SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential For Use of
the Commission Only (as
[X] Definitive Proxy Statement Permitted by Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE INTERGROUP CORPORATION
(Name of Registrant as Specified In Its Charter)
THE INTERGROUP CORPORATION
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I) (1) 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 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:
(3) Date Filed:
<PAGE>
THE INTERGROUP CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 31, 2001
To the Shareholders of
The InterGroup Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The
InterGroup Corporation ("InterGroup" or the "Company") will be held in the
Luxe Summit Hotel Bel-Air, 11461 Sunset Boulevard, Los Angeles, California
90049 on January 31, 2001 at 2:30 P.M. for the following purposes:
(1) to elect two Class A Directors to serve until the 2003 Annual
Meeting and until their successors shall have been duly elected
and qualified;
(2) to ratify the retention of PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal year ending June 30, 2001;
and
(3) to transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 28,
2000 as the record date for determining the shareholders having the right to
vote at the meeting or any adjournments thereof.
Your proxy is important whether you own a few or many shares. Please
complete, sign, date and promptly return the enclosed proxy in the self-
addressed, postage-paid envelope provided. Return the proxy even if you plan
to attend the meeting. You may always revoke your proxy and vote in person.
Dated: January 3, 2001
By Order of the Board of Directors,
/s/ Gary N. Jacobs
Gary N. Jacobs
Secretary
<PAGE>
THE INTERGROUP CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 31, 2001
The Board of Directors of The InterGroup Corporation ("InterGroup" or the
"Company") is soliciting proxies in the form enclosed with this statement in
connection with the Annual Meeting of Shareholders to be held on January 31,
2001 or at any adjournments thereof. Only shareholders of record at the
close of business on December 28, 2000 are entitled to notice of, and to vote
at, the Annual Meeting.
Each shareholder is entitled to cast, in person or by proxy, one vote for
each share held of record at the close of business on December 28, 2000. As
of December 28, 2000 there were outstanding 1,904,899 shares of common stock,
par value $.01 per share (the "Common Stock"), the only outstanding voting
security of the Company. Of the total 1,904,899 shares outstanding, a
majority, or 952,450 voting shares will constitute a quorum for the
transaction of business at the meeting. The affirmative vote of the holders
of the majority of the shares of the Common Stock present and represented at
the meeting and entitled to vote is required to elect directors and ratify
the selection of the company's independent accountants.
The proxies named in the accompanying Form of Proxy will vote the shares
represented thereby if the proxy appears to be valid on its face, and where
specification is indicated as provided in such proxy, the shares represented
will be voted in accordance with such specification. If no specification is
made, the shares represented by the proxies will be voted (1) to elect two
Board nominees for Class A Directors for a three-year term expiring at the
2003 Annual Meeting of Shareholders; and (2) for the ratification of the
retention of Price WaterhouseCoopers LLP as the Company's independent public
accountants for the fiscal year ending June 30, 2001.
If you give us a proxy, you can revoke it at any time before it is used. To
revoke it, you may file a written notice revoking it with the Secretary of
the Company, execute a proxy with a later date or attend the meeting and vote
in person.
This Proxy Statement and the accompanying Form of Proxy are first being sent
to shareholders on or about January 5, 2001. In addition to mailing this
material to shareholders, the Company has asked banks and brokers to forward
copies to persons for whom they hold stock of the Company and to request
authority for the execution of proxies. The Company will reimburse banks and
brokers for their reasonable out-of-pocket expenses in doing so. Officers of
the Company may, without being additionally compensated, solicit proxies by
mail, telephone, telegram or personal contact. All proxy soliciting expenses
will be paid by the Company. The Company does not expect to employ anyone
else to assist in the solicitation of proxies.
<PAGE>
PROPOSAL I
Election of Class A Directors
The Company's Certificate of Incorporation provides that the Board of
Directors shall consist of not more than nine nor less than five members.
The exact number of Directors, presently six, is fixed by the Board prior to
each year's Annual Meeting of Shareholders. The Board is divided into three
staggered classes, each class having not less than one nor more than three
members. Each Director is elected to serve for a three-year term, and until
the election and qualification of his or her successor. When vacancies on
the Board occur, due to resignation or otherwise, the Directors then in
office may continue to exercise the powers of the Directors and a majority of
such directors may select a new Director to fill the vacancy. Any Director
may resign at any time. Any Director may be removed by the vote of, or
written consent of, the holders of a majority of the shares of Common Stock
outstanding at a special meeting called for the purpose of removal or to
ratify the recommendation of a majority of the Directors that such Director
be removed.
