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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (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 Section 240.14a-12
Getty Realty Corporation
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
[GETTY LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2004
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To the Stockholders of
GETTY REALTY CORP.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Getty
Realty Corp., a Maryland corporation, will be held at 270 Park Avenue, 11th
Floor, New York, New York, on May 20, 2004 at 3:30 p.m., for the following
purposes:
(1) To elect a Board of five directors to hold office for the ensuing year
and until the election and qualification of their respective
successors.
(2) To consider and vote upon the Getty Realty Corp. 2004 Omnibus Incentive
Compensation Plan.
(3) To ratify the appointment of PricewaterhouseCoopers LLP as our
independent auditors for the fiscal year ending December 31, 2004.
(4) To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The transfer books will not be closed, but only stockholders of record at
the close of business on March 26, 2004 are entitled to notice of and to vote at
this meeting or any adjournments thereof.
You are cordially invited to attend the meeting. Whether or not you expect
to attend, please promptly vote, sign, date and return the enclosed proxy card
in the enclosed U.S. postage-paid envelope. This will ensure that your shares
are voted in accordance with your wishes and that a quorum will be present. Even
though you have returned your proxy card, you may withdraw your proxy at any
time prior to its use and submit a new proxy card with a later date or vote in
person at the meeting should you so desire.
By Order of the Board of Directors,
/s/ Andrew M. Smith
ANDREW M. SMITH
Vice President, General Counsel and
Corporate Secretary
Jericho, New York
April 9, 2004
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PLEASE NOTE--IF YOU DO NOT PLAN TO ATTEND THE MEETING, IT WOULD BE APPRECIATED
IF YOU WOULD PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE.
GETTY REALTY CORP.
125 JERICHO TURNPIKE, SUITE 103, JERICHO, NEW YORK 11753
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PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
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This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Getty Realty Corp.
(hereinafter called the "Company" or "Getty"), to be voted at the Annual Meeting
of Stockholders to be held at 270 Park Avenue, 11th Floor, New York, New York,
on May 20, 2004 at 3:30 p.m., and at any adjournments or postponements thereof,
for the purpose of electing a Board of Directors, approving the Getty Realty
Corp. 2004 Omnibus Incentive Compensation Plan, ratifying the appointment of
independent auditors and transacting such other business as may properly come
before the meeting.
At the close of business on the March 26, 2004 record date for securities
entitled to vote at the meeting, 24,679,662 shares of Getty common stock were
outstanding. Each outstanding common share is entitled to one vote. The common
shares vote as a single class. In order to constitute a quorum at the meeting,
there must be present, or voting by proxy, holders of a majority of the
outstanding common shares. With respect to the proposals regarding the election
of directors and ratification of auditors, abstentions and broker non-votes will
not be treated as votes cast and, therefore, will not affect the outcome of any
such matter, although they will be considered present for the purpose of
determining the presence of a quorum. With respect to the proposal regarding the
approval of the Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan,
abstentions and broker non-votes will have the same effect as votes against the
proposal, unless holders of more than 50% in interest of all common stock
entitled to vote on the proposal cast votes, in which event broker non-votes
will not have any effect on the result of the vote.
This Proxy Statement and form of proxy will be sent to stockholders in an
initial mailing on or about April 13, 2004. We must receive stockholder
proposals that are intended to be presented at the 2005 annual meeting no
earlier than February 19, 2005 and no later than March 21, 2005, in accordance
with our by-laws. Stockholder proposals to be considered for inclusion in next
year's proxy statement must be received by December 14, 2004.
1
ELECTION OF DIRECTORS
Five directors are to be elected at the meeting for a term of one year or
until their respective successors are elected and qualified. Election of the
directors requires the plurality vote of the shares present in person or
represented by proxy at the meeting as long as a quorum is present.
You may use the enclosed proxy to cast your votes for the election of the
nominees named in the table below. In the event that any of the nominees should
become unable or unwilling to serve as a director, we intend to vote your proxy
for the election of the person, if any, that is designated by the Board of
Directors. The persons nominated for election as directors are as follows:
NAME--AGE OFFICES HELD IN GETTY AND/OR
SERVED AS DIRECTOR SINCE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
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Milton Cooper--75 Chairman of the Board of Kimco Realty Corporation, a real
May 1971 estate investment trust, for more than five years. Director,
Secretary and Assistant Treasurer of CLS General Partnership
Corp.; Director of Blue Ridge Real Estate/Big Boulder
Corporation, a real estate management and land development
firm; and a Trustee of MassMutual Corporate Investors and
MassMutual Participation Investors.
Philip E. Coviello--61 Partner of Latham & Watkins LLP, an international law firm,
June 1996 for more than five years, until his retirement from the firm
as of December 31, 2003. Latham & Watkins LLP has performed
legal services for the Company for many years.
Leo Liebowitz--76 President and Chief Executive Officer of Getty. Served as
May 1971 Chairman, Chief Executive Officer and a director of Getty
Petroleum Marketing Inc. ("Marketing") until December 11,
2000. Director, President and Treasurer of CLS General
Partnership Corp. He is also a director of the Regional
Banking Advisory Board of J. P. Morgan Chase & Co.
Howard Safenowitz--45 President, Safenowitz Family Corp. for more than five years.
December 1998 Served as the Senior Vice President, Business Affairs of
Buena Vista Motion Pictures from March 2001 until April 25,
2003, and prior thereto Vice President, Business Affairs of
Walt Disney Pictures and Television for more than five
years. Served as a director of Marketing from December 1998
until December 11, 2000.
Warren G. Wintrub--70 Retired Partner, former member of the Executive Committee
June 1993 and former Chairman of the Retirement Committee of Coopers &
Lybrand, an international professional services
organization, for more than five years prior to his
retirement in January 1992. Director of Chromcraft
Revington, Inc., Carey Institutional Properties, Inc.,
Corporate Property Associates 14 Inc. and Corporate Property
Associates 16 Global Inc.
2
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table sets forth the beneficial ownership of Getty common
stock as of March 1, 2004, of (i) each person who is a beneficial owner of more
than 5% of the outstanding shares of Getty common stock, (ii) each director,
(iii) the Named Executive Officers (as defined below), and (iv) all directors
and executive officers as a group. The number of shares column includes shares
as to which voting power and/or investment power may be acquired within 60 days
(such as upon exercise of outstanding stock options) because such shares are
deemed to be beneficially owned under the rules of the Securities and Exchange
Commission.
SHARES OF COMMON STOCK APPROXIMATE
BENEFICIALLY OWNED PERCENT OF CLASS(1)
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Milton Cooper 1,361,741(2) 5.5%
Director
c/o Kimco Realty Corporation
3333 New Hyde Park Road
New York, NY 11042
Philip E. Coviello 64,984(3) *
Director
Leo Liebowitz 3,012,740(4) 12.2%
Director, President and Chief
Executive Officer
c/o Getty Realty Corp.
125 Jericho Turnpike
Suite 103
Jericho, NY 11753
Howard Safenowitz 830,940(5)(6) 3.4%
Director
c/o Getty Realty Corp.
125 Jericho Turnpike
Suite 103
Jericho, NY 11753
Warren Wintrub 46,564(3) *
Director
Kevin C. Shea 9,577(7) *
Vice President
Andrew M. Smith 559(7) *
Vice President, General Counsel
and Corporate Secretary
Thomas Stirnweis 3,318 *
Vice President, Treasurer
and Chief Financial Officer
Safenowitz Partners, LP 1,837,894(6) 7.4%
c/o Howard Safenowitz
President of Safenowitz
Family Corp., general partner
c/o Getty Realty Corp.
125 Jericho Turnpike
Suite 103
Jericho, NY 11753
Directors and executive officers as a group (8 persons) 7,168,317(8) 29.0%
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* Total shares beneficially owned constitute less than one percent of the
outstanding shares.
3
(1) The percentage is determined by dividing the number of shares shown by the
aggregate number of shares outstanding and shares that may be acquired
within 60 days.
(2) Includes 10,311 shares held in a partnership of which Mr. Cooper is a
partner, 65,537 shares held by his wife as to which he disclaims beneficial
ownership, 2,421 shares held in a qualified pension plan for the benefit of
Mr. Cooper, 215,607 shares held by a charitable foundation, 20,706 shares
held in the Getty Realty Corp. Retirement and Profit Sharing Plan, 4,887
shares held by a retirement fund of which Mr. Cooper is a beneficiary, and
134,052 shares held by CLS General Partnership Corp. Excludes 16,651 shares
held by Mr. Cooper's children and grandchildren, as to which he disclaims
beneficial ownership.
(3) Includes with respect to Messrs. Coviello and Wintrub, options covering
35,328 and 6,000 shares, respectively, that are presently exercisable or
will become exercisable within 60 days.
(4) Includes 303,623 shares held by Mr. Liebowitz' wife as to which he disclaims
beneficial ownership, 40,724 shares held by a charitable foundation, 20,000
shares held by Liebowitz Family LLC as to which he disclaims beneficial
ownership except to the extent of his pecuniary interest therein, 48,761
shares held in the Getty Realty Corp. Retirement and Profit Sharing Plan,
and 310,957 shares held by CLS General Partnership Corp. Excludes 255,102
shares held by his children, as to which he disclaims beneficial ownership.
(5) Includes 23,479 shares held as custodian for three minor children, 89,303
shares held by The Marilyn Safenowitz Irrevocable Trust u/a/d 12/13/94 (of
which Mr. Safenowitz is a co-trustee and as to which he has no beneficial
interest), 515,000 shares held by The Safenowitz Family Partnership, LP (as
to which he is the president of the general partner and as to which he
disclaims beneficial ownership except to the extent of his pecuniary
interest therein) and 11,523 shares held by his wife (as to which he
disclaims beneficial ownership). Also includes options covering 14,000
shares that are presently exercisable or will become exercisable within 60
days and 12,443 shares held by The Marilyn Safenowitz Irrevocable Trust
u/a/d 4/13/00 (of which he is trustee and as to which he disclaims
beneficial ownership). Excludes 1,837,894 shares held by Safenowitz
Partners, LP (as to which he is the president of the general partner and as
to which he disclaims beneficial ownership except to the extent of his
pecuniary interest therein).
(6) Safenowitz Partners, LP is separate and distinct from The Safenowitz Family
Partnership, LP referred to in Note 5 above. The shares held by Safenowitz
Partners, LP are not included in the total number of shares (or percentage
of class) attributable to Howard Safenowitz as set forth in the table above
and further described in Note 5. Mr. Safenowitz is the president of the
general partner of Safenowitz Partners, LP and disclaims beneficial
ownership of the shares held by Safenowitz Partners, LP except to the extent
of his pecuniary interest therein.
(7) Includes with respect to Messrs. Shea and Smith, 156 and 549 shares,
respectively, held in the Getty Realty Corp. Retirement and Profit Sharing
Plan.
(8) Includes 1,837,894 shares held by Safenowitz Partners, LP (as to which
Howard Safenowitz is the president of the general partner and as to which he
disclaims beneficial ownership except to the extent of his pecuniary
interest therein).
In August 2003, the Company notified holders of the Series A Participating
Convertible Redeemable Preferred Stock that the preferred stock would be
redeemed on September 24, 2003 for $25.00 per share plus a mandatory redemption
dividend of $0.27118 per share. Prior to the redemption date, stockholders with
98% of the preferred stock exercised their right to convert 2,816,919 shares of
preferred stock into 3,186,355 shares of common stock at the conversion rate of
1.1312 shares of common stock for each share of preferred stock so converted,
and received cash in lieu of fractional shares of common stock. The remaining
48,849 shares of the outstanding preferred stock were redeemed for an aggregate
amount, including accrued dividends through the call date, of approximately $1.2
million.
4
DIRECTORS' MEETINGS, COMMITTEES AND EXECUTIVE OFFICERS
DIRECTORS' MEETINGS
During the fiscal year ended December 31, 2003, the Board of Directors held
four regular meetings and two telephonic special meetings. Each of the directors
attended all of the meetings of the Board of Directors, and of the Committees of
the Board on which the director served, except that Mr. Cooper did not attend
one of the regular meetings of the Board of Directors. Each of the directors
attended the annual stockholder meeting in May 2003 and all plan to attend this
year's stockholder meeting to be held on May 20, 2004.
