UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to §240.14a-12
AMREP CORPORATION
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(Name of Registrant as Specified In Its Charter)
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AMREP CORPORATION
(An Oklahoma corporation)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 21, 2005
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of Shareholders of
AMREP Corporation (the "Company") will be held at the Conference Center at
Normandy Farm, Route 202 and Morris Road, Blue Bell, Pennsylvania on September
21, 2005, at 9:00 A.M. for the following purposes:
(1) To elect three directors; and
(2) To consider and act upon such other business as may properly come
before the meeting.
In accordance with the By-Laws, the Board of Directors has fixed the close
of business on July 26, 2005, as the record date for the determination of
shareholders of the Company entitled to notice of and to vote at the meeting and
any adjournment thereof. The list of such shareholders will be available for
inspection by shareholders during the ten days prior to the meeting at the
offices of the Company, 641 Lexington Avenue, Sixth Floor, New York, New York.
Whether or not you expect to be present at the meeting, please mark, date
and sign the enclosed proxy and return it to the Company in the self-addressed
envelope enclosed for that purpose. The proxy is revocable and will not affect
your right to vote in person in the event you attend the meeting.
By Order of the Board of Directors
Joseph S. Moran, Secretary
Dated: August 3, 2005
New York, New York
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Upon the written request of any shareholder of the Company, the Company will
provide to such shareholder a copy of the Company's annual report on Form 10-K
for fiscal 2005, including the financial statements and the schedules thereto,
filed with the Securities and Exchange Commission. Any request should be
directed to Joseph S. Moran, Secretary, AMREP Corporation, 641 Lexington Avenue,
New York, New York 10022. There will be no charge for such report unless one or
more exhibits thereto are requested, in which case the Company's reasonable
expenses of furnishing exhibits may be charged.
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AMREP CORPORATION
641 Lexington Avenue
New York, New York 10022
__________________________
PROXY STATEMENT
__________________________
ANNUAL MEETING OF SHAREHOLDERS
To be Held at 9:00 A.M. on September 21, 2005
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of AMREP Corporation (the "Company") for use
at the Annual Meeting of Shareholders of the Company to be held on September 21,
2005, and at any continuation or adjournment thereof (the "Annual Meeting").
Anyone giving a proxy may revoke it at any time before it is exercised by giving
the Secretary of the Company written notice of the revocation, by submitting a
proxy bearing a later date or by attending the Annual Meeting and voting. This
Proxy Statement and the accompanying Notice of Annual Meeting and proxy form are
first being sent to shareholders on or about August 10, 2005.
All properly executed, unrevoked proxies in the enclosed form which are
received in time will be voted in accordance with the shareholders' directions
and, unless contrary directions are given, will be voted for the election as
directors of the nominees named below. The presence, in person or by proxy, of
the holders of a majority of the outstanding shares of Common Stock of the
Company authorized to vote will constitute a quorum for the transaction of
business at the Annual Meeting. Abstentions will be counted in determining
whether a quorum is present at the Annual Meeting. Directors are elected by a
plurality of the votes of the shares present in person or represented by proxy
at the Annual Meeting and entitled to vote on the election of directors, and
abstentions have no effect.
A copy of the 2005 Annual Report of the Company for the fiscal year ended
April 30, 2005, including financial statements, accompanies this Proxy
Statement. Such Annual Report does not constitute a part of the proxy
solicitation material.
Only shareholders of record at the close of business on July 26, 2005, the
date fixed by the Board of Directors in accordance with the By-Laws, are
entitled to vote at the Annual Meeting. As of July 26, 2005, the Company had
issued and outstanding 6,626,112 shares of Common Stock, par value $.10 per
share. Each share of Common Stock is entitled to one vote on matters to come
before the Annual Meeting.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth in the following table is information concerning the ownership of
the Common Stock of the Company by the persons who, to the knowledge of the
Board of Directors, own beneficially more than 5% of the outstanding shares. The
table also sets forth the same information concerning beneficial ownership for
each current director, each nominee for election as a director, each current
executive officer, and all current directors and executive officers as a group.
Unless otherwise indicated, reported ownership is as of July 26, 2005, and the
beneficial owners have sole voting and investment power with respect to the
shares beneficially owned by them. In the case of nominees, directors and
executive officers, the information below has been provided by such persons at
the request of the Company.
Shares Owned % of
Beneficial Owner Beneficially(1) Class
---------------- ------------ -----
Nicholas G. Karabots (Director and Nominee) 3,635,453 (2) 54.9
P.O. Box 736
Fort Washington, PA 19034
Albert V. Russo (Director and Nominee) 1,264,970 (3) 19.1
Lena Russo, Clifton Russo,
Lawrence Russo
American Simlex Company
401 Broadway
New York, NY 10012
Dimensional Fund Advisors Inc. 386,136 (4) 5.8
1299 Ocean Avenue
Santa Monica, CA 90401
Elmer F. Hansen, Jr. (Nominee) - -
Other Directors and Executive Officers
Jerome Belson 10,250 *
Edward B. Cloues II 12,250 *
Lonnie A. Coombs 9,250 *
Michael P. Duloc 5,000 (5) *
Joseph S. Moran - -
Peter M. Pizza - -
Samuel N. Seidman 10,250 *
James Wall 8,057 (6) *
Directors and Executive Officers as a Group
(10 persons) 4,955,480 (2),3),(5),(6) 74.7
____________________________
* Indicates less than 1%.
