<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
PRESIDENTIAL REALTY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE> 2
PRESIDENTIAL REALTY CORPORATION
180 SOUTH BROADWAY, WHITE PLAINS, N.Y. 10605
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 1998
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
PRESIDENTIAL REALTY CORPORATION has been called for and will be held at 2:00
P.M., New York Time, on Thursday, June 11, 1998 at the Westchester Residence
Inn, 5 Barker Avenue, White Plains, New York, for the following purposes:
1. To elect, by vote of the Class A shares, 4 directors of the Company
to serve for the ensuing year;
2. To elect, by vote of the Class B shares, 2 directors of the Company
to serve for the ensuing year; and
3. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 23, 1998 are
entitled to notice of and to vote at the meeting.
Stockholders are cordially invited to attend the meeting in person. If you
are not able to do so and wish your stock voted, you are requested to complete,
sign and date the accompanying proxy or proxies and promptly return the same in
the enclosed stamped envelope. The proxy for Class A stock is blue and the proxy
for Class B stock is white. If you hold both classes of stock please make sure
that you send in both proxies.
BY ORDER OF THE
BOARD OF DIRECTORS
ROBERT E. SHAPIRO
Chairman of the Board of Directors
Dated: April 27, 1998
<PAGE> 3
PRESIDENTIAL REALTY CORPORATION
180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by
the management of PRESIDENTIAL REALTY CORPORATION of proxies to be used at the
Annual Meeting of Stockholders of the Company to be held June 11, 1998, and at
any adjournment thereof. If proxies in the accompanying form are properly
executed and returned, the shares represented thereby will be voted as
instructed in the proxy. A stockholder executing and returning a proxy has the
power to revoke it at any time before it is voted by giving written notice to
the Secretary of the Company, by submission of another proxy bearing a later
date or by attending the meeting and requesting to vote in person.
Only stockholders of record as of the close of business on April 23, 1998
will be entitled to vote.
The distribution of this Proxy Statement and the enclosed form of Proxy to
stockholders will commence on or about April 27, 1998. The Company's annual
report to stockholders for 1997, including financial statements, is being mailed
to stockholders with this Proxy Statement.
As of March 31, 1998, there were outstanding and entitled to vote at the
Annual Meeting 478,833 shares of the Company's Class A Common Stock (held by
approximately 177 holders of record) and 3,102,212 shares of the Company's Class
B Common Stock (held by approximately 798 holders of record). The Company is
authorized to issue 700,000 Class A shares and 10,000,000 Class B shares. The
holders of the Class A Common Stock have the right at all times to elect
two-thirds of the membership of the Board of Directors of the Company, and the
holders of the Class B Common Stock have the right at all times to elect
one-third of the membership of the Board of Directors of the Company. All
directors, once elected, have equal authority and responsibility. On all other
matters, the holders of the Class A Common Stock and the holders of the Class B
Common Stock have one vote per share for all purposes. However, no action may be
taken which would alter or change the special rights or powers given to either
class of Common Stock so as to affect such class adversely, or which would
increase or decrease the amount of the authorized stock of such class, or
increase or decrease the par value thereof, except upon the affirmative vote of
the holders of the requisite majority of the outstanding shares of the class of
stock so affected.
Accordingly, the Class A shares will vote as a class for the election of
four Directors of the Company to serve for the ensuing year (Proposal No. 1 on
the accompanying Notice of Annual Meeting), and for this purpose each Class A
share will be entitled to one vote. The Class B shares will vote as a class for
the election of two directors of the Company for the ensuing year (Proposal No.
2 on the accompanying Notice of Annual Meeting), and for this purpose each Class
B share will be entitled to one vote.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS BY CLASS A STOCKHOLDERS
It is intended that proxies in the accompanying form as received from the
holders of Class A Common Stock will be voted in favor of the four persons
listed below, each of whom is at present a director, as directors for the
ensuing year. If for any reason any of these nominees becomes unable to accept
nomination or election, it is intended that such proxies will be voted for the
election, in his place, of any substituted nominee as management may recommend,
and of the other nominees listed. The management, however, has no reason to
believe that any nominee will be unable or unwilling to serve as director. The
directors so elected will serve
<PAGE> 4
until the next Annual Meeting of Stockholders and until their respective
successors are duly elected and have qualified.
