating and Corporate Governance Committee, makes a determination as to the independence of each director, considering the current standards for “independence” established by the NYSE. Our Corporate Governance Guidelines provide that a majority of the Board willmust be independent. The Board has determined that fivefour of its seven directors are independent under these standards including- Messrs. Levinson, Lorber, Burger, Ivanhoe Spolan and Burger.Spolan. All members of each of the Company’s Audit, Compensation and Nominating and Corporate Governance Committees are independent directors.directors, as determined by the Board. In addition, upon recommendation of the Nominating and Corporate Governance Committee, the Board has determined that the members of the Audit Committee and the Compensation Committee meet the additional independence criteria required for audit committee and compensation committee membership, respectively, under the applicable NYSE listing standards.
BOARD MEETINGS
The Board held 10five regularly scheduled and special meetings in 20172020 to review significant developments, engage in strategic planning and act on matters requiring Board approval. Each incumbent director attended an aggregate of at least 75 percent of the Board meetings, and the meetings of committees on which he served, during the period that he served in 2017. The Board also acted by unanimous written consent on three occasions.2020.
BOARD COMMITTEES
Our Board has established four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and an Investment Committee. The principal functions of each committee are briefly described below. We comply with the listing requirements and other rules and regulations of the NYSE, as amended or modified from time to time, with respect to each of these committees, and each of these committees (other than the Investment Committee) is comprised exclusively of independent directors.directors, as determined by the Board. Additionally, our Board may from time to time establish other committees to facilitate the management of our company.Company.
Audit Committee
Our Audit Committee consists of three of our independent directors. Mr. Lorber serves as the Chairman of the Audit Committee and Messrs. SpolanBurger and BurgerSpolan are members. Our Board has determined that Messrs. Lorber, Burger and Spolan and Burgereach qualify as an “audit committee financial experts”expert” as that term is defined by applicable SEC regulations and NYSE corporate governance listing standards. Our Board has determinedstandards, and that each of our Audit Committee membersthem is “financially literate” as that term is defined by NYSE corporate governance listing standards. See “AuditTo learn more about this determination process, please refer to the information set forth under the heading “Corporate Governance—Audit Committee Financial Experience” in this Proxy Statement for more information.Experience.” We have adopted an Audit Committee charter which details the principal functions of the Audit Committee, including oversight related to:
● | the integrity of our financial statements; |
● | our compliance with financial, legal and regulatory requirements; |
● | the evaluation of the qualifications, independence and performance of our independent registered public accounting firm; |
● | the performance of our internal audit function; and |
● | our overall risk profile. |
The Audit Committee is also responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, pre-approving professional services provided by the independent registered public accounting firm including(including all audit and non-audit services,services), reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees, and reviewing the adequacy of our internal accounting controls. The Audit Committee is also responsible for the Audit Committee report included in this Proxy Statement. During 2017,2020, the Audit Committee met four times.
Compensation Committee
Our Compensation Committee consists of three of our independent directors. Mr. Lorber serves as the Chairman of the Compensation Committee and Messrs. IvanhoeBurger and LevinsonSpolan are members. We have adopted a Compensation Committee charter which details the principal functions of the Compensation Committee, including:
● | reviewing and approving, at least annually, the corporate goals and objectives relevant to our Chief Executive |
● |
|
● | reviewing our executive compensation policies and plans; |
● | implementing and administering our equity-based incentive compensation |
|
|
● | producing a report on executive compensation to be included in our annual |
The Compensation Committee may delegate its responsibilities to a subcommittee of the Compensation Committee, provided that such responsibilities do not pertain to matters involving executive compensation or certain matters determined to involve compensation intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended. Our Chief Executive Officer and senior members of our management team are responsible for providing recommendations to the Compensation Committee regarding all aspects of our executive compensation program. To evaluate each seniorexecutive officer’s overall compensation, the Compensation Committee reviews total direct and indirect compensation details prepared by management. During 2017,2020, the Compensation Committee met once.
In the event that the Compensation Committee is not comprised of “nonemployee directors” within the meaning of Rule 16b-3 under the Exchange Act, the full Board or a subcommittee of two or more nonemployee directors has and will administer all awards granted to individuals that are subject to Section 16 of the Exchange Act.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of three of our independent directors. Mr. LevinsonIvanhoe is Chairman of the Nominating and Corporate Governance Committee and Messrs. Lorber and IvanhoeSpolan are members. We have adopted a Nominating and Corporate Governance Committee charter which details the principal functions of the Nominating and Corporate Governance Committee, including:
● | identifying and recommending to the full Board, qualified candidates for election as directors to fill vacancies on the Board or at any annual meeting of |
● | developing and recommending to the Board, standards to be applied in making determinations as to the absence of material relationships between the Company and any director; |
● | establishing procedures for the Nominating and Corporate Governance Committee to exercise oversight of the evaluation of the Board and management; |
● | developing and recommending to the Board, corporate governance guidelines, and |
● | assisting management in the preparation of |
During 2017, our2020, the Nominating and Corporate Governance Committee met once.
Investment Committee
Our Investment Committee consists of threefour of our independent directors. Mr. Levinson is Chairman of the Investment Committee and Messrs. Bistricer, Ivanhoe and Verrone are members. We have adopted an Investment Committee charter which details the principal functions of the Investment Committee, including:
● | in consultation with management, |
● |
|
● |
|
● |
|
● |
|
In 2017, ourDuring 2020, the Investment Committee met twice.did not meet.
AUDIT COMMITTEE REPORT
The information contained in this Report of the Audit Committee shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”“Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting material”“soliciting material” or “filed”“filed” with the SEC, or subject to Regulation 14A or 14C, or to the liabilities of Section 18, of the Exchange Act (except to the extent that we specifically incorporate this information by reference).
Although the Audit Committee of the Board of Directors (the “Audit Committee”) oversees the financial reporting process of Clipper Realty Inc., a Maryland corporation (the “Company”), on behalf of the Board of Directors (the “Board”) of the Company, consistent with the Audit Committee’s written charter, management has the primary responsibility for preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles and the reporting process, including disclosure controls and procedures and the system of internal control over financial reporting. The Company’s independent registered public accounting firm is responsible for auditing the annual financial statements prepared by management.
The Audit Committee has reviewed and discussed with management and the Company’s independent registered public accounting firm, BDO USA, LLP, ourthe Company’s December 31, 20172020, audited financial statements. Prior to the commencement of the audit, the Audit Committee discussed with the Company’s management and independent registered public accounting firm, the overall scope and plans for the audit. Subsequent to the audit and each of the quarterly reviews, the Audit Committee discussed with the independent registered public accounting firm, with and without management present, the results of their examinations or reviews, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of specific judgments and the clarity of disclosures in the consolidated financial statements.
In addition, the Audit Committee discussed with the independent registered public accounting firm, the matters required to be discussed by Statements on Auditing Standards No. 61, “Communicationthat independent registered public accounting firms must discuss with Audit Committees,” as amended.audit committees under applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence. The Audit Committee discussed with the independent registered public accounting firm, its independence from the Company, and considered the compatibility of non-audit services, if any, with its independence.
Based upon the reviews and discussions referred to in the foregoing paragraphs, the Audit Committee recommended to the Board that the audited financial statements be included in ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 20172020, filed with the Securities and Exchange Commission.
The foregoing report has been furnished by the Audit Committee as of April 27, 2018.30, 2021.
Howard M. Lorber - Chairman Richard N. Burger Harmon S. Spolan
|
CORPORATE GOVERNANCE
GOVERNANCE DOCUMENTS
Our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee and Investment Committee charters, along with our Code of Business Conduct and Ethics and our Corporate Governance Guidelines, are available on the Leadership and Governance page of the Investor RelationsInvestors section onof our website at www.clipperrealty.com. In accordance with the Corporate Governance Guidelines, the Board and each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee conducts an annual performance self-assessment with the purpose of increasing effectiveness of the Board and its committees. (TheThe Company’s website address provided above and elsewhere in this Proxy Statement is not intended to function as a hyperlink, and the information on the Company’s website is not and should not be considered part of this Proxy Statement and is not incorporated by reference herein.)
CODE OF BUSINESS CONDUCT AND ETHICS
Our Board formally approved a Code of Business Conduct and Ethics that applies to our officers, directors and employees. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote:to:
● | promote honest and ethical conduct, including the ethical handling of conflicts of interest; |
● | promote full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications; |
● | promote compliance with applicable governmental laws, rules and regulations; and |
● | ensure |
Any waiver of the Code of Business Conduct and Ethics for our directors or executive officers and other principal financial officers must be approved by the Board, and any such waiver shall be promptly disclosed as required by law or NYSE regulations.
ROLE OF THE BOARD IN RISK OVERSIGHT
One of the key functions of our Board is informed oversight of our risk management process. Our Board administers this oversight function directly, with support from its four standing committees - the Audit Committee, the Nominating and Corporate Governance Committee, the Compensation Committee and the Investment Committee, each of which addresses risks specific to their respective areas of oversight. In particular, our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function.particular:
● | our Audit Committee considers and discusses our major financial risk exposures and the steps our management has taken to monitor and control these exposures, monitors compliance with legal and regulatory requirements, and provides oversight of the performance of our internal audit function; |
Our Nominating and Corporate Governance Committee monitors the effectiveness of our Corporate Governance Guidelines.