INDEPENDENCE OF DIRECTORS
The Board of Directors has determined that Messrs. Cooper, Coviello,
Safenowitz and Wintrub are "independent" as defined in the listing standards of
the New York Stock Exchange (the "NYSE"). These independent directors will meet
in executive session at least annually, and the chair of such meeting will be
determined on a rotating basis.
COMMITTEES
The Board of Directors has an Audit Committee, a Nominating/Corporate
Governance Committee and a Compensation Committee, the membership and functions
of which are described below.
Audit Committee
The Audit Committee, consisting of Messrs. Coviello (Chairman), Cooper and
Wintrub, met formally three times last year. The Committee selects the firm of
independent public accountants that audits the consolidated financial statements
of Getty and its subsidiaries, discusses the scope and the results of the audit
with the accountants and discusses Getty's financial accounting and reporting
principles as well as the adoption of new accounting pronouncements. The
Committee also examines and discusses the adequacy of Getty's financial controls
with the accountants and with management. In addition to the formal meetings, at
least one Audit Committee member meets telephonically with management and
Getty's independent auditors to review the Company's annual and quarterly
reports and other reports, as appropriate, prior to their filing with the
Securities and Exchange Commission. The entire Audit Committee met with
management and Getty's independent auditors to review the Company's audited
financial statements for the fiscal year ended December 31, 2003, and
recommended to the Board of Directors that the financial statements be included
in the Company's Annual Report on Form 10-K for such fiscal year.
On February 19, 2004, the Board of Directors approved a Revised Audit
Committee Charter in compliance with the listing standards of the NYSE and
adopted revised procedures for the pre-approval of all audit, audit-related, tax
and non-audit services to be performed by the independent auditor. A copy of the
Revised Audit Committee Charter is annexed to this Proxy Statement as Appendix
A.
The Board of Directors has determined that each member of the Audit
Committee is "independent" and "financially literate" as such terms are defined
in the listing standards of the NYSE. Additionally, the Board of Directors has
determined that each member qualifies as an "audit committee financial expert"
under the relevant rules of the Securities and Exchange Commission (the "SEC"),
and that at least Mr. Wintrub has the requisite accounting/financial management
expertise required by the listing standards of the NYSE.
The Revised Charter provides that members of the Audit Committee may not be
members of the audit committee of three or more other public companies unless
such other memberships have been disclosed to the Board and the Board has
determined that such simultaneous service does not impair the ability of such
member to serve effectively on the Audit Committee. Mr. Wintrub has disclosed to
the Board that he is a member of the audit committee of three other public
companies and the Board has determined that such simultaneous service does not
impair Mr. Wintrub's ability to serve effectively on Getty's Audit Committee.
Additionally, Mr. Coviello has advised the Board that he has given notice to
Latham & Watkins LLP, his
5
former law firm that continues to provide services as the Company's outside
legal counsel, and the law firm has confirmed to him, that no portion of his
retirement benefits will be derived from fees paid to the firm by Getty.
At the Audit Committee meeting held on August 14, 2003, the Audit Committee
agreed to serve as the Company's Qualified Legal Compliance Committee in
accordance with SEC rules under the Sarbanes-Oxley Act and on February 19, 2004,
the Audit Committee adopted, and the Board of Directors approved, a Charter for
the Qualified Legal Compliance Committee. Additionally, on February 19, 2004,
the Audit Committee recommended to the Board of Directors for approval, and the
Board of Directors approved, complaint and investigation procedures for
accounting, internal controls, fraud or auditing matters, in accordance with SEC
rules under the Sarbanes-Oxley Act.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee (formerly known as the
Nominating Committee), consisting of Messrs. Liebowitz (Chairman), Cooper,
Coviello and Safenowitz, met one time last year. The Committee recommends
nominees for election to the Board and reviews the role, composition and
structure of the Board and its committees. The Committee will consider nominees
recommended by stockholders upon submission in writing to the Company's
Secretary, in accordance with the provisions of our bylaws, together with the
nominee's qualifications for service as a director. The Committee also
recommends candidates to the Board for election as officers.
On February 19, 2004, the Board of Directors approved a Charter for the
Committee in compliance with the listing standards of the NYSE, a name change to
the "Nominating/Corporate Governance Committee" and written Corporate Governance
Guidelines. Additionally, on February 19, 2004, the Board of Directors resolved
that Mr. Liebowitz no longer shall be a member of the Committee, that Mr.
Wintrub shall serve on the Committee as its chairman and that, in view of such
changes, each member of the Committee is "independent" as such term is defined
in the listing standards of the NYSE. The Nominating/Corporate Governance
Committee charter includes policies with regard to stockholder recommendations
of nominees to the Board of Directors.
Stockholders wishing to submit or recommend candidates for election to the
Board must supply information in writing regarding the candidate to Andrew M.
Smith, Vice President, General Counsel and Corporate Secretary of the Company,
at Getty's executive offices. This information should include the candidate's
name, biographical data and an analysis of the candidate based on the director
candidate criteria described below. The recommendation must also include all
information relating to the proposed director nominee that would be required to
be disclosed in a solicitation of proxies for election of directors in an
election contest under applicable securities law. Additional information
regarding proposed nominees may be requested by the Committee.
The Committee will consider the following criteria, among others the
Committee deems appropriate, including the specific needs of the Board at the
time:
- personal and professional integrity, ethics and values;
- experience in corporate management, such as serving as an officer or
former officer of a publicly held company, and a general understanding of
marketing, finance and other elements relevant to the success of a
publicly-traded company in today's business environment;
- the director's past attendance at meetings and participation in and
contributions to the activities of the Board (if applicable);
- experience in our industry and with relevant social policy concerns;
- understanding of our business;
- educational and professional background;
- experience as a board member of another publicly held company;
6
- practical and mature business judgment, including ability to make
independent analytical inquiries;
- "independence," as defined by the New York Stock Exchange listing
standards;
- financial literacy;
- standing in the community; and
- ability to foster a diversity of backgrounds and views and to complement
the Board's existing strengths.
On the basis of the information gathered in this process, the Committee
will determine which nominees to recommend to the Board. Recommendations
received prior to any Committee meeting where director nominees are to be
considered will be considered at that meeting. The Committee uses the same
process for evaluating all nominees, regardless of the source of the
recommendation.
The Committee has not received any recommendation for a director nominee
from any stockholder owning more than 5% of the common stock of Getty for more
than one fiscal year.
Compensation Committee
The Compensation Committee (formerly known as the Compensation and Stock
Option Committee), which met twice last year, consists of Messrs. Wintrub
(Chairman), Cooper, Liebowitz and Safenowitz. The Compensation Committee
administers Getty's bonus plan, supplemental retirement plan and stock option
plan, and other equity compensation plans as may be approved by the
stockholders, and reviews the compensation of the directors and officers of
Getty.
On February 19, 2004, the Board of Directors approved a Charter for the
Committee in compliance with the listing standards of the NYSE and a name change
to the "Compensation Committee". Additionally, the Board of Directors resolved
that Mr. Liebowitz no longer shall be a member of the Committee and that each
remaining member of the Committee is "independent" as such term is defined in
the listing standards of the NYSE. Also, on February 19, 2004, the Committee
recommended to the Board of Directors that the Getty Realty Corp. 2004 Omnibus
Incentive Compensation Plan (the "2004 Plan") be submitted to the stockholders
for approval at the Annual Meeting. See Proposal to Approve the Company's 2004
Omnibus Incentive Compensation Plan.
WEBSITE ACCESS TO CHARTERS
The charters for each of the Committees, the Corporate Governance
Guidelines, and our Business Conduct Guidelines (which serves as our "code of
ethics" under the Sarbanes-Oxley Act of 2002), may be accessed through the Getty
website at www.gettyrealty.com. Additionally, copies may be requested in writing
by submitting the request to Andrew M. Smith, Vice President, General Counsel
and Corporate Secretary, at the address for Getty's executive offices provided
in this Proxy Statement.
CONTACTING THE BOARD OF DIRECTORS
Stockholders who wish to communicate with the Board of Directors may do so
by sending written communications to the Board of Directors at the following
address: Board of Directors, Getty Realty Corp., 125 Jericho Turnpike, Suite
103, Jericho, New York 11753. Stockholders who wish to direct communications to
only the independent directors of Getty may do so by sending written
communications to the independent directors at the following address:
Independent Directors, Getty Realty Corp., 125 Jericho Turnpike, Suite 103,
Jericho, New York 11753. Concerns relating to accounting, internal controls or
auditing matters are handled in accordance with procedures established by the
Audit Committee with respect to such matters.
DIRECTORS' COMPENSATION
Directors receive annual retainer fees of $20,000, except that the Chairman
of the Audit Committee receives an annual retainer fee of $22,000. Directors
also receive committee and board meeting fees of $1,000 for each meeting
attended, except for telephonic meetings, for which the fee is $500. The
Chairman of the
7
Audit Committee receives $1,500 for each committee meeting, except for
telephonic meetings for which he receives $750. Directors who are employees of
Getty do not receive retainers or board meeting fees. Messrs. Coviello,
Safenowitz and Wintrub have received options under Getty's stock option plan and
will be eligible to receive awards under the 2004 Plan.
EXECUTIVE OFFICERS
Other than Mr. Liebowitz, the executive officers during fiscal 2003 were
Kevin C. Shea, age 44, Vice President of Getty since 2001; Andrew M. Smith, age
51, Vice President, General Counsel and Corporate Secretary of Getty since 2003;
and Thomas Stirnweis, age 45, Vice President, Treasurer and Chief Financial
Officer of Getty since 2003 and Corporate Controller and Treasurer of Getty
since 2001. Management is not aware of any family relationships between any of
its directors or executive officers.
8
COMPENSATION
EXECUTIVE COMPENSATION
The following tables provide information regarding executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the
Chief Executive Officer and each of the other Executive Officers of Getty (the
"Named Executive Officers") for services in all capacities to Getty and its
subsidiaries during the periods indicated.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION FISCAL YEAR ENDED ($) ($) ($)(1) ($) (#) ($)(2)
--------------------------------------------------------------------------------------------------------------------
Leo Liebowitz December 31, 2003 350,870 -0- -0- -0- -0- 55,634(3)
Director, December 31, 2002 341,033 -0- -0- -0- -0- 63,125(3)
President and Chief December 31, 2001 331,100 75,000 -0- -0- -0- 51,268(3)
Executive Officer
Kevin C. Shea December 31, 2003 120,808 60,000 -0- -0- -0- 19,969
Vice President December 31, 2002 117,290 60,000 -0- -0- 10,000 19,654
December 31, 2001 113,149 60,000 -0- -0- 10,000 17,224
Andrew M. Smith December 31, 2003(4) 80,000 35,000 -0- -0- -0- 9,171
Vice President,
General Counsel and
Corporate Secretary
Thomas Stirnweis December 31, 2003 132,464 50,000 -0- -0- -0- 20,542
Vice President, December 31, 2002 128,605 50,000 -0- -0- 10,000 20,657
Treasurer and Chief December 31, 2001 120,673 -0- -0- -0- 10,000 16,618
Financial Officer
-------------------------
(1) None of the Named Executive Officers received perquisites or other personal
benefits that exceeded the lesser of $50,000 or 10% of the officer's salary
and bonus.
(2) All Other Compensation includes Company profit sharing contributions to the
defined contribution Getty Realty Corp. Retirement and Profit Sharing Plan,
including matching contributions under the 401(k) provisions, Getty
contributions to the Getty Realty Corp. Supplemental Retirement Plan for
Executives and life insurance premiums as set forth in the following table.
(3) Mr. Liebowitz reimburses the Company for 75% of the $75,626 fixed annual
premium for a 10-year universal life insurance policy owned by Mr.
Liebowitz. The amount shown is net of the amount of the reimbursement.
(4) Mr. Smith became an employee of the Company on May 6, 2003.