The term of the Class A Directors expires at the Annual Meeting. The Board
proposes John V. Winfield and Josef A. Grunwald as Class A Directors to
serve until the 2003 Annual Meeting and until the election and qualification
of their successors. The Board of Directors has been informed that the
nominees have consented to being named as nominees and are willing to serve
as Directors if elected. However, if any nominee should be unable, or
declines to serve, it is intended that the proxies will be voted for such
other person as the proxies shall, in their discretion, designate. Unless
otherwise directed in the accompanying Proxy, the person's name therein will
vote FOR the election of this nominee. Election requires the affirmative
vote of a majority of the shares represented and voted at the annual meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company:
Position with
Name the Company Age Term to Expire
------------------ ------------------ --- -----------------
Class A Directors:
John V. Winfield Chairman of the Board; 54 2000 Annual Meeting
(1)(4)(5)(6)(7) President and Chief
Executive Officer
Josef A.
Grunwald(2)(7) Director 52 2000 Annual Meeting
Class B Directors:
Gary N. Jacobs
(1)(2)(6)(7) Secretary; Director 55 2001 Annual Meeting
William J. Nance (1)
(2)(3)(4)(5)(6)(7) Treasurer; Director 56 2001 Annual Meeting
Class C Directors:
Mildred Bond
Roxborough Director 73 2002 Annual Meeting
John C. Love (3) Director 60 2002 Annual Meeting
(4)(5)
Other Executive Officers:
Gregory C. McPherson Executive Vice 42 N/A
President;
Assistant Treasurer
Michael G. Zybala Vice President 48 N/A
Operations;
Assistant Secretary
------------------
(1) Member of the Executive Committee
(2) Member of the Administrative and Compensation Committee
(3) Member of the Audit and Finance Committee
(4) Member of the Real Estate Investment Committee
(5) Member of the Nominating Committee
(6) Member of the Securities Investment Committee
(7) Member of the Special Strategic Options Committee
<PAGE>
Business Experience:
The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as
follows:
John V. Winfield -- Mr. Winfield was first appointed to the Board in 1982.
He currently serves as the Company's Chairman of the Board, President and
Chief Executive Officer, having first been appointed as such in 1987. Mr.
Winfield also serves as President, Chairman and Chief Executive Officer of
Santa Fe Financial Corporation ("Santa Fe") and Portsmouth Square, Inc.
("Portsmouth") and Chairman of the Board of Healthy Planet Products, Inc.
("Healthy Planet") and Etz Lavud, Ltd., all public companies.
Josef A. Grunwald -- Mr. Grunwald is an industrial, commercial and
residential real estate developer. He serves as Chairman of PDG N.V.
(Belgium), a hotel management company, and President of I.B.E. Services S.A.
(Belgium), an international trading company. Mr. Grunwald was first elected
to the Board in 1987. Mr. Grunwald is also a Director of Portsmouth and Etz
Lavud, Ltd., both public companies.
William J. Nance -- Mr. Nance is a Certified Public Accountant and private
consultant to the real estate and banking industries. He also serves as
President of Century Plaza Printer, Inc. Mr. Nance was first elected to the
Board in 1984. He was appointed Treasurer, Chief Operating Officer and Chief
Financial Officer in 1987. Mr. Nance resigned as Chief Operating Officer and
Chief Financial Officer in January 1990 but continues to serve as Treasurer.
Mr. Nance is also a Director of Santa Fe, Portsmouth and Healthy Planet.
Mildred Bond Roxborough -- Ms. Roxborough was Director of Development and
Special Programs of the National Association for the Advancement of Colored
People (NAACP) from 1986 to 1997. She also served as Vice Chairman of the
Board of Directors of America's Charities Federation, Chairman of its
Membership and Personnel Committees and member of its Long Range Planning
Committee; and Member of the Board of Directors of Morningside Health and
Retirement Service, Member of Personnel Committee of Morningside Heights
Housing Corporation. Since 1997 Ms. Roxborough has served as a consultant to
the NAACP. Ms. Roxborough was first appointed to the Company's Board in 1984
and served as Vice Chairman from 1987 through 1994.
Gary N. Jacobs -- Mr. Jacobs was appointed to the Board and as Secretary in
1998. Mr. Jacobs is Executive Vice President and General Counsel of MGM
MIRAGE (NYSE: MGG) and Of Counsel to the law firm of Christensen, Miller,
Fink, Jacobs, Glaser, Weil & Shapiro, LLP. Through May 31, 2000 he was a
partner in said firm and the head of the corporate department. Mr. Jacobs
graduated summa cum laude from Brandeis University and from Yale Law School,
where he was Order of the Coif. He is a Trustee of the Natural History
Museum of Los Angeles County and a member of the Board of Overseers of
Brandeis University's Graduate School of International Economics and Finance.
John C. Love -- Dr. Love was appointed to the Board in 1998. He is an
independent consultant to the hospitality and tourism industries and was
formerly a general partner in the national CPA and consulting firm of Pannell
Kerr Forster. He is Chairman Emeritus of the Board of Trustees of Golden
Gate University in San Francisco. Dr. Love is also a Director of Santa Fe and
Portsmouth.
