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:
[X] Preliminary Proxy Statement
[ ] Confidential For Use of the Commission Only
(as Permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-12
THE INTERGROUP CORPORATION
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total Fee Paid:
-------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------
THE INTERGROUP CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 18, 2009
To the Shareholders of The InterGroup Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The
InterGroup Corporation ("InterGroup" or the "Company") for the fiscal year
ended June 30, 2008, will be held at the Hilton San Francisco Financial
District, 750 Kearny Street, San Francisco, CA 94108 on February 18, 2009 at
2:30 P.M. for the following purposes:
(1) To elect one Class C Director to serve until the fiscal 2011
Annual Meeting and until his or her successor shall have been duly
elected and qualified;
(2) To ratify the retention of Burr, Pilger & Mayer LLP as the Company's
independent registered public accounting firm for the fiscal year
ending June 30, 2009;
(3) To approve The InterGroup Corporation 2008 Restricted Stock Unit Plan;
and
(4) To transact such other business as may properly come before the
meeting, or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on January 9, 2009
as the record date for determining the shareholders entitled to notice of, and
to vote at, the Annual Meeting or any postponements or adjournments thereof.
The Company's Annual Report for the fiscal year ended June 30, 2008
accompanies this Notice of Annual Meeting of Shareholders and Proxy Statement.
By Order of the Board of Directors,
Gary N. Jacobs
Secretary
Los Angeles, California
January __, 2009
YOUR PROXY IS IMPORTANT WHETHER YOU OWN A FEW OR MANY SHARES. PLEASE COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE PROVIDED. RETURN THE PROXY EVEN IF YOU PLAN TO ATTEND
THE MEETING. YOU MAY ALWAYS REVOKE YOUR PROXY AND VOTE IN PERSON.
-------------------------------------------------------------------------------
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Shareholders to be Held on February 18, 2009. The Company's Proxy
Statement and Annual Report to Shareholders for the fiscal year ended June 30,
2008 are also available on the Company's website at www.intgla.com
THE INTERGROUP CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 18, 2009
The Board of Directors of The InterGroup Corporation ("InterGroup" or the
"Company") is soliciting proxies in the form enclosed with this statement in
connection with its fiscal 2008 Annual Meeting of Shareholders to be held on
February 18, 2009 or at any adjournments thereof. Only shareholders of record
at the close of business on January 9, 2009 are entitled to notice of, and to
vote at, the Annual Meeting.
Each shareholder is entitled to cast, in person or by proxy, one vote for each
share held of record at the close of business on January 9, 2009. As of
January 9, 2009, there were outstanding 2,363,273 shares of common stock, par
value $.01 per share (the "Common Stock"). Of the total 2,363,273 shares
outstanding, a majority, or 1,181,637 voting shares will constitute a quorum
for the transaction of business at the meeting. The affirmative vote of the
holders of the majority of the shares of the Common Stock present and
represented at the meeting and entitled to vote is required to elect directors
and ratify the selection of the Company's independent registered public
accounting firm. The affirmative vote of a majority of the outstanding shares
of Common Stock is required to approve The InterGroup Corporation 2008
Restricted Stock Unit Plan.
The proxies named in the accompanying Form of Proxy will vote the shares
represented thereby if the proxy appears to be valid on its face, and where
specification is indicated as provided in such proxy, the shares represented
will be voted in accordance with such specification. If no specification is
made, the shares represented by the proxies will be voted (1) FOR the election
of the Board nominee for Class C Director for a three-year term expiring at the
fiscal 2011 Annual Meeting of Shareholders; (2) FOR ratification of the
appointment of Burr, Pilger & Mayer LLP as the Company's independent registered
public accounting firm for the fiscal year ending June 30, 2009; and (3) FOR
approval of The InterGroup Corporation 2008 Restricted Stock Unit Plan.
If you give us a proxy, you can revoke it at any time before it is used. To
revoke it, you may file a written notice revoking it with the Secretary of the
Company, execute a proxy with a later date or attend the meeting and vote in
person.
This Proxy Statement and the accompanying Form of Proxy are first being sent to
shareholders on or about January 23, 2009. In addition to mailing this
material to shareholders, the Company has asked banks and brokers to forward
copies to persons for whom they hold stock of the Company and to request
authority for the execution of proxies. The Company will reimburse banks and
brokers for their reasonable out-of-pocket expenses in doing so. Officers of
the Company may, without being additionally compensated, solicit proxies by
mail, telephone, telegram or personal contact. All proxy soliciting expenses
will be paid by the Company. The Company does not expect to employ anyone else
to assist in the solicitation of proxies.
1
Proposal No. 1
ELECTION OF CLASS C DIRECTOR
The Company's Certificate of Incorporation provides that the Board of Directors
shall consist of not more than nine nor less than five members. The exact
number of Directors is fixed by the Board prior to each year's Annual Meeting
of Shareholders. The Board is divided into three staggered classes, each class
having not less than one or more than three members. Each Director is elected
to serve for a three-year term, and until the election and qualification of his
or her successor. When vacancies on the Board occur, due to resignation or
otherwise, the Directors then in office may continue to exercise the powers of
the Directors and a majority of such directors may select a new Director to
fill the vacancy. Any Director may resign at any time. Any Director may be
removed by the vote of, or written consent of, the holders of a majority of the
shares of Common Stock outstanding at a special meeting called for the purpose
of removal or to ratify the recommendation of a majority of the Directors that
such Director be removed.