9
PROFIT COMPANY SUPPLEMENTAL
SHARING MATCH UNDER RETIREMENT LIFE
NAME FISCAL YEAR ENDED CONTRIBUTION 401(K) PROVISIONS PLAN INSURANCE(5)
----------------------------------------------------------------------------------------------------------------
Leo Liebowitz December 31, 2003 $3,130 $ -0- $31,982 $20,522(3)
December 31, 2002 3,151 -0- 39,452 20,522(3)
December 31, 2001 2,596 -0- 30,514 18,158(3)
Kevin C. Shea December 31, 2003 2,751 3,623 11,732 1,863
December 31, 2002 2,700 3,513 11,578 1,863
December 31, 2001 2,286 3,420 9,655 1,863
Andrew M. Smith December 31, 2003(4) -0- 2,400 5,625 1,146
Thomas Stirnweis December 31, 2003 2,799 3,974 11,573 2,196
December 31, 2002 2,727 3,858 11,940 2,132
December 31, 2001 1,752 3,620 9,176 2,070
(5) All life insurance policy premiums relate to term life insurance policies
unless otherwise noted.
OTHER EXECUTIVE COMPENSATION
In December 1994, Getty entered into agreements with certain key employees
that, as amended, require Getty, under certain circumstances, to pay at least a
minimum guaranteed annual compensation to such employee as long as he or she
remains a Getty employee. The agreements also require Getty, in the event of a
change of control and termination of employment by Getty without cause, or if
the employee is assigned to materially less favorable job responsibilities, to
make payments to such individual at an annual rate of not less than the minimum
guaranteed annual compensation, reduced by the amount of compensation the
individual receives from any other employer during the covered period. Mr.
Stirnweis currently is the only employee covered by these arrangements, and his
agreement has a 12 month benefit period.
STOCK OPTIONS
No stock options were granted by Getty during the fiscal year ended
December 31, 2003.
The following table provides information as to options exercised by each of
the Named Executive Officers of Getty during the fiscal year ended December 31,
2003 and the value of options held by such officers at year end measured in
terms of the closing price of Getty Common Stock on December 31, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---------------------------------------------------------------------------------------------------------------------
Leo Liebowitz -0- -0- -0- -0-
Kevin C. Shea 17,902 139,760 6,000/15,000 $63,775/138,000
Andrew M. Smith -0- -0- -0- -0-
Thomas Stirnweis 7,500 51,975 0/12,500 0/108,875
STOCK OPTION PLAN
Our 1998 Stock Option Plan, as amended, that has been approved by our
stockholders (the "Stock Option Plan"), authorizes the grant of long-term
incentive share awards in the form of options ("Options") to purchase shares of
Getty common stock to directors, officers and other key employees of Getty and
its subsidiaries. The Stock Option Plan is administered by the Compensation
Committee. The maximum number
10
of shares which may be the subject of outstanding Options under the Stock Option
Plan is 1,100,000, subject to adjustments for stock dividends and stock splits.
As of December 31, 2003, 173,085 shares of Getty common stock were issuable upon
the exercise of Options outstanding under the Stock Option Plan. No grants may
be made under the Stock Option Plan after January 30, 2008. The number of
remaining shares available for grant under the Stock Option Plan was 660,881 as
of March 1, 2004.
The recipients, terms (including price and exercise period) and type of
Option to be granted under the Stock Option Plan are determined by the
Compensation Committee; however, the Option price per share under the Stock
Option Plan generally must be at least equal to the fair market value of a share
of Getty common stock (110% of that amount in the case of Incentive Stock
Options granted to any individual who owns stock representing more than 10% of
the voting power of Getty common stock) on the date the Option is granted.
Subject to certain limitations, Options granted under the Stock Option Plan may
be either Incentive Stock Options (within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code")) or Non-Qualified Stock
Options. With certain limited exceptions, Options may not be exercised for a
period of twelve months following the grant of the Option and are exercisable in
installments as specified in the Stock Option Plan or the terms of each Option.
The exercise period of an Option may not extend more than 10 years beyond its
grant date. The following chart presents information regarding Getty's equity
compensation plans:
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN(A))
PLAN CATEGORY (A) (B) (C)
----------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
approved by stockholders
(the Stock Option Plan) 173,085 $18.19 660,881
Equity Compensation Plans not
approved by stockholders* None N/A N/A
-------------------------- -------------------------
Total 173,085 660,881
========================== =========================
-------------------------
* The Company has had a Holiday Award Plan, pursuant to which each employee has
been awarded 10 shares of common stock on or about December 31st of each year,
and a Service Award Plan, pursuant to which each employee, on each fifth
anniversary of their employment, has received 10 shares of common stock for
each five years of employment. See Proposal to Approve the Company's 2004
Omnibus Incentive Compensation Plan, which 2004 Plan incorporates the Holiday
Award Plan and the Service Award Plan.
RETIREMENT PLANS
Getty has a retirement and profit-sharing plan with deferred 401(k) savings
plan provisions (the "Retirement Plan") for employees meeting certain service
requirements. Under the terms of the Retirement Plan, the annual discretionary
profit sharing contribution is determined by the Board of Directors. For the
401(k) portion of the Retirement Plan, the Board of Directors has elected to
contribute to the Retirement Plan for each participating employee an amount
equal to 50% of the employee's contribution to the Retirement Plan, but in no
event more than 3% of the employee's compensation.
Getty also has a supplemental retirement plan for executives (the
"Supplemental Plan"). Under the Supplemental Plan, which is not qualified for
purposes of Section 401(a) of the Code, a participating executive may receive in
his trust account an amount equal to 10% of his compensation, reduced by the
amount of any contributions allocated to the executive under the Retirement
Plan. The amounts paid to the trustee under the Supplemental Plan may be used to
satisfy claims of general creditors in the event of Getty's
11
or any of its subsidiaries' bankruptcy. The trustee may not cause the
Supplemental Plan to be other than "unfunded" for purposes of the Employee
Retirement Income Security Act of 1974, as amended. An executive's account vests
in the same manner as under the Retirement Plan and is paid upon termination of
employment. Under the Supplemental Plan, during any fiscal year the Board of
Directors may elect not to make any payment to the account of any or all
executives.
Pursuant to a long-standing arrangement, in the event of the death of Mr.
Liebowitz, benefits in an amount equal to twelve months' salary will be paid to
his estate. In the event of termination of Mr. Liebowitz' employment due to
illness or incapacity for a period of one year or longer, benefits equal to
twenty-four months' salary will be payable to Mr. Liebowitz.
Mr. Liebowitz receives an annual pension of $3,500 from a subsidiary's
defined benefit retirement plan which was terminated effective October 1, 1985.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for fiscal year 2003 were Messrs.
Cooper, Liebowitz, Safenowitz and Wintrub. Mr. Liebowitz is President and Chief
Executive Officer. Mr. Cooper was a vice president of Getty until June 1992.
Effective February 19, 2004, Mr. Liebowitz no longer is a member of the
Compensation Committee.
12
REPORT OF THE COMPENSATION COMMITTEE
To Our Stockholders:
This report addresses our compensation policies with respect to the
compensation of the Chief Executive Officer and the other executive officers
during fiscal 2003. The Compensation Committee of the Board of Directors (the
"Compensation Committee"), formerly called the Compensation and Stock Option
Committee, is responsible for setting the policies which govern base salary
compensation, bonuses, the Retirement Plan, the Supplemental Retirement Plan,
the Stock Option Plan, other equity based compensation more particularly
described below, and for determining amounts payable under these plans.
Compensation of Getty's executive officers (with the exception of the Chief
Executive Officer) is recommended by the Chief Executive Officer to the
Compensation Committee and is discussed, reviewed and approved by the full Board
of Directors. The compensation of the Chief Executive Officer is discussed,
reviewed and approved by the Compensation Committee and, for 2003, also was
reviewed by the full Board of Directors.
EXECUTIVE OFFICER COMPENSATION
Getty's compensation program for executive officers is designed to provide
each officer with a total compensation package competitive with amounts paid for
similar positions in similar companies. With its objective being to attract and
retain capable people, Getty endeavors to ensure that each officer's
compensation is based on his or her ability, effort and achievement. In addition
to the base salary program, Getty has had a discretionary bonus plan that is
administered by the Compensation Committee in light of Getty's focus on managing
its portfolio of retail motor fuel and convenience store properties as well as
petroleum distribution terminals while minimizing expenses. The Compensation
Committee has determined, for 2004, to increase the base salaries of the
executive officers by amounts approximately equal to the bonuses paid in 2004
for the 2003 fiscal year.
STOCK OPTIONS
Stock options have been granted by Getty, in the discretion of the
Compensation Committee, to encourage and facilitate personal stock ownership by
the directors, executives and certain other key employees and thus strengthen
their personal commitment to Getty and provide a longer-term perspective to
their managerial responsibilities. No stock options were granted in 2003. In
December 2003, the Compensation Committee, in order to better link the
executives' interests with those of the stockholders of Getty, resolved to
recommend to the Board of Directors approval of the 2004 Plan. Under the 2004
Plan, which was approved by the Board of Directors at their February 19, 2004
meeting, subject to approval by the stockholders at the Annual Meeting, the
Compensation Committee would have the discretion to grant, among other forms of
equity based compensation, restricted stock awards, restricted stock units, and
dividend equivalents. The Compensation Committee's intention is to grant equity
based awards under the 2004 Plan based on individual performance and the
potential to contribute to the future success of Getty.
The Compensation Committee believes that the compensation components
described above provide compensation that is competitive with that offered by
similar corporations.
Section 162(m) of the Code denies publicly-held corporations the federal
income tax deduction for compensation in excess of $1.0 million paid to its
chief executive officer and four other most highly compensated officers during a
fiscal year unless the compensation is "performance-based". It is our policy to
take this rule into account in setting the compensation of such executives. In
addition to salaries and bonuses, compensation income recognized upon the
exercise of stock options may represent compensation subject to the Section
162(m) limitation. At this time the salaries and bonuses paid to our executives
and officers are not otherwise affected by the Section 162(m) limitations on
deductibility. In the event that the compensation of our executives were to
approach the Section 162(m) limitations in the future, the Compensation
Committee will consider such limitations in determining an executive's total
compensation.
13
The report of the Compensation Committee should not be deemed incorporated
by reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Securities Act or under the Exchange Act,
except to the extent that Getty specifically incorporates this information by
reference, and should not otherwise be deemed filed under such Acts.
Compensation Committee:
Warren Wintrub (Chairman)
Milton Cooper
Leo Liebowitz (through February 19,
2004)
Howard Safenowitz
14
REPORT OF THE AUDIT COMMITTEE
To Our Stockholders:
This report addresses our compliance with rules of the SEC and the listing
standards of the NYSE designed to enhance audit committee effectiveness, to
improve public disclosure about the functioning of corporate audit committees
and to enhance the reliability and credibility of financial statements of public
companies.
INDEPENDENCE/QUALIFICATIONS
The Board of Directors has determined that each member of the Audit
Committee is "independent" and "financially literate" as such terms are defined
in the listing standards of the NYSE. Additionally, the Board of Directors has
determined that each member qualifies as an "audit committee financial expert"
under the relevant SEC rules, and that at least Mr. Wintrub has the requisite
accounting/financial management expertise required by the listing standards of
the NYSE.
AUDIT COMMITTEE CHARTER, QUALIFIED LEGAL COMPLIANCE COMMITTEE CHARTER AND
WHISTLEBLOWER PROCEDURES
At the Audit Committee meeting held on February 19, 2004, the Committee
adopted a Revised Audit Committee Charter, in compliance with the listing
standards of the NYSE. The Revised Charter subsequently was approved by Getty's
Board of Directors. A copy of the Revised Charter is annexed to this Proxy
Statement as Appendix A. Additionally, the Committee adopted revised procedures
for the pre-approval of all audit, audit-related, tax and non-audit services to
be provided by our independent auditors.
At the Audit Committee meeting held on August 14, 2003, the Audit Committee
agreed to serve as the Company's Qualified Legal Compliance Committee in
accordance with SEC rules under the Sarbanes-Oxley Act and on February 19, 2004,
the Audit Committee adopted, and the Board of Directors approved, a Charter for
the Qualified Legal Compliance Committee. Additionally, on February 19, 2004,
the Audit Committee recommended to the Board of Directors for approval, and the
Board of Directors approved, complaint and investigation procedures for
accounting, internal controls, fraud or auditing matters, in accordance with SEC
rules under the Sarbanes-Oxley Act.
