MONMOUTH REAL ESTATE INVESTMENT CORPORATION
A Real Estate Investment Trust
125 Wyckoff Road
Post Office Box 335
Eatontown, New Jersey 07724
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of
Shareholders of Monmouth Real Estate Investment
Corporation (the Company) will be held on Thursday,
April 24, 1997, at 4:00 p.m. at the offices of the
Company on the second floor of the PNC Bank Building,
125 Wyckoff Road, Eatontown, New Jersey, for the
following purposes:
1. To elect ten Directors, the names of whom
are set forth in the accompanying proxy
statement, to serve for the ensuing year; and
2. To ratify the appointment of KPMG Peat
Marwick LLP as independent auditors for the
Company for the fiscal year ending
September 30, 1997; and
3. To consider and vote upon a proposal to
approve and ratify the Company's 1997 Stock
Option Plan authorizing the grant to officers,
directors and key employees of options to
purchase up to 750,000 shares of Common Stock; and
4. To transact such other business as may
properly come before the meeting and any
adjournments thereof.
The record books containing the records of the last
meeting of shareholders, and the records of all meetings
of the Directors since the last Annual Meeting of
Shareholders, will be presented at the meeting for the
inspection of the shareholders. Only shareholders of
record at the close of business on March 14, 1997 will
be entitled to vote at the meeting and at any
adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE
SIGN AND DATE THE ENCLOSED PROXY WHICH IS BEING
SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Eugene W. Landy
EUGENE W. LANDY
President and Director
March 20, 1997
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the
enclosed proxy card, date and sign the card, and
return it in the envelope provided. If you sign,
date and return the proxy card but give no voting
instructions, your shares will be voted "FOR" Proposals
1, 2 and 3 listed above.
<PAGE>
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
125 Wyckoff Road
Post Office Box 335
Eatontown, New Jersey 07724
PROXY STATEMENT
Annual Meeting of Shareholders
April 24, 1997
This Proxy Statement is furnished in connection
with the solicitation by the Board of Directors of
Monmouth Real Estate Investment Corporation (the
Company) of proxies to be voted at the Annual Meeting of
Shareholders of the Company to be held on April 24,
1997, and at any adjournments thereof (Annual Meeting),
for the purposes listed in the preceding Notice of
Annual Meeting of Shareholders. This Proxy Statement
and the accompanying proxy card are being distributed on
or about March 20, 1997 to shareholders of record
March 14, 1997.
A copy of the Annual Report, including financial
statements, was mailed to all shareholders of record on
or about February 21, 1997.
Any shareholder giving the accompanying proxy has
the power to revoke it at any time before it is
exercised at the Annual Meeting by filing with the
Secretary of the Company an instrument revoking it, by
delivering a duly executed proxy card bearing a later
date, or by appearing at the meeting and voting in
person. Shares represented by properly executed proxies
will be voted as specified thereon by the shareholder.
Unless the shareholder specifies otherwise, such proxies
will be voted FOR the proposals set forth in the Notice
of Annual Meeting.
The cost of preparing, assembling and mailing this
Proxy Statement and form of proxy, and the cost of
soliciting proxies related to the meeting, will be borne
by the Company. It is contemplated that the original
solicitation of proxies by mail will be supplemented by
telephone, telegraph and personal solicitation by
officers, directors and other regular or part-time
employees of the Company and no additional compensation
will be paid to such individuals, except for brokers'
and nominees' out-of-pocket expenses.
VOTING RIGHTS
Only holders of the Company's $.01 par value common
stock (Common Stock) of record as of the close of
business on March 14, 1997, are entitled to vote at the
Annual Meeting of Shareholders. As of the record date,
there were issued and outstanding 3,996,049 shares of
Common Stock, each share being entitled to one vote on
any matter which may properly come before the meeting.
Said voting right is non-cumulative. The holders of a
majority of the outstanding shares of Common Stock shall
constitute a quorum. A majority of the votes cast by
holders of the Common Stock is required for approval of
Proposals 1, 2 and 3.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
It is proposed to elect a Board of ten Directors.
The proxy will be voted for the election of the ten
nominees named below, all of whom are members of the
present Board, to serve for a one-year term for which
they have been nominated, unless authority is withheld
by the shareholder. The nominees have agreed to serve,
if elected, for the new term. If for any reason any of
the said ten nominees shall become unavailable for
election, the proxy will be voted for any substitute
nominee who may be selected by the Board of Directors
prior to or at the meeting, or, if no substitute is
selected by the Board of Directors, for a motion to
reduce the membership of the Board to the number of the
following nominees who are available. In the event the
membership of the Board is reduced, it is anticipated
that it would be restored to the original number at the
next annual meeting. In the event a vacancy occurs on
the Board of Directors after the Annual Meeting, the by-
laws provide that any such vacancy shall be filled for
the unexpired term by a majority vote of the remaining
Directors. The Company has no knowledge that any of the
ten nominees shall become unavailable for election.
The proxies solicited cannot be voted for a greater
number of persons than the nominees named.
Some of the nominees for Director are also Officers
and/or Directors of other companies, including Monmouth
Capital Corporation and United Mobile Homes, Inc., both
publicly-owned companies. In addition, the Officers and
Directors of the Company may engage in real estate
transactions for their own account, which transactions
may also be suitable for Monmouth Real Estate Investment
Corporation. In most respects, the activities of the
Company, United Mobile Homes, Inc. and Monmouth Capital
Corporation are not in conflict, but rather complement
each other. However, the activities of the Officers and
Directors on behalf of the other companies, or for their
own account, may on occasion conflict with those of the
Company and deprive the Company of favorable
opportunities. It is the opinion of the Officers and
Directors of the Company that there have been no
conflicting transactions since the beginning of the last
fiscal year.
Committees of the Board of Directors and Meeting Attendance
The Board of Directors met four times during the
last fiscal year. No Directors attended fewer than 75%
of the meetings, except Ara K. Hovnanian who attended
50% of the meetings.