-2-
(1) The shareholdings include 1,000 shares for each of Messrs. Karabots,
Belson, Cloues, Coombs and Seidman and 2,000 shares for Albert V. Russo
which such persons have the right to acquire pursuant to options issued
under the Company's Non-Employee Directors Option Plan that are now
exercisable or will become so on September 27, 2005.
(2) Includes 580,165 shares owned by The Karabots Foundation, a private
non-profit corporation founded by Mr. Karabots and of which he is the
President, Foundation Manager and one of two directors. Mr. Karabots
disclaims beneficial ownership of the shares owned by The Karabots
Foundation.
(3) Albert V. Russo, Lena Russo, Clifton Russo and Lawrence Russo have reported
that they share voting power as to these shares and that each of them has
sole dispositive power as to the following numbers of such shares
representing the indicated percentages of the outstanding Common Stock:
Albert V. Russo - 680,491 (10.3%); Lena Russo - 58,740 (0.9%); Clifton
Russo - 270,617 (4.1%); and Lawrence Russo - 255,122 (3.85%).
(4) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of these shares, all of
which are held in portfolios of four registered investment companies or
other investment vehicles, including commingled group trusts, for which
Dimensional serves as investment manager or investment advisor. Dimensional
disclaims beneficial ownership of all such shares. This ownership is
reported in a Schedule 13G filed by Dimensional with the Securities and
Exchange Commission on February 9, 2005.
(5) Held jointly with Mr. Duloc's spouse.
(6) Includes 287 shares held in the Company's Savings and Salary Deferral Plan
allocated to the account of Mr. Wall.
ELECTION OF DIRECTORS
The Board of Directors of the Company is a classified board divided into
three classes - Class I consisting of two directors, Class II consisting of two
directors and Class III consisting of three directors. Each class of directors
serves for a term of three years. At this Annual Meeting, three Class III
directors will be elected to serve until the 2008 Annual Meeting and until their
successors are elected and qualified.
The Board of Directors is nominating Nicholas G. Karabots and Albert V.
Russo, who are incumbent Class III directors, and Elmer F. Hansen, Jr., who has
not previously served as a director of the Company, for election at the Annual
Meeting. Jerome Belson, whose term as a Class III director will expire at the
Annual Meeting, is not standing for re-election. Mr. Belson has been a director
of the Company since 1967, and his valued service over that extended period has
been greatly appreciated. Although the Board of Directors does not expect that
any of the persons nominated will be unable to serve as a director, should any
of them become unavailable for election it is intended that the shares
represented by proxies in the accompanying form will be voted for the election
of a substitute nominee or nominees selected by the Board.
-3-
The following table sets forth information regarding the nominees of the
Board of Directors for election and the directors whose terms of office do not
expire this year.
Year First
Elected As Principal Occupation For Past
Name Age A Director Five Years and Current Directorships
---- --- ---------- ------------------------------------
Nominees to serve until the 2008 Annual Meeting (Class III)
Elmer F. Hansen, Jr. 68 - President/Chief Executive Officer of
Hansen Properties, Inc., a company
engaged in the development and
management of real estate investments.
Nicholas G. Karabots 72 1993 Chairman of the Board and Chief
Executive Officer of Kappa Media
Group, Inc., Spartan Organization,
Inc., Jericho National Golf Club,
Inc. and other private companies,
which companies are engaged
primarily in the publishing,
printing, recreational sports and
real estate businesses.
Albert V. Russo 51 1996 Managing Partner, Russo Associates,
Pioneer Realty, 401 Broadway Realty
Company and related real estate
entities; Partner, American Simlex
Company, textile exports.
Directors continuing in office until the 2007 Annual Meeting (Class II)
Samuel N. Seidman 71 1977 President of Seidman & Co., Inc.,
economic consultants and investment
bankers; Director, Chairman of the
Board and Chief Executive Officer
of Productivity Technologies Corp.,
manufacture of metal forming and
handling automation equipment and a
wirer of control panels.
Lonnie A. Coombs 57 2001 Certified Public Accountant, Lonnie
A. Coombs, CPA, accounting, tax and
business consulting services.