● | our Nominating and Corporate Governance Committee monitors the effectiveness of our Corporate Governance Guidelines; |
Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
● | our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking; and |
Our
● | our Investment Committee assesses the viability of potential acquisitions and dispositions of properties. |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2017, our Compensation Committee consisted of Messrs. Lorber, Bistricer and Levinson. Between the date of our initial public offering (the “IPO”) and February 6, 2018, Mr. Bistricer, our Chief Executive Officer and Co-Chairman of the Board, was a member of the Compensation Committee. Mr. Bistricer served on our Compensation Committee as permitted under the NYSE’s transition rules for newly-public companies. Except with respect to Mr. Bistricer, since February 6, 2018, noNo director serving on the Compensation Committee is or has beenwas an officer or employee of the Company.Company in 2020. In addition, none of the Company's executive officers serves, or in the past fiscal year served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Board or the Compensation Committee.Committee of the Company.
COMMUNICATIONS WITH THE BOARD
StockholdersShareholders and other interested parties may write to the Co-Chairmen, the entire Board or any of its members, at Clipper Realty Inc., c/o Lawrence Kreider Jr.,Michael C. Frenz, Chief Financial Officer and Secretary, 4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219. StockholdersShareholders and other interested parties also may e-mail the Co-Chairmen, the entire Board or any of its members, c/o Lawrence Kreider Jr.,Michael C. Frenz, Chief Financial Officer and Secretary, at larry@clipperrealty.com.mfrenz@clipperrealty.com. The Board may not be able to respond to all stockholdershareholder inquiries directly. Therefore, the Board has developed a process to assist it with managing inquiries.
The Chief Financial Officer and Secretary will perform a review in the normal discharge of his duties to ensure that communications forwarded to the Co-Chairmen, the entire Board or any of its members, preserve the integrity of the process. While the Board oversees management, it does not participate in day-to-day management functions or business operations, and is not normally in the best position to respond to inquiries with respect to thosethese matters. For example, items that are unrelated to the duties and responsibilities of the Board, such as spam, junk mail and mass mailings, ordinary course disputes over fees or services, personal employee complaints, business inquiries, new product or service suggestions, resumes and other forms of job inquiries, surveys, business solicitations or advertisements, will not be forwarded to the Co-Chairmen, the entire Board or any other director.of its members. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be forwarded to the Co-Chairmen, the entire Board or any other directorof its members, and will not be retained. Suchretained; such material may be forwarded to local or federal law enforcement authorities.
Any communication that is relevant to the conduct of our business and is not forwarded will be retained for one year and made available to the Co-Chairmen and any other independent director on request. The independent directors grant the Chief Financial Officer and Secretary the discretion to decide what correspondence will be shared with our management, and any personal employee communications may be shared with our human resources department if deemed appropriate. If a response on behalf of the Board is appropriate, we gather any information and documentation necessary for answering the inquiry and provide the information and documentation, as well as a proposed response, to the appropriate director(s). We also may attempt to communicate with the stockholdershareholder for any necessary clarification. Our Chief Financial Officer and Secretary (or his designee) reviews and approves responses on behalf of the Board in consultation with the applicable director(s), as appropriate.
Certain circumstances may require that the Board depart from the procedures described above, such as the receipt of threatening letters or e-mails or voluminous inquiries with respect to the same subject matter. Nevertheless, the Board considers stockholdershareholder questions and comments important, and endeavors to respond promptly and appropriately.
NOMINATION PROCESS FOR DIRECTOR CANDIDATES
The Nominating and Corporate Governance Committee is, among other things, responsible for identifying and evaluating potential candidates and recommending candidates to the Board for nomination. The Nominating and Corporate Governance Committee is governed by a written charter, a copy of which is available on the Leadership and Governance page of the Investor RelationsInvestors section onof our website at www.clipperrealty.com. The Company’s website address provided above and elsewhere in this Proxy Statement is not intended to function as a hyperlink, and the information on the Company’s website is not and should not be considered part of this Proxy Statement and is not incorporated by reference herein.
The Nominating and Corporate Governance Committee regularly reviews the composition of the Board and whether the addition of directors with particular experiences, skills, or characteristics would make the Board more effective. When a need arises to fill a vacancy, or it is determined that a director possessing particular experiences, skills, or characteristics would make the Board more effective, the Nominating and Corporate Governance Committee initiates a search. As a part of the search process, the Nominating and Corporate Governance Committee may consult with other directors and members of senior management, and may hire a search firm to assist in identifying and evaluating potential candidates.
When considering a candidate, the Nominating and Corporate Governance Committee reviews the candidate’s experiences, skills, and characteristics. The Nominating and Corporate Governance Committee also considers whether a potential candidate would otherwise qualify for membership on the Board, and whether the potential candidate would likely satisfy the independence requirements of the NYSE as described below.
Candidates are selected on the basis of outstanding achievement in their professional careers, broad experience, personal and professional integrity, their ability to make independent analytical inquiries, financial literacy, mature judgment, high performance standards, familiarity with our business and industry, and an ability to work collegially. Other factors include having members with various and relevant career experience and technical skills, and having a Board that is, as a whole, diverse. Where appropriate, we will conduct a criminal and background check on the candidate. In addition, at least one member of the Board should have the qualifications and skills necessary to be considered an “Audit Committee Financial Expert”“audit committee financial expert” under Section 407 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), as defined by the rules of the SEC, and within one year of the NYSE listing date, at least a majority of the Board must be independent as determined by the Board under the guidelines of the NYSE listing standards.
All potential candidates are interviewed by the Co-Chairmen of the Board and the Nominating and Corporate Governance Committee Chairman, and, to the extent practicable, the other members of the Nominating and Corporate Governance Committee, and may be interviewed by other directors and members of senior management as desired and as schedules permit. In addition, the Chief Financial Officer and Secretary conducts a review of the director questionnaire submitted by the candidate and, as appropriate, a background and reference check is conducted. The Nominating and Corporate Governance Committee then meets to consider and approve the final candidates, and either makes its recommendation to the Board to fill a vacancy or add an additional member, or recommends a slate of candidates to the Board for nomination for election to the Board. The selection process for candidates is intended to be flexible, and the Nominating and Corporate Governance Committee, in the exercise of its discretion, may deviate from the selection process when particular circumstances warrant a different approach.
StockholdersShareholders may recommend candidates to our Board. The stockholdershareholder must submit a detailed resume of the candidate and an explanation of the reasons why the stockholdershareholder believes the candidate is qualified for service on our Board and how the candidate satisfies the Board’s criteria. The stockholdershareholder must also provide such other information about the candidate as is set forth in our bylaws and as would be required by the SEC rules, to be included in a Proxy Statement.proxy statement. In addition, the stockholdershareholder must include the consent of the candidate and describe any arrangements or undertakings between the stockholdershareholder and the candidate regarding the nomination. The stockholdershareholder must also submit proof of the stockholder’s holdinghis/her ownership of Clipper Realty Inc.’s common stock or special voting stock. All communications are to be directed to the Co-ChairmenChairman of the Nominating and Corporate Governance Committee, c/o Clipper Realty Inc., 4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219, Attention: Chief Financial Officer and Secretary. For any annual meeting, recommendations must be received afterat least 120 days prior to the anniversary of the date of the Proxy Statementproxy statement for the prior year’s annual meeting, areor they will not be considered timely for consideration by the Nominating and Corporate Governance Committee for that annual meeting.
AUDIT COMMITTEE FINANCIAL EXPERIENCE
Our Board has determined that each of Messrs. Lorber, Burger and Spolan qualifyqualifies as an “audit committee financial experts,expert,” as thisthe term has been defined by the SEC in Item 407(d)(5)(ii) of Regulation S-K. EachOur Board has also determined that each of Messrs. Lorber, Burger and Spolan were determined by our Board to beis “financially literate”literate,” in accordance with SEC rules, based on their prior experience.
Our Board has determined that Mr. Lorber acquired the required attributes of an audit committee financial expert as a result of his extensive experience (i) supervising individuals responsible for financial preparation and reporting, and (ii) reviewing public company financial processes and disclosure as both an officer and director of public companies (including serving on the board of directors of a financial services company and serving on the audit committee of multiple public companies.companies).
Our Board has determined that Mr. Burger acquired the required attributes of an audit committee financial expert as a result of his experience as a chief financial officer and treasurer of a public company, and as president of a company with direct supervision over the principal financial officer. Mr. Burger also holds a Master’sMaster of Business Administration degree.
Our Board has determined that Mr. Spolan acquired the required attributes for designation asof an audit committee financial expert as a result of his experience as a president of a bank, a chair of the financial services practice group of a law firm and as an audit committee member of multiple public company boards, forcompanies, in connection with which he served aswas determined to be an audit committee financial expert.