The term of the Class C Director expires at the fiscal 2008 Annual Meeting to
be held on February 18, 2009. The Board has proposed John C. Love as the Class
C Director to serve until the fiscal 2011 Annual Meeting and until the election
and qualification of his successor. The Board of Directors has been informed
that the nominee has consented to being named as nominee and is willing to
serve as a Director if elected. However, if the nominee should be unable, or
declines to serve, it is intended that the proxies will be voted for such other
person as the proxies shall, in their discretion, designate. Unless otherwise
directed in the accompanying Proxy, the person's name therein will vote FOR the
election of this nominee. Election requires the affirmative vote of a majority
of the shares represented and voted at the Annual Meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company:
Position with
Name the Company Age Term to Expire
------------------ ------------------ --- -----------------
Class A Directors:
John V. Winfield Chairman of the Board; 62 Fiscal 2009 Annual Meeting
(1)(4)(6)(7) President and Chief
Executive Officer
Josef A. Grunwald
(2)(3)(5)(7) Director and Vice 60 Fiscal 2009 Annual Meeting
Chairman of the Board
Class B Directors:
Gary N. Jacobs
(1)(2)(5)(6)(7) Secretary; Director 63 Fiscal 2010 Annual Meeting
William J. Nance (1)
(2)(3)(4)(6)(7) Director 64 Fiscal 2010 Annual Meeting
Class C Director:
John C. Love Director 68 Fiscal 2008 Annual Meeting
(3)(4)
2
Other Executive
Officers:
David C. Gonzalez Vice President 41 N/A
Real Estate
David T. Nguyen Treasurer and 35 N/A
Controller
Michael G. Zybala Assistant Secretary 56 N/A
And Counsel
------------------
(1) Member of the Executive Committee
(2) Member of the Administrative and Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Real Estate Investment Committee
(5) Member of the Nominating Committee
(6) Member of the Securities Investment Committee
(7) Member of the Special Strategic Options Committee
Business Experience:
The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as follows:
John V. Winfield -- Mr. Winfield was first appointed to the Board in 1982. He
currently serves as the Company's Chairman of the Board, President and Chief
Executive Officer, having first been appointed as such in 1987. Mr. Winfield
also serves as President, Chairman and Chief Executive Officer of Santa Fe
Financial Corporation ("Santa Fe") and Portsmouth Square, Inc. ("Portsmouth")
both public companies.
Josef A. Grunwald -- Mr. Grunwald is an industrial, commercial and residential
real estate developer. He serves as Chairman of PDG N.V. (Belgium), a hotel
management company, and President of I.B.E. Services S.A. (Belgium), an
international trading company. Mr. Grunwald was first elected to the Board in
1987 and named Vice Chairman on January 30, 2002. Mr. Grunwald is also a
Director of Portsmouth.
William J. Nance -- Mr. Nance is a Certified Public Accountant and private
consultant to the real estate and banking industries. He is also President of
Century Plaza Printers, Inc. Mr. Nance was first elected to the Board in 1984.
He served as the Company's Chief Financial Officer from 1987 to 1990 and as
Treasurer from 1987 to June 2002. Mr. Nance is also a Director of Santa Fe and
Portsmouth. Mr. Nance also serves as a director of Goldspring, Inc., a public
company.
Gary N. Jacobs -- Mr. Jacobs was appointed to the Board and as Secretary in
1998. Mr. Jacobs is Executive Vice President, General Counsel, Secretary and a
Director of MGM MIRAGE (NYSE: MGM) and has held those positions since 2000.
John C. Love -- Mr. Love was appointed to the Board in 1998. Mr. Love is an
international hospitality and tourism consultant and a hotel broker. He was
formerly a partner in the national CPA and consulting firm of Pannell Kerr
Forster. He is Chairman Emeritus of the Board of Trustees of Golden Gate
University in San Francisco. Mr. Love is also a Director of Santa Fe and
Portsmouth.
David C. Gonzalez -- Mr. Gonzalez was appointed Vice President Real Estate of
the Company on January 31, 2001. Over the past 20 years, Mr. Gonzalez has
served in numerous capacities with the Company, including Controller and
Director of Real Estate.
3
David T. Nguyen - Mr. Nguyen was appointed as Treasurer of the Company on
February 26, 2003. Mr. Nguyen also serves as Treasurer of Santa Fe and
Portsmouth, having been appointed to those positions on February 27, 2003.
Mr. Nguyen is a Certified Public Accountant and, from 1995 to 1999, was
employed by PricewaterhouseCoopers LLP where he was a Senior Accountant
specializing in real estate. Mr. Nguyen served as the Company's Controller
from 1999 to 2001 and from 2003 to the present.
Michael G. Zybala -- Mr. Zybala was appointed Vice President Operations and
Assistant Secretary of the Company on January 27, 1999 and served as Vice
President Operations until July 15, 2002. Mr. Zybala is an attorney at law and
has served as legal counsel the Company since 1999. Mr. Zybala is also the
Vice President and Secretary of Santa Fe and Portsmouth and has served as their
General Counsel since 1995. Mr. Zybala has provided legal services to Santa Fe
and Portsmouth since 1978.
Family Relationships: There are no family relationships among directors,
executive officers, or persons nominated or chosen by the Company to become
directors or executive officers.
Involvement in Certain Legal Proceedings: No director or executive officer, or
person nominated or chosen to become a director or executive officer, was
involved in any legal proceeding requiring disclosure.
BOARD AND COMMITTEE INFORMATION
InterGroup's common stock is listed on the NASDAQ Capital Market tier of the
NASDAQ Stock Market LLC ("NASDAQ"). InterGroup is a Smaller Reporting Company
under the rules and regulations of the Securities and Exchange Commission
("SEC").
The Board of Directors of InterGroup currently consists of five members. With
the exception of the Company's President and CEO, John V. Winfield, all of
InterGroup's Board of Directors consists of "independent" directors as
independence is defined by the applicable rules of the SEC and NASDAQ. The
Board of Directors held four meetings during the 2008 Fiscal Year (in person,
telephonically or by written consent). No Director attended (whether in
person, telephonically, or by written consent) less than 75% of all meetings
held during the period of time he served as Director during the 2008 Fiscal
Year. The independent directors also meet in executive session at least two
times per year.
The Board of Directors has not established a formal process for security
holders to send communications to the Board of Directors and the Board has not
deemed it necessary to establish such a procedure at this time. Historically,
almost all communications that the Company receives from security holders are
administrative in nature and are not directed to the Board of Directors. If
the Company should receive a security holder communication directed to the
Board of Directors, or to an individual director, said communication will be
relayed to the Board of Directors or the individual director as the case may
be.
The Company does not have any formal policy with regard to board members
attendance at annual meetings of shareholders but encourages each director to
attend said meetings. All of the Company's directors attended the fiscal 2007
annual meeting of shareholders.