-4-
Year First
Elected As Principal Occupation For Past
Name Age A Director Five Years and Current Directorships
---- --- ---------- ------------------------------------
Directors continuing in office until the 2006 Annual Meeting (Class I)
Edward B. Cloues II 57 1994 Chairman and Chief Executive Officer
of K-Tron International, Inc., a
material handling equipment
manufacturer; Director of K-Tron
International, Inc., Penn Virginia
Corporation and Penn Virginia
Resource GP, the general partner of
Penn Virginia Resource Partners, L.P.
James Wall 68 1991 Chairman of the Board, President and
Chief Executive Officer of AMREP
Southwest Inc., a wholly-owned
subsidiary of the Company; Senior
Vice President of the Company.
Each current director has served continuously since the year in which he
was first elected.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Common Stock is listed on the New York Stock Exchange and the
Company is subject to the Exchange's Corporate Governance Standards (the
"Governance Standards"). The Governance Standards, among other things, generally
require a listed company to have independent directors within the meaning of the
Governance Standards as a majority of its board of directors and for the board
to have a nominating/corporate governance committee and a compensation committee
composed entirely of independent directors. However, the Company is a
"controlled company" within the meaning of the Governance Standards because
Nicholas G. Karabots and entities related to him have the power to vote more
than a majority of the outstanding Common Stock, and the Governance Standards
permit a controlled company to choose not to comply with those requirements. The
Board has chosen not to have a nominating/corporate governance committee. Also,
the Board has chosen not to comply with the Governance Standards applicable to
compensation committees. Although the Board has a Compensation and Human
Resources Committee, not all of its members are independent directors as is
required by the Governance Standards.
Under the Governance Standards, a director of the Company will not be
considered independent if such person has any material relationship with the
Company, either directly, or as a partner, shareholder or officer of an
-5-
organization that has a relationship with the Company. The Governance Standards
also provide that the presence of any of the following particular relationships
will preclude a determination of independence:
(1) the director is, or has been within the last three years, an employee
of the Company, or an immediate family member is, or has been within the
last three years, an executive officer of the Company;
(2) the director has received, or has an immediate family member who has
received, during any twelve-month period within the last three years, more
than $100,000 in direct compensation from the Company, other than director
and committee fees and pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in any way on
continued service);
(3) (A) the director or an immediate family member is a current partner of
a firm that is the Company's internal or external auditor; (B) the director
is a current employee of such a firm; (C) the director has an immediate
family member who is a current employee of such a firm and who participates
in the firm's audit, assurance or tax compliance (but not tax planning)
practice; or (D) the director or an immediate family member was within the
last three years (but is no longer) a partner or employee of such a firm
and personally worked on the Company's audit within that time;
(4) the director or an immediate family member is, or has been within the
last three years, employed as an executive officer of another company where
any of the Company's present executive officers at the same time serves or
served on that company's compensation committee; or
(5) the director is a current employee, or an immediate family member is a
current executive officer, of a company that has made payments to, or
received payments from, the Company for property or services in an amount
which, in any of the last three fiscal years, exceeds the greater of $1
million or 2% of such other company's consolidated gross revenues.
Mr. Karabots does not qualify as an independent director under the
Governance Standards because his son-in-law, Michael P. Duloc, is the chief
operating officer of the Company's fulfillment and distribution services
businesses. Additionally, those businesses provide distribution and fulfillment
services to publishers owned by Mr. Karabots (see "Compensation Committee
Interlocks and Insider Participation" at page 12 of this Proxy Statement).
Based principally on their responses to questions to these persons
regarding the relationships addressed by the Governance Standards and
discussions with them, the Board has determined that, except for Messrs.
Karabots and Wall, all of its members, as well as Mr. Hansen who is being
proposed as a new member, meet the director independence requirements of the
-6-
Governance Standards. The Board was informed that Mr. Coombs, who is a certified
public accountant, for many years has provided, and expects to continue to
provide, business and tax consulting services to companies owned by Mr.
Karabots, including companies which are customers for the Company's distribution
and fulfillment services. The revenues from such business and tax consulting
services for the Company's last three fiscal years have accounted for from 16.5%
to 7.5% of Mr. Coombs' professional service revenues over those years. However,
the Board concluded that Mr. Coombs' relationship with Mr. Karabots and his
companies is as an independent contractor, and not as an employee, partner,
shareholder or officer, and would not interfere with Mr. Coombs' independence
from the Company's management.
The nominees for election as directors are selected by the whole Board of
Directors. The Board has no charter addressing the director nomination process
nor any specific qualifications for nominees to meet. In selecting Mr. Hansen as
a new nominee for director, the Board considered his extensive experience in the
real estate business and financial sophistication as important factors. If the
Board determines in the future to seek any new director, it will consider the
qualifications for the position at that time. The Board will consider candidates
for director recommended by shareholders on the same basis as any other proposed
nominees. Any shareholder desiring to propose a candidate for selection as a
nominee of the Board for election at the 2006 Annual Meeting may do so by
sending a written communication no later than May 1, 2006 to AMREP Corporation,
641 Lexington Ave., New York, NY 10022, Attention: Corporate Secretary,
identifying the proposing shareholder, specifying the number of shares of Common
Stock held and stating the name and address of the proposed nominee and the
information concerning such person which Securities and Exchange Commission
regulations require be included in a proxy statement relating to such person's
election as a director. Shareholders should recognize that so long as Mr.