The Company has a standing Audit Committee and
Compensation Committee of the Board of Directors. Upon
ratification of the Stock Option Plan, the Board will
appoint a Stock Option Committee consisting of two
independent Directors to administer the Plan.
The Audit Committee consists of Charles P.
Kaempffer and W. Dunham Morey, both of whom are outside
Directors. This Committee met once during the last
fiscal year. The Audit Committee recommends to the
Directors the independent public accountants to be
engaged by the Company and reviews with management the
Company's internal accounting procedures and controls.
The Compensation Committee consisted of W. Dunham
Morey and Daniel Cronheim. This Committee, which makes
recommendations to the Directors concerning
compensation, met once during the last fiscal year.
Effective January 1, 1997, the Compensation Committee
consists of Ara K. Hovnanian and Robert G. Sampson.
2
<PAGE>
NOMINEES FOR DIRECTOR
Present Position with the Company;
Business Experience During Past Director
Nominee; Age Five Years; Other Directorships Since
__________________________________________________________________________
Ernest V. Bencivenga Treasurer (1968 to present) and Director. 1968
(79) Financial Consultant (1976 to present);
Treasurer and Director (1961 to present)
and Secretary (1967 to present) of Monmouth
Capital Corporation; Director (1969 to
present) and Secretary/Treasurer (1984 to
present) of United Mobile Homes, Inc.
Anna T. Chew Controller (1991 to present) and Director. 1993
(38) Certified Public Accountant; Controller
(1991 to present) and Director (1994 to
present) of Monmouth Capital Corporation;
Vice President and Chief Financial Officer
(1995 to present), Controller (1991 to
1995) and Director (1994 to present) of
United Mobile Homes, Inc.; Senior Manager
(1987 to 1991) of KPMG Peat Marwick.
Daniel D. Cronheim Director. Attorney at Law, Daniel D. 1989
(42) Cronheim, Esq.(1982 to present);
Executive Vice President (1989 to present)
and General Counsel (1983 to present) of
David Cronheim Company.
Boniface DeBlasio Director. Chairman of the Board (1968 to 1968
(76) present) and Director (1961 to present)
of Monmouth Capital Corporation.
Ara K. Hovnanian Director. President (1988 to present) 1989
(39) and Director (1981 to present) of Hovnanian
Enterprises, Inc., a publicly- owned company
specializing in the construction of housing.
Charles P. Kaempffer Director. Investor; Director (1970 to 1974
(59) present) of Monmouth Capital Corporation;
Director (1969 to present) of United Mobile
Homes, Inc.; Director (1989 to 1996) of
Sovereign Community Bank (formerly Colonial
Bank).
3
<PAGE>
NOMINEES FOR DIRECTOR (continued)
Present Position with the Company;
Business Experience During Past Director
Nominee; Age Five Years; Other Directorships Since
_________________________________________________________________________
Eugene W. Landy President (1968 to present) and Director. 1968
(63) Attorney at Law, Landy & Landy; President
and Director (1961 to present) of Monmouth
Capital Corporation; Chairman of the Board
(1995 to present), President (1969 to 1995)
and Director (1969 to present) of United
Mobile Homes, Inc.
Samuel A. Landy Director. Attorney at Law, Landy & Landy 1989
(36) (1987 to present); President (1995 to present),
Vice President (1991 to 1995) and Director
(1992 to present) of United Mobile Homes, Inc.;
Director (1994 to present) of Monmouth Capital
Corporation.
W. Dunham Morey Director. Certified Public Accountant, 1968
(76) W. Dunham Morey, CPA; Director (1961 to
present) of Monmouth Capital Corporation.
Robert G. Sampson Director. Investor; Director (1963 to present) 1968
(71) of Monmouth Capital Corporation; Director (1969
to present) of United Mobile Homes, Inc.;
Director (1972 to 1993) of United Jersey Bank;
General Partner (1983 to present) of Sampco,
Ltd., an investment group.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
4
<PAGE>
PROPOSAL 2
APPROVAL OF INDEPENDENT AUDITORS
It is proposed to approve the appointment of KPMG
Peat Marwick LLP as Independent Auditors for the Company
for the purpose of making the annual audit of the books
of account of the Company for the year ending September
30, 1997 and shareholder approval of said appointment is
requested. KPMG Peat Marwick LLP served as Independent
Auditors of the Company since 1994. There are no
affiliations between the Company and KPMG Peat Marwick
LLP, its partners, associates or employees, other than
its employment as Independent Auditors for the Company.
KPMG Peat Marwick LLP informed the Company that it has
no direct or indirect financial interest in the Company.
The Company does expect a representative of KPMG Peat
Marwick LLP to be present at the Annual Meeting either
to make a statement or to respond to appropriate
questions.
The approval of the appointment of the Independent
Auditors must be by the affirmative vote of a majority
of the votes cast at the Annual Meeting. In the event
KPMG Peat Marwick LLP does not receive an affirmative
vote of the majority of the votes cast by the holders of
shares entitled to vote, then another firm will be
appointed as Independent Auditors and the shareholders
will be asked to ratify the appointment at the next
annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
PROPOSAL 3
RATIFICATION OF 1997 STOCK OPTION PLAN
It is proposed to ratify the Monmouth Real Estate
Investment Corporation 1997 Stock Option Plan (the
Plan). The following are the terms and conditions of
the Plan:
General
The Board of Directors adopted, subject to
shareholder approval, the Monmouth Real Estate
Investment Corporation 1997 Stock Option Plan. The Plan
is included as an Appendix to this Proxy Statement. The
following summary is not intended to be exhaustive and
is subject to, and qualified in its entirety by,
reference to the full text of the Plan.