Committees:
The Company has an Executive Committee that meets in lieu of the Board upon the
request of the Chairman of the Committee. Mr. Winfield is Chairman of the
Executive Committee. The Committee held two meetings (in person,
telephonically or by written consent) during the 2008 Fiscal Year.
4
The Company's Administrative and Compensation Committee (the "Compensation
Committee") is comprised of three "independent" members of the Board of
Directors as independence is defined by the applicable rules of the SEC and
NASDAQ. Mr. Nance serves as Chairman of the Compensation Committee. The
Company has not established a charter for the Compensation Committee. The
Compensation Committee reviews and recommends to the Board of Directors the
compensation for the Company's Chief Executive Officer and other executive
officers, including equity or performance based compensation and plans. The
Compensation Committee seeks to design and set compensation to attract and
retain highly qualified executive officers and to align their interests with
those of long-term owners of the Company. The Compensation Committee may also
make recommendations to the Board of Directors as to the amount and form of
director compensation. The Compensation Committee has not engaged any
compensation consultants in determining the amount or form of executive of
director compensation, but does review and monitor published compensation
surveys and studies. The Compensation Committee may delegate to the Company's
Chief Executive Officer the authority determine the compensation of certain
executive officers. The Compensation Committee held two meetings (in person,
telephonically or by written consent) during the 2008 Fiscal Year. The
Compensation Committee also oversees the Company's Stock Option Plans and the
2007 Stock Compensation Plan for Non-Employee Directors.
The Company has a Real Estate Investment Committee, which is chaired by Mr.
Nance. This Committee held six meetings (in person, telephonically or by
written consent) during the 2008 Fiscal Year. The Real Estate Investment
Committee reviews and considers potential acquisitions, dispositions, and
financings of properties.
The Company's Nominating Committee is comprised of two "independent" directors
as independence is defined by the applicable rules of the SEC and NASDAQ. The
Company has not established a charter for the Nominating Committee and the
Committee has no policy with regard to consideration of any director candidates
recommended by security holders. As a Smaller Reporting Company whose
directors own in excess of sixty percent of the voting shares of the Company,
InterGroup has not deemed it appropriate to institute such a policy. Mr.
Grunwald is the Chairman of the Nominating Committee. The Committee held one
meeting during the 2008 Fiscal Year
The Company's Securities Investment Committee oversees and establishes certain
investment procedures and reports to the Board of Directors. The Committee's
Chairman is Mr. Winfield. This committee held four meetings (in person,
telephonically or by written consent) during the 2008 Fiscal Year.
The Company's Special Strategic Options Committee is chaired by Mr. Winfield.
This committee held no formal meetings during the 2008 Fiscal Year, but its
members consult with each other frequently on an informal basis. The Special
Strategic Options Committee reviews and considers the Company's strategic
options and provides guidance to accomplish its goals considering both current
and prospective investment opportunities.
The Company is a Smaller Reporting Company under SEC rules. The Company's
Audit Committee is currently comprised of three members: Directors Nance
(Chairperson), Grunwald and Love, each of who meet the independence
requirements of the SEC and NASDAQ as modified or supplemented from time to
time. Directors Nance and Love also meet the Audit Committee Financial Expert
requirement as defined by the SEC and NASDAQ. The primary function of the
Audit Committee is to assist the Board of Directors in fulfilling its
responsibility of overseeing management's conduct of the financial reporting
process, the annual independent audit of the Company's financial statements,
reviewing the financial reports provided by the Company to any governmental
body or the public; the Company's system of internal controls regarding
finance, accounting, legal compliance and ethics that management and the Board
have established; and the Company's auditing, accounting and financial
processes generally. The Audit Committee is also responsible for the selection
and retention of the Company's independent auditors. The Audit Committee held
six meetings during the 2008 Fiscal Year.
The Company's Board of Directors has adopted a written charter for the Audit
Committee, which is reviewed on an annual basis. A copy of that written
charter, as amended, is attached as Appendix A to this proxy statement.
5
EXECUTIVE COMPENSATION
Executive Officers Compensation
The following table provides certain summary information concerning
compensation awarded to, earned by, or paid to the Company's principal
executive officer and other named executive officers of the Company whose total
compensation exceeded $100,000 for all services rendered to the Company and its
subsidiaries for each of the Company's last two completed fiscal years ended
June 30, 2008 and June 30, 2007. There are currently no employment contracts
with the executive officers and no stock awards, long-term compensation,
options or stock appreciation rights were granted to any of the named executive
officers during the last two fiscal years.
SUMMARY COMPENSATION TABLE
Fiscal All Other
Name and Principal Position Year Salary Bonus Compensation Total
--------------------------- ---- ---------- ---------- ------------ ------------
John V. Winfield 2008 $522,000(1) $ - $166,000(2) $ 688,000
Chairman, President and 2007 $522,000(1) $ - $153,000(2) $ 675,000
Chief Executive Officer
David C. Gonzalez 2008 $180,000 $ - $ - $ 180,000
Vice President 2007 $180,000 $ - $ - $ 180,000
Real Estate
David T. Nguyen 2008 $180,000(3) $ - $ - $ 180,000
Treasurer and 2007 $180,000(3) $ - $ - $ 180,000
Controller
Michael G. Zybala 2008 $138,000(4) $ - $ - $ 138,000
Asst. Secretary 2007 $162,000(4) $ - $ - $ 162,000
and Counsel
---------------------------
(1) Mr. Winfield also serves as President and Chairman of the Board of the
Company's subsidiary, Santa Fe, and Santa Fe's subsidiary, Portsmouth. Mr.
Winfield received a salary from Santa Fe and Portsmouth in the aggregate amount
of $255,000 from those entities for each of fiscal years 2008 and 2007, as well
as director's fees totaling $12,000 for each year. Those amounts are included
in this item.