Karabots remains the Company's controlling shareholder, his concurrence is
necessary for the election of any director.
In July 2004 in response to the Governance Standards, the Board adopted
Corporate Governance Guidelines (the "Guidelines") which address various matters
involving the Board and the conduct of its business. The Board also adopted a
new Code of Business Conduct and Ethics setting forth principles of business
conduct applicable to the directors, officers and employees of the Company. The
Guidelines and Code of Business Conduct and Ethics, as well as the charters of
the Board's Audit Committee and Compensation and Human Resources Committee, may
be viewed under "Corporate Governance" on the Company's website at
www.amrepcorp.com, and written copies will be provided to any shareholder upon
request to the Company at AMREP Corporation, 641 Lexington Ave., New York, NY
10022, Attention: Corporate Secretary. The Company intends to disclose on its
website any amendment to or waiver of any provision of the Code of Business
Conduct and Ethics that applies to any of its executive officers, including its
principal financial and accounting officer.
Directors are expected to attend Annual Meetings of Shareholders and all of
them attended last year's Annual Meeting. The Board held four meetings during
the last fiscal year, and all of the directors attended at least 75% of the
total of those meetings and the meetings during such year of the Board
-7-
Committees of which they were members. Pursuant to the Guidelines, the Board has
established a policy that the non-management directors meet in executive session
at least two times per year and that the independent directors also meet in
executive session at least twice per year. The Chairman of the Board (currently,
Edward B. Cloues II), if in attendance, will be the presiding director at each
such executive session; otherwise, those attending will select a presiding
director.
Any shareholder wishing to communicate with the Board or any of the
directors may send a written communication to AMREP Corporation, 641 Lexington
Ave., New York, NY 10022, Attention: Corporate Secretary for forwarding to the
intended person or persons.
The Board has an Executive Committee which generally has the power of the
Board and acts, as needed, between meetings of the Board. Also, in the absence
of a Chief Executive Officer (the Company has not had a CEO since January 1996),
the Committee is charged with the oversight of the Company's business. The
current members of the Committee are Messrs. Cloues, Karabots and Russo. Mr.
Cloues is Chairman of the Board and of the Committee and is compensated for his
services in those positions at the rate of $135,000 per year. Mr. Karabots is
Vice-Chairman of the Board and of the Committee, having been elected to those
positions in March 2005. At that time, the Company began paying a monthly fee of
$10,000 to a company wholly-owned by Mr. Karabots for making him available to
act in such positions. These payments to Messrs. Cloues and Karabots are in
addition to the other fees paid to them as directors and members of the
Compensation and Human Resources Committee. During the last fiscal year, the
Executive Committee met frequently on an informal basis but held no formal
meetings.
The Board also has an Audit Committee and a Compensation and Human
Resources Committee. For fiscal 2005, the fee payable to members of the Audit
Committee for each Committee meeting attended was $1,000. For fiscal 2005, the
fee payable to members of the Compensation and Human Resources Committee for
each Committee meeting attended was $750.
Each member of the Audit Committee is an independent director, as defined
by the Governance Standards. The Committee operates under a written charter
adopted by the Board of Directors, most recently on July 13, 2004. The duties of
the Audit Committee include (i) appointing the Company's independent auditors,
approving the services to be provided by the independent auditors and their
compensation and reviewing the auditors' independence and performance of
services, (ii) reviewing the scope and results of the yearly audit by the
independent auditors, (iii) reviewing the Company's system of internal controls
and procedures, (iv) reviewing with management and the independent auditors the
Company's annual and quarterly financial statements, (v) reviewing the Company's
financial reporting and accounting standards and principles, and (vi) overseeing
the administration of the Guidelines. This Committee reports regularly to the
-8-
Board concerning its activities. The current members of this Committee are
Messrs. Belson, Coombs and Seidman (Chairman), each of whom has been determined
by the Board to be independent and financially literate within the meaning of
the Governance Standards. The Board has also determined that Mr. Coombs, who is
a certified public accountant, qualifies as an audit committee financial expert
within the meaning of Securities and Exchange Commission regulations. The Audit
Committee held five meetings during the last fiscal year.
In past years, the Compensation and Human Resources Committee was
responsible for making recommendations to the Board concerning compensation and
other matters relating to employees. The members of this Committee are Messrs.
Cloues, Karabots (Chairman) and Russo, and it held four meetings during the last
fiscal year. Under its charter, adopted by the Board in July 2005, this
Committee is now responsible for determining salaries and bonuses for the
executives of the Company and its subsidiaries, establishing overall
compensation and benefit levels and fixing bonus pools for other employees, and
making recommendations to the Board concerning other matters relating to
employees and regarding director compensation.