Purpose
The purpose of the Plan is to promote the interests
of the Company by affording an incentive to certain
officers and key employees to remain in the employ of
the Company and to use their best efforts in its behalf;
and further to aid the Company in attracting,
maintaining, and developing capable management personnel
of a caliber required to insure the Company's continued
success, by means of an offer to such persons of an
opportunity to acquire or increase their propriety
interest in the Company through the granting of options
5
<PAGE>
to purchase the Company's stock pursuant to the terms
of the Plan. Directors of the Company are also eligible
to participate, but in the case of Directors who are
not employees, only pursuant to automatic grants as set
forth in Section 5(b) of the Plan. The Options granted
under the Plan are intended to be either incentive stock
options (Incentive Options) within the meaning of
Section 422 of the Internal Revenue Code of 1986, as
amended (the Code), or Options that do not meet the
requirements for Incentive Options (Non-Qualified
Options), but the Company makes no warranty as to
the qualification of any Option as an Incentive Option.
Incentive Options may be granted only to employees of
the Company.
Shares Subject to the Plan
The Plan provides for the grant of Options to
purchase shares of Common Stock of the Company. The
shares to be delivered upon exercise of options granted
shall be made available from the authorized unissued
shares of the Company's Common Stock or from shares
reacquired by the Company, including shares purchased in
the open market.
The aggregate number of shares reserved for
issuance upon exercise of Options granted under the Plan
shall not exceed 750,000 shares of the Class A $.01 par
value Common Stock of the Company.
In the event an option granted under the Plan
expires or terminates for any reason whatsoever without
having been exercised in full, the shares subject to
such option shall become available for other options to
the same optionee or other optionees without decreasing
the aggregate number of shares which may be granted
under the Plan.
More than one option may be granted to an optionee.
However, not more than 20% of the number of shares which
can be issued under the Plan may be purchased by one
optionee upon exercise of all options granted to such
optionee.
Option Agreements
Each option shall be evidenced by an option
agreement signed by an officer of the Company and the
optionee. Said option agreement shall contain such
provisions as may be approved by the Stock Option
Committee.
Effective Date and Termination
Upon approval of the Plan by a majority of the
votes cast at the 1997 Annual Meeting, the Plan will
become effective as of January 1, 1997. Unless
previously terminated by the Board, the Plan will
terminate December 31, 2006, except that Options that
were granted under the Plan before its termination will
continue to be administered under its terms until the
Options terminate or are exercised.
Eligibility
Key employees of the Company and any of its
subsidiaries including officers and directors who are
employees shall be eligible to receive options. Key
employees to whom options may be granted under the Plan
will be those selected by the Stock Option Committee
from time to time who, in the sole discretion of the
Committee, have contributed in the past or who may be
expected to contribute materially in the future to the
successful performance of the Company. Each person who
is a non-employee member of the Board on December 31,
1996, shall automatically be granted a Non-Qualified
Option to purchase 15,000 shares of common stock.
Thereafter, each person who first becomes a non-employee
member of the Board shall automatically be granted, upon
6
<PAGE>
the date such person first becomes a member of the
Board, a Non-Qualified Option to purchase 5,000 shares
of common stock.
Option Price
The price at which shares of stock may be purchased
under an option granted pursuant to the Plan shall be
determined by the Committee but shall not be less than
100% of fair market value of such shares on the date
that the option is granted, such fair market value to be
determined by, and in accordance with, procedures to be
established by the Stock Option Committee. The option
price will be subject to adjustments in accordance with
provisions of Section 11 of the Plan.
In the case of Incentive Options granted to an
optionee who, at the time such option would be granted,
owns more than 10% of the outstanding stock of the
Company, the price at which shares of stock may be
purchased under an option grant shall not be less than
110% of fair market value.
Administration and Operation
The Plan is to be administered entirely by a Stock
Option Committee appointed by the Board of Directors.
Said Committee shall consist of at least two of the
Company's "disinterested" members of its Board. No
individual who has been granted options under the Plan,
except for options granted pursuant to Section 5(b) of
the Plan, shall become a member of the Committee while
said options are still in existence. No member of the
Committee shall be eligible for any grant of options,
except for options granted pursuant to Section 5(b) of
the Plan. The Committee shall have full power and
authority to construe, interpret and administer the Plan
and may from time to time adopt such rules and
regulations for carrying out the Plan. Subject to the
terms, provisions, and conditions of the Plan, the
Committee shall have exclusive jurisdiction as to (i)
the selection of key employees to whom options shall be
granted, (ii) the number of shares subject to each
option, (iii) the time when options will be granted,
(iv) the determination of the option price, (v) the
determination of the time when each option may be
exercised, and (vi) the determination of all other
questions relating to the administration of the Plan.
Exercise of Options
The period during which each Option may be
exercised shall be fixed by the Committee at the time
such option is granted, but such period shall expire not
later than ten (10) years from the date of grant. In
the case of Incentive Options granted to an employee
who, at the time such option would be granted, owns more
than ten percent (10%) of the outstanding stock of the
Company, such period shall expire not later than five
(5) years from the date the option is granted.
Each Option granted under the Plan may be exercised
only after one year of continued employment by the
Company or one of its subsidiaries immediately following
the date the Option is granted and only during the
continuance of employment with the Company or one of its
subsidiaries. Subject to the foregoing, each option
shall be exercisable in whole or in part in installments
at such time or times as the Committee may prescribe and
specify in the Stock Option Agreement.
Options granted under the Plan will become fully
exercisable upon a change in control as set forth in the
Plan. Holders of options will also have the right to
cash out their options in the event of a change of
control.
7
<PAGE>
Loans by the Company
Upon the exercise of any option by an employee, the
Company may lend to any optionee, as of the date of
exercise, an amount equal to the exercise price of such
option. The loan shall have a term of not more than ten
years, shall become due within sixty days after the
recipient ceases to be an employee of the Company, shall
bear interest at a rate not less than the prevailing
applicable federal rate at the time the loan is made,
and shall be fully collateralized. Loan terms and
conditions may be changed by the Stock Option Committee
to comply with IRS and SEC regulations.