(2) Amounts include an auto allowance and compensation for a portion of the
salary of an assistant. The auto allowance was $29,000 and $23,000 during
fiscal years 2008 and 2007, respectively. The amount of compensation related
to the assistant was approximately $52,000 and $42,000 during fiscal years 2008
and 2007, respectively. During fiscal 2008 and 2007, the Company and its
subsidiaries also paid annual premiums in the total amount of $85,000 for split
dollar whole life insurance policies owned by, and the beneficiary of which
are, a trust for the benefit of Mr. Winfield's family. Of the $85,000
in premiums paid each year, Santa Fe and Portsmouth paid $43,000 of that
amount. The Company has a secured right to receive, from any proceeds of the
policies, reimbursement of all premiums paid prior to any payment to the
beneficiary.
(3) Mr. Nguyen's salary is allocated approximately 50% to the Company and 50%
to Santa Fe and Portsmouth.
(4) For fiscal 2008, this amount includes $94,800 in salary and Special Hotel
Committee fees allocated to and paid by Portsmouth and $16,200 in salary
allocated to Santa Fe. For fiscal 2007, this amount includes $118,800 in salary
and Special Hotel Committee fees allocated to Portsmouth and $16,200 in salary
allocated Santa Fe.
6
On July 18, 2003, the disinterested members of the respective Boards of
Directors of the Company's subsidiary, Santa Fe and Santa Fe's subsidiary,
Portsmouth, established a performance based compensation program for the
Company's CEO, John V. Winfield, to keep and retain his services as a direct
and active manager of the securities portfolios of those companies. On January
12, 2004, the disinterested members of the Securities Investment Committee of
InterGroup also established a performance based compensation program for Mr.
Winfield, which was ratified by the Board of Directors. The Company's previous
experience and results with outside money managers was not acceptable.
Pursuant to the criteria established the Board of Directors, Mr. Winfield is
entitled to performance compensation for his management of the securities
portfolios of the Company and its subsidiaries equal to 20% of all net
investment gains generated in excess of an annual return equal to the Prime
Rate of Interest (as published by the Wall Street Journal) plus 2%.
Compensation amounts are earned, calculated and paid quarterly based on the
results of the Company's investment portfolio for that quarter. Should the
companies have a net investment loss during any quarter, Mr. Winfield would not
be entitled to any further performance-based compensation until any such
investment losses are recouped by the Company. This performance based
compensation program may be modified or terminated at the discretion of the
respective Boards of Directors. No performance based compensation was earned or
paid for fiscal years ended June 30, 2008 or 2007.
Internal Revenue Code Limitations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that, in the case of a publicly held corporation, the corporation is
not generally allowed to deduct remuneration paid to its chief executive
officer and certain other highly compensated officers to the extent that such
remuneration exceeds $1,000,000 for the taxable year. Certain remuneration,
however, is not subject to disallowance, including compensation paid on a
commission basis and, if certain requirements prescribed by the Code are
satisfied, other performance based compensation. Since InterGroup, Santa Fe
and Portsmouth are each public companies, the $1,000,000 limitation applies
separately to the compensation paid by each entity. For fiscal years 2008 and
2007 no compensation paid by the Company to its CEO or other executive officers
was subject the deduction disallowance prescribed by Section 162(m) of the
Code.
Outstanding Equity Awards at Fiscal Year End.
The following table sets forth information concerning unexercised options for
each named executive officer outstanding as of the end of the Company's last
competed fiscal year ended June 30, 2008. There were no stock awards issued or
outstanding to any named executive officer.
Outstanding Equity Awards at Fiscal Year End
Number of Number of
securities securities
underlying underlying
unexercised unexercised Option Option
options(#) options(#) exercise expiration
Name exercisable unexercisable price($) date
-------- ----------- ------------- -------- -----------
John V. Winfield 225,000 - $ 7.92 12/21/2008
David C. Gonzalez 10,500 4,500(1) $13.17 01/30/2011
-----------------
(1) Mr. Gonzalez's options vest at a rate of 2,250 shares per year on each
January 31 for the next two years.
7
EQUITY COMPENSATION PLANS
As of its fiscal year ended June 30, 2008, the Company had two equity
compensation plans, each of which was approved by the Company's shareholders.
Set forth below is a summary of those plans.
1998 Stock Option Plan for Selected Key Officers, Employees and Consultants
On December 8, 1998, the Board of Directors of the Company adopted, subject to
shareholder approval and ratification, a 1998 Stock Option Plan for selected
key officers, employees and consultants (the "Key Employee Plan"). The Key
Employee Plan was ratified by the stockholders on January 27, 1999.
The stock to be offered under the Key Employee Plan shall be shares of the
Company's Common Stock, par value $.01 per share, which may be unissued shares
or treasury shares. Subject to certain adjustments upon changes in
capitalization, the aggregate number of shares to be delivered upon exercise of
all options granted under the Key Employee Plan shall not exceed 300,000 shares
(adjusted for stock split). The Key Employee Plan shall terminate on the
earliest to occur of (i) the dates when all of the Common Stock available under
the Key Employee Plan shall have been acquired through the exercise of options
granted under the Key Employee Plan; (ii) 10 years after the date of
adoption of the Key Employee Plan by the Board; or (iii) such other date that
the Board may determine.
The Key Employee Plan is administered by a Committee appointed by the Board of
Directors which consists of two or more disinterested persons within the
meaning of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of
1934 (the "Exchange Act"). Persons eligible to receive options under the Key
Employee Plan shall be employees who are selected by the Committee. In
determining the Employees to whom options shall be granted and the number of
shares to be covered by each option, the Committee shall take into account the
duties of the respective employee, their present and potential contribution to
the success of the Company, their anticipated number of years of active service
remaining and other factors as it deems relevant in connection with
accomplishing the purposes of the Key Employee Plan. An employee who has been
granted an option may be granted an additional option or options as the
Committee shall so determine.
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at the
time of the grant of the option. The term of the option shall not exceed 10
years from the date on which the option is granted. The vesting schedule for
the options and the method or time that when the option may be exercised in
whole or in part shall be determined by the Committee. However, in no event
shall an option be exercisable within six months of the date of grant in the
case of an optionee subject to Section 16(b) of the Exchange Act. Subject to
certain exceptions, the option shall terminate six months after the optionee's
employment with the Company terminates. No options to purchase shares were
granted pursuant to the Key Employee Plan during fiscal 2008. The Key Employee
plan expired on December 7, 2008; however, any outstanding options issued under
the Key Employee Plan remain effective in accordance with their terms.