Gregory C. McPherson -- Mr. McPherson joined the Company in 1993. Prior to
joining the Company, Mr. McPherson was a private financial and strategic
advisor, served as Vice President in the Investment Banking and Corporate
Finance Department of Kemper Securities Group, Inc., was with Prudential
Bache Capital Funding in their Mergers and Acquisitions and Financial
Restructuring Group and was a manager at the public accounting firm of
PricewaterhouseCoopers LLP. Mr. McPherson received an M.B.A. from the
Harvard Business School and is a Certified Public Accountant. Effective
March 23, 2000, Mr. McPherson was named as Interim President of Healthy
Planet. Mr. McPherson also serves as a special consultant to Portsmouth.
Michael G. Zybala -- Mr. Zybala was appointed Vice President Operations and
Assistant Secretary of the Company on January 27, 1999. Mr. Zybala is an
attorney at law and has served as a special legal consultant to the Company.
Mr. Zybala is also the Vice President, Secretary and Treasurer of Santa Fe
and Portsmouth and has served as their General Counsel since 1995. Mr.
Zybala has provided legal services to Santa Fe and Portsmouth since 1978. Mr.
Zybala is also a Director of Healthy Planet and has served as its Secretary
since August 1998.
<PAGE>
Family Relationships and Involvement in Certain Legal Proceedings: There are
no family relationships among directors, executive officers, or persons
nominated or chosen by the Company to become directors or officers, nor was
anyone involved in any legal proceeding requiring disclosure.
Board Meetings and Committees
The Board of Directors held four meetings during the 2000 Fiscal Year. No
Director attended (whether in person, telephonically, or by written consent)
less than 75% of all meetings held during the period of time he or she served
as Director during the 2000 Fiscal Year.
The Company has an Executive Committee that meets in lieu of the Board upon
the request of the Chairman of the Committee. Mr. Winfield is Chairman of
the Executive Committee. The Committee held two meetings during the 2000
Fiscal Year.
The Company's Administrative and Compensation Committee, reviews executive
salaries and any stock based compensation plans. Mr. Nance is Chairman of
the Administrative and Compensation Committee. This committee held one
meeting during the 2000 Fiscal Year.
The Company has a Real Estate Investment Committee, which is chaired by Mr.
Nance. This committee held nineteen meetings during the 2000 Fiscal Year.
The Real Estate Investment Committee reviews and considers potential
acquisitions and dispositions of property.
The Company's Nominating Committee selects nominees for election or re-
election of directors and officers. The Committee is chaired by Mr. Nance.
The Committee held one meeting during the 2000 Fiscal Year.
The Company's Securities Investment Committee oversees and establishes
certain investment procedures and reports to the Board of Directors. The
Committee's Chairman is Mr. Winfield. This committee held four meetings
during the 2000 Fiscal Year.
The Company's Special Strategic Options Committee is chaired by Mr. Winfield.
This committee held no meetings during the 2000 Fiscal Year. The Special
Strategic Options Committee reviews and considers the Company's strategic
options and provides guidance to accomplish its goals considering both
current and prospective investment opportunities.
The Company is a Small Business Filer under SEC rules. The Company's Audit
Committee is comprised of Messrs. Nance (Chairperson) and Love, each of who
are independent directors (as independence is defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' ("NASD") listing standards,
as applicable and as may be modified or supplemented. Each of these
directors also meets the financial management expertise test. The primary
function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing: the financial reports
provided by the Company to any governmental body or the public; the Company's
system of internal controls regarding finance, accounting, legal compliance
and ethics that management and the Board have established; and the Company's
auditing, accounting and financial processes generally. The Audit Committee
held five meetings during the 2000 Fiscal Year. On June 8, 2000, the
Company's Board of Directors adopted a written charter for the Audit
Committee. A copy of that written charter is attached as Appendix A to this
proxy statement.
AUDIT COMMITTEE REPORT
The Audit Committee's primary duties and responsibilities are to: serve as an
independent and objective party to monitor the Company's financial reporting
process and internal control system; review and appraise the audit efforts of
the Company's independent accountants; and provide an open avenue of
communications among the independent accountants, financial and senior
management, and the Board of Directors.
<PAGE>
During the fiscal year ended June 30, 2000, the Audit Committee: (i) reviewed
and discussed the Company's audited financial statements with the Company's
management; (ii) discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
as may be modified or supplemented; and (iii) received the written
disclosures and the letter from the Company's independent accountants
required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees), as may be modified or supplemented, and discussed with such
independent accountant the independent accountant's independence. In
addition the Audit Committee has met with the Company's independent
accountants, prior to the filing of the Company's Quarterly Reports on Form
10-QSB, to discuss the results of the independent accountant's review of the
financial information included in those reports.
In performing its oversight function, the Audit Committee relied upon advice
and information received in its discussions with the Company's management and
independent auditors. Based in part on the review and discussions with
management and the Company's independent auditors referred to above, the
Audit Committee recommended to the Company's Board of Directors that the
audited financial statements be included in the Company's Report on Form 10-
KSB for the fiscal year ended June 30, 2000 for filing with the Commission.