AUDIT COMMITTEE PRE-APPROVAL POLICY
The Audit Committee has adopted a charter which provides that the Audit Committee’s policy is to pre-approve all significant audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services to be provided and is generally subject to a specific budget. Our independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
BDO USA, LLP’s fees for the fiscal years ended December 31, 20172020 and 20162019, were as follows:
Fiscal Year Ended December 31 | Fiscal Year Ended December 31, | |||||||||||||||
2017 | 2016 | 2020 | 2019 | |||||||||||||
Audit Fees | $ | 245,500 | $ | 340,350 | $ | 284,375 | $ | 244,000 | ||||||||
Audit-Related Fees | ─ | 6,500 | ─ | ─ | ||||||||||||
Tax Fees | ─ | ─ | ─ | ─ | ||||||||||||
All Other Fees | ─ | ─ | ─ | ─ | ||||||||||||
Total Fees | $ | 245,000 | $ | 346,850 | $ | 284,375 | $ | 244,000 | ||||||||
A description of theThe types of services provided in each category isfor the years noted above were as follows:
Audit Fees-IncludesFees
Includes fees for professional services provided in connection with our(i) the Company’s annual audit, (ii) review of ourthe Company’s quarterly financial statements, and services(iii) the registration of certain shares of the Company’s common stock in connection with our IPO in 2017, SEC registration statements and securities offerings.
Audit-Related Fees-Includes acquisition audits of a significant 2016 portfolio acquisition.2020.
All of the services performed by BDO USA, LLP, were pre-approved by the Audit Committee, and the Audit Committee was provided with regular updates as to the nature of such services and the fees paid for such services.
BOARD ATTENDANCE AT ANNUAL MEETING OF STOCKHOLDERSSHAREHOLDERS
While the Board understands that there may be situations that prevent a director from attending an annual meeting of stockholders,shareholders, the Board encourages all directors to attend. The Annual Meeting will beDue to COVID-19 concerns, one director attended the Company’s first2020 annual meeting of stockholders held as a public company.
OTHER COMPANY PROPOSALSshareholders in person and five directors attended telephonically.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee appointed BDO USA, LLP, as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2018.2021. Pursuant to this appointment, BDO USA LLP will serve as our independent registered public accounting firm and report on our consolidated financial statements for the fiscal year ending December 31, 2018.2021.
We expect that representatives of BDO USA LLP will attend the Annual Meeting and will have the opportunity to make a statement if they so desire and to respond to appropriate questions.
Although stockholdershareholder ratification is not required, the appointment of BDO USA LLP is being submitted for ratification at the Annual Meeting with a view towards soliciting stockholders’shareholders’ opinions, which the Audit Committee will take into consideration in future deliberations. If BDO USA LLP’sBDO’s selection is not ratified at the Annual Meeting, the Audit Committee will consider the engagement of another independent registered accounting firm.firm in the future. The Audit Committee may terminate BDO USA LLP’sBDO’s engagement as our independent registered public accounting firm, without the approval of our stockholdersshareholders, whenever the Audit Committee deems termination appropriate.
Recommendation of the Board of Directors:
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”“FOR” THE RATIFICATION OF BDO USA, LLP, AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2018.2021.
EXECUTIVE OFFICERS
Our executive officers are as follows:
Name | Age | Position |
David Bistricer |
| Chief Executive Officer and Co-Chairman of the Board |
J.J. Bistricer |
| Chief Operating Officer |
|
| Chief Financial Officer and Secretary |
Jacob Schwimmer | 50 | Chief Property Management Officer |
The following section sets forthBelow is certain background information regarding those persons currently serving asthe executive officers of Clipper Realty Inc., excluding
David Bistricer who is described on page 8. See information set forth under the heading “Proposal No. 1-Nominees for 1–Election to the Board”:of Directors.”
J.J.J.J. Bistricer is our Chief Operating Officer and has, since 2006, served as Chief Operating Officer at several properties in the New York City metropolitan area in which David Bistricer is General Manager, with direct responsibility for acquisitions, dispositions, leasing, property development and property operations. Mr. J.J. Bistricer has been an officer of Clipper Equity, which controls and manages entities that own interests in multi-family and commercial properties in the New York metropolitan area (as more fully described in Certainunder the heading “Certain Relationships and Related Party Transactions)Transactions”), since 2006. At the Company’s Flatbush Gardens property, Mr. J.J. Bistricer has served as overall operating manager since 2006.2006, and executed the extensive renovation and repositioning strategy to modernize the property through 2018. At the Company’s 250 Livingston Street property, Mr. J.J. Bistricer managed the conversion of certain office space to residential since 2006.units from 2006 to 2013, and the subsequent renovation of certain residential units from 2014 to 2017. Mr. Bistricer has served as Chief Operating Officer at the Company’s Tribeca House properties since acquisition in December 2014, executed a comprehensive, multiyear repositioning strategy, and has beenis responsible for residential and retail leasing, development and operations.operations at the properties. Mr. J.J.Bistricer led the extensive renovation of the Company’s Clover House property from acquisition in 2017 to completion in 2019. Mr. Bistricer currently operates approximately 7,000 residential units across multiple companies. Mr. Bistricer is the son of David Bistricer.Bistricer, our Chief Executive Officer and Co-Chairman of the Board. As Chief Operating Officer at a number of other properties in the New York metropolitan area, Mr. J.J. Bistricer has additional experience in repositioning properties, including from office and hospital use to residential rental and condominium use.
Lawrence E. Kreider, Jr. Michael C. Frenzwas retired and self-employed as a financial consultant from 2012 to August 2015, when he became has been the Chief Financial Officer and Secretary of the Company.Company since July 2019. Previously, he was the Head of Capital Markets from June 2017. Mr. KreiderFrenz manages the Company’s financial and investment strategy, and works with the executive team to unlock meaningful long-term value across the portfolio. Prior to joining the Company, Mr. Frenz was a Senior Vice President in the real estate investment banking group at FBR, where he advised clients on capital raising and strategic transactions from June 2014 until joining the Company in June 2017. Previously, Mr. Frenz held various investment banking roles at Goldman Sachs, Bank of America Securities and Merrill Lynch. Separately, Mr. Frenz partnered with Kohlberg Kravis Roberts on a multinational oil production company principal investment, where he served as Deputy Chief Financial Officer and led the financial planning/corporate strategy division. Mr. Frenz holds a Master of Cedar Realty TrustBusiness Administration degree from 2007 to 2011, where he had direct responsibility for all aspects of the Company’s financial operations. From 2001 to 2007, Mr. Kreider was Senior Vice President, Chief Financial Officer, Chief Information OfficerColumbia Business School and Chief Accounting Officer for Affordable Residential Communities, now named Hilltop Holdings Inc. From 1999 to 2001, Mr. Kreider was Senior Vice President of Finance for Warnaco Group Inc. and, in 2000 and 2001, President of Warnaco Europe. From 1986 to 1999, Mr. Kreider held several senior finance positions with Revlon, Inc., as Senior Vice President, Controller and Chief Accounting Officer, and with MacAndrews & Forbes Holdings. Prior to 1986, he held senior finance positions with Zale Corporation, Johnson Matthew Jewelry Corporation and Refinement International Company. Mr. Kreider began his career with Coopers & Lybrand, now PricewaterhouseCoopers. Mr. Kreider holds a Bachelor of ArtsScience degree from Yale University and a Master’s of Business Administration from the Stanford Graduate School of Business.The Wharton School.
Jacob Schwimmer has, since 1992, been actively involved in managing, developing and investing in residential and commercial real estate properties in the New York City metropolitan area, in conjunction with his parents and in partnership with David Bistricer and Sam Levinson. Mr. Schwimmer, members of his family and family trusts were principal investors in the acquisitions of the 141 Livingston Street and 250 Livingston Street properties in 2002, and the acquisition of the Flatbush Gardens property in 2005. Mr. Schwimmer has served as the principal property management executive at these properties since acquisition. Mr. Schwimmer also serves in the same capacity at another property in New York City in which David Bistricer is the managing member.
EXECUTIVE COMPENSATION
This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below. Our “named executive officers” during 20172020 were:
● | David Bistricer, |
● | J.J. Bistricer, Chief Operating |
● |
|
We are an “emerging growth company” as defined under the Jumpstart Our Business Startups (JOBS) Act. As such, we are permitted to meet the disclosure requirements of Item 402 of Regulation S-K by providing the reduced disclosures required of a smaller reporting company.
Summary Compensation Table
The following table sets forth information concerning the compensation of our named executive officers for the fiscal years ended December 31, 20172020 and 2016.2019.