FINANCIAL STATEMENTS
With regard to our audited financial statements, the Audit Committee has:
(1) reviewed and discussed the audited financial statements with
management and with PricewaterhouseCoopers LLP, our independent auditors;
(2) discussed with PricewaterhouseCoopers LLP the matters required by
SAS 61, as may be modified or supplemented;
(3) (a) received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as modified or supplemented, (b)
discussed with PricewaterhouseCoopers LLP their independence, and (c)
concluded that the provision of those services in conjunction with audit
services by PricewaterhouseCoopers LLP is compatible with maintaining their
independence; and
(4) based upon the review and discussions set forth in paragraphs (1)
through (3) above, recommended to Getty's Board of Directors that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2003.
The Audit Committee Chairman, prior to filing with the SEC of each of the
Company's quarterly reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 2003, reviewed with the
15
Company's management and PricewaterhouseCoopers LLP the Company's interim
financial results to be included in such reports and the matters required to be
discussed by SAS 61.
The report of the Audit Committee should not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Securities Act or under the Exchange Act,
except to the extent that Getty specifically incorporates this information by
reference, and should not otherwise be deemed filed under such Acts.
Audit Committee:
Philip Coviello (Chairman)
Milton Cooper
Warren Wintrub
16
STOCK PERFORMANCE GRAPH
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
GETTY (GTY), S&P 500, AND PEER GROUP
(Performance results through 12/31/03)
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on Getty common stock against the
cumulative total return of the Standard & Poor's 500 Stock Index and the Peer
Group for the period of five years ended December 31, 2003.
[PERFORMANCE GRAPH]
-----------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
-----------------------------------------------------------------------------------------------------------
Getty Realty Corp. $100.00 78.94 111.90 185.65 202.95 303.20
-----------------------------------------------------------------------------------------------------------
Standard & Poor's 500 $100.00 120.28 108.08 93.99 72.02 91.02
-----------------------------------------------------------------------------------------------------------
Peer Group $100.00 83.65 100.78 142.12 178.50 227.55
-----------------------------------------------------------------------------------------------------------
Assumes $100 invested at the close of trading on 12/31/98 in Getty common stock,
Standard & Poor's 500, and Peer Group.
*Cumulative total return assumes reinvestment of dividends, and in the case of
Getty includes the special one-time earnings and profits distribution made in
August 2001.
Getty has chosen as its Peer Group the following companies: Commercial Net
Lease Realty, Inc., U.S. Restaurant Properties, Inc., Realty Income Corp. and
Hospitality Property Trust. We have chosen these companies as our Peer Group
because a substantial segment of each of their businesses is as a real estate
company that owns and leases commercial properties.
The Stock Performance Graph should not be deemed incorporated by reference
by any general statement incorporating this Proxy Statement by reference into
any filing under the Securities Act or under the Exchange Act, except to the
extent that Getty specifically incorporates this graph by reference, and should
not otherwise be deemed filed under such Acts.
We cannot assure you that Getty stock performance will continue in the
future with the same or similar trends depicted in the graph above. We do not
make or endorse any predictions as to future stock performance.
17
PROPOSAL TO APPROVE THE COMPANY'S
2004 OMNIBUS INCENTIVE COMPENSATION PLAN
GENERAL
The Board of Directors has approved, and recommends stockholder approval
of, the Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the "2004
Plan") for officers and other valued employees of the Company and its
subsidiaries and members of the Board. The 2004 Plan will become effective upon
its approval by the affirmative vote of a majority of the votes cast by holders
of common stock present or represented by proxy and entitled to vote thereon at
the meeting, provided that the total vote cast on this matter represents over
50% in interest of all common stock entitled to vote on the matter.
The Board of Directors believes that the 2004 Plan will promote the
success, and enhance the value, of Getty by continuing to link the personal
interest of participants to those of our stockholders and by providing
participants with an incentive for outstanding performance.
The 2004 Plan provides for the grant of restricted stock, restricted stock
units, performance awards, dividend equivalents, stock payments and stock awards
to eligible individuals. The 2004 Plan does not provide for the grant of stock
options. In this regard, the Stock Option Plan will continue to remain in
effect. A summary of the principal provisions of the 2004 Plan is set forth
below. The summary is qualified by reference to the full text of the 2004 Plan,
which is annexed to this Proxy Statement as Appendix B.
ADMINISTRATION
The 2004 Plan will be administered by the Compensation Committee of the
Board. The Compensation Committee will have the exclusive authority to
administer the 2004 Plan, including the power to determine eligibility, the
types and sizes of awards, the price and timing of awards, terms of vesting, the
acceleration or waiver of any vesting restriction and the timing and manner of
settling vested awards.
ELIGIBILITY
If approved at the 2004 Annual Meeting of Stockholders, persons eligible to
participate in the 2004 Plan will include all (approximately 16) employees of
Getty and its subsidiaries, as determined by the Compensation Committee, and all
members of the Board, comprised of five persons.
LIMITATION ON AWARDS AND SHARES AVAILABLE
An aggregate of 1,000,000 shares of common stock will be available for
grant pursuant to the 2004 Plan. The shares of common stock covered by the 2004
Plan will be authorized but unissued shares. If any right to acquire shares of
common stock under any award under the 2004 Plan expires or is canceled without
having been fully exercised, or is settled in whole or in part for cash as
permitted by the 2004 Plan, the number of unexercised shares subject to such
cancelled or expired award, and the number of shares with respect to which an
award was settled in cash, again may be awarded under the 2004 Plan.
The aggregate maximum number of shares of common stock that may be subject
to awards granted under the 2004 Plan to all participants during any calendar
year is 80,000.
AWARDS
The 2004 Plan provides for the grant of restricted stock, restricted stock
units, performance awards, dividend equivalents, stock payments and stock
awards. No determination has been made as to the types or amounts of awards that
will be granted to specific individuals pursuant to the 2004 Plan. See the
Summary Compensation Table above, for information on prior awards to named
executive officers under the Stock Option Plan.
Restricted stock may be granted pursuant to the 2004 Plan. A restricted
stock award is the grant of shares of common stock at a price determined by the
Compensation Committee (which price may be no less than par
18
value unless otherwise permitted by applicable state law), that is
nontransferable and may be subject to substantial risk of forfeiture until
specific conditions are met. Conditions may be based on continuing employment or
achieving performance goals. During the period of restriction, participants
holding shares of restricted stock will, unless the Compensation Committee
determines otherwise, have full voting and dividend rights with respect to such
shares. The restrictions will lapse in accordance with a schedule or other
conditions determined by the Compensation Committee.
Restricted stock units also may be granted pursuant to the 2004 Plan. A
restricted stock unit has a value equal to one share of common stock and may be
settled, in the sole discretion of the Compensation Committee, in cash or by the
issuance of such share. The grant of a restricted stock unit does not provide
voting or other shareholder rights unless and until the restricted stock unit is
settled for a share of common stock. However, to the extent provided in the
applicable award agreement, an award of restricted stock units may include
dividend equivalents. An award of restricted stock units is nontransferable and
may be subject to substantial risk of forfeiture until specific conditions are
met. Conditions may be based on continuing employment or achieving performance
goals.
Dividend equivalents represent the value of the dividends per share paid by
Getty, calculated with reference to the number of shares covered by the
restricted stock unit or other award held by the participant. Dividend
equivalents may be paid in cash or in shares of common stock or in a combination
of both, in the sole discretion of the Compensation Committee.
AMENDMENT AND TERMINATION
The Compensation Committee may terminate, amend, or modify the 2004 Plan at
any time; provided, however, that stockholder approval must be obtained for any
amendment to the extent required in order to comply with any applicable law,
regulation or stock exchange rule, or to increase the maximum number of shares
which may be issued under the 2004 Plan.
In no event may an award be granted pursuant to the 2004 Plan on or after
the tenth anniversary of the last date on which Getty's stockholders approve the
2004 Plan.
FEDERAL INCOME TAX CONSEQUENCES
Nontransferable restricted stock subject to a substantial risk of
forfeiture results in income recognition equal to the excess of the fair market
value over the price paid, if any, only at the time the restrictions lapse
(unless the recipient elects to accelerate recognition as of the date of grant).
Stock-based performance awards, restricted stock units, dividend equivalents and
other types of awards generally are subject to tax at the time of payment.
Compensation otherwise effectively deferred is taxed when paid. In each of the
foregoing cases, Getty generally will have a corresponding deduction at the time
the participant recognizes income.
ACCOUNTING TREATMENT
Getty will generally record compensation expense with respect to the grant
of awards under the 2004 Plan using the fair value method of accounting. Under
generally accepted accounting principles, Getty will record compensation expense
for a restricted stock award equal to the excess of the fair market value of the
award determined as of the date of the grant over the amount (if any) the
participant pays for the stock, and will recognize this amount as compensation
expense ratably over any applicable service vesting period. Awards of restricted
stock units will be treated similarly. Awards subject to performance vesting
conditions will result in similar compensation expense measured at the grant
date, which may be adjusted periodically as vesting becomes more or less likely,
and amounts recognized as compensation expense in any period in which vesting
occurs. Getty will charge retained earnings in the amount of any payment of
dividend equivalents granted under the 2004 Plan.
19
NEW PLAN BENEFITS
No awards will be granted pursuant to the 2004 Plan until it is approved by
Getty's stockholders. In addition, awards are subject to the discretion of the
Compensation Committee. Therefore, it is not possible to determine the benefits
that will be received in the future by participants in the 2004 Plan or the
benefits that would have been received by such participants if the 2004 Plan had
been in effect in the year ended December 31, 2003.
VOTE REQUIRED
Approval of the 2004 Plan requires approval by affirmative vote of a
majority of the votes cast by holders of our common stock who are present or
represented by proxy and entitled to vote thereon at the meeting, provided that
the total vote cast on the proposal represents over 50% in interest of all
common stock entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
GETTY REALTY CORP. 2004 OMNIBUS INCENTIVE COMPENSATION PLAN.
20
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On February 19, 2004, the Audit Committee appointed the firm of
PricewaterhouseCoopers LLP, subject to ratification by the stockholders at the
Annual Meeting, to audit the accounts of Getty with respect to our operations
for the fiscal year ending December 31, 2004 and to perform such other services
as may be required. Should this firm of auditors be unable to perform these
services for any reason, the Audit Committee will appoint other independent
auditors to perform these services. As long as a quorum is present, a majority
of votes cast at the meeting is necessary to ratify the appointment of the
independent auditors.
The fees paid to PricewaterhouseCoopers LLP, our principal independent
auditors, during fiscal year 2002 and fiscal year 2003 were as follows:
FY 2002 FY 2003
-----------------------
(a) Audit Fees(1) $108,000 $120,000
(b) Audit-Related Fees (assurance and related services
reasonably related to audit or review of financial
statements not reported under (a)) $ 0 $ 10,000
(c) Tax Fees (professional services for tax compliance, advice
and planning) $127,000(2) $ 99,625(3)
(d) All Other Fees (not reflected in (a)--(c)) $ 0 $ 0
The Audit Committee's Pre-Approval Policy provides for pre-approval of
all audit, audit-related, tax and non-audit services to be provided by
PricewaterhouseCoopers LLP and specifically described by the Audit
Committee on an annual basis. Any additional services not pre-approved and
any services exceeding pre-approved cost levels must be separately approved
by the Audit Committee. The Policy authorizes the Audit Committee to
delegate to one or more of its members, and the Audit Committee has
delegated to each of its members, authority to pre-approve non-audit
services. All (100%) of the non-audit services performed by
PricewaterhouseCoopers LLP in 2002 and 2003 were approved by the Audit
Committee.
-----------------------------------
(1) Includes the aggregate fees estimated for professional services
rendered by PricewaterhouseCoopers LLP for the audit of the
Company's annual financial statements for the fiscal year and the
reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for the fiscal year.
(2) Includes tax return and REIT compliance projects and due diligence
and tax services related to potential acquisitions.
(3) Includes $84,285 for federal and state tax compliance; $7,670 for
tax treatment of preferred stock redemption; and $7,670 for state
tax planning.
Representatives of the firm of PricewaterhouseCoopers LLP are expected to
be present at the Annual Meeting, will have the opportunity to make a statement
if they desire to do so, and will be available to respond to appropriate
questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS GETTY'S INDEPENDENT PUBLIC AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2004.
21
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Exchange Act and the rules issued
thereunder, Getty's executive officers and directors are required to file
reports of ownership and changes in ownership of Getty equity securities with
the SEC and the NYSE. Copies of these reports are required to be furnished to
us. Based on our review of the Forms 3 and 4 that we received during fiscal 2003
and of the Forms 5 that we received with respect to fiscal 2003, Getty believes
that during fiscal 2003 all of our executive officers and directors complied
with the Section 16(a) requirements.