THE AUDIT COMMITTEE:
WILLIAM J. NANCE, CHAIRPERSON
JOHN C. LOVE
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and each beneficial owner of more than ten percent of
the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors
and greater than ten-percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5's were
required for those persons, the Company believes that during fiscal 2000 all
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF JOHN V. WINFIELD
AND JOSEF A. GRUNWALD AS CLASS A DIRECTORS OF THE COMPANY.
<PAGE>
EXECUTIVE COMPENSATION
Executive Officers Compensation
The following table provides certain summary information concerning
compensation paid to or accrued by the Company to the Executive Officers and
one employee of the Company who earned more than $100,000 (salary and bonus)
for all services rendered to the Company and its subsidiaries for fiscal
years 2000, 1999 and 1998. There are currently no employment contracts with
the Executive Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- ------------
Awards
------
Securities
Name and Principal Other Annual Underlying
Position Year Salary Bonus Compensation Options/SARs
------------------- ------ ------- ------ ------------- ------------
<S> <C> <C> <C> <C> <C>
John V. Winfield
Chairman; President 2000 $552,000(1) - $68,359(2) -
and Chief Executive 1999 $457,572(1) - $56,200(2) $150,000(3)
Officer 1998 $235,397(1) - $43,193(2) -
Gregory C. McPherson 2000 $158,006(4) $ 25,000 -
Executive Vice President; 1999 $170,331(4) $ 10,000 -
and Assistant Treasurer 1998 $185,856(4) $ 10,000 -
Michael G. Zybala 2000 $127,465(5) $ 20,000 -
Vice President Operations 1999 $118,850(5) $ 10,000 -
and Assistant Secretary
David C. Gonzalez 2000 $120,000 $100,000 $32,071(6)
Director of Real Estate 1999 $120,000 $ 55,000 -
1998 $105,000 $ 60,000 -
---------------------
</TABLE>
(1) Mr. Winfield also serves as the President and Chairman of the Board of
the Company's subsidiary Santa Fe, and Santa Fe's subsidiary, Portsmouth.
Mr. Winfield received salary and directors' fees of $252,000, $200,282 and
$133,319 from those entities during fiscal years 2000, 1999 and 1998,
respectively, which amounts are included in this item.
(2) Amounts include an auto allowance and compensation for a portion of the
salary of an assistant. The auto allowance was $29,700, $29,193 and $29,693
during fiscal years 2000, 1999 and 1998, respectively. The amount of
compensation related to the assistant was approximately $32,000, $26,500 and
$14,000 during fiscal years 2000, 1999 and 1998 respectively. During fiscal
2000 and 1999, the Company also paid annual premiums in the amount of $42,577
for a split dollar whole life insurance policy owned by, and the beneficiary
of which is, a trust for the benefit of Mr. Winfield's family. The Company
has a secured right to receive, from any proceeds of the policy,
reimbursement of all premiums paid prior to any payment to the beneficiary.
During the fiscal years 2000 and 1999, Santa Fe and Portsmouth also paid
annual premiums on split dollar policies in the total amount of $41,500.
(3) On December 22, 1998 Mr. Winfield was granted options to purchase up to
150,000 shares of the Common Stock of the Company at an exercise price of
$11.875 per share, which was the closing price of the Common Stock on the
date of grant. The term of the options is for the period beginning December
22, 1998 and ending on December 21, 2008. The options vest according to the
following schedule: December 22, 1998 - 37,500 shares; January 27, 1999 -
37,500 shares; December 22, 1999 - 37,500 shares; and December 22, 2000 -
37,500 shares.
<PAGE>
(4) Mr. McPherson is a consultant of Portsmouth and received annual
consulting fees of $88,200 during the fiscal years 2000, 1999 and 1998, which
are included in this item.
(5) Mr. Zybala became Vice President Operations in January 1999. His salary
and bonuses are allocated 30% to the Company and 70% to Santa Fe and
Portsmouth.
(6) Amounts shown relate to forgiveness of unpaid balance on promissory note
due to the Company.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No stock option grants or Stock Appreciation Rights ("SARs") were made during
the fiscal year ended June 30, 2000 to any named executive officers of the
Company.
AGGREGATE OPTIONS/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table contains information concerning each exercise of stock
options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options and SARs.
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options/SARs as of In-the-Money Options/
Name Exercise (#) Realized ($) June 30, 2000 at June 30, 2000
---- ------------ ----------- ----------------------- --------------------
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- -------------------------
<S> <C> <C> <C> <C>
John V.
Winfield - $ - 112,500/37,500 $689,063/$229,688(1)
--------------
</TABLE>
(1) Based on the closing price of the Company's Common Stock on June 30, 2000
of $18.00 per share.