<TABLE>
<CAPTION>
FIRST CLASS A CLASS B
BECAME DIRECTOR COMMON COMMON PERCENTAGE OF
OCCUPATION OR OF PRESIDENTIAL BENEFICIALLY BENEFICIALLY ALL OUTSTANDING
PRINCIPAL OR ITS OWNED AND OWNED AND STOCK
NAME AND AGE EMPLOYMENT PREDECESSOR PERCENTAGE PERCENTAGE (CLASS A AND B
OF DIRECTOR FOR PAST 5 YEARS COMPANY OF CLASS(1) OF CLASS(1) COMBINED)
------------ --------------------------- --------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert Feder (67).......... Partner, Cuddy & Feder & 1981 916* 20,106* *
Worby, Attorneys
Jeffrey F. Joseph (56)**... President of Presidential 1993 198,735(2) 24,000(3) (6.1)
(41.5)
Robert E. Shapiro (80)**... Chairman of the 1961 None 41,744 (1.2)
Board of Directors (1.4)
of Presidential
Joseph Viertel (82)**...... Director and Chairman 1961 None None
of the Executive
Committee of Presidential.
</TABLE>
- ---------------
* Less than 1% of the class of stock
** Member of the Executive Committee of the Board of Directors
(1) These figures, based on information as of March 31, 1998, include 124 shares
of Class A Common Stock and 27,795 shares of Class B Common Stock of
Presidential held in trust or in the names of wives, the beneficial
ownership of which is disclaimed by the respective Directors. Each of the
owners of the shares set forth in the table has the sole voting and
investment power over such shares except that such owner has no voting or
investment power over shares the beneficial ownership of which is
disclaimed.
(2) These shares are owned by Pdl Partnership, a general partnership in which
Mr. Joseph has a 20% partnership interest. See Principal Holders of
Securities below.
(3) Represents presently exercisable options to purchase Class B Common Stock.
Robert E. Shapiro and Joseph Viertel are brothers.
ELECTION OF DIRECTORS BY CLASS B STOCKHOLDERS
It is intended that proxies in the accompanying form as received from the
holders of Class B Common Stock will be voted in favor of the two persons listed
below, each of whom is at present a director, as directors for the ensuing year.
If for any reason any of these nominees becomes unable to accept nomination or
election, it is intended that such proxies will be voted for the election, in
his place, of any substituted nominee as management may recommend, and of the
other nominees listed. The management, however, has no reason to believe that
any nominee will be unable or unwilling to serve as a director. The directors so
elected will serve until the next Annual Meeting of Stockholders and until their
respective successors are duly elected and have qualified.
<TABLE>
<CAPTION>
FIRST CLASS A CLASS B
BECAME DIRECTOR COMMON COMMON PERCENTAGE OF
OCCUPATION OR OF PRESIDENTIAL BENEFICIALLY BENEFICIALLY ALL OUTSTANDING
PRINCIPAL OR ITS OWNED AND OWNED AND STOCK
NAME AND AGE EMPLOYMENT PREDECESSOR PERCENTAGE PERCENTAGE (CLASS A AND B
OF DIRECTOR FOR PAST 5 YEARS COMPANY OF CLASS(1) OF CLASS(1) COMBINED)
------------ --------------------------- --------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Richard Brandt (70)........ Chairman of the 1972 none 3,900* *
Board of Directors
of Trans-Lux
Corporation (2)
Mortimer M. Caplin (81).... Partner, Caplin & 1984 none 55,396 (1.6)
Drysdale, Attorneys (3) (1.8)
</TABLE>
- ---------------
* Less than 1% of the class of stock
(1) These figures are based on information as of March 31, 1998. Each of the
owners of the shares set forth in the table has the sole voting and
investment power over such shares.
2
<PAGE> 5
(2) Trans-Lux Corporation is a manufacturer of teleprinters, stock tickers and
electronic displays and its entertainment division operates motion picture
theaters.
(3) Mr. Caplin is a director of Fairchild Corporation and Danaher Corporation.
PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1998 the following persons owned beneficially the following
amounts and percentages of the Class A and Class B Common Stock of Presidential:
<TABLE>
<CAPTION>
PERCENTAGE
OF ALL
OUTSTANDING
CLASS A CLASS B PERCENTAGE OF STOCK
COMMON STOCK PERCENTAGE OF COMMON STOCK CLASS B (CLASS A AND B
BENEFICIALLY CLASS A BENEFICIALLY COMMON COMMON STOCK
NAME OWNED COMMON STOCK OWNED STOCK COMBINED)
---- ------------ ------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Pdl Partnership.................. 198,735(1) (41.5) none none (5.5)
180 South Broadway
White Plains, N.Y. 10605
Jack Harry Stewart............... 70,700(2) (14.7) none none (1.9)
9300 S.W. 90th St.
Miami, Florida
The Trust Company of New
Jersey......................... none none 312,500(3) (9.9) (8.6)
35 Journal Square
Jersey City, N.J. 07306
Westport Asset Management,
Inc............................ none none 272,342(4) (8.6) (7.5)
253 Riverside Avenue
Westport, CT 06880
All officers, and directors as a
group (10 persons)............. 224,252(5) (46.8) 205,191(5) (6.5) (11.8)
</TABLE>
- ---------------
(1) Such amount does not include 24,601 shares owned by certain partners of Pdl
Partnership, including 4,762 shares owned by a partner as trustee, the
beneficial ownership of which 4,762 shares is disclaimed. The partners of
Pdl Partnership are Jeffrey Joseph, an officer and director of Presidential
and a nominee for director, and Steven Baruch and Thomas Viertel, officers
of Presidential.
(2) Such amount includes 20,500 shares held in the name of his wife and
children, the beneficial ownership of which is disclaimed. This information
is based upon a Schedule 13D dated December 26, 1989 filed by Mr. Stewart.
The Company has not received a more recent filing from Mr. Stewart.
(3) The Company has been informed by The Trust Company of New Jersey that it has
sole voting and dispositive power with respect to 304,000 of such shares and
shared voting and dispositive power with respect to 8,500 of such shares.
This information is based upon an amendment dated February 13, 1998 to a
Schedule 13G filed by The Trust Company of New Jersey.
(4) The Company has been informed by Westport Asset Management, Inc. that it has
sole voting and dispositive power with respect to 88,110 of such shares and
shared voting and dispositive power with respect to 184,232 of such shares.
Westport Asset Management disclaims beneficial ownership of such 272,342
shares, which are held either in discretionary managed accounts or by
officers and stockholders of Westport Asset Management. This information is
based upon a Schedule 13G dated February 19, 1998 filed by Westport Asset
Management, Inc.
(5) Such amount includes (i) 198,735 shares of Class A Common Stock owned by Pdl
Partnership (see Note 1 above), (ii) 4,886 shares of Class A Common Stock
and 27,795 shares of Class B Common Stock held in trust or in the names of
wives, the beneficial ownership of which is disclaimed by the respective
persons and (iii) options to purchase 60,000 shares of Class B Common Stock.
Except as noted in the table, each of the owners of the shares set forth in
the table has the sole voting and dispositive power over such shares except that
such owner has no voting or dispositive power over shares the beneficial
ownership of which is disclaimed.
3
<PAGE> 6
The Company's management knows of no other persons owning beneficially more
than 5% of either the outstanding Class A Common Stock or the outstanding Class
B Common Stock of the Company.
Neither Pdl Partnership nor its partners have any contract, arrangement,
understanding or relationship (legal or otherwise) with respect to any
securities of the Company, except as described below. 212,648 Class A Shares
owned by Pdl Partnership or its partners are pledged to Robert E. Shapiro and
Joseph Viertel, directors of the Company, as security for loans previously made
in connection with the purchase of 134,334 Class A Shares by Pdl Partnership's
predecessor in interest. The partners of Pdl Partnership have entered into an
Agreement pursuant to which they have agreed among themselves that the Class A
Shares owned by Pdl Partnership may (1) be voted by Pdl Partnership only by
action of any two of them or (2) be sold by Pdl Partnership only with the
approval of any two of them.
EXECUTIVE OFFICERS
The following table sets forth information with respect to the executive
officers of Presidential. Each officer has been elected for a period of one year
and thereafter until his successor is elected, subject to the terms of the
Employment Agreements described below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH REGISTRANT
---- --- ------------------------
<S> <C> <C>
Jeffrey F. Joseph.................................. 56 President and a Director
Thomas Viertel..................................... 56 Executive Vice President and Chief
Financial Officer
Steven Baruch...................................... 59 Executive Vice President
Elizabeth Delgado.................................. 53 Treasurer
Roslyn Lacativa.................................... 60 Secretary
</TABLE>
Mr. Joseph has been President of the Company since February, 1992 and a
Director since April, 1993.