Name & Principal Position | Year | Salary | Stock | Non-Equity | All Other | Total | Year | Salary | Stock | Non-Equity | All Other | Total | ||||||||||||||||||||||||||||||
David Bistricer | 2017 | $ | 500,000 | $ | 202,968 | - | $ | 73,796 | $ | 776,764 | 2020 | $ | 546,404 | $ | 859,752 | - | $ | 150,427 | $ | 1,556,583 | ||||||||||||||||||||||
Chief Executive Officer | 2016 | $ | 500,000 | $ | 700,000 | - | $ | 44,778 | $ | 1,244,778 | 2019 | $ | 520,187 | $ | 616,156 | - | $ | 101,117 | $ | 1,237,460 | ||||||||||||||||||||||
J.J. Bistricer | 2017 | $ | 250,000 | $ | 1,096,000 | $ | 250,000 | $ | 51,933 | $ | 1,647,933 | 2020 | $ | 286,862 | $ | 433,600 | $ | 250,000 | $ | 90,655 | $ | 1,061,117 | ||||||||||||||||||||
Chief Operating Officer | 2016 | $ | 250,000 | $ | 225,005 | 258,000 | $ | 15,384 | $ | 748,389 | 2019 | $ | 273,098 | $ | 256,734 | $ | 250,000 | $ | 67,548 | $ | 847,380 | |||||||||||||||||||||
Lawrence Kreider | 2017 | $ | 325,000 | $ | 121,777 | - | $ | 24,544 | $ | 471,321 | ||||||||||||||||||||||||||||||||
Chief Financial Officer | 2016 | $ | 325,000 | $ | 150,000 | - | $ | 14,300 | $ | 489,300 | ||||||||||||||||||||||||||||||||
Jacob Schwimmer | 2020 | $ | 229,490 | $ | 406,500 | $ | 150,000 | $ | 50,513 | $ | 836,503 | |||||||||||||||||||||||||||||||
Chief Property Management Officer | 2019 | $ | 218,478 | $ | 154,046 | $ | 150,000 | $ | 29,466 | $ | 551,990 | |||||||||||||||||||||||||||||||
____________
(1) |
|
(2) |
|
(3) | The amounts in this column for |
Outstanding Equity Awards at Fiscal Year End
The following table provides information about the outstanding, Clipper Realtyunvested Company equity-based awards held by each of our named executive officers as of December 31, 2017:2020:
Name | Number of | Market Value of Units That Have | Equity Incentive Awards: Shares, Other Have (#) | Equity Incentive Payout Shares, Other Have | ||||||||||||
David Bistricer | 203,704 | (2) | $ | 2,035,003 | - | - | ||||||||||
J.J. Bistricer | 163,334 | (3) | $ | 1,631,707 | - | - | ||||||||||
Lawrence Kreider | 68,890 | (4) | $ | 688,211 | - | - | ||||||||||
Name | Number of | Market Value of | Equity Incentive | Equity Incentive | ||||||||||||
David Bistricer | 192,055 | (2) | $ | 1,353,988 | - | - | ||||||||||
J.J. Bistricer | 199,231 | (3) | $ | 1,404,579 | - | - | ||||||||||
Jacob Schwimmer | 86,539 | (4) | $ | 610,100 | - | - | ||||||||||
____________
(1) | The market value of the unvested stock awards held by our named executive officers is based on the closing price of our stock on December |
(2) | Represents |
|
|
(3) | Represents the following awards, which are |
(4) | Represents |
Employment Agreements
On August 3, 2015, we entered into, through our operating partnership, employment agreements with each of our named executive officers. Under the employment agreements, Mr. David Bistricer serves as Chief Executive Officer of the Company, Mr. J.J. Bistricer serves as Chief Operating Officer of the Company, and Mr.Kreider Schwimmer serves as Chief FinancialProperty Management Officer of the Company. The term of each employment agreement is for an unspecified duration and constitutes “at will” employment.
Each employment agreement provides for, among other things: (i) an initial annual base salary of $500,000 for Mr. David Bistricer, $250,000 for Mr. J.J. Bistricer and $325,000$200,000 for Mr. Kreider,Schwimmer, (ii) an annual incentive bonus, with a target bonus opportunity of 50% of annual base salary for Mr. David Bistricer, 100% of annual base salary for Mr. J.J. Bistricer and 46%75% of annual base salary for Mr. KreiderSchwimmer, with the actual amount to be earned ranging from 0% to 200%100% of target based on actual achievement against performance metrics to be established by the Compensation Committee, (iii) annual long-term equity incentive compensation awards to be granted beginning in 2016 in form, including vesting restrictions, and amount determined in the sole discretion of the Compensation Committee and the Board, and (iv) participation in the Company’s employee benefit and welfare plans. Effective March 16, 2021, the Board approved annual base salaries of $578,813 for Mr. David Bistricer, $303,876 for Mr. J.J. Bistricer and $243,101 for Mr. Schwimmer.
Upon a termination of a named executive officer’s employment by the Company without “cause,” subject to a general release of claims in favor of the Company, the named executive officer will be entitled to: (i) a prorated annual incentive bonus for the year of termination based on actual performance, (ii) either (A) continued benefits under the Company’s group healthcare, vision and dental plans through the 12-month anniversary of termination of employment or (B) a lump-sum payment (grossed up for applicable taxes) equal to 12 times the monthly COBRA cost of continued health and medical coverage, and (iii) continued vesting of any outstanding equity compensation awards as if the named executive officer had remained employed through the applicable vesting dates.
“Cause” generally means the named executive officer’s: (i) conviction of, or plea of, guilty or no contest to, any felony or any crime involving fraud or moral turpitude, (ii) engagement in gross misconduct that causes material financial or reputation harm to the Company, (iii) material violation of the terms of the employment agreement or any written Company policy, or (iv) disqualification or bar by any governmental or self-regulatory authority from serving in the capacity required by the named executive officer’s job description, or loss of any governmental or self-regulatory license that is reasonably necessary for the named executive officer to perform his duties or responsibilities.
Each employment agreement also contains confidentiality and non-disparagement provisions, which apply indefinitely, and non-competition as well as client and employee non-solicitation provisions that apply during the term of the employment agreement and for a period of up to one year following a termination of employment for any reason. In addition, the employment agreements for Messrs. David Bistricer and J.J. Bistricer acknowledge that each such named executive officer provides services to Clipper Equity and other entities and businesses affiliated with Mr. David Bistricer (which we refer to as the “affiliated entities”), that such responsibilities preclude theeach such named executive officersofficer from devoting substantially all of theirhis time to the Company, and that there may be certain potential conflicts of interest or duties associated with their roles at the Company and the affiliated entities. For a further discussion of Clipper Equity, see information under the heading “Certain Relationships and Related Party Transactions—Clipper Equity.”
Other than the employment agreements described above, we do not currently have any agreements, plans or arrangements that provide for severance payments to our named executive officers.
Annual Incentive Awards
We grant any annual incentive awards to the named executive officers pursuant to the Clipper Realty Inc. 2015 Executive Incentive Compensation Plan (the “2015 Incentive Plan”). The 2015 Incentive Plan provides that annual incentive awards may be paid out to participants in either cash or equity-based compensation (the equity-based payouts are made pursuant to the 2015 Omnibus Incentive Plan described below). Annual incentive awards for 20172020 and 20162019 were paid to our named executive officers in April 2020 and March 2017 and 20162019, respectively, as follows: Mr. David Bistricer – 18,51952,632 and 51,85219,231 LTIP units with a grant date fair value equal to $202,968$250,002 and $700,000,$256,734, respectively; Mr. KreiderJ.J. Bistricer – 11,111cash payments of $250,000 and 11,112 LTIP units with a grant date fair value equal to $121,777 and $150,000,$250,000, respectively; and Mr. J.J. Bistricer -Schwimmer – cash payoutspayments of $250,000$150,000 and $258,000, respectively, and, in 2017, a long-term incentive compensation grant of 100,000 LTIP units with a grant date fair value of $1,096,000.$150,000, respectively. The LTIP units granted to Messrs.Mr. David Bistricer in 2020 and Kreider2019 vested on January 1, 2021, and 2, 2018,January 1, 2020, respectively, and are reflected in the “Stock Awards” column of the Summary“Summary Compensation TableTable” as 2016 compensation.2020 and 2019 compensation, respectively. Mr. J.J. Bistricer’s 2017Bistricer and 2016Mr. Schwimmer’s 2020 and 2019 bonuses were paid in cash and are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary“Summary Compensation TableTable” as 20172020 and 2016 compensation; his long-term incentive2019 compensation, grant is scheduled to vest on January 1, 2023 and is reflected in the “Stock Awards” column of the Summary Compensation Table as 2017 compensation.respectively.
Long-Term Equity Incentive Awards
Our Board has adopted, and our stockholdersshareholders have approved, the Clipper Realty Inc. 2015 Omnibus Incentive Compensation Plan, (the “2015 Omnibus Plan”), effective August 3, 2015, pursuant to which cash and equity-based incentives may be granted to employees and consultants. The principal purposes of the 2015 Omnibus Incentive Plan are to give the Company a competitive advantage in attracting, retaining and motivating employees and consultants, to align the interests of participants with those of the Company’s stockholdersshareholders and to promote ownership of the Company’s equity. The 2015 Omnibus Incentive Plan provides for the grant of stock options (both stock options intended to be “incentive stock options” intended to meet the requirements under Section 422 of the Code and stock options intended to be “nonqualified stock options” that do not meet such requirements), stock appreciation rights, (“SARs”), restricted stock, restricted stock units, LTIP units, dividend equivalent rights, and other equity-based, equity-related or cash-based awards (including performance share awards and performance units settled in cash).