Transferability of Options
Options may not be transferred except by will or
the laws of descent or distribution.
Termination of Employment
In the event of the termination of employment of
the employee, the Option shall be exercisable at any
time prior to the expiration date of the option or
within three months after such termination, whichever is
earlier,but only to the extent the employee had the
right to exercise such option at the date of such
termination. However, in the event of death of an
optionee while in the Company's employ, his option may
be exercisable by a legatee of the employee under his
last will, or by his personal representatives, at any
time prior to the expiration date of the option or
within three months after the date of such death,
whichever is earlier, but only to the extent the
optionee had the right to exercise such option on the
date of his death.
Amendments, Suspension or Termination of the Plan
The Board shall have the right to amend, suspend or
terminate the Plan in any respect which it may deem to
be in the best interests of the Company. However, no
amendments shall be made in the Plan which would (i)
increase the total number of shares for which options
may be granted, (ii) change the minimum purchase price
for the optioned shares, (iii) affect outstanding
options or any unexercised rights thereunder, (iv)
extend the option period or make an option exercisable
earlier than as specified, and (v) extend the
termination date of the Plan.
Capital Adjustments Affecting Stock
In the event of a capital adjustment resulting from
a stock dividend, stock split, reorganization, merger,
consolidation, or a combination or exchange of shares,
the Plan provides for adjustments to (i) the number of
shares of stock subject to the Plan, and (ii) the number
of shares under option. The price of any shares under
option shall be adjusted so that there will be no change
in the aggregate purchase price payable under exercise
of any such option.
Federal Income Tax Consequences
It is recommended that Optionees consult their own
professional tax advisors for personal and specific
advice about Options. In general, Optionees will not
realize taxable income upon the grant of an Incentive
Stock Option. In addition, Optionees will not realize
taxable income upon the exercise of an Incentive Stock
Option. The tax consequences of Optionees selling
Option Stock are complex and Optionees must consult
their tax advisors and review applicable Tax Laws. In
the event a Stock Option Plan is non-qualified, the
difference between the exercise price of the Option and
the fair market value of the Option Stock on the date of
exercise is compensation income taxable to the Optionee.
This is the principal reason to use qualified Stock
Option Plans as opposed to non-qualified Plans.
8
<PAGE>
Vote Required to Approve the Plan
Approval of the Plan requires the affirmative vote
of a majority of the votes cast at the 1997 Annual
Meeting of Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
PRINCIPAL SHAREHOLDERS
On March 3, 1997, no person owned of record, or was
known by the Company to own beneficially, more than five
percent (5%) of the shares of the Company, except the
following:
Name and Address Shares Owned Percent
Title of Class of Beneficial Owner Beneficially of Class
Common Stock Eugene W. Landy 323,400 8.09%
20 Tuxedo Road
Rumson, NJ 07760
9
<PAGE>
INFORMATION RESPECTING DIRECTORS AND OFFICERS
As of March 3, 1997, the Directors and Officers,
individually and as a group, beneficially owned Common
Stock as follows:
Name of Shares Owned
Beneficial Owner Beneficially (1) Percent of Class
Ernest V. Bencivenga 7,992 0.20%
Anna T. Chew 6,517 (2) 0.16%
Daniel D. Cronheim 15,985 0.40%
Boniface DeBlasio 10,788 0.27%
Ara K. Hovnanian 341 0.01%
Charles P. Kaempffer 36,015 (3) 0.90%
Eugene W. Landy 323,400 (4) 8.09%
Samuel A. Landy 106,696 (5) 2.67%
W. Dunham Morey 45,986 (6) 1.15%
Robert G. Sampson 67,775 (7) 1.70%
Directors and Officers
as a Group 621,495 15.55%
(1) Beneficial ownership, as defined herein, includes
Common Stock as to which a person has or shares voting
and/or investment power.
(2) Held jointly with Ms. Chew's husband; includes
1,882 shares held in Ms. Chew's 401(k) Plan.
(3) Includes (a) 13,586 shares owned by Mr. Kaempffer's
wife; (b) 1,080 shares in joint name with Mrs. Kaempffer;
and (c) 1,877 shares held in the Charles P. Kaempffer
Defined Benefit Pension Plan of which Mr. Kaempffer is
Trustee with power to vote.
(4) Includes (a) 63,891 shares owned by Mr. Landy's wife;
(b) 155,189 shares held in the Landy & Landy Profit Sharing
Plan of which Mr. Landy is a Trustee with power to vote;
and (c) 83,574 shares held in the Landy & Landy Pension Plan
of which Mr. Landy is a Trustee with power to vote. Excludes
38,857 shares held by Mr. Landy's adult children in which he
disclaims any beneficial interest.
(5) Includes (a) 2,767 shares owned by Mr. Landy's wife; (b) 20,160
shares held in custodial accounts for Mr. Landy's minor children
under the NJ Uniform Transfers to Minors Act in which he disclaims
any beneficial interest but has power to vote; and (c) 7,195 shares
held in Mr. Landy's 401(k) Plan.
(6) Includes 10,678 shares owned by Mr. Morey's wife.
(7) Includes (a) 40,020 shares held in the Estate of Helen Haskell
Sampson; and (b) 6,000 shares held by Sampco Ltd. in which Mr.
Sampson has a beneficial interest.
10
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table.
The following Summary Compensation Table shows
compensation paid or accrued by the Company to its Chief
Executive Officer for services rendered during the
fiscal years ended September 30, 1996, 1995 and 1994.
Because no other executive officers received total
annual salary and bonus exceeding $100,000, only the
compensation paid to the Chief Executive Officer is to
be disclosed under the Securities and Exchange
Commission disclosure requirements.