1998 Stock Option Plan for Non-Employee Directors
On December 8, 1998, the Board of Directors of the Company adopted, subject to
shareholder approval and ratification, a 1998 Stock Option Plan for Non-
Employee Directors (the "1998 Director Plan"). The stockholders ratified that
plan on January 27, 1999.
The stock offered under the 1998 Director Plan was shares of the Company's
Common Stock, par value $.01 per share, which may be unissued shares or
treasury shares. Subject to certain adjustments upon changes in
capitalization, the aggregate number of shares to be delivered upon exercise of
all options granted under the 1998 Director Plan were not to exceed 150,000
shares (adjusted for March 31, 2003 stock split).
8
Since all options authorized to be issued under the 1998 Director Plan were
exhausted in fiscal 2006, the Plan was terminated upon shareholder approval,
and Board adoption, of the 2007 Stock Compensation Plan for Non-Employee
Directors described below; however, any outstanding options under the Plan
remain effective in accordance with their terms.
2007 Stock Compensation Plan for Non-Employee Directors
On February 21, 2007, the shareholders of the Company approved The InterGroup
Corporation 2007 Stock Compensation Plan for Non-Employee Directors (the "2007
Plan"), which was thereafter adopted by the Board of Directors. The 2007 Plan
will terminate upon the earlier of the date all shares reserved for issuance
have been awarded or February 21, 2017, if not sooner terminated by the Board
upon recommendation by the Compensation Committee.
The stock to be available for issuance under the 2007 Plan shall be
unrestricted shares of the Company's Common Stock, par value $.01 per share,
which may be unissued shares or treasury shares. Subject to certain
adjustments upon changes in capitalization, a maximum of 60,000 shares (subject
to changes in capitalization or other adjustments for corporate changes) of the
Common Stock will be available for issuance to participants under the 2007
Plan.
All non-employee directors are eligible to participate in the 2007 Plan. Each
non-employee director as of the adoption date of the 2007 Plan shall be granted
an award of 600 unrestricted shares of the Company's Common Stock. On each
July 1 following the adoption date of the 2007 Plan, each non-employee director
shall receive an automatic grant of a number of shares of Company's Common
Stock equal in value to $18,000 based on 100% of the fair market value (as
defined) of the Common Stock on the date of grant, provided he or she holds
such position on that date and the number of shares of Common Stock
available for grant under the 2007 Plan is sufficient to permit such automatic
grant. Any fractional shares resulting from such grant will be rounded up to
next highest whole share. All stock awards to non-employee directors will be
fully vested on the date of grant. The dollar amount of the annual grant is
subject to further adjustment by the Board of Directors upon recommendation by
the Compensation Committee.
The stock awards granted under the 2007 Plan are shares of unrestricted Common
Stock and are fully vested on the date of grant. The right of the non-employee
director to receive his or her annual grant of Common is personal to the
director and is not transferable. Once received, shares of Common Stock awarded
to the non-employee director are freely transferable subject to any
requirements of Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). On June 28, 2007, Company filed a registration
statement on Form S-8 to register the shares subject to the 2007 Plan and the
Company's two stock option plans.
Upon recommendation of the Compensation Committee, the Board may, at any time
and from time to time and in any respect, amend or modify the 2007 Plan. The
Board must obtain stockholder approval of any material amendment to the 2007
Plan if required by any applicable law, regulation or stock exchange rule. The
Board of Directors may amend the 2007 Plan or any award agreement, which
amendment may be retroactive, in order to conform it to any present or future
law, regulation or ruling relating to plans of this or similar nature. No
amendment or modification of the 2007 Plan or any award agreement may adversely
affect any outstanding award without the written consent of the participant
holding the award.
For the fiscal year ended June 30, 2008, the four non-employee directors of the
Company, Josef A. Grunwald, Gary N. Jacobs, John C. Love and William J. Nance,
each received a grant of 987 shares of Common Stock pursuant to the 2007 Plan.
9
DIRECTOR COMPENSATION
Fees
Earned
or Paid Stock All Other
Name in Cash(1) Awards(2) Compensation Total
----------------- --------- ---------- ------------ -------
Josef A. Grunwald $22,000(3) $18,000 - $40,000
Gary N. Jacobs $16,000 $18,000 - $34,000
John C. Love $66,000(4) $18,000 - $84,000
William J. Nance $68,000(5) $18,000 - $86,000
John V. Winfield(6)
--------------
(1) Amounts shown include board retainer fees, committee fees and meeting
fees.
(2) Amounts shown reflect value of 987 shares of Common Stock awarded on
July 2, 2007 pursuant to the 2007 Stock Compensation Plan for Non-Employee
Directors based on closing price of the Company's Common Stock of $18.24
on June 29, 2007.
(3) Mr. Grunwald also serves as a director of the Company's subsidiary,
Portsmouth. This amount includes $6,000 in regular board fees paid
to Mr. Grunwald by Portsmouth.
(4) Mr. Love also serves as a director of the Company's subsidiaries, Santa
Fe and Portsmouth. Amounts shown include $8,000 in regular board and audit
committee fees paid by Santa Fe and $8,000 in regular board and audit
committee fees paid by Portsmouth. These amounts also include $30,000 in
special hotel committee fees paid by Portsmouth related to the oversight
its Hotel asset.
(5) Mr. Nance also serves as a director of the Company's subsidiaries, Santa
Fe and Portsmouth. Amounts shown include $8,000 in regular board and audit
committee fees paid by Santa Fe and $8,000 in regular board and audit
committee fees paid by Portsmouth. These amounts also include $30,000 in
special hotel committee fees paid by Portsmouth related to the oversight
its Hotel asset.
(6) As Chief Executive Officer, the Company's Chairman, John Winfield, was
not paid any board, committee or meetings fees. Mr. Winfield did receive a
a total of $12,000 in regular board fees from the Company's subsidiaries,
which is reported on the Summary Compensation Table.