1998 Stock Option Plan for Non-Employee Directors
On December 8, 1998, the Board of Directors of the Company adopted, subject
to stockholder approval and ratification, a 1998 Stock Option Plan for Non-
employee Directors (the "Plan"). The stockholders ratified that plan on
January 27, 1999.
The stock to be offered under the Plan shall be shares of the Company's
Common Stock, par value $.01 per share, which may be unissued shares or
treasury shares. Subject to certain adjustments upon changes in
capitalization, the aggregate number of shares to be delivered upon exercise
of all options granted under the Plan shall not exceed 100,000 shares. The
Plan shall terminate on the earliest to occur of (i) the dates when all of
the Common Stock available under the Plan shall have been acquired through
the exercise of options granted under the Plan; (ii) 10 years after the date
of adoption of the Plan by the Board; or (iii) such other date that the Board
may determine.
Pursuant to the Plan, each non-employee director as of the adoption date of
the Plan shall be granted on the date thereof: (i) if he or she became a non-
employee director prior to January 1, 1998, an option to purchase 8,000
shares of Common Stock; and (ii) if he or she became a non-employee director
on or after January 1, 1998, an option to purchase 4,000 shares of Common
Stock. Each new non-employee director who is elected to the Board shall
automatically be granted an option to purchase 4,000 shares of Common Stock
upon the initial date of election to the Board. On each July 1 following the
adoption date, each non-employee director shall be granted an option to
purchase 2,000 shares of Common Stock provided he or she holds such position
on that date and the number of Common Shares available for grant under the
Plan is sufficient to permit such automatic grant.
<PAGE>
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at
the time of the grant of the option. The term of the option shall be for ten
years. Options granted to any non-employee director will not vest 100% until
such person has been a member of the Board for four (4) years or more. Non-
employee directors who have been a member of Board less than four (4) years,
shall be vested with respect to 20% of the options on the date of grant and
20% on each anniversary of such person having become a member of the Board,
provided that the optionee is on each such date serving as a member of the
Board or as an employee or consultant to the Company.
Pursuant to the plan, the following non-employee directors of the Company
were granted options during fiscal 2000 to purchase shares of Common Stock:
Josef A. Grunwald (2,000 shares); William J. Nance (2,000 shares); Mildred
Bond Roxborough (2,000 shares); Gary N. Jacobs (2,000 shares); and John C.
Love (2,000 shares). The exercise price for the options is $12.25 per share,
which was the closing price of the Company's Common Stock on the Nasdaq
National Market System as of the date of grant on July 1, 1999.
1998 Stock Option Plan for Selected Key Officers,
Employees and Consultants
On December 8, 1998, the Board of Directors of the Company adopted, subject
to shareholder approval and ratification, a 1998 Stock Option Plan for
selected key officers, employees and consultants (the "Key Employee Plan").
The Key Employee Plan was ratified by the stockholders on January 27, 1999.
The stock to be offered under the Key Employee Plan shall be shares of the
Company's Common Stock, par value $.01 per share, which may be unissued
shares or treasury shares. Subject to certain adjustments upon changes in
capitalization, the aggregate number of shares to be delivered upon exercise
of all options granted under the Key Employee Plan shall not exceed 200,000
shares. The Key Employee Plan shall terminate on the earliest to occur of
(i) the dates when all of the Common Stock available under the Key Employee
Plan shall have been acquired through the exercise of options granted under
the Key Employee Plan; (ii) 10 years after the date of adoption of the Key
Employee Plan by the Board; or (iii) such other date that the Board may
determine.
The Key Employee Plan is administered by a Committee appointed by the Board
of Directors which consists of two or more disinterested persons within the
meaning of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of
1934 (the "Exchange Act"). Persons eligible to receive options under the Key
Employee Plan shall be employees who are selected by the Committee. In
determining the Employees to whom options shall be granted and the number of
shares to be covered by each option, the Committee shall take into account
the duties of the respective employee, their present and potential
contribution to the success of the Company, their anticipated number of years
of active service remaining and other factors as it deems relevant in
connection with accomplishing the purposes of the Key Employee Plan. An
employee who has been granted an option may be granted an additional option
or options as the Committee shall so determine.
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at
the time of the grant of the option. The term of the option shall not exceed
10 years from the date on which the option is granted. The vesting schedule
for the options and the method or time that when the option may be exercised
in whole or in part shall be determined by the Committee. However, in no
event shall an option be exercisable within six months of the date of grant
in the case of an optionee subject to Section 16(b) of the Exchange Act.
Subject to certain exceptions, the option shall terminate six months after
the optionee's employment with the Company terminates. As discussed above,
options to purchase 150,000 shares were granted to the Company's CEO during
fiscal 1999 pursuant to the Key Employee Plan.
<PAGE>
Employee Stock Ownership Plan and Trust ("ESOP")
In April 1986, the Company established an Employee Stock Ownership Plan and
Trust ("ESOP" or the "Plan"), effective July 1985, which enabled eligible
employees to receive an ownership interest in Common Stock of the Company.