For fiscal 2005 each non-employee director of the Company was paid a fee of
$20,000 in addition to fees paid to such director as a member of one or more
Board Committees. Additionally, under the 2002 Non-Employee Directors' Stock
Plan, each non-employee director receives a grant from the Company of 1,250
shares of its Common Stock on each March 15 and September 15 as partial payment
for services for the preceding six months. Regarding the fiscal 2005 grants, the
last sales prices for the Common Stock on the New York Stock Exchange on
September 14, 2004 (there having been no reported trades on September 15) and
March 15, 2005 were $18.09 and $25.99. Also, under the Non-Employee Directors
Option Plan, following the Company's Annual Meeting of Shareholders each
non-employee director is granted an option covering 500 shares of Common Stock
of the Company. The price per share payable upon exercise of such option is
either (i) the mean between the highest and lowest reported sale price of the
Common Stock on the date of grant on the New York Stock Exchange, or (ii) the
price of the last sale of Common Stock on that date as quoted on the New York
Stock Exchange, whichever is higher. For the options granted following the 2004
Annual Meeting, the exercise price is $17.55 per share. Each option becomes
exercisable as to all or any portion of the shares covered thereby one year
after the date of grant and expires five years after the date of grant.
-9-
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth certain information
concerning the compensation of the persons who were the Company's executive
officers at April 30, 2005.*
SUMMARY COMPENSATION TABLE
Annual Compensation
----------------------------------
Other Annual
Compensation($)
Name and Principal Position Year Salary($) Bonus($) (a)(b)
--------------------------- ---- --------- -------- ------------
James Wall 2005 281,831 - 10,732
Senior Vice President; 2004 277,572 35,000 4,552
Chairman of the Board, 2003 273,801 20,000 3,567
President and CEO of the
Company's AMREP Southwest
Inc. subsidiary
Peter M. Pizza 2005 174,720 - 8,249
Vice President, Chief 2004 171,692 10,000 1,639
Financial Officer and 2003 165,538 10,000 -0-
Treasurer
Michael P. Duloc 2005 220,619 - 7,428
Chief Operating Officer 2004 217,042 12,500 4,298
of the Company's fulfillment 2003 206,153 7,500 3,227
and distribution services
businesses
____________________________
(a) Includes amounts contributed by the Company to the Company's Savings and
Salary Deferral Plan.
(b) Other compensation in the form of personal benefits to the named persons
has been omitted because it does not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus as to each.
Options
No stock options were granted to or exercised by any of the officers named
in the Summary Compensation Table during the fiscal year ended April 30, 2005.
No stock options were held by any of such officers at April 30, 2005.
Compensation and Human Resources Committee Report on Executive Compensation
The current members of the Company's Compensation and Human Resources
Committee are Messrs. Cloues, Karabots and Russo.
____________________________
*Since January 1996, the Company has not had a CEO.
-10-
Compensation Policy for Executive Officers
------------------------------------------
The Compensation and Human Resources Committee's compensation policy for
executive officers is to pay competitively, while balancing pay versus
performance and otherwise to be fair and equitable in the administration of
compensation. In determining the salary to be paid to a particular individual,
the Compensation and Human Resources Committee applies these and other criteria,
while also using its best judgment of compensation applicable to other
executives holding comparable positions both within the Company and at other
companies.
With respect to salaries, bonuses and other compensation and benefits, the
decisions and recommendations of the Compensation and Human Resources Committee
are subjective and are not based on any list of specific criteria. We believe
that the compensation received by each of the executive officers for fiscal 2005
was reasonable. The Company has not had a Chief Executive Officer since January
1996, when the employment of the then CEO was terminated due to disability, and
senior management now operates under the supervision of the Executive Committee
of the Board and its Chairman, who is also the Chairman of the Board.
Early in fiscal 2005, the Compensation and Human Resources Committee
recommended and the Board of Directors approved the payment of bonuses to the
executive officers based on the Committee's evaluation of their performance in
fiscal 2004. The Committee has not acted on bonuses for executive officers in
respect of fiscal 2005.
There have been no stock options granted to executive officers since fiscal
1995.
Payments during fiscal 2005 to the Company's executives as discussed above
were made with regard to the provisions of Section 162(m) of the Internal
Revenue Code. Section 162(m) limits the deduction that may be claimed by a
"public company" for compensation paid to certain individuals to $1 million,
except to the extent that any excess compensation is "performance-based
compensation". It is the Compensation and Human Resources Committee's intention
that compensation will not be awarded that exceeds the deductibility limits of
Section 162(m).
Bases for Chief Executive Officer's Compensation
------------------------------------------------
Since January 1996, the Company has not had a CEO.