Thomas Viertel has been an Executive Vice President of the Company since
January, 1993 and its Chief Financial Officer since April of that year. Mr.
Viertel is also the Chairman of the Board of Scorpio Entertainment, Inc., a
privately owned company which produces theatrical enterprises. (See Certain
Transactions below.)
Mr. Baruch has been an Executive Vice President of the Company since
January, 1993. Mr. Baruch is also the President of Scorpio Entertainment, Inc.
(See Certain Transactions below.)
Ms. Delgado has been Treasurer of the Company since 1986.
Ms. Lacativa has been the Secretary of the Company since November, 1993.
Prior thereto, she was an administrative assistant at Presidential.
Thomas Viertel is the son of Joseph Viertel, a Director of Presidential and
the nephew of Robert E. Shapiro, a Director of Presidential. Steven Baruch is
the cousin of Robert E. Shapiro and Joseph Viertel.
Prior to August 1, 1979, Jeffrey Joseph, Thomas Viertel and Steven Baruch
were executive officers of Presidential.
4
<PAGE> 7
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table and discussion summarizes the compensation for the year
ended December 31, 1997 of the Chief Executive Officer of the Company and of any
other executive officer of the Company who served as such at December 31, 1997
and whose total annual compensation exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ------------
(A) (B) (E) (F)
(C) (D) OTHER ANNUAL STOCK
SALARY BONUS COMPENSATION(A) OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
--------------------------- ---- -------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Jeffrey F. Joseph............................. 1997 $253,879 $49,287 0 0
President and Chief 1996 239,509 39,987 0 0
Executive Officer and Director 1995 232,533 39,106 0 0
Thomas Viertel................................ 1997 $170,600 $36,966 0 0
Executive Vice President 1996 165,632 26,241 0 0
and Chief Financial Officer 1995 153,501 29,330 0 0
Steven Baruch................................. 1997 $170,600 $36,966 0 0
Executive Vice President 1996 165,632 26,241 0 0
1995 160,808 29,330 0 0
Elizabeth Delgado............................. 1997 $ 91,670 $11,780 0 0
Treasurer 1996 89,000 0 0 0
1995 82,174 0 0 0
</TABLE>
- ---------------
(A) Does not include perquisites or other personal benefits which in the
aggregate do not exceed the lesser of (a) 10% of annual salary and bonus or
(b) $50,000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES 12/31/97 12/31/97
ACQUIRED VALUE (#) (A)($)
ON REALIZED EXERCISABLE(E) EXERCISABLE(E)
NAME EXERCISE(#) ($) UNEXERCISABLE(U) UNEXERCISABLE(U)
---- ----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
Jeffrey F. Joseph.............................. 0 0 E -- 24,000 E -- $15,000
President and Chief U -- 0 U -- 0
Executive Officer and Director
Thomas Viertel................................. 0 0 E -- 18,000 E -- 11,250
Executive Vice President and U -- 0 U -- 0
Chief Financial Officer
Steven Baruch.................................. 0 0 E -- 18,000 E -- 11,250
Executive Vice President U -- 0 U -- 0
</TABLE>
- ---------------
(A) Based on the $6.125 per share exercise price of all options and the $6.75
per share closing price on the American Stock Exchange on December 31, 1997.
In addition, the Employment Agreements for Messrs. Joseph, Viertel and
Baruch provide that to the extent that any of the existing stock options held by
those executives are either exercised or lapse, the Company will grant to the
executive new options in the amount of the stock options that have either been
exercised or lapsed, which new options will have an exercise price equal to the
closing price of the Class B common stock on the date that the new option is
actually granted, will have a term of six years from the date
5
<PAGE> 8
such new option is granted and will be otherwise subject to the terms of the
Stock Option Plan dated November 17, 1993.
DEFINED BENEFIT PENSION PLAN
The Company has a Defined Benefit Pension Plan which covers substantially
all of its employees, including the officers listed in the Summary Compensation
Table. Directors who are not employees of the Company are not eligible to
participate in the Plan. The Plan is a non-contributory, tax qualified defined
benefit plan which provides a monthly retirement benefit payable for a
participant's lifetime in an amount equal to the sum of (i) 6.5% of an
employee's average monthly compensation and (ii) .62% of such employee's average
monthly compensation in excess of the average Social Security wage base,
multiplied in each case by the employee's years of service commencing after
December 31, 1993 (up to a maximum of 10 years). Average monthly compensation
for these purposes is the employee's monthly compensation averaged over the five
consecutive Plan years which produce the highest monthly average within the
employee's last ten years of service. However, the amount of compensation taken
into account under a tax qualified plan is limited to $160,000 per annum in
1997, which limit may be increased in future years for cost of living increases.