LTIP unit awards consist of a grant of limited partnership units of Clipper Realty L.P., the Company’s operating partnership, and are valued by reference to shares of the Company’s common stock. These awards are structured to qualify as “profits interests” for federal income tax purposes. Upon vesting, LTIP unit awards are convertible by the holder on a one-for-one basis into OP units, which arewith each OP unit redeemable at the request of the holder for cash, in an amount equal to the price of a share of the Company’s common stock, of the Company, or, at the Company’s election, for one share of the Company’s common stock.
On April 19, 2017,7, 2020, we made a special one-time grant undergranted long-term equity incentive awards, in the 2015 Omnibus Planform of 100,000 LTIP units, to our named executive officers as follows: Mr. J.J.David Bistricer – 90,000 LTIP units with a grant date fair value equal to $1,096,000, which is scheduled to vest on January 1, 2023. On March 2, 2016, we made a special one-time grant under the 2015 Omnibus Plan of 16,667 LTIP units to$427,500; Mr. J.J. Bistricer – 64,000 LTIP units with a grant date fair value equal to $225,005, which is$304,000; and Mr. Schwimmer – 60,000 LTIP units with a grant date fair value equal to $285,000. On June 30, 2020, we granted long-term equity incentive awards, in the form of LTIP units, to our named executive officers as follows: Mr. David Bistricer – 22,500 LTIP units with a grant date fair value equal to $182,250; Mr. J.J. Bistricer – 16,000 LTIP units with a grant date fair value equal to $129,600; and Mr. Schwimmer – 15,000 LTIP units with a grant date fair value equal to $121,500. The awards in the preceding two sentences are scheduled to vest on February 28, 2019. TheseJanuary 1, 2023, and are reflected in the “Stock Awards” column of the Summary“Summary Compensation TableTable” as 20172020 compensation. On March 26, 2019, we granted long-term equity incentive awards, in the form of LTIP units, to our named executive officers as follows: Mr. David Bistricer – 26,923 LTIP units with a grant date fair value equal to $359,422; Mr. J.J. Bistricer – 19,231 LTIP units with a grant date fair value equal to $256,734; and 2016 compensation, respectively.Mr. Schwimmer – 11,539 LTIP units with a grant date fair value equal to $154,046; these awards are scheduled to vest on January 1, 2022, and are reflected in the “Stock Awards” column of the “Summary Compensation Table” as 2019 compensation.
Retirement Benefits
We do not currently offer plans that provide for retirement benefits, including, but not limited to, tax-qualified defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans, or nonqualified defined contribution plans.
Director Compensation
The following table provides information concerningon the compensation of each non-employee director forin connection with service on our Board in 2017.2020. Directors who are also employees of usthe Company or any of ourits subsidiaries did not receive, and will not receive, any additional compensation for their servicesservice as directors.
| Name | Fees Earned or | Stock Awards(1) | All Other Compensation(2) | Total | Fees Earned or Paid in Cash | Stock | All Other Compensation(2) | Total | ||||||||||||||||||||||||
Sam Levinson | $ | - | $ | 150,000 | $ | 45,991 | $ | 195,991 | $ | - | $ | 788,483 | $ | 110,401 | $ | 898,884 | ||||||||||||||||
Howard M. Lorber | $ | 95,000 | $ | - | $ | 617 | $ | 95,617 | $ | 95,000 | $ | 13,357 | $ | 1,815 | $ | 110,172 | ||||||||||||||||
Richard N. Burger | $ | 75,000 | $ | 13,357 | $ | 1,181 | $ | 89,538 | ||||||||||||||||||||||||
Robert J. Ivanhoe | $ | 75,000 | $ | - | $ | 617 | $ | 75,617 | $ | 82,500 | $ | 13,357 | $ | 1,815 | $ | 97,672 | ||||||||||||||||
Harmon Spolan | $ | 75,000 | $ | 13,357 | $ | 1,181 | $ | 89,538 | ||||||||||||||||||||||||
Roberto A. Verrone | $ | 75,000 | $ | - | $ | 617 | $ | 75,617 | $ | 75,000 | $ | 13,357 | $ | 1,086 | $ | 89,443 | ||||||||||||||||
____________
(1) | The |
(2) | The amounts in this column represent the payment of quarterly cash distributions |
Effective August 2015, we adopted a compensation program for our directors pursuant to which we pay customary fees to each of our non-employee directors, including aan initial $75,000 base cash retainer ($80,000(an initial $80,000 for Mr. Levinson) and other Board and committee fees as determined from time to time, including an additional feesfee for the Chairman of each of our Board committees ($10,000) and for the Co-Chairmennon-executive Co-Chairman of our Board ($50,000). Mr. Levinson’s retainer and other fees are paid in the form of LTIP unit awards, at Mr. Levinson’s election with Board approval. Mr. Levinson’sIn 2020, as discussed above, we granted 2,812 LTIP units to each of our non-employee directors. All non-employee director LTIP unit awards were granted pursuant to the Clipper Realty Inc. 2015 Non-Employee Director Plan, which is substantially similar to the 2015 Omnibus Plan.
We also reimburse our directors for reasonable out-of-pocket expenses incurred in connection with the performance of their duties as directors, including, without limitation, travel expenses in connection with their in-person attendance in-person at board of directorsBoard and committee meetings.
Harmon Spolan and Richard Burger began service as directors subsequent to December 31, 2017.
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERSSHAREHOLDERS
The following table sets forth information known to us about the beneficial ownership of shares of our common stock and special voting stock as of April 23, 201822, 2021, by our 5% or greater stockholdersshareholders and by our executive officers and directors. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power or investment power of such security. A stockholdershareholder is also deemed to be, as of any date, the beneficial owner of allany securities that such stockholdershareholder has the right to acquire within 60 days after thesuch date, through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement.
As of April 23, 2018,22, 2021, there were 17,812,75516,063,228 shares of our common stock and 26,317,396 shares of our special voting stock outstanding.
Unless otherwise indicated, below, the address of each beneficial owner listed in the table below is c/o Clipper Realty Inc., 4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219.
Name of Beneficial Owner | Number of | Percent | Number of | Percent | Aggregate | Percent | Number of | Percent | Number of | Percent | Aggregate | Percent | ||||||||||||||||||||||||||||||||||||
5% or Greater Stockholders (other than Executive Officers and Directors) | ||||||||||||||||||||||||||||||||||||||||||||||||
5% or Greater Shareholders (other than Executive Officers and Directors) | ||||||||||||||||||||||||||||||||||||||||||||||||
Moric Bistricer | - | - | 4,278,058 | 16.3 | % | 4,278,058 | (2) | 9.7 | % | - | - | 4,278,058 | 16.3 | % | 4,278,058 | (2) | 10.1 | % | ||||||||||||||||||||||||||||||
Eva Schwimmer | - | - | 2,731,667 | 10.4 | % | 2,731,667 | 6.2 | % | - | - | 2,731,667 | 10.4 | % | 2,731,667 | 6.4 | % | ||||||||||||||||||||||||||||||||
David Bistricer Trust of 2014 | - | - | 2,772,500 | 10.5 | % | 2,772,500 | 6.3 | % | - | - | 2,772,500 | 10.5 | % | 2,772,500 | 6.5 | % | ||||||||||||||||||||||||||||||||
Moric Bistricer Trust of 2014 | - | - | 2,772,500 | 10.5 | % | 2,772,500 | 6.3 | % | - | - | 2,772,500 | 10.5 | % | 2,772,500 | 6.5 | % | ||||||||||||||||||||||||||||||||
Indaba Capital Management, L.P.(8) | 1,740,111 | 9.8 | % | 1,740,111 | 3.9 | % | ||||||||||||||||||||||||||||||||||||||||||
Signature Global Asset Management(9) | 1,462,739 | 8.2 | % | - | - | 1,462,739 | 3.3 | % | ||||||||||||||||||||||||||||||||||||||||
American Financial Group(10) | 1,111,111 | 6.2 | % | - | - | 1,111,111 | 2.5 | % | ||||||||||||||||||||||||||||||||||||||||
Forward Management(11) | 1,009,496 | 5.7 | % | - | - | 1,009,496 | 2.3 | % | ||||||||||||||||||||||||||||||||||||||||
FMR LLC(5) | 1,694,820 | 10.6 | % | - | - | 1,694,820 | 4.0 | % | ||||||||||||||||||||||||||||||||||||||||
BlackRock, Inc.(6) | 1,033,619 | 6.4 | % | - | - | 1,033,619 | 2.4 | % | ||||||||||||||||||||||||||||||||||||||||
Forward Management(7) | 1,009,685 | 6.3 | % | - | - | 1,009,685 | 2.4 | % | ||||||||||||||||||||||||||||||||||||||||
American Financial Group, Inc.(8) | 930,111 | 5.8 | % | - | - | 930,111 | 2.2 | % | ||||||||||||||||||||||||||||||||||||||||
Brigade Capital Management(9) | 874,724 | 5.4 | % | - | - | 874,724 | 2.1 | % | ||||||||||||||||||||||||||||||||||||||||
Executive Officers and Directors | ||||||||||||||||||||||||||||||||||||||||||||||||