OTHER MATTERS
Management does not know of any matters, other than those referred to
above, to be presented at the meeting for action by the stockholders. However,
if any other matters are properly brought before the meeting, or any adjournment
or adjournments or postponements thereof, we intend to cast votes pursuant to
the proxies with respect to such matters in accordance with the best judgment of
the persons acting under the proxies.
The proxy may be revoked at any time prior to its exercise. Brokerage
houses and other custodians will be requested to forward solicitation material
to beneficial owners of stock that they hold of record. We will reimburse
brokerage houses, banks and custodians for their out-of-pocket expenses in
forwarding proxy material to the beneficial owners. The cost of this
solicitation, which will be effected by mail, will be borne by us.
April 9, 2004 By Order of the Board of Directors,
[/S/ ANDREW M. SMITH]
Andrew M. Smith
Vice President, General Counsel
and Corporate Secretary
22
APPENDIX A
GETTY REALTY CORP.
REVISED CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Adopted February 19, 2004
I. PURPOSE
The Audit Committee (the "Committee") is appointed by the Board of
Directors of the Company (the "Board") to assist the Board in fulfilling its
oversight responsibilities regarding:
- management's conduct of the Company's financial reporting process and
systems of internal accounting and financial controls;
- the Company's compliance with legal and regulatory requirements;
- the integrity of the Company's financial statements;
- the independent auditor's qualifications, independence and performance;
- the performance of the Company's internal audit function; and
- communication among the independent auditor, management and the Board.
The Committee may conduct or authorize investigations into any matters
within the scope of the powers and responsibilities delegated to the Committee.
It shall have direct access to all company personnel and to the independent
auditor. The Committee may retain any independent counsel, experts or advisors
(accounting, financial or otherwise) that the Committee believes to be necessary
or appropriate. The Committee may also utilize the services of the Company's
regular legal counsel or other advisors to the Company. The Company shall
provide for appropriate funding, as determined by the Committee, for payment of
compensation to the independent auditor for the purpose of rendering or issuing
an audit report or performing other audit, review or attest services, for
payment of compensation to any advisors employed by the Committee and for
ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties.
In addition to the powers and responsibilities expressly delegated to the
Committee in this Charter, the Committee may exercise any other powers and carry
out any other responsibilities delegated to it by the Board from time to time
consistent with the Company's bylaws. The powers and responsibilities delegated
by the Board to the Committee in this Charter or otherwise shall be exercised
and carried out by the Committee as it deems appropriate without requirement of
Board approval, and any decision made by the Committee (including any decision
to exercise or refrain from exercising any of the powers delegated to the
Committee hereunder) shall be at the Committee's sole discretion. While acting
within the scope of the powers and responsibilities delegated to it, the
Committee shall have and may exercise all the powers and authority of the Board.
To the fullest extent permitted by law, the Committee shall have the power to
determine which matters are within the scope of the powers and responsibilities
delegated to it.
Notwithstanding the foregoing, the Committee's responsibilities are limited
to oversight. Management of the Company is responsible for the preparation,
presentation and integrity of the Company's financial statements as well as the
Company's financial reporting process, accounting policies, internal audit
function, internal accounting controls and disclosure controls and procedures.
The independent auditor is responsible for performing an audit of the Company's
annual financial statements, expressing an opinion as to the conformity of such
annual financial statements with generally accepted accounting principles,
reviewing the Company's quarterly financial statements and issuing an attesting
report as to the fairness of management's assertions about the effectiveness of
the Company's internal controls over financial reporting. It is not the
responsibility of the Committee to plan or conduct audits or to determine that
the Company's financial statements and disclosure are complete and accurate and
in accordance with generally accepted accounting principles and applicable laws,
rules and regulations. Each member of the Committee shall be entitled to rely on
the integrity
23
of those persons within the Company and of the professionals and experts
(including the Company's internal auditor (or others responsible for the
internal audit function, including contracted non-employee or audit or
accounting firms engaged to provide internal audit services) (the "internal
auditor") and the Company's independent auditor) from which the Committee
receives information and, absent actual knowledge to the contrary, the accuracy
of the financial and other information provided to the Committee by such
persons, professionals or experts.
II. COMPOSITION AND MEETINGS
The Committee's composition shall meet the eligibility requirements of the
Audit Committee Policy of the New York Stock Exchange. The Committee shall meet
at least once each fiscal quarter and more frequently as the Committee deems
desirable.
All non-management directors that are not members of the Committee may
attend and observe meetings of the Committee, but shall not participate in any
discussion or deliberation unless invited to do so by the Committee, and in any
event shall not be entitled to vote. The Committee may, at its discretion,
include in its meetings members of the Company's management, representatives of
the independent auditor, the internal auditor, any other financial personnel
employed or retained by the Company or any other persons whose presence the
Committee believes to be necessary or appropriate. Notwithstanding the
foregoing, the Committee may also exclude from its meetings any persons it deems
appropriate, including, but not limited to, any non-management director that is
not a member of the Committee.
The Committee shall be comprised of not less than three (3) members of the
Board, each of whom shall be independent, non-employee members of the Board,
free from any relationship that would interfere with the exercise of his or her
independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements. However, at least one (1) member of the
Committee shall have accounting or related financial management expertise as
determined by the Board in its business judgment. In addition, either at least
one (1) member of the Committee shall be an "audit committee financial expert"
within the definition adopted by the Securities and Exchange Commission (the
"SEC") or the Company shall disclose in its periodic reports required pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act") the reasons why at
least one (1) member of the Committee is not an "audit committee financial
expert."
Committee members shall be appointed by the Board on recommendation of the
Company's Nominating Committee. Each Committee member shall satisfy the
independence requirements of the New York Stock Exchange and Exchange Act Rule
10A-3(b)(1). If a Committee Chair is not designated by the Board or present at a
meeting, the members of the Committee may designate a Chair by majority vote of
the members of the Committee who are present. A majority of the members of the
Committee shall constitute a quorum.
Members of the Audit Committee may not be members of the audit committee of
three or more other public companies unless such other memberships have been
disclosed to the Board and the Board has determined that such simultaneous
service does not impair the ability of such member to effectively serve on the
Company's Audit Committee, which determination must be disclosed in the
Company's Proxy or other periodic report required pursuant to the Exchange Act
filed next filed after such determination.
III. RESPONSIBILITIES AND DUTIES
The Committee's principal responsibility is one of oversight. The Company's
management is responsible for preparing the Company's financial statements and
the independent auditor is responsible for auditing and/or reviewing those
financial statements. In carrying out its oversight responsibilities, the
Committee is not providing any expert or special assurance as to the Company's
financial statements or any professional certification as to the independent
auditor's work. The Committee's specific responsibilities are as follows:
1. The Committee shall be directly responsible for the appointment,
compensation, retention and oversight of the work of the independent auditor
(including resolution of any disagreements between Company
24
management and the independent auditor regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work or performing
other audit, review or attest services for the Company.
(a) Before the independent auditor is engaged by the Company or its
subsidiaries to render audit or non-audit services, the Committee shall
pre-approve the engagement.
(b) Committee pre-approval of audit and non-audit services will not be
required if the engagement for the services is entered into pursuant to
pre-approval policies and procedures established by the Committee regarding
the Company's engagement of the independent auditor, provided the policies
and procedures are detailed as to the particular service, the Committee is
informed of each service provided and such policies and procedures do not
include delegation of the Committee's responsibilities under the Exchange
Act to the Company's management. Committee pre-approval of non-audit
services (other than review and attest services) will not be required if
such services are permitted by the SEC to be undertaken without
pre-approval.
(c) The Committee may delegate to one or more designated members of
the Committee the authority to grant pre-approvals, provided such approvals
are presented to the Committee at a subsequent meeting.
(d) If the Committee elects to establish pre-approval policies and
procedures regarding non-audit services, the Committee must be informed of
each non-audit service provided by the independent auditor.
2. The Committee shall provide, in the auditor's services agreement, that
the auditor shall report directly to the Committee.
3. The Committee shall establish procedures for the receipt, collection,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls, auditing matters, and the confidential
and anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
4. The Committee shall review and approve any and all related party
transactions.
5. The Committee or the Committee Chair shall discuss with management and
the independent auditor the Company's earnings press releases (with particular
focus on any "pro forma" or "adjusted" non-GAAP information), as well as
financial information and earnings guidance provided to analysts and rating
agencies. The Committee's discussion in this regard may be general in nature
(i.e., discussion of the types of information to be disclosed and the type of
presentation to be made) and need not take place in advance of each earnings
release or each instance in which the Company may provide earnings guidance.
6. The Committee shall review with management and the independent auditor,
the annual audited financial statements, including the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and review and consider with the independent auditor the matters
required to be discussed by Statement on Auditing Standards ("SAS") No. 61,
"Communication with Audit Committees," as then in effect. In this regard, the
Committee shall review with the independent auditor any problems or difficulties
the independent auditor may have encountered during the course of the audit
work, including any restrictions on the scope of activities or access to
required information or any significant disagreements with management and
management's responses to such matters. Among the items that the Committee
should consider reviewing with the independent auditor are: (A) any accounting
adjustments that were noted or proposed by the auditor but were "passed" (as
immaterial or otherwise); (B) any communications between the audit team and the
independent auditor's national office respecting auditing or accounting issues
presented by the engagement; and (C) any "management" or "internal control"
letter issued, or proposed to be issued, by the independent auditor to the
Company. The Committee shall obtain from the independent auditor assurances that
Section 10A(b) of the Exchange Act has not been implicated.
7. The Committee, based on the review and discussions in paragraph 6 above,
shall determine whether to recommend to the Board that the audited financial
statements be included in the Company's Annual Report
25
on Form 10-K prior to filing with the Securities and Exchange Commission
("SEC"), or the Annual Report to Shareholders if distributed prior to the filing
of Form 10-K.
8. The Committee shall review and discuss with management and the
independent auditor: (A) major issues regarding accounting principles and
financial statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and major issues as
to the adequacy of the Company's internal controls and any special audit steps
adopted in light of material control deficiencies; (B) any analyses prepared by
management or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the preparation of the
Company's financial statements, including analyses of the effects of alternative
GAAP methods on the Company's financial statements; and (C) the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the Company's financial statements.
9. The Committee shall review with management and the independent auditor
any impact on the financial statements of any new or proposed changes in
accounting principles or legal or regulatory requirements.
10. The Committee shall discuss with management the Company's policies with
respect to risk assessment and risk management. The Committee shall discuss with
management the Company's significant financial risk exposures and the actions
management has taken to limit, monitor or control such exposures.
11. At least one member of the Committee, prior to filing of each quarterly
report on Form 10-Q with the SEC, shall review with management and the
independent auditor the Company's interim financial results to be included in
such, including the Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
12. The Committee shall require the auditors to issue to the Committee an
audit report containing all critical accounting policies/practices used, all
alternative treatments of financial information within GAAP that were discussed
with management, ramifications of such alternative disclosures and treatment
preferred by the auditors, and providing other written material between
management and the auditors.
13. The Committee shall discuss with management and the independent auditor
the quality, appropriateness and adequacy of the Company's internal controls and
accounting principles applied in its financial reporting. The Committee will
meet separately with the chief executive officer and chief financial officer of
the Company at least annually to review the financial affairs of the Company.
The Committee will meet with the independent auditor of the Company at such time
as it deems appropriate to review the independent auditor's examination and
management report, and may do so in executive session if deemed appropriate.
14. The independent auditor is ultimately accountable to the Committee and
the Board. In connection therewith, the Committee shall:
- Request from the independent auditor annually a formal written statement
delineating all relationships between the independent auditor and the
Company consistent with Independence Standards Board Standard No. 1.
- Discuss with the independent auditor any such disclosed relationships and
their impact on the independent auditor's independence.
- Set clear hiring policies for employees or former employees of the
Company's independent auditor.
- Recommend that the Board take appropriate action in response to the
independent auditor's report to satisfy itself of the independent
auditor's independence.