Maximum benefits under the Plan are attainable after ten years of service
commencing after December 31, 1993, and are payable at age 65. Mr. Joseph (56
years old), Mr. Viertel (56 years old) and Mr. Baruch (59 years old) all have
four years of service credited under the Plan.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Jeffrey F. Joseph, President
of the Company, that extends through December 31, 1999 and provides for annual
compensation of $258,449 for calendar year 1998, with a cost of living increase
for 1999. The employee may also become entitled to a bonus for each calendar
year based on a formula relating to the Company's earnings, which bonus is
limited to a maximum amount of 33 1/3% of his annual basic compensation for that
year. The agreement also provides for retirement benefits commencing at age 65
in the annual amount of $29,000, subject to increases based on fifty percent of
any increase in the cost of living subsequent to the first year of retirement.
The Company also has employment agreements with Steven Baruch, Executive
Vice President of the Company, and Thomas Viertel, Executive Vice President and
Chief Financial Officer of the Company, that each extend to December 31, 1999
and provide for annual compensation of $173,671 for calendar year 1998, with a
cost of living increase for 1999. Mr. Baruch and Mr. Viertel may also become
entitled to a bonus for each calendar year based on a formula relating to the
Company's earnings, which bonus is limited to a maximum amount of 33 1/3% of the
annual basic compensation for the year. Each of the agreements also provides for
retirement benefits commencing at age 65 in the annual amount of $29,000,
subject to increases based on fifty percent of any increase in the cost of
living subsequent to the first year of retirement. The Company's employment
agreements with Mr. Baruch and Mr. Viertel permit them to spend a reasonable
amount of their time during normal business hours on matters related to Scorpio
Entertainment, Inc., a company which is engaged in theatrical productions, so
long as the time and effort for Scorpio Entertainment, Inc. does not conflict or
interfere with the performance of their duties for the Company and they
diligently perform their duties for the Company to the satisfaction of the Board
of Directors. (See Certain Transactions below.)
The Company also has an employment agreement with Elizabeth Delgado, the
Company's Treasurer, that extends through December 31, 1999 and provides for
annual compensation of $94,878 for calendar year 1998. The employment agreement
provides for a retirement period that commences at age 65 with annual cash
benefits during retirement equal to the sum of (a) 23.6% plus (b) 2.6% for each
year of employment subsequent to December 31, 1994, up to a maximum of 60% of
the average of the three highest annual salary rates paid during employment,
provided that such annual benefits shall not exceed $50,046 per annum, and
provided further that any payments to be made under the retirement provisions of
the employment agreement shall be reduced dollar for dollar by any amounts
payable to the employee as a participant under the Company's Defined Benefit
Pension Plan. Annual cash retirement benefits payable by the Company to
6
<PAGE> 9
Ms. Delgado under such employment agreement cannot be less than $29,547, but
could be higher depending upon future rates of compensation and the terms of any
subsequent employment agreement.
During the retirement periods under the above agreements, the employees
will also be entitled to the continuation of certain life, group health and
disability insurance benefits. None of the employment contracts described above
provide death benefits for the recipients or for funding by Presidential of the
anticipated retirement benefits.
COMPENSATION OF DIRECTORS
The Company pays each Director (other than Jeffrey F. Joseph, who is the
President of the Company, Robert E. Shapiro, who is the Chairman of the Board of
Directors of the Company, and Joseph Viertel, who is the Chairman of the
Executive Committee of the Board of Directors of the Company) $10,000 per annum
plus $1,250 for each meeting of the Board of Directors attended and $1,250 for
each Committee meeting attended, plus in each case reimbursement of expenses.
The Company ordinarily does not pay any other compensation to Directors for
their services as Directors.