David Bistricer | 721,966 | 4.1 | % | 4,278,058 | 16.3 | % | 5,000,024 | (3) | 11.3 | % | 1,077,206 | 6.6 | % | 4,278,058 | 16.3 | % | 5,355,264 | (10) | 12.5 | % | ||||||||||||||||||||||||||||
Sam Levinson | 1,599,048 | 9.0 | % | 7,296,279 | 27.7 | % | 8,895,327 | (4) | 20.2 | % | 1,826,136 | 11.2 | % | 7,296,279 | 27.7 | % | 9,122,415 | (11) | 21.4 | % | ||||||||||||||||||||||||||||
Howard M. Lorber | 31,598 | * | - | - | 31,598 | (12) | * | |||||||||||||||||||||||||||||||||||||||||
Robert J. Ivanhoe | 1,667 | * | - | - | 1,667 | (12) | * | 6,229 | * | - | - | 6,229 | (13) | * | ||||||||||||||||||||||||||||||||||
Howard Lorber | 1,667 | * | - | - | 1,667 | (13) | * | |||||||||||||||||||||||||||||||||||||||||
Roberto Verrone | 1,667 | * | - | - | 1,667 | (14) | * | |||||||||||||||||||||||||||||||||||||||||
Lawrence E. Kreider, Jr. | 22,222 | * | - | - | 22,222 | (15) | * | |||||||||||||||||||||||||||||||||||||||||
Roberto A. Verrone | 6,229 | * | - | - | 6,229 | (14) | * | |||||||||||||||||||||||||||||||||||||||||
Richard N. Burger | 4,562 | * | - | - | 4,562 | (15) | * | |||||||||||||||||||||||||||||||||||||||||
Harmon S. Spolan | 5,562 | * | - | - | 5,562 | (16) | * | |||||||||||||||||||||||||||||||||||||||||
Jacob Schwimmer | 103,889 | * | 2,188,334 | 8.3 | % | 2,292,223 | (17) | 5.4 | % | |||||||||||||||||||||||||||||||||||||||
J.J. Bistricer | - | * | - | - | - | (16) | * | 63,334 | * | - | - | 63,334 | (18) | * | ||||||||||||||||||||||||||||||||||
Jacob Schwimmer | 57,223 | * | 2,188,334 | 8.3 | % | 2,245,556 | (5) | 5.1 | % | |||||||||||||||||||||||||||||||||||||||
All executive officers and directors as a group (10 persons) | 2,405,459 | 13.5 | % | 13,762,671 | 52.3 | % | 16,168,130 | 36.6 | % | |||||||||||||||||||||||||||||||||||||||
All Executive Officers and Directors as a group (10 persons) | 3,174,017 | 18.9 | % | 13,762,671 | 52.3 | % | 16,936,688 | 39.3 | % | |||||||||||||||||||||||||||||||||||||||
*Less than 1%.
____________
1. | Holders of our special voting stock generally are entitled to vote together as a single class with holders of our common stock on all matters on which our common |
2. | Represents 4,278,058 shares of special voting stock held directly. Excludes (i) 318,262 shares of common stock owned by the Moric Bistricer 2012 Family Trust, for which Mr. David Bistricer is one of two trustees, and (ii) 2,772,500 shares of special voting stock owned by the Moric Bistricer Trust of 2014, for which Marc Bistricer, the grandson of Moric Bistricer, is the sole trustee. Moric Bistricer disclaims beneficial ownership of the shares of common stock and special voting stock owned by the Moric Bistricer 2012 Family Trust and the Moric Bistricer Trust of 2014, respectively. |
3. | Marc Bistricer, the son of David Bistricer, is the sole trustee of the David Bistricer Trust of 2014, and has sole voting and investment control over all of the shares held by this trust. |
4. | Marc Bistricer, the sole trustee of the Moric Bistricer Trust of 2014, has sole voting and investment control over all of the shares held by this trust. |
5. | Based solely on the Schedule 13G/A filed by FMR LLC (“FMR”), the parent holding company of FIAM LLC, Fidelity Institutional Asset Management Trust Company, Fidelity Management & Research Company, and FMR Co., Inc., and Abigail P. Johnson, a predominant owner, director, and the Chairman and Chief Executive Officer of FMR, on April 12, 2021. Represents 1,694,820 shares of common stock. FMR has sole voting power for 923,196 shares and FMR and Ms. Johnson have sole dispositive power for 1,694,820 shares. FMR is a company incorporated under the laws of Delaware and is an investment manager. The address for FMR and Ms. Johnson is 245 Summer Street, Boston, MA, 02210. |
6. | Based solely on the Schedule 13G filed by BlackRock, Inc. (“BlackRock”), the parent holding company of BlackRock Advisors, LLC, BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., and BlackRock Investment Management, LLC, on February 2, 2021. BlackRock has sole voting power for 1,023,497 shares and sole dispositive power for 1,033,619 shares. BlackRock is a company incorporated under the laws of Delaware and is an investment manager. The address for BlackRock is 55 East 52nd Street, New York, NY, 10055. |
7. | Based solely on the Schedule 13G/A filed by Forward Management, LLC (“Forward”) and Salient Select Income Fund (“Salient”) on January 13, 2021. Represents 1,009,685 shares of common stock for which Forward and Salient have sole voting and dispositive power. Forward and Salient are companies incorporated under the laws of Delaware and are investment managers. The address for Forward and Salient is 244 California Street, Suite 200, San Francisco, CA, 94111. |
8. | Based solely on the Schedule 13G filed by American Financial Group, Inc. (“AFG”) on February 2, 2021. Represents 930,111 shares of common stock for which AFG has sole voting and dispositive power. AFG is a company incorporated under the laws of Ohio and is an investment manager. The address for AFG is 301 E. 4th Street, Cincinnati, OH, 45202. |
9. | Based solely on the Schedule 13G/A filed by Brigade Capital Management, LP (“Brigade”), Brigade Capital Management GP, LLC (“Brigade Capital Management GP”), Brigade’s sole general partner, and Donald E. Morgan, III, the managing member of Brigade Capital Management GP, on February 16, 2021. Represents 874,724 shares of common stock for which Brigade, Brigade Capital Management GP and Mr. Morgan have shared voting and dispositive power. Brigade is a company incorporated under the laws of Delaware and is an investment advisor, Brigade Capital Management GP is a Delaware limited liability company and Mr. Morgan is a United States citizen. The address for the Brigade reporting persons is 399 Park Avenue, 16th Floor, New York, NY, 10022. |
10. | Represents (i) 4,278,058 shares of special voting stock |
11. | ||
Represents (i) 1,253,016 shares of common stock and 4,464,692 shares of special voting stock owned by Trapeze Inc., a Delaware corporation, (ii) 136,782 shares of common stock and 1,362,039 shares of special voting stock owned by Trapeze D Holdings LLC, a Delaware limited liability company, (iii) 128,185 shares of common stock and 1,469,548 shares of special voting stock owned by ECL Holdings LLC, a Delaware limited liability company, (iv) |
12. | Represents 6,229 vested LTIP units, which are convertible into common stock on a one-for-one basis, and 25,369 shares of common stock. Excludes 2,250 LTIP units which will vest in 2021, generally subject to continued service as a director. |
13. | Represents 6,229 vested LTIP units, which are convertible into common stock on a one-for-one basis. Excludes 2,250 LTIP units which will vest in 2021, generally subject to continued service as a director. |
14. | Represents 4,312 vested LTIP units, which are convertible into common stock on a one-for-one basis, and 1,917 shares of common stock. Excludes 2,250 LTIP units which will vest in 2021, generally subject to continued service as a director. |
15. | Represents 4,562 vested LTIP units, which are convertible into common stock on a one-for-one basis. Excludes 2,250 LTIP units which will vest in 2021, generally subject to continued service as a director. |
16. | Represents 4,562 vested LTIP units, which are convertible into common stock on a one-for-one basis, and 1,000 shares of common stock. Excludes 2,250 LTIP units which will vest in 2021, generally subject to continued service as a director. |
17. | Represents 35,000 shares of common stock, | |
18. | Represents 63,334 vested LTIP units, which are convertible into common stock on a one-for-one basis. | |
| ||
| Excludes 100,000 shares of common stock owned by the Jacob Joseph Bistricer 2017 |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors, as well as those persons who own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. These persons are required by SEC rule to furnish us with copies of all Section 16(a) forms they file.
Based solely on a review of copies of reports filed with the SEC and submitted to us and on written representations by certain of our directors and executive officers, we are not aware of any failure to file reports on a timely basis during the year ended December 31, 2017 under the reporting requirements of Section 16(a) of the Exchange Act, except David Bistricer failed on one occasion to timely file a Form 4 for an open market purchase. The delinquent filing was a result of an administrative error and the Company has taken corrective actions to assure compliance with the filing requirements of Section 16(a).