15. The Committee, at least annually, shall review and evaluate the
independence, quality control procedures, performance and compensation of the
independent auditor and the experience and qualifications
26
of the independent auditor's senior personnel that are providing audit services
to the Company, and discharge or replace the independent auditor should
circumstances warrant. In conducting its review:
(a) The Committee shall obtain and review a report prepared by the
independent auditor describing (i) the auditing firm's internal
quality-control procedures and (ii) any material issues raised by the most
recent internal quality-control review, or peer review, of the auditing
firm, or by any inquiry or investigation by governmental or professional
authorities, within the preceding five (5) years, respecting one or more
independent audits carried out by the auditing firm, and any steps taken to
deal with any such issues.
(b) The Committee shall confirm with the independent auditor that the
independent auditor is in compliance with the partner rotation requirements
established by the SEC.
(c) The Committee shall consider whether the Company should adopt a
rotation of the annual audit among independent auditing firms.
(d) The Committee shall, if applicable, consider whether the
independent auditor's provision of any permitted information technology
services or other non-audit services to the Company is compatible with
maintaining the independence of the independent auditor.
16. The Committee, annually, shall review the appointment and continuing
retention of the internal auditor.
17. The Committee shall meet periodically with the Company's internal
auditor to discuss the responsibilities, budget and staffing of the Company's
internal audit function and any issues that the internal auditor believes
warrant Audit Committee attention. The Committee shall discuss with the internal
auditor any significant reports to management prepared by the internal auditor
and any responses from management.
18. The Committee shall review and reassess the adequacy of this Charter at
least annually. The Charter shall be submitted to the Board for approval and
shall be published in accordance with SEC regulations.
19. The Committee shall provide to the New York Stock Exchange on an annual
basis a written affirmation regarding the independence of the Committee members,
the financial literacy of the members, that at least one member is a "financial
expert", and that the Committee has performed a review of the Audit Committee
Charter.
20. The Committee shall submit a report to shareholders for inclusion in
the Company's annual proxy statement as required by SEC rules.
21. In addition to the above responsibilities, the Committee will undertake
such other duties as the Board delegates to it, and will report at least
annually to the Board regarding the Committee's examinations and
recommendations.
IV. REPORTS AND MINUTES
1. The Committee will maintain written minutes of its meetings that will be
filed with the minutes of the meetings of the Board.
2. The Committee will report periodically to the Board regarding the
Committee's activities, which will be incorporated as a part of the minutes of
the Board at which those activities are presented.
3. In particular, the Committee, through its Chair, shall report regularly
to, and review with, the Board any issues that arise with respect to the quality
or integrity of the Company's financial statements, the Company's compliance
with legal or regulatory requirements, the performance and independence of the
Company's independent auditor, the performance of the Company's internal audit
function or any other matter the Committee determines is necessary or advisable
to report to the Board. The Committee, at least annually, shall perform an
evaluation of the performance of the Committee and its members, including a
review of the Committee's compliance with this Charter, which shall be reported
to the Board.
27
APPENDIX B
2004 GETTY REALTY CORP. OMNIBUS INCENTIVE COMPENSATION PLAN
28
GETTY REALTY CORP.
2004 OMNIBUS INCENTIVE COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS...................................... 30
ARTICLE II. SHARES SUBJECT TO PLAN.......................... 32
ARTICLE III. GRANTING OF AWARDS............................. 33
ARTICLE IV. AWARD OF RESTRICTED STOCK....................... 34
ARTICLE V. PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS................... 35
ARTICLE VI. AWARD OF RESTRICTED STOCK UNITS................. 37
ARTICLE VII. ADMINISTRATION................................. 38
ARTICLE VIII. MISCELLANEOUS PROVISIONS...................... 38
NOTE: THIS FORM OF OMNIBUS EQUITY-BASED COMPENSATION PLAN IS INTENDED TO ALLOW
THE COMPENSATION COMMITTEE MAXIMUM FLEXIBILITY BY PROVIDING FOR AWARDS OF
RESTRICTED STOCK, RESTRICTED STOCK UNITS AND STOCK BONUSES (AND CASH BONUSES IN
CONNECTION THEREWITH), AS LONG AS THE BOARD HAS GIVEN ITS PRIOR APPROVAL OF SUCH
TYPE OF AWARD.
29
The purpose of the Getty Realty Corp. 2004 Omnibus Incentive Compensation
Plan (the "Plan") is to provide a flexible framework that will permit the Board
of Directors (the "Board") of Getty Realty Corp. (the "Company") by and through
the Company's Compensation Committee (the "Committee") to develop and implement
a variety of stock-based, incentive compensation programs based on the changing
needs of the Company, its competitive market, and regulatory climate.
The Board and senior management of the Company believe it is in the best
interest of its shareholders for officers, employees and directors of the
Company to own stock in the Company, to vest in them a proprietary interest in
the success of the Company and its subsidiaries and to provide certain
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code, and that such ownership will enhance the Company's ability to attract
and retain highly qualified personnel and enhance the long-term performance of
the Company and its subsidiaries.
ARTICLE I.
DEFINITIONS
Wherever the following terms are used in the Plan they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.
1.1. "Administrator" shall mean the Committee unless the Board has assumed
the authority for administration of the Plan generally as provided in Section
7.1 hereof.
1.2. "Award" shall mean a Restricted Stock award, a Restricted Stock Unit
award, a Performance Award, a Dividend Equivalents award, a Deferred Stock
award, or a Stock Payment award which may be awarded or granted under the Plan
(collectively, "Awards").
1.3. "Award Agreement" shall mean a written agreement executed by an
authorized officer of the Company and the Holder which shall contain such terms
and conditions with respect to an Award as the Administrator shall determine,
consistent with the Plan.
1.4. "Annual Aggregate Award Limit" shall mean, in the aggregate, for any
calendar year, for all Holders receiving Awards in such calendar year, 80,000
shares of Common Stock, as adjusted pursuant to Section 8.3; provided, however,
that solely with respect to Performance Awards granted pursuant to Section
5.2(b) and Dividend Equivalents granted pursuant to Section 5.3, Annual
Aggregate Award Limit, for any calendar year, shall mean $915,000.
1.5. "Board" shall mean the Board of Directors of the Company.
1.6. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7. "Committee" shall mean the Compensation Committee of the Board, or
another committee or subcommittee of the Board.
1.8. "Common Stock" shall mean the common stock of the Company, par value
$.01 per share.
1.9. "Company" shall mean Getty Realty Corp., a Maryland corporation.
1.10. "Deferred Stock" shall mean Common Stock awarded under Article V of
the Plan.
1.11. "Director" shall mean a member of the Board.
1.12. "Dividend Equivalent" shall mean a right to receive the equivalent
value (in cash or Common Stock) of dividends paid on Common Stock, awarded under
Article V of the Plan.
1.13. "DRO" shall mean a domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
1.14. "Employee" shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.
30
1.15. "Escrow Holder" shall mean the Secretary of the Company or such other
person or company that the Committee may designate to serve as the Escrow Holder
hereunder.
1.16. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.17. "Fair Market Value" of a share of Common Stock as of a given date
shall be (a) the closing price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange), on the
trading day previous to such date, or if shares were not traded on the trading
day previous to such date, then on the next preceding date on which a trade
occurred, or (b) if Common Stock is not traded on an exchange but is quoted on
Nasdaq or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by Nasdaq or such successor quotation system,
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
Nasdaq or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.
1.18. "Holder" shall mean a person who has been granted or awarded an
Award.
1.19. "Independent Director" shall mean a member of the Board who is not an
Employee of the Company.
1.20. "Performance Award" shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Article V of the Plan.
1.21. "Performance Criteria" shall mean the following business criteria
with respect to the Company, any Subsidiary or any division or operating unit
thereof: (a) net income; (b) pre-tax income; (c) operating income; (d) cash
flow; (e) earnings per share; (f) return on equity; (g) return on invested
capital or assets; (h) cost reductions or savings; (i) funds from operations;
(j) appreciation in the Fair Market Value of a share of Common Stock; (k)
operating profit; (l) working capital; and (m) earnings before any one or more
of the following items: interest, taxes, depreciation or amortization; provided,
that each of the business criteria described in subsections (a) through (m)
shall be determined in accordance with generally accepted accounting principles
("GAAP"). For each fiscal year of the Company, the Committee may provide for
objectively determinable adjustments, as determined in accordance with GAAP, to
any of the business criteria described in subsections (a) through (m) for one or
more of the items of gain, loss, profit or expense: (i) determined to be
extraordinary or unusual in nature or infrequent in occurrence; (ii) related to
the disposal of a segment of a business; (iii) related to a change in accounting
principles under GAAP; (iv) related to discontinued operations that do not
qualify as a segment of a business under GAAP; (v) attributable to the business
operations of any entity acquired by the Company during the fiscal year and (vi)
reflecting adjustments to funds from operations with respect to straight-line
rental income as reported in the Company's Exchange Act reports.
1.22. "Plan" shall mean the Getty Realty Corp. 2004 Omnibus Incentive
Compensation Plan.
1.23. "Restricted Stock" shall mean Common Stock awarded under Article IV
of the Plan.
1.24. "Restricted Stock Unit" shall mean the award of the rights with
respect to a share of Common Stock, described in Article VI of the Plan.
1.25. "Retirement" shall mean Termination of Employment by a Holder upon
attaining the age of at least 65 years old and "Early Retirement" shall mean
Termination of Employment by a Holder upon attaining the age of at least 55
years old (and provided that the Holder has not less than 6 years service with
the Company.
1.26. "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act, as such Rule may be amended from time to time.
1.27. "Section 162(m) Participant" shall mean any valued Employee
designated by the Administrator as a valued Employee whose compensation for the
fiscal year in which the valued Employee is so designated or a
31
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.
1.28. "Securities Act" shall mean the Securities Act of 1933, as amended.
1.29. "Stock Payment" shall mean a payment in the form of shares of Common
Stock awarded under Article V of the Plan.
1.30. "Subsidiary" shall mean any corporation, limited partnership or
limited liability company in an unbroken chain of such entities beginning with
the Company if each of the entities other than the last entity in the unbroken
chain then owns equity interests possessing 50% or more of the total combined
voting power of all classes of equity interest in one of the other entities in
such chain.
1.31. "Termination of Directorship" shall mean the time when a Holder who
is an Independent Director ceases to be a Director for any reason, including,
but not by way of limitation, a termination by resignation, failure to be
elected, death Retirement or Early Retirement. The Board, in its sole and
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship with respect to Independent Directors.
1.32. "Termination of Employment" shall mean the time when the
employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability Retirement or Early Retirement; but excluding (a) terminations where
there is a simultaneous reemployment or continuing employment of a Holder by the
Company or any Subsidiary, (b) at the discretion of the Administrator,
terminations which result in a temporary severance of the employee-employer
relationship, and (c) at the discretion of the Administrator, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The Administrator, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1. Shares Subject to Plan.
(a) The shares of stock subject to Awards shall be Common Stock.
Subject to adjustment as provided in Section 8.3, the aggregate number of
such shares which may be issued with respect to Awards granted under the
Plan shall not exceed 1,000,000. The shares of Common Stock issuable with
respect to such Awards shall be previously authorized but unissued shares.
(b) The maximum number of shares which may be subject to Awards
granted under the Plan, in any calendar year, for all Holders receiving
Awards for such calendar year, shall not exceed the Annual Aggregate Award
Limit.
2.2. Add-back of Rights. If any right to acquire shares of Common Stock
under any Award under the Plan, expires or is canceled without having been fully
exercised, or is exercised in whole or in part for cash as permitted by the
Plan, the number of shares subject to such Award or other right but as to which
such Award or other right was not exercised prior to its expiration,
cancellation or exercise may again be granted or awarded hereunder, subject to
the limitations of Section 2.1. Furthermore, any shares subject to Awards which
are adjusted pursuant to Section 8.3 and become exercisable with respect to
shares of stock of another corporation shall be considered cancelled and may
again be granted or awarded hereunder, subject to the limitations of Section
2.1.
32
ARTICLE III.
GRANTING OF AWARDS
3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.
3.2. Provisions Applicable to Section 162(m) Participants.
(a) The Committee, in its discretion, may determine whether an Award
is to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the contrary, the
Committee may grant any Award to a Section 162(m) Participant, including
(i) Restricted Stock or Restricted Stock Units, the restrictions with
respect to which lapse upon the attainment of performance goals which are
related to one or more of the Performance Criteria and (ii) any performance
or incentive award described in Article V or Article VI that vests or
becomes exercisable or payable upon the attainment of performance goals
which are related to one or more of the Performance Criteria.