Presidential also has employment agreements with two directors (who were
executive officers of the Company prior to their retirement) providing for
stipulated annual payments for life (plus continuation of life, group health and
disability insurance benefits). The annual cash retirement benefits paid under
these contracts in 1997 were as follows:
<TABLE>
<CAPTION>
ANNUAL CASH RETIREMENT
BENEFIT (SUBJECT TO INCREASE
NAME AND AGE POSITION WITH PRESIDENTIAL FOR INFLATION)
------------ -------------------------- ----------------------------
<S> <C> <C>
Robert E. Shapiro(80)............. Director and Chairman of the Board $162,304
of Directors. Retired as President
in 1992.
Joseph Viertel (82)............... Director and Chairman of the 146,672
Executive Committee. Retired as
President in 1987.
</TABLE>
CERTAIN TRANSACTIONS
Presidential currently has loans outstanding to certain affiliates of Ivy
Properties, Ltd. (collectively "Ivy") as more fully described in the table set
forth below. Ivy is owned by Thomas Viertel, Steven Baruch and Jeffrey Joseph
(the "Ivy Principals"). Mr. Joseph is currently the President and a Director of
Presidential and is a nominee for Director. Mr. Viertel is currently an
Executive Vice President and the Chief Financial Officer of Presidential and is
the son of Joseph Viertel, a Director of Presidential, and a nephew of Robert E.
Shapiro, also a Director of Presidential. Steven Baruch is currently an
Executive Vice President of Presidential and is a cousin of Robert E. Shapiro
and Joseph Viertel.
Pdl Partnership, a partnership which is wholly owned by the Ivy Principals,
currently owns 198,735 shares of the Company's Class A Common Stock. As a result
of the ownership of these shares by Pdl Partnership, together with the ownership
of an aggregate of 24,601 additional shares of Class A Common Stock individually
by the Ivy Principals, Pdl Partnership and the Ivy Principals have beneficial
ownership of an aggregate of approximately 47% of the outstanding shares of
Class A Common Stock of the Company, which class of stock is entitled to elect
two-thirds of the Board of Directors of the Company. By reason of such
7
<PAGE> 10
beneficial ownership, the Ivy Principals are in a position substantially to
control elections of the Board of Directors of the Company.
The Board of Directors has adopted a resolution pursuant to which
Presidential will not make any loan to Ivy nor enter into any other material
transaction with Ivy unless such transaction is unanimously approved by the
Directors of Presidential who are not otherwise affiliated with Presidential or
Ivy (with no more than one abstention).
The following table sets forth information with respect to all outstanding
loans to Ivy at December 31, 1996 and December 31, 1997:
<TABLE>
<CAPTION>
ORIGINAL
LOAN BASIC
DATE ADVANCED DESCRIPTION INTEREST RATE 12/31/97 12/31/96
---- ---------- ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1981..... $5,285,000 UTB Associates, a partnership 11.8 to 25.33% $ 544,616 $ 617,419
in which Presidential owns a
66 2/3% interest, sold an apt.
property in New Haven, CT to
Ivy for long-term, non-recourse
purchase money notes.
1984..... 4,305,500 Sale by Presidential to Ivy of 6.00% 1,543,342 1,567,400
50% interest in a partnership
which owns an apartment complex
in Alexandria, VA (Overlook
loan).(1)
1991..... 526,454 UTB End Loans: Purchase money Various 198,222 241,935
notes on co-op apts. These
notes were transferred to
Presidential as part of the Ivy
settlement.
1991..... 155,084 Consolidated Loans: Replaced Chase Prime 64,719 116,787
previously defaulted loans.(2)
---------- ----------
Total Loans 2,350,899 2,543,541
Less: Discounts 160,735 145,915
Deferred gain on Overlook
loan 1,543,342 1,567,400
---------- ----------
Net Carrying Value $ 646,822 $ 830,226
========== ==========
</TABLE>
- ---------------
(1) Pursuant to a Settlement Agreement effectuated in November, 1991 between the
Company and Ivy (the "Settlement Agreement") relating to this loan and other
outstanding loans to Ivy, Ivy agreed to give Presidential a deed in lieu of
foreclosure to various assets held by Presidential as collateral for this
loan, but since Presidential in its capacity as a secured creditor exercises
significant control over, and receives the economic benefits from, such
collateral, Presidential has no current plans to request such deed or
foreclose on its collateral. The Overlook loan, which is a nonrecourse loan,
is secured by three mortgages (the "Collateral Security") with face values
totalling $1,593,342. All interest and principal collected by Ivy on the
Collateral Security is paid to Presidential in reduction of current
interest, previously deferred interest or principal.