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transaction Approval Policy
Our Board has adopted a written related party transaction approval policy (the “Related Party Transaction Policy”) pursuant to which an independent committee (which may be a standing or ad hoc committee) of our Board will review and approve, or take such other action as it may deem appropriate with respect to, the following transactions:
● | a transaction in which we are a participant, |
● | any material amendment, modification or extension of the Company’s tax protection agreement, services agreements or continuing investors registration rights agreement; and |
● | any other transaction that meets the related party disclosure requirements of the SEC as set forth in Item 404. |
This policy sets forth factors to be considered by an independent committee in determining whether to approve any such transaction, including the nature of our involvement in the proposed transaction, whether we have demonstrable business reasons to enter into the proposed transaction, whether the proposed transaction would impair the independence of a director and whether the proposed transaction involves any potential reputational or other risk issues.
To simplify the administration of the approval process under the Related Party Transaction Policy, an independent committee may, where appropriate, establish guidelines for certain types of related party transactions or designate certain types of such transactions that will be deemed pre-approved. This policy also provides that the following transactions are deemed pre-approved:
● | decisions on compensation or benefits for, or the hiring or retention of, our directors |
● |
|
● | transactions where the related person’s interest or benefit arises solely from such person’s ownership of our securities, and other holders of such securities receive the same benefit on a pro rata basis. |
If our Board appoints an ad hoc independent committee to review and take action with regard to any one or morea related party transactions,transaction, the committee will be comprised of at least three independent directors. A director on any committee considering a related party transaction who has an interest in the transaction will not participate in the consideration of that transaction, unless requested by the chairperson of the committee.
The
This policy does not apply to the implementation or administration of the Company’s tax protection agreement, which is described in further detail below.
In the ordinary course of our business, we entered into transactions with the transactionsentities set forth below in 2020 and 2019, which were approved under our Related Party Transaction Policy. We believe that these transactions were entered into on an arm’s-lengtharm’s length basis and were executed on terms no less favorable to us than those we could have obtained from unrelated third parties.
Clipper Equity
Clipper Equity controls and manages entities that own interests in multi-family and commercial properties in the New York metropolitan area. Each of David Bistricer, our Co-Chairman of the Board and Chief Executive Officer, and an owner of Clipper Equity, and J.J. Bistricer, our Chief Operating Officer, is an officer of Clipper Equity. Each of Sam Levinson, our Co-Chairman of the Board and the Chairman of our Investment Committee, and Jacob Schwimmer, our Chief Property Management Officer, hashave ownership interests in properties controlled by Clipper Equity.
During the years ended December 31, 20172020 and 2016,2019, the Company shared office space with Clipper Equity and in connection therewith paid overhead charges related to office expenses to Clipper Equity of approximately $387,000$266,000 and $275,000,$148,000, respectively.
During the years ended December 31, 2020 and 2019, the Company recognized reimbursable payroll expense pertaining to Clipper Equity of approximately $75,000 and $79,000, respectively.
During the years ended December 31, 2020 and 2019, the Company shared with Clipper Equity certain legal and advisory expenses incurred through a joint venture in which the Company owns a 50% interest, in connection with various rent laws and ordinances which govern certain of our and Clipper Equity’s properties; the Company paid approximately $457,000 and $316,000, and Clipper Equity paid approximately $187,000 and $128,000, for their respective portions of these expenses in 2020 and 2019, respectively.
We have adopted an investment policy (the “Investment Policy”) that provides that our officers, including officers involved with Clipper Equity, will not invest in any wholly-owned multi-family or commercial property (other than excluded assets)assets, as defined below) located in the metropolitan New York City area, unless the investment opportunity is first offered to the Company and our Board (or an independent committee thereof) determines that the Company will not pursue the investment opportunity. Our officers including each of David Bistricer, J.J. Bistricer and Jacob Schwimmer, can pursue investment opportunities related to excluded assets, which include (i) for-sale condominium or cooperative conversion orconversions, (ii) development projects, (ii)(iii) projects that would require us to obtain guarantees from third parties or to backstop obligations of other parties, or (iii)and (iv) land acquisitions, without first offering them to our company.the Company. Under our charter, we renounce any interest or expectancy in, or right to be offered or to participate in, any business opportunity identified in any investment policy (including the Investment Policy) or agreement with any of our officers unless the policy or agreement contemplates that the officer must present, communicate or offer such business opportunity to us.
Iron Hound Management Company
Our Board approved the payment of a fees aggregating $1,880,000 in 2018 and $420,000 in 2017 to Iron Hound Management Company (“Iron Hound”) totaling approximately $421,000 in 2019, for its service as a broker regardingin connection with the loan arrangements for the Company’s 2017 purchases of the properties at 107 Columbia Heights in Brooklyn, New York and 10 W 65th Street, Manhattan, New York and for the February 2018 refinancingsMay 2019 refinancing of the Company’s loans atloan on its Flatbush Gardens250 Livingston Street property and Tribeca House properties. Robertthe December 2019 loan on its 1010 Pacific Street property. Roberto Verrone, a director of the Company, is the owner of Iron Hound. Mr. Verrone did not participate in the Board’s considerationsconsideration of these matters.the matters involving Iron Hound.
GreenburgGreenberg Traurig LLP
Our Board approved the payment of a fees aggregating $378,000totaling approximately $5,000 in 20172020 and $7,000 in 2019 to Greenberg Traurig LLP (“Greenberg Traurig”) for its legal services regarding the Company’s 2017 purchasesin connection with property development and other routine matters. Robert Ivanhoe, a director of the property at 10 W 65th Street, Manhattan, New York and for other routine legal matters. Mr. IvanhoeCompany, is a partner at Greenberg Traurig. Mr. Ivanhoe did not participate in the Board’s consideration of the mattermatters involving Greenberg Traurig.
Indaba Capital Management, L.P.
In November 2020, the Company repurchased approximately 1.67 million shares of common stock from Indaba Capital Management, L.P., which owned greater than 5% of the acquisition.Company’s outstanding common shares prior to the transaction, for a total purchase price of approximately $9.5 million.
Tax Protection Agreement
Prior to our IPO, onOn August 3, 2015, we completed certain formation transactions involving our initial portfolio of properties (which included the(the Tribeca House, Flatbush Gardens, 141 Livingston Street and 250 Livingston Street properties) and the sale of shares of common stock in a private offering (the “Private Offering”). We contributed the net proceeds of the Private Offering to Clipper Realty L.P., our operating partnership subsidiary (the “Operating Partnership”), in exchange for units in the Operating Partnership. The Operating Partnership in turn contributed such net proceeds to the limited liability companies (“LLC(the “LLC Subsidiaries”) that comprised the initial portfolio of properties of the predecessor of the Company (the “Predecessor”“Predecessor,” or specifically, 50/53 JV LLC (“50/53”), Berkshire Equity LLC (“Berkshire”), Gunki Holdings LLC (“Gunki”) and Renaissance Equity Holdings LLC (“Renaissance,”Renaissance”)), in exchange for classClass A LLC units in such LLC’sLLCs and became the managing member of such LLCs. The owners of the LLC Subsidiaries, which include David Bistricer, Moric Bistricer, Sam Levinson, Jacob Schwimmer, Eva Schwimmer, the David Bistricer Trust of 2014 and the Moric Bistricer Trust of 2014 (collectively, the “Continuing Investors”Investors,” and each a “Continuing Investor”), exchanged their interests for Class B LLC units and an equal number of special, non-economic, voting stock in the Company. See footnote 1 to the “Stock Ownership—Principal Stockholders”Shareholders” table in this Proxy Statement for more information on the Class B LLC units.
In connection with such Private Offering, we entered into a tax protection agreement (the “Tax Protection Agreement”) with our Continuing Investors, pursuant to which we agreed to indemnify the Continuing Investors against certain tax liabilities incurred during the 8-year period following the Private Offering (or with respect to item (iv) below, certain tax liabilities resulting from certain transfers occurring during the 8-year period following the Private Offering) if those tax liabilities result from (i) the sale, transfer, conveyance or other taxable disposition of any of the properties of our LLC Subsidiaries in the initial portfolio, (ii) any of the LLC Subsidiaries failing to maintain a level of indebtedness allocable for U.S. federal income tax purposes to any of the Continuing Investors such that any of the Continuing Investors is allocated less than a specified minimum indebtedness in each such LLC Subsidiary (in order to comply with this requirement, (1) Renaissance needs to maintain approximately $101.3 million of indebtedness, (2) Berkshire needs to maintain approximately $125.8 million of indebtedness, and (3) Gunki needs to maintain approximately $34.4 million of indebtedness), (iii) in a case that such level of indebtedness noted immediately above cannot be maintained by the applicable LLC Subsidiary, failing to make available to such a Continuing Investor the opportunity to execute a guarantee of indebtedness of the LLC Subsidiary meeting certain requirements that would enable the continuing investorContinuing Investor to continue to defer certain tax liabilities, or (iv) the imposition of New York City or New York State real estate transfer tax liability upon a Continuing Investor as a result of the formation of the Company, the Private Offering, the IPO and/or certain other subsequent transactions or as a result of any of those transfers being aggregated. We estimate that if all of the assets subject to the Tax Protection Agreement had been sold in a taxable transaction immediately after the Private Offering, the amount of our LLC Subsidiaries’ indemnification obligations underpursuant to the Tax Protection Agreement (based on then currentthen-current tax rates and tax basis, and the valuationsvaluation of our assets based on the December 31, 20172020, closing price of $9.99our common stock of $7.05 per share, and including additional payments to compensate the indemnified Continuing Investors for additional tax liabilities resulting from the indemnification payments) would have been approximately $328.2$344.5 million. In addition, we estimate that if New York City or New York State real estate transfer taxes had been imposed on our Continuing Investors, the maximum amount of our LLC Subsidiaries’ indemnification obligations pursuant to the Tax Protection Agreement in respect of New York City or New York State real estate transfer tax liability (based on then currentthen-current tax rates and tax basis, and the valuationsvaluation of our assets based on the private offeringDecember 31, 2020, closing price of $9.99our common stock of $7.05 per share, and including additional payments to compensate the indemnified Continuing Investors for additional tax liabilities resulting from the indemnification payments) would have been approximately $66.3$74.4 million (although the amount may have been significantly less). We do not presently intend to sell or take any other action that would result in a tax protection payment with respect to the properties covered by the Tax Protection Agreement.