The Company did not make any ESOP contributions during fiscal years 2000 and
1999, and made $816 in ESOP contributions during fiscal year 1998. The
Company made distributions of 1,680 shares (adjusted for splits) to
terminated employees during fiscal year 1998 and made no distributions during
fiscal years 2000 and 1999. Effective November 15, 1998, the Plan was
terminated and the interest of each participant was fully vested and
nonforfeitable. Following appropriate governmental filings, approvals and
notices to participants, the Board of Directors, on November 20, 2000,
authorized the distribution of the Plan benefits and authorized the Company's
stock transfer agent to issue to ESOP participants a total of 46,254 shares
of the Company's common stock, which were held in the name of the Trustee of
the ESOP.
Compensation of Directors
The Company's arrangements for compensation of Directors is as follows: the
Chairman of the Board of Directors is eligible to receive $9,000 per annum;
each Director is eligible to receive a fee of $6,000 per annum and a fee of
$500 for each Board or committee meeting attended; and each Director who is a
chairman of a committee of the Board of Directors is eligible to receive $600
for each committee meeting which he or she chairs. The Directors who are
also Executive Officers do not receive any fee for attending either meetings
of the board or of any Board committee. As an Executive Officer, the
Company's Chairman has also elected to forego his annual board fee. The
Directors are also eligible for grants of options to purchase shares of the
Company's Common Stock pursuant to the 1998 Stock Option Plan for Non-
Employee Directors.
Except for the foregoing, there are no other arrangements for compensation of
Directors and there are no employment contracts between the Company and its
Directors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September December 28, 2000, certain
information with respect to the beneficial ownership of Common Stock owned by
(i) those persons or groups known by the Company to own more than five
percent of the outstanding shares of Common Stock, (ii) each Director and
Executive Officer, and (iii) all Directors and Executive Officers as a
group.
Name and Address of Amount and Nature
Beneficial Owner of Beneficial Owner(1) Percentage(2)
-------------------- ---------------------- --------------
John V. Winfield 1,075,938(3) 52.4%
820 Moraga Drive
Los Angeles, CA 90049
Josef A. Grunwald 85,045(2) 4.4%
820 Moraga Drive
Los Angeles, CA 90049
William J. Nance 50,250(2) 2.6%
820 Moraga Drive
Los Angeles, CA 90049
Mildred Bond Roxborough 14,350(2) *
820 Moraga Drive
Los Angeles, CA 90049
Gary N. Jacobs 8,650(2)(4) *
820 Moraga Drive
Los Angeles, CA 90049
John C. Love 6,400(2) *
820 Moraga Drive
Los Angeles, CA 90049
Gregory C. McPherson 8,993 *
820 Moraga Drive
Los Angeles, CA 90049
Michael G. Zybala 0 *
820 Moraga Drive
Los Angeles, CA 90049
All Directors and
Executive Officers as a
Group (8 persons) 1,249,626 59.4%
------------------
* Ownership does not exceed 1%.
(1) Unless otherwise indicated and subject to applicable community property
laws, each person has sole voting and investment power with respect to the
shares beneficially owned.
(2) Percentages are calculated on the basis of 1,904,899 shares of Common
Stock outstanding at December 28, 2000, plus any securities that person has
the right to acquire within 60 days pursuant to options, warrants, conversion
privileges or other rights. The following options are included in directors
shares: Josef A. Grunwald - 12,000; William J. Nance - 12,000; Mildred Bond
Roxborough - 12,000; Gary N. Jacobs - 6,400; John C. Love - 6,400.
(3) Includes 150,000 shares of which Mr. Winfield has the right to acquire
pursuant to options.
(4) Other than his options, all shares of Mr. Jacobs are held by the Gary
and Robin Jacobs Family Trust
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 26, 1999, the Executive Committee of the Company authorized a short-
term loan from the Company to the Company's Chairman and President in the
amount of $426,000 at an interest rate equal to the prime rate, as of the
date of the loan, plus one percent (8.75%). All principal and interest under
the loan was due on May 31, 1999. The loan was repaid in full with interest
on May 31, 1999.
On January 4, 1999, the Executive Committee of the Company authorized a
short-term loan from the Company to the Company's Chairman and President in
the amount of $350,000 at an interest rate equal to the prime rate, as of the
date of the loan, plus one percent (9.5%). All principal and interest under
the loan was due on March 31, 1999. The loan was repaid in full with
interest on March 31, 1999.
On December 4, 1998, the Administrative and Compensation Committee authorized
the Company to obtain whole life and split dollar insurance policies covering
the Company's President and Chief Executive Officer, Mr. Winfield. During
fiscal 2000 and 1999, the Company paid annual premiums in the amount of
$42,577 for the split dollar whole life insurance policy owned by, and the
beneficiary of which is, a trust for the benefit of Mr. Winfield's family.