Nicholas G. Karabots, Chairman
Edward B. Cloues II
Albert V. Russo
July 26, 2005
-11-
Compensation Committee Interlocks and Insider Participation
On August 4, 1993, pursuant to an agreement with Nicholas G. Karabots and
two corporations he then owned, the Company, in exchange for 575,593 shares of
its Common Stock, acquired various rights to distribute magazines for its
distribution business. The distribution rights covered various magazines
published by unaffiliated publishers, as well as magazines published by Mr.
Karabots' companies. The distribution contracts with Mr. Karabots' companies,
from time to time, have been amended and extended and are now scheduled to
expire on December 31, 2005.
The conduct of the Company's magazine distribution business involves the
purchase of magazines from publishing companies, including those owned or
controlled by Mr. Karabots, and their resale to wholesalers. During the fiscal
year ended April 30, 2005, the purchases of magazines from Mr. Karabots'
companies amounted to approximately $41.6 million. The Company reports as
revenues only the spread between the prices paid to publishers and the prices
received for copies sold to wholesaler customers. The $41.6 million paid to Mr.
Karabots' companies represents 28.2% of the approximately $147.5 million which
the Company paid to all publishers in fiscal 2005. Consistent with industry
practice, advance payments for magazine purchases are made to publishers,
including Mr. Karabots' companies, based upon estimates of the amounts that will
be due to them from the sales of their publications to the buying public. If the
actual sales are less than estimated, overadvances will result, which the
publishers are obligated to repay promptly, without interest. The total
overadvance to Mr. Karabots' companies at June 30, 2005 was approximately
$30,000, and its highest amount between May 1, 2004 and June 30, 2005 was
approximately $354,000.
The Company also provides fulfillment services for publishing companies
owned or controlled by Mr. Karabots under contracts that are effective through
August 1, 2006, and continue from year to year thereafter, unless terminated at
the election of either party. For fiscal 2005, the revenues for these services
were $344,000.
Mr. Karabots is a director, Vice-Chairman of the Board and of the Executive
Committee, Chairman of the Compensation and Human Resources Committee and the
father-in-law of Michael P. Duloc, one of the Company's executive officers.
Performance Graph
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return of the Standard & Poor's
500 Index ("S&P 500 Index") and with an index comprised of the stock of 27
companies with market capitalizations similar to that of the Company ("Similar
Cap Issuers"), for the five years ended April 30, 2005 (assuming the investment
of $100 in the stock of the Company, the S&P 500 Index and the Similar Cap
Issuers on April 30, 2000, and the reinvestment of all dividends). The Company
cannot identify an index of issuers engaged in operations similar to those in
which it is currently engaged and therefore has determined to use the Similar
Cap Issuers for purposes of comparison.
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2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----
AMREP CORP 100 78.00 160.00 188.00 353.18 506.24
S&P 500 INDEX 100 87.03 76.04 65.92 81.00 86.14
SIMILAR CAP ISSUERS 100 111.80 164.68 134.59 214.55 197.04
The Similar Cap Issuers are: Bankrate, Inc., Cavalier Homes, Inc., D&K
Healthcare Resources, Inc., Deckers Outdoor Corporation, DSG International
Limited, First Federal Bankshares, Inc., First National Lincoln Corporation
(Maine), Glowpoint, Inc., Golden Enterprises, Inc., Horizon Health Corporation,
Hyperdynamics Corporation, I.D. Systems, Inc., Key Technology, Inc., Koss
Corporation, Lipid Sciences, Inc., Mer Telemanagement Solutions Ltd., Mercury
Air Group, Inc., Merit Medical Systems, Inc., NewMil Bancorp, Inc., Northway
Financial, Inc., Oil-Dri Corporation of America, Perceptron, Inc., Security
Capital Corporation (Delaware), SIFCO Industries, Inc., Sport Chalet, Inc.,
TeamStaff, Inc. and Zindart Limited.
As a result of changes in market capitalizations from year to year, none of
the companies comprising the Similar Cap Issuer index in the Company's 2004
Proxy Statement met the criteria for inclusion in the Similar Cap Issuer index
in this Proxy Statement. The 2004 Similar Cap companies were: America First
Apartment Investors, Inc., Codorus Valley Bancorp, Inc., Conrad Industries,
Inc., DNB Financial Corporation, Eagle Supply Group, Inc., Edge Petroleum
Corporation, Inc., Exponent, Inc., Featherlite, Inc., Genta Incorporated,
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Harold's Stores, Inc., Intest Corporation, Irvine Sensors Corporation, JMAR
Technologies, Inc., KCS Energy, Inc., KMG Chemicals, Inc., LSB Corporation,
Mesabi Trust, The Middleton Doll Company, Nano-Proprietary, Inc., Nobility
Homes, Inc., North America Scientific, Inc., Onspan Networking, Inc., PVF
Capital Corp., Quality Dining, Inc., Startech Environmental Corporation, Thomas
Group, Inc. and Westbank Corporation.
Equity Compensation Plan Information
The following table sets forth information as of April 30, 2005 concerning
Common Stock of the Company which is issuable under its compensation plans.