Operating Partnership Agreement and Limited Liability Company Agreements
Concurrently with the completion of the Private Offering, we entered into an operating partnership agreement (the “Operating Partnership Agreement”) with the various persons who received Class B LLC units, and Clipper Realty L.P., our operating partnership subsidiary (the “Operating Partnership”), entered into amended and restated limited liability company agreements (the “LLC Agreements”) with the various Continuing Investors. As a result, such persons became either limited partners of our Operating Partnership or non-managing members inof our LLC Subsidiaries.
Pursuant to the Operating Partnership Agreement and LLC Agreements, each limited partner of our Operating Partnership has the right, subject to the terms and conditions set forth in the Operating Partnership Agreement, to require our Operating Partnership to redeem all or a portion of the units of limited partnership in our Operating Partnership (the “OP units”) held by such limited partner in exchange for a cash amount equal to the number of tendered OP units multiplied by the price of a share of our common stock (determined in accordance with, and subject to adjustment under, the terms of the partnership agreement)Operating Partnership Agreement), unless the terms of such OP units or a separate agreement entered into between the Operating Partnership and the holder of such OP units provide that the holder is not entitled to a right of redemption or impose conditions on the exercise of such right of redemption. On or before the close of business on the fifth business day after we receive a notice of redemption, we may, in our sole and absolute discretion, but subject to the restrictions on the ownership of our stock imposed under our charter and the transfer restrictions and other limitations thereof, elect to acquire some or all of the tendered OP units from the tendering person in exchange for shares of our common stock, based on an exchange ratio of one share of our common stock for each OP unit (subject to anti-dilution adjustments provided in the Operating Partnership Agreement). EachPursuant to the LLC Agreements, each non-managing member of the LLC Subsidiaries has the right, subject to the terms and conditions set forth in the LLC Agreements, to require theour Operating Partnership to exchange all or a portion of the Class B LLC units held by such non-managing member, together with the same number of shares of our special voting stock, for a cash amount equal to the number of tendered Class B LLC units multiplied by the price of a share of our common stock (determined in accordance with, and subject to adjustment under, the terms of the LLC Agreements), unless the terms of such Class B LLC units or a separate agreement entered into between an LLC Subsidiary and the holder of such Class B LLC units provide that the holder is not entitled to a right of exchange or imposes conditions on the exercise of such right of exchange. On or before the close of business on the fifth business day after we and the operating partnershipOperating Partnership receive a notice of exchange, we may, in our sole and absolute discretion, but subject to the restrictions on the ownership of our stock imposed under our charter and the transfer restrictions and other limitations thereof, elect to acquire some or all of the tendered Class B LLC units from the tendering non-managing member in exchange for shares of our common stock, based on an exchange ratio of one share of our common stock for each Class B LLC unit (subject to anti-dilution adjustments provided in the LLC Agreements).
Indemnification of Our Directors and Officers
To the maximum extent permitted by Maryland law in effect from time to time, our charter authorizes us to indemnify any individual who serves or has served, and our bylaws obligate us to indemnify any individual who is made or threatened to be made a party to or witness in a proceeding by reason of his or her service:
● | as a present or former director or |
● | while a director or officer of our Company and, at our request, as a director, officer, partner, manager, member or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, limited liability company, employee benefit plan or other enterprise, from and against any claim or liability to which he or she may become subject or that he or she may incur by reason of his or her service in any of these capacities. |
|
|
Our charter authorizes us, and our bylaws require us, without requiring a preliminary determination of such individual’s ultimate entitlement to indemnification, to pay or reimburse any such individual’s reasonable expenses in advance of final disposition of a proceeding. Our charter and bylaws also permit us to indemnify and advance expenses to any individual who served a predecessor of our Company in any of the capacities described above and any employee or agent of our Company or a predecessor of our Company.
We have entered into indemnification agreements with each of our directors and executive officers that providedprovide for indemnification and advance of expenses to the maximum extent permitted by Maryland law.
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS
Under the rules of the SEC, we are permitted to use a method of delivery often referred to as “householding.” Householding permits us to mail a single set of proxy materials to any household in which two or more different stockholdersshareholders reside and are members of the same household or in which one stockholdershareholder has multiple accounts. If we household materials for future meetings, then only one copy of our 2017Annual Report, as amended,annual report and Proxy Statementproxy statement will be sent to multiple stockholdersshareholders who share the same address and last name, unless we have received contrary instructions from one or more of those stockholders.shareholders. In addition, we have been notified that certain intermediaries (i.e., brokers, banks or other nominees) will household proxy materials for theour Annual Meeting. For voting purposes, a separate proxy card will be included for each account at the shared address. We will deliver promptly, upon oral or written request, a separate copy of the 2017our Annual Report as amended, and Proxy Statement to any stockholdershareholder at the same address. If you wish to receive a separate copy of the 2017 Annual Report as amended, and Proxy Statement, or future annual reports and Proxy Statements, thenproxy statements, you may contact Broadridge by internetvia the Internet at www.proxyvote.com by, via telephone at 1-800-579-1639, or byvia email at sendmaterial@proxyvote.com. You can also contact your broker, bank or other nominee to make a similar request. StockholdersShareholders sharing an address who now receive multiple copies of our 2017 Annual Report, as amended,annual report and Proxy Statementproxy statement may request delivery of a single copy by contacting us as indicated above, or by contacting their broker, bank or other nominee, provided the broker, bank or other nominee has elected to household proxy materials.
STOCKHOLDERSHAREHOLDER PROPOSALS
20192022 Annual Meeting Proposals
StockholdersShareholders who wish to have proposals considered for inclusion in the proxy statement and form of proxy for our 20192022 annual meeting of stockholdersshareholders pursuant to Rule 14a-8 under the Exchange Act must cause their proposals to be received in writing by our Chief Financial Officer and Secretary at the address set forth on the first page of this Proxy Statement4611 Twelfth Avenue, Suite 1L, Brooklyn, New York, 11219, no later than December 31, 2018.2021. Any proposal should be addressed to our Chief Financial Officer and Secretary, and may be included in next year’s proxy materials only if such proposal complies with the rules and regulations promulgated by the SEC. Nothing in this section shall be deemed to require us to include in our Proxy Statement or ourany future proxy materials relating to any annual meeting, any stockholdershareholder proposal that does not meet all of the requirements for inclusion established by the SEC.
In addition, our bylaws currently require that we be given advance written notice of nominations for election as directors and other matters that stockholdersshareholders wish to present for action at an annual meeting of stockholdersshareholders (other than matters included in our proxy materials in accordance with Rule 14a-8(e) under the Exchange Act). Our Chief Financial Officer and Secretary must receive such notice at the address set forth on the first page of this Proxy Statement notno later than the close of business on December 31, 20182021, and no earlier than December 1, 20182021, in order for director nominations andand/or other matters to be eligible to be presented at the 20192022 annual meeting of our stockholders.shareholders.
OTHER MATTERS
Our Board knows of no other matters that may properly be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting or any continuation, postponement or adjournment of the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their discretion.
It is important that the proxies be returned promptly and that you be represented. StockholdersShareholders are urged to authorize a proxy promptly by either(i) via electronically submitting a proxy or voting instruction card over the Internet, by(ii) via telephone, or by(iii) via delivering to us or your broker, bank or other nominee, a signed and dated proxy card.
ANNUAL MEETING OF STOCKHOLDERS OFCLIPPERREALTY INC.
Important Notice Regarding the Internet Availability of Proxy Materials for the Stockholder Meeting to Be Held on June 12, 2018
The Notice of Annual Meeting, Proxy Statement, 2017 Annual Report, as amended, and other SEC filings are available at the investor relations page of our website atwww.proxyvote.com.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD INTHE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