(c) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect
to any Award granted under Articles V and VI which may be granted to one or
more Section 162(m) Participants, no later than ninety days following the
commencement of any fiscal year in question or any other designated fiscal
period or period of service (or such other time as may be required or
permitted by Section 162(m) of the Code), the Committee shall, in writing,
(i) designate one or more Section 162(m) Participants, (ii) select the
Performance Criteria applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various performance
targets, in terms of an objective formula or standard, and amounts of such
Awards, as applicable, which may be earned for such fiscal year or other
designated fiscal period or period of service, and (iv) specify the
relationship between Performance Criteria and the performance targets and
the amounts of such Awards, as applicable, to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period
or period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify
in writing whether the applicable performance targets have been achieved
for such fiscal year or other designated fiscal period or period of
service. In determining the amount earned by a Section 162(m) Participant,
the Committee shall have the right to reduce (but not to increase) the
amount payable at a given level of performance to take into account
additional factors that the Committee may deem relevant to the assessment
of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision of the Plan, any
Award which is granted to a Section 162(m) Participant and is intended to
qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
amended to the extent necessary to conform to such requirements.
3.3. Limitations Applicable to Section 16 Reporting
Persons. Notwithstanding any other provision of the Plan, the Plan, and any
Award granted or awarded to any individual who is then subject to Section 16 of
the Exchange Act, shall be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.
33
3.4. At-Will Employment. Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of
the Company or any Subsidiary, or as a Director of the Company, or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Holder at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written employment agreement between the
Holder and the Company or any Subsidiary.
ARTICLE IV.
AWARD OF RESTRICTED STOCK
4.1. Eligibility. Subject to the Annual Aggregate Award Limit, Restricted
Stock may be awarded to any Employee who the Committee determines is a valued
Employee or any Director who the Committee determines should receive such an
Award.
4.2. Award of Restricted Stock.
(a) The Committee may from time to time, in its absolute discretion:
(i) Determine which Employees are valued Employees and select from
among the valued Employees or Directors (including Employees or
Directors who have previously received other awards under the Plan) such
of them as in its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with the
Plan.
(b) The Committee shall establish the purchase price, if any, and form
of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be
purchased, unless otherwise permitted by applicable state law. In all
cases, legal consideration shall be required for each issuance of
Restricted Stock.
(c) Upon the selection of a valued Employee or Director to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company
to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as the Committee deems appropriate.
4.3. Rights as Shareholders. Subject to Section 4.4, upon delivery of the
shares of Restricted Stock to the Escrow Holder pursuant to Section 4.6, the
Holder shall have, unless otherwise provided by the Committee, all the rights of
a shareholder with respect to said shares, subject to the restrictions in the
Holder's Award Agreement, including the right to receive dividends and other
distributions paid or made with respect to the shares (which dividends
(including Dividend Equivalents) and distributions shall be delivered to the
Escrow Holder and distributed to the Holder upon expiration or termination of
the applicable restrictions); provided, however, that in the reasonable
discretion of the Committee, uniformly applied to similar cases, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 4.4.
4.4. Restriction. All shares of Restricted Stock issued under the Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability, Company performance and individual performance; provided,
however, that, except with respect to shares of Restricted Stock granted to
Section 162(m) Participants, by action taken after the Restricted Stock is
issued, the Committee may, on such terms and conditions as it may determine to
be appropriate, remove any or all of the restrictions imposed by the terms of
the Award Agreement. Restricted Stock may not be sold or encumbered until all
restrictions are terminated or expire. If no monetary consideration was paid by
the Holder upon issuance, a Holder's rights in unvested Restricted Stock shall
lapse, and such Restricted Stock shall be surrendered to the Company without
consideration, upon Termination of Employment or, if applicable, upon
Termination of Directorship with the Company.
34
4.5. Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Award Agreement that the Company shall have the right
to repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement (i.e. not vested) immediately upon a Termination of
Employment or, if applicable, upon a Termination of Directorship between the
Holder and the Company, at a cash price per share equal to the price paid by the
Holder for such Restricted Stock.
4.6. Escrow. The Escrow Holder shall retain physical custody of
certificate(s) representing Restricted Stock until the restrictions imposed
under the Award Agreement with respect to the shares evidenced by such
certificate(s) expire or shall have been removed or until the expiration of such
other period of time or the satisfaction of conditions, as may be specified by
the Committee in the Holder's Award Agreement.
4.7. Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby. Upon the
expiration or other termination of such restrictions, the Committee shall cause
the Escrow Holder to deliver such certificate(s) to the Secretary of the
Company, who shall cause the transfer agent for the Company to issue to the
Holder new certificate(s) for such shares without any restrictive legend.
4.8. Section 83(b) Election. If a Holder makes an election under
Section 83(b) of the Code, or any successor section thereto, to be taxed with
respect to the Restricted Stock as of the date of transfer (to the Escrow Holder
or otherwise) of the Restricted Stock rather than as of the date or dates upon
which the Holder would otherwise be taxable under Section 83(a) of the Code, the
Holder shall deliver a copy of such election to the Company immediately after
filing such election with the Internal Revenue Service.
ARTICLE V.
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS
5.1. Eligibility. Subject to the Annual Aggregate Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock
Payments may be granted to any Employee whom the Committee determines is a
valued Employee or any Director whom the Committee determines should receive
such an Award.
5.2. Performance Awards.
(a) Any Employee or Director selected by the Committee may be granted
one or more Performance Awards. The value of such Performance Awards may be
linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by
the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific
type of award) the contributions, responsibilities and other compensation
of the particular Employee or Director.
(b) Without limiting Section 5.2(a), the Committee may grant
Performance Awards to any 162(m) Participant in the form of a cash bonus
payable upon the attainment of objective performance goals which are
established by the Committee and relate to one or more of the Performance
Criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee. Any such bonuses paid to 162(m)
Participants shall be based upon objectively determinable bonus formulas
established in accordance with the provisions of Section 3.2 and may take
into account the federal, state and/or local income tax payable by any
Holder upon receipt of any Award. The maximum amount of any Performance
Award payable to a 162(m) Participant under this Section 5.2(b) shall not
exceed the Annual Aggregate Award Limit with respect to any fiscal year of
the Company calendar year. Unless otherwise specified by the Committee at
the time of grant, the Performance Criteria with respect to a Performance
Award payable to a 162(m) Participant shall be determined on the basis of
GAAP.
35
5.3. Dividend Equivalents. Any Employee or Director selected by the
Committee may be granted Dividend Equivalents based on the dividends declared on
Common Stock, to be credited as of dividend payment dates, during the period
between the date a Restricted Stock Unit, Deferred Stock or Performance Award is
granted, and the date such Restricted Stock Unit, Deferred Stock or Performance
Award is settled, exercised, vests or expires, as determined by the Committee.
Payments pursuant thereto shall be delivered, in the discretion of the
Committee, either (x) to the Holder, or (y) to the Escrow Holder, to be held by
for the benefit of the Holder in a bookkeeping account or such other actual or
deemed investment vehicle as may be set forth in the applicable Award Agreement
or, if not set forth therein, as may be determined by the Committee in its
discretion, until settlement, exercise, vesting or expiration thereof. Such
Dividend Equivalents shall be converted to cash or additional shares of Common
Stock by such formula and at such time and subject to such limitations as may be
determined by the Committee.
5.4. Stock Payments. Any Employee or Director selected by the Committee may
receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter and may include payments of a fixed
number of shares to all Employees at the end of each calendar year or payments
to Employees based upon their years of service to the Company.
5.5. Deferred Stock. Any Employee or Director selected by the Committee may
be granted an award of Deferred Stock in the manner determined from time to time
by the Committee. The number of shares of Deferred Stock shall be determined by
the Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Common Stock underlying a Deferred Stock Award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Holder of Deferred Stock shall have no rights as a Company
shareholder with respect to such Deferred Stock until such time as the Award has
vested and the Common Stock underlying the Award has been issued.
5.6. Term. The term of a Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.
5.7. Exercise or Purchase Price. The Committee may establish the exercise
or purchase price of a Performance Award, shares of Deferred Stock or shares
received as a Stock Payment; provided, however, that such price shall not be
less than the par value of a share of Common Stock, unless otherwise permitted
by applicable state law.
5.8. Exercise Upon Termination of Employment or Termination of
Directorship. A Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment is exercisable or payable only while the Holder is an
Employee or Independent Director, as applicable; provided, however, that the
Committee, in its sole and absolute discretion may provide that the Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment may be
exercised or paid subsequent to a Termination of Employment or Termination of
Directorship following a "change of control or ownership" (within the meaning of
Section 1.162-27(e)(2)(v) or any successor regulation thereto or as may be
defined otherwise by the Committee) of the Company; provided, further, that
except with respect to Performance Awards granted to Section 162(m)
Participants, the Committee, in its sole and absolute discretion may provide
that Performance Awards may be exercised or paid following a Termination of
Employment or a Termination of Directorship without cause, or following a change
of control or ownership of the Company (as may be defined by the Committee), or
because of the Holder's Retirement, Early Retirement, death or disability, or
otherwise; and provided, further, that the Committee, in the case of Early
Retirement, may defer settlement until the Holder is at least 65 years old or
upon death or disability.
5.9. Form of Payment. Payment of the amount determined under Section 5.2 or
5.3 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article V is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 5.10.
36
5.10. Conditions to Issuance of Stock Certificates. The Company shall not
be required to issue or deliver any certificate or certificates for shares of
stock prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) the completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations
of the Securities Exchange Commission or any other governmental regulatory
body which the Administrator shall, in its absolute discretion, deem
necessary or advisable;
(c) the obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable;
(d) the lapse of such reasonable period of time following entitlement
thereto as the Administrator may establish from time to time for reasons of
administrative convenience; and
(e) the receipt by the Company of full payment of the required
consideration for such shares, including payment of any applicable
withholding tax, which in the discretion of the Administrator may be in the
form of consideration used by the Holder to pay for such shares.
ARTICLE VI.
AWARD OF RESTRICTED STOCK UNITS
6.1. Eligibility. Subject to the Annual Aggregate Award Limit, Restricted
Stock Units may be awarded to any Employee who the Committee determines is a
valued Employee or any Director who the Committee determines should receive such
an Award.
6.2. Award of Restricted Stock Units.
The Committee may from time to time, in its absolute discretion:
(a) determine which Employees are valued Employees and select from
among the valued Employees or Directors (including Employees or Directors
who have previously received other awards under the Plan) such of them as
in its opinion should be awarded Restricted Stock Units; and
(b) determine the terms and conditions applicable to such Restricted
Stock Units, consistent with the Plan.
6.3. Restriction. All Restricted Stock Units issued under the Plan shall,
in the terms of each individual Award Agreement, be subject to such restrictions
as the Committee shall provide, which restrictions may include, without
limitation, restrictions concerning, vesting, settlement upon vesting, voting
rights and transferability, Company performance and individual performance;
provided, however, that, except with respect to Restricted Stock Units granted
to Section 162(m) Participants, by action taken after the Restricted Stock Units
are issued, the Committee may, on such terms and conditions as it may determine
to be appropriate, remove any or all of the restrictions imposed by the terms of
the Award Agreement. Restricted Stock Units may not be sold or encumbered until
all restrictions are terminated or expire. If no monetary consideration was paid
by the Holder upon issuance, a Holder's rights in unvested Restricted Stock
Units shall lapse, and such Restricted Stock Units shall be surrendered to the
Company without consideration, upon Termination of Employment or, if applicable,
upon Termination of Directorship with the Company.
6.4. Settlement of Restricted Stock Units. To the extent, and in the
manner, described in the applicable Award Agreement, Restricted Stock Units may
be settled in cash (at the Fair Market Value of the underlying Common Stock) or
by issuance of the underlying shares of Common Stock, such election to be made,
at the time of settlement, in the sole discretion of the Committee.
6.5. No Rights as a Shareholder. Until any settlement of a Restricted Stock
Unit for a share of Common Stock pursuant to an Award Agreement, no Holder of a
Restricted Stock Unit shall have any rights as a shareholder of the Company with
respect thereto.