Name and Annual Compensation
Principal Position Year Salary Bonus Other
Eugene W. Landy 1996 None None $173,203(1)
Chief Executive Officer 1995 None None $162,445
1994 None None $142,130
(1) Represents Director's fees of $3,200 paid to Mr. Landy,
management fees of $107,503, legal fees of $3,500
paid to the firm of Landy & Landy, and $59,000 accrual
for pension and other benefits in accordance with Mr.
Landy's employment agreement.
Compensation of Directors
The Directors received a fee of $800 for each Board
meeting attended. Directors appointed to house
committees received $150 for each meeting attended.
Those specific committees are Compensation Committee and
Audit Committee.
Employment Agreement
On December 9, 1994, the Company and Eugene W.
Landy entered into an Employment Agreement under which
Mr. Landy receives an annual base compensation
(management fee) of $100,000 plus bonuses and customary
fringe benefits, including health insurance and five
weeks' vacation. In lieu of annual increases in base
compensation, there will be additional bonuses voted by
the Board of Directors. The Employment Agreement is
terminable by either party at any time subject to
certain notice requirements.
On severance of employment for any reason, Mr.
Landy will receive severance of $300,000 payable
$100,000 on severance and $100,000 on the first and
second anniversaries of severance.
In the event of disability, Mr. Landy's
compensation shall continue for a period of three years,
payable monthly.
On retirement, Mr. Landy shall receive a pension of
$40,000 a year for ten years, payable in monthly
installments.
11
<PAGE>
In the event of death, Mr. Landy's designated
beneficiary shall receive $300,000, $150,000 thirty days
after death and the balance one year after death.
The Employment Agreement terminates December 31,
1999. Thereafter, the term of the Employment Agreement
shall be automatically renewed and extended for
successive one-year periods.
Other Information
Except for specific agreements, the Company has no
retirement plan in effect for Officers, Directors or
employees and, at present, has no intention of
instituting such a plan.
Cronheim Management Company received the sum of
$17,825 in 1996 for management fees, and David
Cronheim Company received $21,777 in commissions. These
totals are based on amounts paid or accrued during the
fiscal year. Management believes that the aforesaid
fees are no more than what the Company would pay for
comparable services elsewhere.
Report of Board of Directors on Executive Compensation
Overview and Philosophy
The Company has a Compensation Committee consisting
of two independent outside Directors. This Committee is
responsible for making recommendations to the Board of
Directors concerning compensation. The Compensation
Committee takes into consideration three major factors
in setting compensation.
The first consideration is the overall performance
of the Company. The Board believes that the financial
interests of the executive officers should be aligned
with the success of the Company and the financial
interests of its shareholders. Increases in funds from
operations, the enhancement of the Company's equity
portfolio, and the success of the Dividend Reinvestment
and Stock Purchase Plan all contribute to increases in
stock prices, thereby maximizing shareholders' return.
The second consideration is the individual
achievements made by each officer. The Company is a
small real estate investment trust (REIT). The Board of
Directors is aware of the contributions made by each
officer and makes an evaluation of individual
performance based on their own familiarity with the
officer.
The final criteria in setting compensation is
comparable wages in the industry. In this regard, the
REIT industry maintains excellent statistics.
12
<PAGE>
Evaluation
The Company continues to increase funds from
operations. The Committee reviewed the progress made by
Eugene W. Landy, Chief Executive Officer, in shifting
the Company's focus from mortgage loans to equity
properties. The Committee also noted that Mr. Landy's
current compensation was less than the average salary
received by Chief Executive Officers of other REITs.
His base compensation under his contract is $100,000 per
year. The Committee has recommended that Mr. Landy
receive a bonus of $10,000 in 1996.
COMPARATIVE STOCK PERFORMANCE
The following line graph compares the total return
of the Company's common stock for the last five fiscal
years to the NAREIT All REIT Total Return Index,
published by the National Association of Real Estate
Investment Trusts (NAREIT), and the S&P 500 Index for
the same period. The total return reflects stock price
appreciation and dividend reinvestment for all three
comparative indices. The information herein has been
obtained from sources believed to be reliable, but
neither its accuracy nor its completeness is guaranteed.
Monmouth Real Estate
Investment Corporation NAREIT S&P 500
1991 100 100 100
1992 127 113 108
1993 162 147 124
1994 158 141 131
1995 152 158 159
1996 173 189 189
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors of the Company has granted
Eugene W. Landy, President, a loan of $100,000 at an
interest rate of 10% due May 23, 1997. Principal and
accrued interest is payable at maturity.
There is no family relationship between any of the
Directors or Executive Officers of the Company, except
that Samuel A. Landy, Director, is the son of Eugene W.
Landy, President and Director of the Company. Daniel D.
Cronheim, Director, is the son of Robert Cronheim,
President of David Cronheim Company, the Real Estate
Advisor to the Company.
Eugene W. Landy and Samuel A. Landy are partners in
the law firm of Landy & Landy, which firm, or its
predecessor firms, have been retained by the Company as
legal counsel since the formation of the Company, and
which firm the Company proposes to retain as legal
counsel for the current fiscal year.
The New Jersey Supreme Court has ruled that the
relationship of directors also serving as outside
counsel is not per se improper, but the attorney should
fully discuss the issue of conflict with the other
directors and disclose it as part of the proxy statement
so that shareholders can consider the conflict issue
when voting for or against the attorney/director
nominee.
GENERAL
The Board of Directors knows of no other matters
other than those stated in the Proxy Statement which are
to be presented for action at the Annual Meeting. If
any other matters should properly come before the Annual
Meeting, it is intended that proxies in the accompanying
form will be voted on any such matter in accordance with
the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is
conferred by such proxies upon the persons voting them.
The Company will provide, without charge, to each
person being solicited by this Proxy Statement, on the
written request of any such person, a copy of the Annual
Report of the Company on Form 10-K for the year ended
September 30, 1996 (as filed with the Securities and
Exchange Commission), including the financial statements
and schedules thereto. All such requests should be
directed to Monmouth Real Estate Investment Corporation,
Attention: Secretary, 125 Wyckoff Road, Eatontown, NJ
07724.