(2) As part of the Settlement Agreement with Ivy, certain of Presidential's
outstanding nonrecourse loans to Ivy were modified and consolidated into two
nonrecourse loans (collectively, the "Consolidated Loans") that were
collateralized by substantially all of Ivy's then remaining business assets
with respect to which Presidential either did not previously have any
security interest or had a junior security interest (collectively, the
"Consolidated Collateral"). The terms of the Settlement Agreement permit Ivy
to use the proceeds of each sale of Consolidated Collateral to (1) pay
existing indebtedness of Ivy to its bank and trade creditors and certain
operating expenses and (2) create and fund specified reserves to provide
8
<PAGE> 11
for payment of future obligations and potential liabilities. At December 31,
1997, the Consolidated Loans had an outstanding principal balance of
$4,834,769 and a net carrying value of $64,719. In light of Ivy's
substantial indebtedness, Presidential does not expect to recover any
material amount on the Consolidated Loans in excess of their net carrying
value.
As part of the Settlement Agreement with Ivy, Presidential obtained an
option to acquire Scorpio Entertainment, Inc., a company owned by the Ivy
Principals to carry on theatrical productions ("Scorpio"). The option called for
a $100,000 purchase price, to be paid by crediting it against amounts due to
Presidential from the Ivy Principals under the Consolidated Loans. In 1996
Presidential and the Ivy Principals agreed to a modification of the Settlement
Agreement to provide that the Ivy Principals will make payments on the
Consolidated Loans in an amount equal to 25% of the operating cash flow (after
provision for certain reserves) of Scorpio. This agreement, and Presidential's
decision not to exercise its option to acquire the capital stock of Scorpio, was
made pursuant to the unanimous determination of the members of the Board of
Directors who are not affiliated with the Ivy Principals that such actions were
in the best interests of Presidential. As a result of this modification, during
1997 Presidential received $81,250 from the Ivy Principals as payments on the
Consolidated Loans.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Presidential has an Executive Committee, an Audit
Committee, a Compensation and Pension Committee and an Unaffiliated Director
Committee. The Board of Directors does not have a nominating committee.
The members of the Executive Committee are Jeffrey F. Joseph, Robert E.
Shapiro and Joseph Viertel. The function of the Executive Committee is to make
general and specific recommendations to the Board of Directors with respect to
matters to be considered by the Board. The Executive Committee meets from time
to time throughout the year as required by the business of Presidential.
The members of the Audit Committee are Richard Brandt, Mortimer Caplin and
Robert Feder. The function of the Audit Committee is to review the policies and
procedures adopted by the Company and its independent public accountants with
respect to the financial reporting by the Company. The Audit Committee held one
meeting during the Company's last fiscal year.
The members of the Compensation and Pension Committee are Richard Brandt,
Mortimer Caplin and Robert Feder. The function of the Compensation and Pension
Committee is to recommend guidelines and specific compensation levels to the
Board of Directors of the Company for the executive officers of the Company. The
Compensation and Pension Committee held one meeting during the Company's last
fiscal year.
The members of the Unaffiliated Director Committee are Richard Brandt,
Mortimer Caplin and Robert Feder. The function of the Unaffiliated Director
Committee is to review and vote upon any material transaction with Ivy
Properties, Ltd. or any of its affiliates. The Company will not enter into any
material transaction with Ivy or any affiliate of Ivy unless the members of the
Unaffiliated Director Committee unanimously approve the transaction, with no
more than one abstention. The Unaffiliated Director Committee did not hold any
meetings during the Company's last fiscal year.
The Board of Directors of the Company held four meetings during the
Company's last fiscal year. All of the directors attended all of the meetings in
1997 of the Board of Directors and the committees of which they were members
except that Joseph Viertel did not attend one Board meeting because of illness.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche, LLP, who, with their predecessor companies, have been
the independent public accountants for Presidential and its predecessor
companies since 1960, will have representatives present at the Annual Meeting of
Stockholders who will have an opportunity to make a statement if they desire to
do so and to respond to appropriate questions. Deloitte & Touche, LLP has
advised the Company that neither it nor, to
9
<PAGE> 12
the best of its knowledge, any of its members has any direct or material
indirect financial interest in the Company nor has it had any connection during
the past five years with the Company in the capacity of promoter, underwriter,
voting trustee, director, officer or employee other than as independent auditors
for the Company.