37
6.6. Dividend Equivalents. To the extent expressly provided in the
applicable Award Agreement, an award of Restricted Stock Units may include
Dividend Equivalents, which shall be upon terms and conditions, and may be
subject to restrictions, all as determined by the Committee in its sole
discretion, as set forth in the applicable Award Agreement
ARTICLE VII.
ADMINISTRATION
7.1. Duties and Powers of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith, and to interpret, amend or
revoke any such rules. The Committee shall also have the power to amend any
Award Agreement, provided that the rights or obligations of the Holder of the
Award that is the subject of any such Award Agreement are not affected
adversely. Grants or Awards under the Plan need not be the same with respect to
each Holder. In its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee under the Plan,
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
conduct the general administration of the Plan with respect to Awards granted to
Independent Directors.
7.2. Majority Rule; Unanimous Written Consent. The Committee shall act by a
majority of its members in attendance at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by all members of the
Committee.
7.3. Compensation; Professional Assistance; Good Faith Actions. Members of
the Committee shall receive such compensation, if any, for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of the Plan
shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Awards, and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
8.1. Not Transferable.
(a) No Award under the Plan may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution or, subject to the consent of the Administrator, pursuant to a
DRO, unless and until such Award has been exercised, or the shares
underlying such Award have been issued, and all restrictions applicable to
such shares have terminated, expired or lapsed. No Award or interest or
right therein shall be liable for the debts, contracts or engagements of
the Holder or his or her successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including
bankruptcy), and any attempted disposition thereof shall be null and void
and of no effect, except to the extent that such disposition is permitted
by the preceding sentence.
38
(b) During the lifetime of the Holder, only the Holder may exercise
rights under an Award (or any portion thereof) granted to the Holder under
the Plan, unless it has been disposed of with the consent of the
Administrator pursuant to a DRO. After the death of the Holder, any
exercisable portion of an Award may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Award Agreement, be
exercised by the Holder's personal representative or by any person
empowered to do so under the deceased Holder's will or under the then
applicable laws of descent and distribution.
8.2. Amendment, Suspension or Termination of the Plan. Except as otherwise
provided in this Section 8.2, the Plan may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time by
the Administrator. However, without approval of the Company's shareholders
before or after the action by the Administrator, no action of the Administrator
may, except as provided in Section 8.3, increase the limits imposed in Section
1.4 as the Annual Aggregate Award Limit or in Section 2.1 on the maximum number
of shares which may be issued under the Plan and no action of the Administrator
may be taken that would otherwise require approval by the Company's shareholders
as a matter of applicable law, regulation or rule. No amendment, suspension or
termination of the Plan shall, without the consent of the Holder, alter or
impair any rights or obligations under any Award theretofore granted or awarded,
unless the Award itself otherwise expressly so provides. No Awards may be
granted or awarded during any period of suspension, after termination of the
Plan or following the expiration of ten years from the date the Plan is last
approved by the Company's shareholders under Section 8.4.
8.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.
(a) Subject to Sections 8.3(d) and (f), in the event that the
Administrator determines that any dividend or other distribution (whether
in the form of cash, Common Stock, other securities or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of
the Company, or other similar corporate transaction or event, in the
Administrator's sole discretion, affects the Common Stock such that an
adjustment is determined by the Administrator to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to an Award,
then the Administrator shall, in such manner as it may deem equitable,
adjust any or all of:
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Awards may be granted or
awarded (including, but not limited to, adjustments of the limitations
in Section 2.1 on the maximum number and kind of shares which may be
issued and adjustments of the Annual Aggregate Award Limit);
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Awards; and
(iii) the grant or exercise price or other characteristics of any
Award.
(b) Subject to Section 8.3(d), in the event of any transaction or
event described in Section 8.3(a) or any unusual or nonrecurring
transactions or events affecting the Company, any affiliate of the Company,
or the financial statements of the Company or any affiliate, or of changes
in applicable laws, regulations or accounting principles, the
Administrator, in its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event and
either automatically or upon the Holder's request, is hereby authorized to
take any one or more of the following actions whenever the Administrator
determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to any Award under the
39
Plan, to facilitate such transactions or events or to give effect to such
changes in laws, regulations or principles:
(i) to provide for either the purchase of any such Award for an
amount of cash equal to the amount that could have been attained upon
the exercise or settlement of such Award or realization of the Holder's
rights had such Award been currently exercisable or payable or fully
vested or the replacement of such Award with other rights or property
selected by the Administrator in its sole discretion;
(ii) to provide that the Award cannot vest, be exercised or settled
or become payable after such event;
(iii) to provide that such Award shall be fully vested as to all
shares covered thereby, notwithstanding anything to the contrary in the
provisions of such Award;
(iv) to provide that such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices;
(v) to make adjustments in the number and type of shares of Common
Stock (or other securities or property) subject to outstanding Awards,
and in the number and kind of outstanding Restricted Stock or Deferred
Stock and/or in the terms and conditions of (including the grant or
exercise price), and the criteria included in, outstanding rights and
awards and rights and awards which may be granted in the future; and
(vi) to provide that, for a specified period of time prior to such
event, the restrictions imposed under an Award Agreement upon some or
all shares of Restricted Stock or Deferred Stock may be terminated, and,
in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase under Section 4.5 or
forfeiture under Section 4.4 after such event.
(c) Subject to Sections 3.2, 3.3 and 8.3(d), the Administrator may, in
its discretion, include such further provisions and limitations in any
Award, agreement or certificate, as it may deem equitable and in the best
interests of the Company.
(d) With respect to Awards which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation
under Section 162(m)(4)(C), no adjustment or action described in this
Section 8.3 or in any other provision of the Plan shall be authorized to
the extent that such adjustment or action would cause such Award to fail to
so qualify under Section 162(m)(4)(C), or any successor provisions thereto.
Furthermore, no such adjustment or action shall be authorized to the extent
such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3 unless
the Administrator determines that the Award is not to comply with such
exemptive conditions. The number of shares of Common Stock subject to any
Award, if not a whole number, shall always be rounded to the next highest
whole number.
(e) The existence of the Plan, the Award Agreement and the Awards
granted hereunder shall not affect or restrict in any way the right or
power of the Company or the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change
in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior
preference stocks whose rights are superior to or affect the Common Stock
or the rights thereof or which are convertible into or exchangeable for
Common Stock, or the dissolution or liquidation of the company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
(f) The Administrator shall exercise its discretion under this Section
8.3 reasonably and uniformly with respect to similar cases.
40
8.4. Approval of Plan by Shareholders. The Plan will be submitted for the
approval of the Company's shareholders after the date of the Board's initial
adoption of the Plan, and any amendment to the Plan increasing the aggregate
number of shares of Common Stock issuable under the Plan will be submitted for
the approval of the Company's shareholders after the date of the Board's
adoption of such amendment. In addition, if the Board determines that Awards
which may be granted to Section 162(m) Participants should continue to be
eligible to qualify as performance-based compensation under Section 162(m)(4)(C)
of the Code, the Performance Criteria must be disclosed to and approved by the
Company's shareholders no later than the first shareholder meeting that occurs
in the fifth year following the year in which the Company's shareholders
previously approved the Performance Criteria.
8.5. Tax Withholding. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Holder of any sums
required by federal, state or local tax law to be withheld with respect to the
issuance, vesting, exercise or payment of any Award. The Administrator may in
its discretion and in satisfaction of the foregoing requirement allow such
Holder to elect to have the Company withhold shares of Common Stock otherwise
issuable under such Award (or allow the return of shares of Common Stock) having
a Fair Market Value equal to the sums required to be withheld. Notwithstanding
any other provision of the Plan, the number of shares of Common Stock which may
be withheld with respect to the issuance, vesting, exercise, settlement or
payment of any Award (or which may be repurchased from the Holder of such Award
within six months after such shares of Common Stock were acquired by the Holder
from the Company) in order to satisfy the Holder's federal and state income and
payroll tax liabilities with respect to the issuance, vesting, exercise or
payment of the Award shall be limited to the number of shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for
federal and state tax income and payroll tax purposes that are applicable to
such supplemental taxable income.
8.6. Forfeiture Provisions. Pursuant to its general authority to determine
the terms and conditions applicable to Awards under the Plan, the Administrator
shall, to the extent permitted by applicable law, have the right to provide, in
the terms of Awards made under the Plan, or to require a Holder to agree by
separate written instrument, that (a)(i) any proceeds, gains or other economic
benefit actually or constructively received by the Holder upon any receipt or
exercise of the Award, or upon the receipt or resale of any Common Stock
underlying the Award, must be paid to the Company, and (ii) the Award shall
terminate and any unexercised portion of the Award (whether or not vested) shall
be forfeited, if (b)(i) a Termination of Employment or Termination of
Directorship occurs prior to a specified date, or within a specified time period
following receipt or exercise of the Award, or (ii) the Holder incurs a
Termination of Employment or Termination of Directorship for cause.
8.7. Effect of Plan Upon Options and Compensation Plans. The adoption of
the Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in the Plan shall be construed to
limit the right of the Company (a) to establish any other forms of incentives or
compensation for Employees or Directors of the Company or any Subsidiary, or (b)
to grant or assume options or other rights or awards otherwise than under the
Plan in connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, limited liability
company, firm or association.
8.8. Compliance with Laws. The Plan, the granting and vesting of Awards
under the Plan and the issuance and delivery of shares of Common Stock and the
payment of money under the Plan or under Awards granted or awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable
41
law, the Plan and Awards granted or awarded hereunder shall be deemed amended to
the extent necessary to conform to such laws, rules and regulations.
8.9. Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
8.10. Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
New York without regard to conflicts of laws thereof.
* * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Getty Realty Corp. on February 19, 2004.
/s/ Andrew M. Smith
--------------------------------------
Name: Andrew M. Smith
Title: Vice President, General
Counsel and Corporate
Secretary
* * *
I hereby certify that the foregoing Plan was approved by the shareholders
of Getty Realty Corp. on May 20, 2004.
Executed on this day of May 2004.
--------------------------------------
Name:
Title:
42
[X] PLEASE MAKE VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE GETTY REALTY CORP. WITH- FOR ALL
FOR HOLD EXCEPT
ANNUAL MEETING OF STOCKHOLDERS C 1. ELECTION OF DIRECTORS. [ ] [ ] [ ]
MAY 20, 2004 FOR all nominees listed (except
O as marked to the contrary below)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
M NOMINEES: M. COOPER, P. COVIELLO, L. LIEBOWITZ,
The undersigned stockholder of Getty Realty Corp. hereby H. SAFENOWITZ, W. WINTRUB
constitutes and appoints LEO LIEBOWITZ and THOMAS STIRNWEIS, M
and each of them, the true and lawful attorneys, agents and INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
proxies of the undersigned, each with full power of O NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN
substitution, to vote at the meeting (or if only one shall be THE SPACE PROVIDED BELOW.
present and acting at the meeting then that one), all of the N
common shares of stock of the corporation that the undersigned ---------------------------------------------------------------
would be entitled, if personally present, to vote at the
annual meeting of stockholders of the corporation to be held FOR AGAINST ABSTAIN
at 270 Park Avenue, 11th Floor, New York, New York, on May 20, 2. The approval of the Getty Realty [ ] [ ] [ ]
2004, and at any adjournments or postponements thereof. Corp. 2004 Omnibus Incentive
Compensation Plan.
3. The ratification of the appointment FOR AGAINST ABSTAIN
of PricewaterhouseCoopers LLP as [ ] [ ] [ ]
independent auditors for the Company
for the fiscal year ended December 31,
2004.
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting
or any adjournment or postponement thereof.
---------------------------- Receipt is acknowledged of notice and proxy statement for
Please be sure to sign and date Dated the foregoing meeting and of annual report to stockholders for
this Proxy in the box below. the fiscal year ended December 31, 2003.
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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" ITEMS 1, 2
--- Stockholder sign above --- Co-holder (if any) sign above ---- AND 3, AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER
THAT PROPERLY MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
+ +
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/\ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. /\
GETTY REALTY CORP.
125 Jericho Tpke., Suite 103, Jericho, NY 11753
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Please sign exactly as your name appears hereon. 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 duly authorized officer. If a partnership, please sign in partnership name by authorized
officer.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE
ENVELOPE PROVIDED.
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