14
<PAGE>
COMPLIANCE WITH EXCHANGE ACT FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of
1934, as amended, requires the Company's Officers and
Directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and
changes in ownership with the Securities and Exchange
Commission. Officers, Directors and greater than 10%
shareholders are required by Securities and Exchange
Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based
solely on review of the copies of such forms furnished
to the Company, the Company believes that, during the
fiscal year, all Section 16(a) filing requirements
applicable to its Officers, Directors and greater than
10% beneficial owners were met.
SHAREHOLDER PROPOSALS
In order for Shareholder Proposals for the 1998
Annual Meeting of Shareholders to be eligible for
inclusion in the Company's 1998 Proxy Statement, they
must be received by the Company at its principal office
at 125 Wyckoff Road, P. O. Box 335, Eatontown, New
Jersey 07724 not later than October 30, 1997.
By Order of the Board of Directors
/s/ Eugene W. Landy
EUGENE W. LANDY
President and Director
Dated: March 20, 1997
IMPORTANT: Shareholders can help the Directors avoid
the necessity and expense of sending follow-up letters
to insure a quorum by promptly returning the enclosed
proxy. The proxy is revocable and will not affect your
right to vote in person in the event you attend the
meeting. You are earnestly requested to sign and return
the enclosed proxy in order that the necessary quorum
may be present at the meeting. The enclosed addressed
envelope requires no postage and is for your
convenience.
15
<PAGE>
APPENDIX
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
1997 STOCK OPTION PLAN
1. Purpose. The purpose of the 1997 Stock
Option Plan (hereinafter called the "Plan"), is to
promote the interests of Monmouth Real Estate Investment
Corporation (hereinafter called the "Company"), by
affording an incentive to certain officers and key
employees to remain in the employ of the Company and to
use their best efforts in its behalf; and further to aid
the Company in attracting, maintaining, and developing
capable management personnel of a caliber required to
insure the Company's continued success, by means of an
offer to such persons of an opportunity to acquire or
increase their proprietary interest in the Company
through the granting of options to purchase the
Company's stock pursuant to the terms of this Plan.
Directors of the Company are also eligible to
participate, but in the case of Directors who are not
employees, only pursuant to automatic grants as set
forth in Section 5(b) hereof. The options granted under
the Plan are intended to be either incentive stock
options ("Incentive Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or options that do not meet the
requirements for Incentive Options ("Non-Qualified
Options"), but the Company makes no warranty as to the
qualification of any option as an Incentive Option.
Incentive Options may be granted only to employees of
the Company.
2. Shares Subject to the Plan. (a) The
shares to be delivered upon exercise of options granted
under the Plan shall be made available, at the
discretion of the Board of Directors of the Company (the
"Board"), from the authorized unissued shares of the
Company's Common Stock or from shares reacquired by the
Company, including shares purchased in the open market.
(b) Subject to adjustments made pursuant to
provisions of Section 11 hereof, the aggregate number of
shares which may be issued upon exercise of all options
which may be granted under the Plan shall not exceed
750,000 shares of the Class A $.01 par value Common
Stock of the Company.
(c) In the event that any option granted
under this Plan expires or terminates for any reason
whatsoever without having been exercised in full, the
shares subject to, but not delivered under, such option
shall become available for other options to the same
optionee or other optionees without decreasing the
aggregate number of shares which may be granted under
the Plan; or shall be available for any lawful corporate
purpose.
(d) More than one option may be granted to an
optionee pursuant to this Plan. However, not more than
twenty percent (20%) of the number of shares which can
be issued under this Plan in accordance with Section
2(b) hereof may be purchased by one optionee upon
exercise of all options granted under the Plan to such
optionee.
3. Option Agreements. (a) Each option under
the Plan shall be evidenced by an option agreement which
shall be signed by an officer of the Company and by the
16
<PAGE>
optionee and which shall contain such provisions as may
be approved by the Committee (as defined in Section 4
hereof).
(b) The option agreements shall constitute
binding contracts between the Company and the optionee
and every optionee, upon acceptance of such option
agreement, shall be bound by the terms and restrictions
of this Plan and of the option agreement.
(c) The terms of the option agreement shall
be in accordance with this Plan, but may include
additional provisions and restrictions, provided that
the same are not inconsistent with the Plan.
4. Administration. The Plan shall be
administered by an Option Committee appointed by the
Board comprised of at least two (2) of the Company's
"disinterested" members of its Board (the "Committee"),
in accordance with the provisions of Rule 16b-3
promulgated under the Securities Exchange Act of 1934,
as amended. The Committee shall have no authority,
power or discretion to determine the number or timing of
options granted pursuant to Section 5(b) hereof. No
individual who has been granted options under this Plan,
except for options granted pursuant to Section 5(b)
hereof, shall become a member of the Committee while
said options are still in existence. No member of the
Committee shall be eligible for any grant of options,
except for options granted pursuant to Section 5(b)
hereof. The Committee shall have full power and
authority to construe, interpret, and administer the
Plan and may from time to time adopt such rules and
regulations for carrying out this Plan as it may deem
proper and in the best interests of the Company.
Subject to the terms, provisions, and conditions of the
Plan, the Committee shall have exclusive jurisdiction
(i) to select the key employees to whom options shall be
granted, (ii) to determine the number of shares subject
to each option, (iii) to determine the time or times
when options will be granted, (iv) to determine the
option price of the shares subject to each option, (v)
to determine the time when each option may be exercised,
(vi) to fix such other provisions of the option
agreement as the Committee may deem necessary or
desirable consistent with the terms of this Plan, and
(vii) to determine all other questions relating to the
administration of the Plan. The interpretation of any
provisions of this Plan by the Committee shall be final,
conclusive, and binding upon all persons and the Board
shall place into effect the determinations of the
Committee.