Change in Control or Other Arrangements
Except for the foregoing, there are no other arrangements for compensation of
Directors and there are no employment contracts between the Company and its
Directors or any change in control arrangements.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and each beneficial owner of more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based upon a review of the copies of such reports received by it,
or written representations from certain reporting persons that no Form 5's were
required for those persons, the Company believes that during fiscal 2008 all
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 9, 2009, certain information with
respect to the beneficial ownership of Common Stock of the Company owned by (i)
those persons or groups known by the Company to own more than five percent of
the outstanding shares of Common Stock, (ii) each Director and Executive
Officer, and (iii) all Directors and Executive Officers as a group.
Name and Address of Amount and Nature
Beneficial Owner (1) of Beneficial Owner(2) Percentage(3)
-------------------- ---------------------- -------------
John V. Winfield 1,388,953 57.7%
Josef A. Grunwald 129,588(3) 5.4%
William J. Nance 57,524(3) 2.4%
Gary N. Jacobs 26,502(3)(4) 1.1%
John C. Love 23,127(3) 1.0%
David C. Gonzalez 28,500(5) 1.2%
Michael G. Zybala 0 *
David T. Nguyen 0 *
All Directors and
Executive Officers as a
Group (9 persons) 1,654,194 67.3%
------------------
* Ownership does not exceed 1%.
(1) Unless otherwise indicated, the address for the persons listed is
820 Moraga Drive, Los Angeles, CA 90049.
(2) Unless otherwise indicated and subject to applicable community property
laws, each person has sole voting and investment power with respect to the
shares beneficially owned.
(3) Percentages are calculated on the basis of 2,363,273 shares of Common Stock
outstanding at January 9, 2009, plus any securities that person has the right
to acquire within 60 days pursuant to options, warrants, conversion privileges
or other rights. The following options are included in director's shares:
Josef A. Grunwald-20,400; William J. Nance-20,400; Gary N. Jacobs-20,400; John
C. Love-20,400.
(4) Other than his options, all shares of Mr. Jacobs are held by the Gary and
Robin Jacobs Family Trust.
(5) Includes 12,750 shares of which Mr. Gonzalez has the right to acquire
pursuant to options.
As of January 9, 2009 the number of holders of record of the Company's Common
Stock was approximately 705. Such number of owners was determined from the
Company's shareholders records and does not include beneficial owners of the
Company's Common Stock whose shares are held in names of various brokers,
clearing agencies or other nominees. Including beneficial holders, there are
approximately 1,100 shareholders of the Company's Common Stock.
11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 4, 1998, the Compensation Committee authorized the Company to
obtain whole life and split dollar insurance policies covering the Company's
President and Chief Executive Officer, Mr. Winfield. During fiscal 2007 and
2006, the Company paid annual premiums in the amount of approximately $85,000
for the split dollar insurance policy owned by, and the beneficiary of which
is, a trust for the benefit of Mr. Winfield's family. The Company has a secured
right to receive, from any proceeds of the policy, reimbursement of all
premiums paid prior to any payments to the beneficiary.
On June 30, 1998, the Company's Chairman and President entered into a voting
trust agreement with the Company giving the Company the power to vote his 4.0%
interest in the outstanding shares of the Santa Fe common stock.
As Chairman of the Securities Investment Committee, the Company's President and
Chief Executive officer, John V. Winfield, oversees the investment activity of
the Company in public and private markets pursuant to authority granted by the
Board of Directors. Mr. Winfield also serves as Chief Executive Officer and
Chairman of Santa Fe and Portsmouth and oversees the investment activity of
those companies. Depending on certain market conditions and various risk
factors, the Chief Executive Officer, his family, Santa Fe and Portsmouth may,
at times, invest in the same companies in which the Company invests. The
Company encourages such investments because it places personal resources of the
Chief Executive Officer and his family members, and the resources of Santa Fe
and Portsmouth, at risk in connection with investment decisions made on behalf
of the Company. Under the direction of the Securities Investment Committee,
the Company has instituted certain modifications to its procedures to reduce
the potential for conflicts of interest.
The Company, its subsidiary Santa Fe and Santa Fe's subsidiary, Portsmouth,
have established performance based compensation programs for Mr. Winfield's
management of the securities portfolios of those companies. The performance
based compensation program was approved by the disinterested members of the
respective Boards of Directors of the Company and its subsidiaries. No
performance bonus compensation was paid to Mr. Winfield for the fiscal years
ended June 30, 2008 and 2007.
Director Independence
InterGroup's common stock is listed on the NASDAQ Capital Market tier of the
NASDAQ Stock Market LLC ("NASDAQ"). InterGroup is a Smaller Reporting Company
under the rules and regulations of the Securities and Exchange Commission
("SEC"). The Board of Directors of InterGroup currently consists of five
members. With the exception of the Company's President and CEO, John V.
Winfield, all of InterGroup's Board of Directors consists of "independent"
directors as independence is defined by the applicable rules of the SEC and
NASDAQ. There are no members of the Company's compensation, nominating or audit
committees that do not meet those independence standards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF JOHN C. LOVE AS
CLASS C DIRECTOR OF THE COMPANY.
12
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed the firm of Burr,
Pilger & Mayer LLP as the Company's independent registered public accounting
firm for the fiscal year ending June 30, 2009. Burr, Pilger & Mayer LLP has
served as the Company's independent registered public accounting firm since
October 23, 2007. Although the action of shareholders in this matter is not
required, the Audit Committee believes it is appropriate to seek shareholder
ratification of this appointment. Ratification requires the affirmative vote
of a majority of the shares represented and voted at the Annual Meeting.
On October 23, 2007, the Audit Committee of the Board of Directors recommended
and approved the dismissal of PricewaterhouseCoopers LLP ("PWC") as the
Company's independent registered public accounting firm. PWC served as the
independent registered accounting firm engaged to audit the Company's financial
statements for its fiscal year ended June 30, 2007. On October 23, 2007, the
Audit Committee engaged and appointed Burr, Pilger & Mayer LLP ("BPM") as the
Company's new independent registered accounting firm.