(C)
(A) (B) Number of securities
Number of securities Weighted average remaining available for
to be issued upon exercise price of future issuance under equity
exercise of outstanding compensation plans (excluding
outstanding options, options, warrants securities reflected in
Plan Category warrants and rights and rights column (A))
------------- ------------------- ---------- -----------
Equity compensation plans approved by
shareholders 7,000 $14.92 12,000 (a)
Equity compensation plans not
approved by shareholders - - 27,500 (b)
----- ------
Total 7,000 39,500
===== ======
____________________________
(a) Consists of shares available for options to be issued under the
Non-Employee Directors Option Plan.
(b) Consists of shares available for issuance under the 2002 Non-Employee
Directors' Stock Plan.
On December 5, 2002, the Board of Directors adopted the AMREP Corporation
2002 Non-Employee Directors' Stock Plan and reserved 65,000 shares of Common
Stock of the Company for issuance thereunder. Under this Plan, each non-employee
director receives a grant from the Company of 1,250 shares on each March 15 and
September 15 as partial payment for services for the preceding six months.
Retirement Benefits
The Company's executive officers participate in a Retirement Plan (the
"Plan"), which was amended effective January 1, 1998, and subsequently frozen
effective March 1, 2004, so that in the determination of the benefit payable, a
participant's compensation from and after March 1, 2004 is not taken into
account. Prior to the 1998 amendment, the Plan provided a monthly benefit
payable at age 65 to employees with five or more years of service in an amount
equal to 1.125% of the employee's highest consecutive 60-month average monthly
earnings up to a specified amount related to the social security wage base, plus
1.5% of such earnings in excess of such specified amount, multiplied by years of
service not to exceed 35. From and after January 1, 1998 through February 29,
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2004, each participant's benefit was the amount of the monthly benefit accrued
for that participant as of December 31, 1997, under the terms of the Plan prior
to the 1998 amendment, plus an additional benefit determined by establishing a
cash balance account for the participant to which was allocated annually 2% of
the participant's compensation plus an annual interest credit of 5% of the
amount in such account. The cash balance account may be converted to a life
annuity or may be taken in a lump sum. After February 29, 2004, a participant's
benefit under the Plan is the sum of (i) the actuarial equivalent of the
participant's cash balance account as of February 29, 2004, plus interest on the
cash balance account at the rate of 5% per year, and (ii) the participant's
monthly pension benefit under the Plan as at December 31, 1997.
Mr. Wall has passed the normal retirement age of 65 under the Plan. His
annual retirement benefit under the Plan had he elected to receive the life
annuity pension at normal retirement age would have been $54,290. Mr. Pizza has
nine years of credited service and Mr. Duloc has twelve years of credited
service. Assuming that (i) they continue to be employed until age 65, and (ii)
they elect the life annuity form of pension, their annual retirement benefits
are estimated to be: Mr. Pizza - $5,679 and Mr. Duloc - $11,178.
Certain Transactions
See "Compensation Committee Interlocks and Insider Participation" for
information concerning transactions involving Nicholas G. Karabots.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of its
Common Stock to file initial reports of ownership and reports of changes of
ownership of the Common Stock with the Securities and Exchange Commission and
the New York Stock Exchange. The related regulations require copies of the
reports to be provided to the Company.
Based upon a review of the copies of the reports received by the Company
and certain written representations from the directors and executive officers,
the Company believes that for the fiscal year ended April 30, 2005, all required
Section 16(a) reports were filed on time.
AUDIT-RELATED MATTERS
The consolidated financial statements of the Company and its subsidiaries
included in the Annual Report to Shareholders for the fiscal year ended April
30, 2005 have been audited by McGladrey & Pullen, LLP, an independent registered
public accounting firm. No representative of McGladrey & Pullen, LLP is expected
to attend the Annual Meeting. The Audit Committee has not yet acted with respect
to the selection of auditors for fiscal 2006.
-15-
Audit Committee Report
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management, which has primary responsibility for the
financial statements. McGladrey & Pullen, LLP, as the Company's independent
registered public accountants, are responsible for expressing an opinion on the
conformity of the Company's audited financial statements with U.S. generally
accepted accounting principles. The Committee has discussed with McGladrey &
Pullen, LLP the matters that are required to be discussed by Statement on
Auditing Standards No. 61 (Communication With Audit Committees). McGladrey &
Pullen, LLP have provided to the Committee the written disclosures and the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Committee has discussed with
McGladrey & Pullen, LLP that firm's independence. Based on these considerations,
the Audit Committee recommended to the Board of Directors that the consolidated
financial statements audited by McGladrey & Pullen, LLP be included in the
Company's annual report on Form 10-K for fiscal 2005.