5. Eligibility. (a) Key employees of the
Company and any of its subsidiaries including officers
and directors who are employees shall be eligible to
receive options. The fact that an employee has been
granted an option under this Plan shall not in any way
affect or qualify the right of the employer to terminate
his employment at any time. Nothing contained in this
Plan shall be construed to limit the right of the
Company to grant options otherwise than under the Plan
for any proper and lawful corporate purpose, including
but not limited to options granted to key employees.
Key employees to whom options may be granted under the
Plan will be those selected by the Committee from time
to time who, in the sole discretion of the Committee,
have contributed in the past or who may be expected to
contribute materially in the future to the successful
performance of the Company.
(b) Each person who is a non-employee member
of the Board on December 31, 1996, shall automatically
be granted a Non-Qualified Option to purchase 15,000
shares of common stock. Thereafter, each person who
first becomes a non-employee member of the Board shall
automatically be granted, upon the date such person
first becomes a member of the Board, a Non-Qualified
Option to purchase 5,000 shares of common stock. The
17
<PAGE>
terms of such options, including the purchase price,
shall be determined in the same manner as set forth in
other provisions of the Plan.
6. Option Price. (a) The price at which
shares of stock may be purchased under an option granted
pursuant to this Plan shall be determined by the
Committee but shall not be less than one hundred percent
(100%) of fair market value of such shares on the date
that the option is granted, such fair market value to be
determined by, and in accordance with, procedures to be
established by the Committee. The option price will be
subject to adjustments in accordance with provisions of
Section 11 hereof.
(b) In the case of Incentive Options granted
to an optionee who, at the time such option would be
granted, owns more than ten percent (10%) of the
outstanding stock of the Company, the price at which
shares of stock may be purchased under an option grant
shall not be less than one hundred ten percent (110%) of
fair market value, determined as described in (a) above.
7. Exercise of Options. (a) Subject to the
provisions of the Plan with respect to termination of
employment under Section 10 hereof, the period during
which each option may be exercised shall be fixed by the
Committee at the time such option is granted, but such
period shall expire not later than ten (10) years from
the date the option is granted. In the case of
Incentive Options granted to an employee who, at the
time such option would be granted, owns more than ten
percent (10%) of the outstanding stock of the Company,
such period shall expire not later than five (5) years
from the date the option is granted.
(b) Each option granted to an employee under
the Plan may be exercised only after one (1) year of
continued employment by the Company or one of its
subsidiaries immediately following the date the option
is granted and, except as provided in Section 10 hereof,
only during the continuance of the optionee's employment
with the Company or one of its subsidiaries. Subject to
the foregoing limitations and the terms and conditions
of the option agreement, each option shall be
exercisable in whole or in part in installments at such
time or times as the Committee may prescribe and specify
in the applicable option agreement.
(c) Options granted under the Plan will
become fully exercisable upon a change in control. A
change of control means (i) any acquisition by a person
or group (other than an acquisition by the Company, the
Company's management, or a Company-sponsored employee
benefit plan) of twenty percent (20%) or more of the
outstanding shares of Common Stock, (ii) a change in the
majority of the Company's directors, (iii) approval by
the Company's shareholders of a reorganization, merger,
consolidation, sale or disposition of all or
substantially all of the assets of the Company under
certain circumstances, or (iv) approval by the Company's
shareholders of a complete liquidation or dissolution of
the Company. Holders of options also have the right to
cash out their options in the event of a change of
control.
(d) No shares shall be delivered pursuant to
any exercise of an option until the requirement of such
laws and regulations as may be deemed by the Committee
to be applicable to them are satisfied and until payment
in full in cash (including check, bank draft or money
order) or, if authorized by the Committee pursuant to
Section 8 hereof, by a loan from the Company in
accordance with Section 8 hereof. No optionee, or the
legal representative, legatee, or distributee of an
optionee, shall be deemed to be a holder of any shares
subject to any option unless and until the certificate
or certificates for them have been issued.
18
<PAGE>
(e) Except as otherwise provided under the
Code, to the extent that the aggregate fair market value
of stock with respect to which options are exercisable
for the first time by an optionee during any calendar
year exceeds $100,000, such options shall be treated as
Non-Qualified Options under the Code. For purposes of
this limitation, (i) the fair market value of stock is
determined as of the time the option is granted, (ii)
the limitation will be applied by taking into account
options in the order in which they were granted, and
(iii) Incentive Options granted before 1987 shall not be
taken into account.
(f) If a disposition of shares granted under
the Plan occurs within two (2) years from the date of
the granting of the option or within one (1) year after
the date of exercise, such options shall be treated as
Non-Qualified Options under the Code.
(g) In connection with the exercise of any
option, the optionee must agree to notify the Company of
any disqualifying disposition (as defined in Section 421
of the Code) of the shares acquired upon the exercise
and agree to pay to the Company any amount required to
be withheld under any tax law on account of the
disposition.
8. Loans by the Company. Upon the exercise
of any option by an employee, the Company may, at the
request of the optionee and subject to the approval of
the Committee, lend to such optionee, as of the date of
exercise, an amount equal to the exercise price of such
option, provided that such loan (i) has a term of not
more than ten years, (ii) becomes due within sixty (60)
days after the recipient of the loan ceases to be an
employee of the Company, (iii) bears interest at a rate
not less than the prevailing applicable federal rate at
the time the loan is made, and (iv) is fully
collateralized at all times, which collateral may
include securities issued by the Company. Loan terms
and conditions may be changed by the Committee to comply
with applicable Internal Revenue Service and Securities
and Exchange Commission regulations.
9. Transferability of Options. An option
granted under the Plan may not be transferred except by
will or the laws of descent or distribution, and during
the lifetime of the employee to whom granted, may be
exercised only by such employee.