The reports of PWC on the financial statements of the Company for the fiscal
year ended June 30, 2007 did not contain an adverse opinion or disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope, or
accounting principle. During the fiscal year ended June 30, 2007 and through
October 23, 2007, there were no disagreements with PWC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements (as defined in Item 304(a)(1)(iv)(A) of
Regulation S-B), if not resolved to the satisfaction of PWC, would have caused
PWC to make reference thereto in their reports on the Company's financial
statements for such years. During the fiscal year ended June 30, 2007 and
through October 23, 2007, there were no reportable events as defined in Item
304(a)(1)(iv)(B) of Regulation S-B.
The Company provided PWC with a copy of the above disclosures and requested
that PWC furnish a letter addressed to the U.S. Securities and Exchange
Commission stating whether or not it agrees with the statements made by the
Company and, if not, stating the respects in which it does not agree. PWC
furnished a letter confirming that it agreed with the statements made by the
Company.
During fiscal year ended June 30, 2007 and through October 23, 2007, there were
no consultations with BPM on any matters described in Item 304(a)(2)(i) and
Item 304(a)(2)(ii) of Regulation S-B.
BPM serves as the auditors of the Justice Investors limited partnership
("Justice" or the Partnership"). Due to the consolidation of the financial
statements of Justice into those of the Company, effective July 1, 2006, the
Audit Committee believed that the engagement of BPM would promote greater
efficiencies and savings for the Company, especially since the hotel owned by
the Partnership is now the major asset and operating entity on the Company's
financial statements.
We expect that a representative of Burr Pilger & Mayer LLP will be present at
the Annual Meeting to respond to appropriate questions from Shareholders, and
we will provide this representative with an opportunity to make a statement if
he or she desires to do so.
13
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SEC UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY REFERENCE IN ANY
DOCUMENT SO FILED.
AUDIT COMMITTEE REPORT
The Audit Committee's responsibilities are described in a written charter
adopted by the Board of Directors, which is attached as Appendix A to this
Proxy Statement. The Audit Committee primary duties and responsibilities are
to: serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; appoint and approve
the compensation of the Company's independent registered public accounting
firm; review and appraise the audit efforts of the Company's independent
registered public accounting firm; and provide an open avenue of communications
among the independent registered public accounting firm, financial and senior
management, and the Board of Directors. During fiscal year ended June 30,
2008, the Company retained Burr, Pilger & Mayer LLP as its independent
registered public accounting firm to provide audit and audit related services.
There were no fees paid for non-audit services.
The Audit Committee reviewed and discussed the audited financial statements
with management and Burr, Pilger & Mayer LLP and management represented to the
Audit Committee that the consolidated financial statements were prepared in
accordance with generally accepted accounting principals. The discussions with
Burr, Pilger & Mayer LLP also included the matters required by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), as amended by
SAS No. 90 with respect to quarterly financial statements. The Audit Committee
has also received the written disclosures and the letter from Burr, Pilger &
Mayer LLP regarding its independence as required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees), which
was discussed with Burr, Pilger & Mayer LLP.
Based on the Audit Committee's review of the audited financial statements, and
the review and discussions with management and Burr, Pilger & Mayer LLP
referred to above, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2008 for filing
with the Securities and Exchange Commission.
THE AUDIT COMMITTEE:
WILLIAM J. NANCE, CHAIRPERSON
JOHN C. LOVE
JOSEF A. GRUNWALD
14
Audit Fees
The aggregate fees billed for each of the last two fiscal years ended June 30,
2008 and 2007 for professional services rendered by Burr, Pilger & Mayer, LLP
(fiscal 2008) and PricewaterhouseCoopers LLP (fiscal 2007), the independent
registered public accounting firms for the audit of the Company's annual
financial statements and review of financial statements included in the
Company's Form 10-QSB or services normally provided by the independent
registered public accounting firms in connection with statutory and regulatory
filings or engagements for those fiscal years, were as follows:
Fiscal Year
-------------------------
2008 2007
-------- --------
Audit Fees $277,000 $407,000
Audit Related Fees - -
Tax Fees - -
All Other Fees - -
-------- --------
TOTAL: $277,000 $407,000
======== ========
Audit Committee Pre-Approval Policies
The Audit Committee shall pre-approve all auditing services and permitted non-
audit services (including the fees and terms thereof) to be performed for the
Company by its independent registered public accounting firm, subject to any de
minimus exceptions that may be set for non-audit services described in Section
10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to
the completion of the audit. The Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit services,
provided that decisions of such subcommittee to grant pre-approvals shall be
presented to the full Committee at its next scheduled meeting. All of the
services described herein were approved by the Audit Committee pursuant to its
pre-approval policies.
None of the hours expended on the independent registered public accounting
firms' engagement to audit the Company's financial statements for the most
recent fiscal year were attributed to work performed by persons other than the
independent registered public accounting firm's full-time permanent employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF BURR, PILGER & MAYER LLP AS THE COMPANY'S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM.
15
PROPOSAL NO. 3
APPROVAL OF THE INTERGROUP CORPORATION
2008 RESTRICTED STOCK COMPENSATION PLAN
GENERAL. Based on the recommendation of the Compensation Committee, our
Board of Directors adopted, subject to shareholder approval, a new equity
compensation plan for its officers, directors and key employees on December 3,
2008, entitled, The InterGroup Corporation 2008 Restricted Stock Unit Plan
(which we refer to as the Plan). At the same time the Board adopted the Plan,
the holders of more than 65.2% of the outstanding common stock of the Company
executed written consents in favor of the adoption of the Plan and have
committed to vote in favor of the ratification of the 2008 Plan at this Annual
Meeting of Shareholders. A majority of the outstanding shares of Common Stock
are required to approve the Plan.
The Plan authorizes the Company to issue restricted stock units ("RSUs") as
equity compensation to officers, directors and key employees of the Company on
such terms and conditions established by the Compensation Committee. RSUs are
not actual shares of the Company's common stock, but rather promises to deliver
common stock in the future, subject to certain vesting requirements and other
restrictions as may be determined by the Committee.
Our executive officers, directors and key employees have an interest in the
proposal to approve the Plan since each is an eligible participant in such
awards that may be granted under the Plan by the Compensation Committee. As of
December 31, 2008, were five (5) directors and four (4) named executive
officers that are eligible participants under the Plan.