The foregoing report is provided by the following directors who constitute
the Audit Committee:
Samuel N. Seidman, Chairman
Jerome Belson
Lonnie A. Coombs
July 13, 2005
Audit Fees
The following table sets forth certain information concerning the fees of
McGladrey & Pullen, LLP and its affiliate, RSM McGladrey Inc., for the Company's
last two fiscal years. The reported fees, except the Audit Fees, are amounts
billed to the Company in the indicated fiscal years. The Audit Fees are for
services for those fiscal years.
Fiscal Year Ended April 30,
---------------------------
2005 2004
---- ----
Audit Fees (1).......................... $122,838 $112,368
Audit-Related Fees (2).................. 16,679 106,609
Tax Fees (3)............................ 41,656 46,276
All Other Fees.......................... - -
___________________
(1) Includes fees for the audit of the Company's annual financial statements
and for review of the unaudited financial statements included in the
Company's quarterly reports to the Securities and Exchange Commission on
Form 10-Q.
(2) Includes fees in fiscal 2005 for consultation related to preparation for
Sarbanes-Oxley Section 404 compliance, in fiscal 2004 for an acquisition
audit and an information systems controls review, and in both periods for
benefit plan audits.
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(3) Includes fees for tax compliance, tax advice and tax planning services.
Such services principally involved reviews of the Company's federal income
tax returns and advice on the tax treatment of certain transactions.
Pre-Approval Policies and Procedures
The Audit Committee pre-approves all audit services to be provided by the
independent registered public accountants and, separately, all permitted
non-audit services to be performed by the independent registered public
accountants.
OTHER MATTERS
The Board of Directors knows of no matters that will be presented for
consideration at the Annual Meeting other than the matters referred to in this
Proxy Statement. Should any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
SOLICITATION OF PROXIES
The Company will bear the cost of this solicitation of proxies. In addition
to solicitation of proxies by mail, the Company may reimburse brokers and other
nominees for the expense of forwarding proxy materials to the beneficial owners
of stock held in their names. Directors, officers and employees of the Company
may solicit proxies on behalf of the Board of Directors but will not receive any
additional compensation therefor.
SHAREHOLDER PROPOSALS
From time to time, shareholders present proposals which may be proper
subjects for inclusion in the Proxy Statement and for consideration at an annual
meeting. Shareholders who intend to present proposals at the 2006 Annual Meeting
and who wish to have such proposals included in the Company's Proxy Statement
for the 2006 Annual Meeting must be certain that such proposals are received by
the Company's Secretary at the Company's executive offices, 641 Lexington
Avenue, New York, New York 10022, not later than April 6, 2006. Such proposals
must meet the requirements set forth in the rules and regulations of the
Securities and Exchange Commission in order to be eligible for inclusion in the
Proxy Statement. For any proposal that is not submitted for inclusion in next
year's Proxy Statement but is, instead, sought to be presented directly at the
2006 Annual Meeting, Securities and Exchange Commission rules permit management
to vote proxies in its discretion if the Company does not receive notice of the
proposal prior to the close of business on June 27, 2006.
By Order of the Board of Directors
Joseph S. Moran, Secretary
Dated: August 3, 2005
-17-
PROXY AMREP CORPORATION PROXY
SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
The Conference Center at Normandy Farm
Route 202 and Morris Road, Blue Bell, Pennsylvania
September 21, 2005, 9:00 A.M. Local Time
The undersigned hereby appoints Edward B. Cloues II and Peter M. Pizza, and
each of them acting alone, with full power of substitution, proxies to vote the
Common Stock of the undersigned at the 2005 Annual Meeting of Shareholders of
AMREP Corporation, and any adjournment thereof, for the election of directors as
set forth in the Proxy Statement of the Board of Directors dated August 3, 2005,
and upon all other matters which come before said meeting or any continuation or
adjournment thereof.
Receipt of the Notice of Annual Meeting of Shareholders and accompanying
Proxy Statement of the Board of Directors is acknowledged.
Unless otherwise specified, this proxy will be voted FOR the election of
directors as set forth in the Proxy Statement.
(Continued and to be dated and signed on reverse side.)
PLEASE MARK, DATE SIGN
AND MAIL YOUR PROXY [X]
PROMPTLY IN THE ENVELOPE Votes MUST be indicated
PROVIDED. (x) in Black or Blue ink.
A vote FOR ITEM 1 is recommended by the Board of Directors.
1. FOR ELECTION OF THREE (3) DIRECTORS AS DESCRIBED IN THE PROXY STATEMENT OF
THE BOARD OF DIRECTORS.
FOR all nominees [ ] WITHHOLD AUTHORITY to vote for [ ] * Exceptions [ ]
listed below all nominees listed below
Nominees: Elmer F. Hansen, Jr., Nicholas G. Karabots, Albert V. Russo
(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
*Exceptions _______________________________ To change your address, please mark
this box. [ ]
If stock is held in the name of more than one person, all holders
should sign. Sign exactly as name or names appear at left. Persons
signing in a fiduciary capacity should include their title as such.
______________________________ _____________________________
Date Share owner sign here Co-Owner sign here