10. Termination of Employment. In the event
that employment of an optionee of the Company or any
subsidiary is terminated for any reason other than
death, an option shall be exercisable by the optionee at
any time prior to the expiration date of the option or
within three (3) months after the date of such
termination, whichever is earlier, but only to the
extent the optionee had the right to exercise such
option at the date of such termination. In the event of
death of an optionee while in the employ of the Company
(or within three (3) months after termination of
employment by reasons of retirement with the consent of
the Company), his option may be exercisable by the
person or persons to whom such optionee's rights pass by
will or by the laws of descent and distribution at any
time prior to the expiration date of the option or
within three (3) months after the date of such death,
whichever is earlier, but only to the extent the
optionee had the right to exercise such option on the
date of his death.
11. Capital Adjustments Affecting Stock. In
the event of a capital adjustment resulting from a stock
dividend, stock split, reorganization, merger,
consolidation, or a combination or exchange of shares,
the number of shares of stock subject to this Plan and
the number of shares under option shall be adjusted
consistent with such capital adjustment. The price of
any share under option shall be adjusted so that there
will be no change in the aggregate purchase price
payable under exercise of any such option. The granting
19
<PAGE>
of an option pursuant to this Plan shall not affect in
any way the right or power of the Company to make
adjustments, reorganizations, reclassifications, or
changes of its capital or business structure or to
merge, consolidate, dissolve, liquidate, or sell or
transfer all of any part of its business or assets.
12. Amendments, Suspension, or Termination.
The Board shall have the right, at any time, to amend,
suspend or terminate the Plan in any respect which it
may deem to be in the best interests of the Company,
provided, however, no amendments shall be made in the
Plan which (i) increase the total number of shares for
which options may be granted under this Plan for all key
employees or for any one of them except as provided in
Section 11 hereof; (ii) change the minimum purchase
price for the optioned shares, except as provided in
Section 11 hereof; (iii) affect outstanding options or
any unexercised rights thereunder, except as provided in
Section 7 hereof; (iv) extend the option period provided
in Section 7 hereof or make an option exercisable
earlier than as specified in Section 7 hereof; and (v)
extend the termination date of the Plan.
13. Effective Date, Term, and Approval.
Subject to the approval of the stockholders of the
Company at the Annual Meeting in 1997, the Plan shall
take effect on January 1, 1997. This Plan will
terminate on December 31, 2006, and no options may be
granted under the Plan after that date, unless an
earlier termination date after which no options may be
granted under the Plan is fixed by action of the Board,
but any option granted prior thereto may be exercised in
accordance with its terms. The Plan and all options
granted pursuant to it are subject to all laws,
approvals, requirements and regulations of any
governmental authority which may be applicable thereto
and, notwithstanding any provisions of the Plan or
option agreement, the holder of an option shall not be
entitled to exercise his option nor shall the Company be
obligated to issue any shares to the holder if such
exercise or issuance shall constitute a violation by the
holder or the Company of any provisions of any such
approval requirements, law or regulation.
14. Governing Law. This Plan shall be
governed by and construed in accordance with the laws of
the State of Delaware, to the extent not preempted by
federal law.
15. Miscellaneous. The Committee, in fixing
the terms of the options granted, may, but shall not be
required to, conform the options so that they may
qualify as Incentive Options under the Code or such
future Internal Revenue Code provisions as may provide
more favorable tax treatment than unqualified options.
20
<PAGE>
PROXY PROXY
MONMOUTH REAL ESTATE INVESTMENT CORPORATION
A Real Estate Investment Trust
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
PLEASE FILL IN, DATE AND SIGN PROXY AND RETURN PROMPTLY
The undersigned hereby appoints EUGENE W. LANDY, CHARLES
P. KAEMPFFER and ERNEST V. BENCIVENGA, and each or any
of them, proxies of the undersigned, with full power of
substitution, to vote in their discretion (subject to
any direction indicated hereon) at the Annual Meeting of
Shareholders to be held at the Company Office on the
second floor of the PNC Bank Building, 125 Wyckoff Road,
Eatontown, New Jersey, on Thursday, April 24, 1997, at
4:00 o'clock p.m., and at any adjournment thereof, with
all the powers which the undersigned would possess if
personally present, and to vote all shares of stock
which the undersigned may be entitled to vote at said
meeting.
<PAGE>
The Board of Directors recommends a vote FOR items (1),
(2) and (3), and all shares represented by this Proxy
will be so voted unless otherwise indicated, in which
case they will be voted as marked.
(1) Election of Directors - Nominees are: Ernest V.
Bencivenga, Anna T. Chew, Daniel D. Cronheim, Boniface
DeBlasio, Ara K. Hovnanian, Charles P. Kaempffer, Eugene
W. Landy, Samuel A. Landy, W. Dunham Morey and Robert G. Sampson.
(Instruction: To withhold authority to vote for any individual
Nominee, write that person's name on the line below.
________________________________________________________________________
FOR all Nominees WITHHOLD AUTHORITY
except as Indicated to vote for listed Nominees
/ / / /
(2) Approval of the appointment of KPMG Peat Marwick LLP
as Independent Auditors for the Company for the fiscal year
ending September 30, 1997.
FOR AGAINST ABSTAIN
/ / / / / /
(3) Approval and ratification of the 1997 Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
(4) Such Other Business as may be brought before the meeting or any
adjournment thereof. The Board of Directors at present knows of no
other business to be presented by or on behalf of the Company or its
Board of Directors at the meeting.
Receipt of Notice of Meeting and Proxy Statement is hereby acknowledged.
Dated:_____________________________________, 1997.
Signature_________________________________________________
Signature_________________________________________________
Important: Please date this Proxy; sign exactly as your
name (s) appears hereon. When signing as joint tenants,
all parties to the joint tenancy should sign. When
signing the Proxy as attorney, executor, administrator,
trustee or guardian, please give full title as such.