OTHER MATTERS
At the date of this Proxy Statement, the only proposals which the
management intends to present at the meeting are those set forth in the Notice
of the Annual Meeting of Stockholders. Management knows of no other matter which
may come before the meeting, but if any other matters properly come before the
meeting, it is intended that proxies in the accompanying forms will be voted
thereon in accordance with the judgment of the person or persons voting the
proxies.
PROPOSALS FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
Shareholder proposals for the 1999 Annual Meeting of Stockholders must be
received by the Secretary at the corporate offices of Presidential, 180 South
Broadway, White Plains, New York 10605, no later than December 29, 1998 for
inclusion in the Proxy Statement for the 1999 Annual Meeting of Stockholders.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying forms has been or will
be borne by the Company. In addition to solicitation by mail, solicitations may
be made by telephone calls by existing employees of the Company.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. IF YOU ARE
UNABLE TO BE PRESENT IN PERSON, YOU ARE REQUESTED TO SIGN THE ENCLOSED PROXY OR
PROXIES AND RETURN SAME IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE.
A STOCKHOLDER EXECUTING AND RETURNING A PROXY HAS THE POWER TO REVOKE IT AT
ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE TO THE SECRETARY OF THE
COMPANY, BY SUBMISSION OF ANOTHER PROXY BEARING A LATER DATE, OR BY ATTENDING
THE MEETING AND REQUESTING TO VOTE IN PERSON.
April 27, 1998
10
<PAGE> 13
<TABLE>
<S> <C> <C>
[PRESIDENTIAL REALTY PRESIDENTIAL REALTY CORPORATION (CLASS A SHARES)
LOGO] 180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605
MANAGEMENT PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
</TABLE>
The undersigned hereby appoints JEFFREY F. JOSEPH and THOMAS VIERTEL, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to appear and vote all of the shares of Class A stock standing in the name
of the undersigned on April 23, 1998, at the Annual Meeting of Stockholders of
Presidential Realty Corporation to be held at the Westchester Residence Inn, 5
Barker Avenue, White Plains, New York, on June 11, 1998 at 2:00 P.M., New York
time, and at any and all adjournments thereof, and the undersigned hereby
instructs said attorneys to vote as designated below:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS WITHHOLD AUTHORITY
FOR all nominees listed below: to vote for all nominees listed below [ ]
(except as marked to the contrary below) [
]
</TABLE>
ROBERT FEDER, JEFFREY F. JOSEPH, ROBERT E. SHAPIRO, JOSEPH VIERTEL
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
................................................................
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments thereof.
The undersigned hereby acknowledges receipt of the Proxy Statement dated April
27, 1998.
(CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE)
<PAGE> 14
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
Dated................, 1998 Please sign exactly as name
appears below. When shares are held
by joint tenants, both should sign.
When signing as attorney, as
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.
...................................
Signature
...................................
Signature if held jointly.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE> 15
<TABLE>
<S> <C> <C>
[PRESIDENTIAL REALTY PRESIDENTIAL REALTY CORPORATION (CLASS B SHARES)
LOGO] 180 SOUTH BROADWAY, WHITE PLAINS, NEW YORK 10605
MANAGEMENT PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
</TABLE>
The undersigned hereby appoints JEFFREY F. JOSEPH and THOMAS VIERTEL, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to appear and vote all of the shares of Class B stock standing in the name
of the undersigned on April 23, 1998, at the Annual Meeting of Stockholders of
Presidential Realty Corporation to be held at the Westchester Residence Inn, 5
Barker Avenue, White Plains, New York, on June 11, 1998 at 2:00 P.M., New York
time, and at any and all adjournments thereof, and the undersigned hereby
instructs said attorneys to vote as designated below:
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS WITHHOLD AUTHORITY
FOR all nominees listed below: to vote for all nominees listed below [ ]
(except as marked to the contrary below) [
]
</TABLE>
RICHARD BRANDT, MORTIMER M. CAPLIN
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
................................................................
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments thereof.
The undersigned hereby acknowledges receipt of the Proxy Statement dated April
27, 1998.
(CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE)
<PAGE> 16
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
Dated................, 1998 Please sign exactly as name
appears below. When shares are held
by joint tenants, both should sign.
When signing as attorney, as
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.
...................................
Signature
...................................
Signature if held jointly.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