The Company has a secured right to receive, from any proceeds of the policy,
reimbursement of all premiums paid prior to any payments to the beneficiary.
On June 30, 1998, the Company's Chairman and President entered into a voting
trust agreement with the Company giving the Company the power to vote on his
3.7% interest in the outstanding shares of the Santa Fe common stock.
In May 1996, the Company's Chairman and President exercised options to
purchase 421,875 shares (adjusted for stock splits) of Common Stock at a
price of $3.41(adjusted for stock splits) per share through a full recourse
note due the Company on demand, but in no event later than May 2001. The
note bears interest floating at the lower of 10% or the prime rate (9.50% at
June 30, 2000) with interest payable quarterly. The balance of the note
receivable of $1,438,000 is reflected as a reduction of shareholders' equity
at June 30, 2000. During the fiscal years ended June 30, 2000 and 1999, the
President of the Company made interest payments of approximately $131,000 and
$122,000, respectively in connection with the note relating to his 1996
exercise of stock options.
The Company's Chairman and President directs the investment activity of the
Company, Santa Fe and Portsmouth in public and private markets pursuant to
authority granted by the Board of Directors of each entity. Depending on
certain market conditions and various risk factors, the President and members
of his immediate family may at times invest in the same companies in which
the Company, Santa Fe and Portsmouth invest. The Company, Santa Fe and
Portsmouth encourage such investments because it places personal resources of
the President and his family members at risk in connection with investment
decisions made on behalf of the Company, Santa Fe and Portsmouth. Following
allegations concerning the President made by a former officer and director of
the Company, the Board of Directors authorized committees of the Board to
conduct a thorough and independent review of such matters, including the
Company's practices in this regard. The committee advised the Board of
Directors that it found the material allegations of improprieties made by the
former officer and director could not be substantiated. The committee made
recommendations that the Company institute certain modifications to its
existing procedures to reduce the potential for conflicts of interest. The
Company's Board of Directors has adopted these recommendations.
Gary N. Jacobs, a Director of the Company, is Of Counsel to the law firm of
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP. Through May
31, 2000 he was a senior partner of said firm, which provided legal services
to the Company during the years ended June 30, 2000 and 1999. During the
years ended June 30, 2000 and 1999, the Company made payments of
approximately $216,000 and $269,750, respectively to Christensen, Miller,
Fink, Jacobs, Glaser, Weil & Shapiro, LLP.
<PAGE>
PROPOSAL II
Ratification Of Appointment Of Independent Accountants
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP,
certified public accountants, to continue as the Company's independent
accountants for the fiscal year ending June 30, 2001 and recommends to the
shareholders that they vote for the ratification of this selection.
Ratification requires the affirmative vote of a majority of the shares
represented and voted at the Annual Meeting. The Board expects that
representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to respond to appropriate questions from Shareholders, and the Board
will provide these representatives with an opportunity to make a statement if
they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENSENT ACCOUNTANTS FOR
THE COMPANY.
OTHER BUSINESS
As of the date of this statement, management knows of no business to be
presented at the meeting that is not referred to in the accompanying notice,
other that the approval of the minutes of the last shareholders' meeting,
which action will not amount to ratification of the actions taken at that
meeting. As to other business that may properly come before the meeting, it
is intended that the proxies properly executed and returned will be voted in
respect thereof at the discretion of the person voting the proxies in
accordance with the best judgment of that person.
SHAREHOLDER PROPOSALS
It is presently anticipated that the 2001 Annual Meeting of Shareholders will
be held on or around January 30, 2002. Any shareholder proposals intended to
be considered for inclusion in the proxy statement for presentation at the
2001 Annual Meeting must be received by the Company no later than August 30,
2001. The proposal must be in accordance with the provisions of Rule 4a-8
promulgated by the Securities and Exchange Commission under the Securities
Act of 1934. It is suggested that the proposal be submitted by certified
mail - return receipt requested,
FORM 10-KSB and ANNUAL REPORT
The Annual Report to Shareholders for the 2000 fiscal year accompanies this
proxy statement, but is not deemed a part of the proxy solicitation material.
A copy of the Company's Form 10-KSB for the fiscal year ended June 30, 2000,
as required to be filed with the Securities and Exchange Commission,
excluding exhibits, will be mailed to shareholders without charge upon
written request to: John V. Winfield, President, The InterGroup Corporation,
820 Moraga Drive, Los Angeles, CA 90049. Such request must set forth a good-
faith representation that the requesting party was either a holder of record
or beneficial owner of the common stock of the Company on December 28, 2000.
The Company's Form 10-KSB and other public filings are also available through
the Securities and Exchange Commission's world wide web site
(http://www.sec.gov.).
By Order of the Board of Directors
THE INTERGROUP CORPORATION
Gary N. Jacobs
Secretary
Dated: Los Angeles California
January 3, 2001
<PAGE>
APPENDIX-A
----------
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF
THE INTERGROUP CORPORATION
CHARTER
--------------------
(Adopted June 8, 2000)
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation
to any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the corporation's policies, procedures and
practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
* Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
* Review and appraise the audit efforts of the Corporation's
independent accountants and internal accounting department.
* Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of two or more directors as determined
by the Board, the majority of which shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
A director will not be considered "independent" if, among other things, he or
she has:
<PAGE>
* been employed by the corporation or its affiliates in the current or past
three years;
* accepted any compensation from the corporation or its affiliates in excess
of $60,000 during the previous fiscal year (except for board service,
retirement plan benefits, or non-discretionary compensation;
* an immediate family member who is, or has been in the last three years,
employed by the corporation or its affiliates as an executive officer;
* been a partner, controlling shareholder or an executive officer of any
for-profit business to which the corporation made, or from which it
received, payments (other than those which arise solely from investments
in the corporation's securities) that exceed five percent of the
organization's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or
* been employed as an executive of another entity where any of the company's
executives serve on that entity's compensation committee.
<PAGE>
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee
shall have accounting or related financial management expertise. Committee
members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Corporation or an
outside consultant.
The members of the Committee shall be elected by the Board at the annual
meeting of the Board of Directors or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of the
internal auditing department and the independent accountants in separate
executive sessions to discuss any matters that the Committee or each of these
groups believe should be discussed privately. In addition, the Committee or
at least its Chair should meet with the independent accountants and
management quarterly to review the Corporations financials consistent with
IV.4. below).
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
------------------------
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal accounting department and management's response.
4. Review with financial management and the independent accountants the
10-QSB prior to its filing or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for purposes
of this review.
Independent Accountants
-----------------------
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Corporation to determine the accountants' independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
<PAGE>
Financial Reporting Processes
-----------------------------
8. In consultation with the independent accountants and the internal
accountants, review the integrity of the organization's financial
reporting processes, both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
10. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
accounting department.
Process Improvement
-------------------
11. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and the
internal accountants regarding any significant judgments made in
management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
12. Following completion of the annual audit, review separately with
management, the independent accountants and the internal accounting
department any significant difficulties encountered during the course
of the audit, including any restrictions on the scope of work or access
to required information.
13. Review any significant disagreement among management and the
independent accountants or the internal accounting department in
connection with the preparation of the financial statements.
14. Review with the independent accountants, the internal accounting
department and management the extent to which changes or improvements
in financial or accounting practices, as approved by the Audit
Committee, have been implemented. (This review should be conducted at
an appropriate of time subsequent to implementation of changes or
improvements, as decided by the Committee.)
Ethical and Legal Compliance
----------------------------
15. Review management's monitoring of the corporation's compliance
requirements and ensure that management has the proper review system in
place to ensure that corporation's financial statements, reports and
other financial information disseminated to governmental organizations,
and the public satisfy legal requirements.
16. Review activities, organizational structure, and qualifications of the
internal audit department.
17. Review, with the organization's counsel, legal compliance matters any
legal matter that could have a significant impact on the organization's
financial statements.
18. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
<PAGE>
FORM OF PROXY
This Proxy is Solicited on Behalf of the Board of Directors of
THE INTERGROUP CORPORATION
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of The InterGroup Corporation to be held on January
31, 2001 at 2:30 P.M. at the Luxe Summit Hotel Bel-Air, 11461 Sunset
Boulevard, Los Angeles, California 90049 and the Proxy Statement in
connection therewith each dated January 3, 2001; (b) appoints John V.
Winfield and Gary N. Jacobs, as proxies, each with the power to appoint his
or her substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side of this Form of Proxy, all of the shares of
Common Stock of The InterGroup Corporation held of record by the undersigned
on December 28, 2000 at the Annual Meeting of Shareholders to be held on
January 31, 2001 or at any adjournment thereof.
(To be Signed on Reverse Side)
<PAGE>
Please date, sign and mail your
Proxy card back as soon as possible!
Annual Meeting of Shareholders
THE INTERGROUP CORPORATION
January 31, 2001
Please Detach and Mail in the Envelope Provided
----------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
WITHHOLD AUTHORITY
FOR NOMINEE TO VOTE FOR NOMINEES
LISTED AT RIGHT LISTED AT RIGHT
Nominees:
1. Election
of Class A [ ] [ ] John V. Winfield
Directors Josef A. Grunwald
To withhold authority to vote for any individual
nominee, strike a line through that nominee's
name in line at right.
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE THE RETENTION
OF PRICEWATERHOUSECOOPERS LLP AS
AS THE INDEPENDENT PUBLIC ACCOUNTANTS [ ] [ ] [ ]
OF THE INTERGROUP CORPORATION.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy
will be voted FOR Proposals 1, 2 and 3.
Please date, sign, and return this proxy in the enclosed envelope.
SIGNATURE_________________ DATE ______ ______________________ DATE _____
Signature if held jointly
NOTE: When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian please give
full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