A copy of the Plan is attached to this Proxy Statement as Appendix B and is
hereby incorporated by reference. The following summary of the key provisions
of the Plan is qualified in its entirety by reference to the attached Plan
document.
PURPOSE. The Plan was adopted, in part, to replace our 1998 Stock Option
Plan for Non-Employee Directors and our 1998 Stock Option Plan for Key Officers
and Employees (which we refer to as the Prior Plans). The Prior Plans expired
on December 7, 2008. The purpose of the Plan is to provide a means whereby
officers, directors and key employees of the Company develop a sense of
proprietorship and personal involvement in the development and financial
success of the Company, and to encourage them to devote their best efforts to
the business of the Company, thereby advancing the interests of the Company and
its shareholders. A further purpose of this Plan is to provide a means through
which the Company may attract able individuals to become employees or serve as
directors of the Company and to provide a means for such individuals to acquire
and maintain stock ownership in the Company, thereby strengthening their
concern for the welfare of the Company. The Plan will also provides flexibility
for the Company to exchange RSUs for stock options granted under Prior Plans
which will reduce the number of shares of common stock subject to equity
awards, thereby reducing potential dilution to the Company's shareholders in
the event of significant increases in the value of its common stock.
EFFECTIVE DATE AND DURATION. The Plan became effective upon adoption by
the Board of Directors on December 3, 2008; however, no RSUs that may be
granted shall vest until the Plan is approved by the holders of a majority of
the outstanding Common Stock of the Company. The Plan shall be rescinded and
all equity compensation granted under the Plan shall be null and void unless
within six months from the date of the adoption of the Plan it is approved by
the shareholders of the Company. The Plan will terminate ten (10) years from
December 3, 2008, unless terminated sooner by the Board of Directors. After the
Plan is terminated, no awards may be granted but awards previously granted
shall remain outstanding in accordance with the Plan and their applicable terms
and conditions.
16
SHARES AVAILABLE FOR AWARDS; MAXIMUM AWARDS. The shares available for
issuance under the Plan are shares of the Company's common stock, par value
$.01 per share, which may be unissued shares or treasury shares. Subject to
certain adjustments upon changes in capitalization, a maximum of 200,000 shares
of the common stock will be available for issuance to participants under the
Plan.
AWARDS AUTHORIZED FOR ISSUANCE. The awards authorized for issuance are
restricted stock units ("RSUs"), each of which represents a right to acquire
one share of our common stock. RSUs are not actual shares of common stock but
rather promises to deliver common stock in the future, subject to certain
vesting requirements and restrictions as may be determined by the Compensation
Committee. Holders of RSUs have no voting rights with respect to the underlying
shares of common stock and holders are not entitled to receive any dividends
until the RSUs vest and the shares are delivered. No awards of RSUs shall vest
until at least six months after shareholder approval of the Plan.
TRANFERABILITY. Awards of RSUs are personal to the participant and may not
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated.
REGISTRATION OF SHARES. The shares to be delivered pursuant to the award
of RSUs have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"). Following approval of the plan by the stockholders, the
Company may, but shall not be obligated to, register the shares subject to the
Plan by filing a registration statement on Form S-8 under the 1933 Act or any
other applicable law. Shares of stock issued pursuant to the plan may bear an
appropriate restrictive legend as determined by the Committee.
ELIGIBILITY AND PARTICIPATION. Individuals eligible to participate in the
Plan include all officers, directors, key employees and holders of awards from
Prior Plans. Subject to the provisions of the Plan, the Compensation Committee
may, from time to time, select from all eligible individuals, those individuals
to whom awards shall be granted and shall determine, in its sole discretion,
the nature of, any and all terms permissible by law, and the amount of each
award. Presently there are five directors and four named executive officers
that may be eligible participants under the Plan.
ADMINISTRATION AND AUTHORITY. The Compensation Committee shall be
responsible for administering the Plan. The Compensation Committee shall have
full and exclusive discretionary power to interpret the terms and the intent of
the Plan and any award agreement in connection with the Plan, to determine
eligibility for awards and to adopt such rules, regulations, forms,
instruments, and guidelines for administering the Plan as the Committee may
deem necessary or proper. Such authority shall include, but not be limited to,
selecting award recipients, establishing all award terms and conditions,
including the terms and conditions set forth in award agreements, granting
awards as an alternative to, or as the form of, payment for grants or rights
earned or due under compensation plans or arrangements of the Company,
including an exchange of awards granted under Prior Plans, construing any
ambiguous provision of the Plan or any award agreement, and adopting
modifications and amendments to the Plan or any award agreement, including
without limitation, any that are necessary to comply with the laws of the
countries and other jurisdictions in which the Company and/or its Subsidiaries
operate. All actions taken and all interpretations and determinations made by
the Committee shall be final and binding upon the participants, the Company,
and all other interested individuals.
17
OTHER RESTRICTIONS. The Compensation Committee may impose such other
conditions and/or restrictions on any RSUs granted pursuant to the Plan as it
may deem advisable including, without limitation, a requirement that
participants pay a stipulated purchase price for each RSU, restrictions based
upon the achievement of specific performance goals, time-based restrictions on
vesting following the attainment of the performance goals, service time-based
restrictions, restrictions under applicable laws or under the requirements of
any stock exchange or market upon which such Shares are listed or traded,
and/or holding requirements or sale restrictions placed on the shares by the
Company upon vesting of RSUs.
EXCHANGE PROGRAM. Under to the Plan, the Compensation Committee also has
the power and authority to establish and implement an exchange program that
would permit the Company to offer holders of awards issued under prior
shareholder approved compensation plans to exchange certain options for new
RSUs on terms and conditions to be set by the Committee. The exchange program
is designed to increase the retention and motivational value of awards granted
under Prior Plans. In addition, by exchanging options for RSUs, the Company
will reduce the number of shares of common stock subject to equity awards,
thereby reducing potential dilution to stockholders in the event of significant
increases in the value of its common stock.
AMENEDMENT AND DISCONTINUANCE. Upon recommendation of the Compensation
Committee, the Board may amend or modify the Plan. The Board must obtain
stockholder approval of any material amendment to the Plan if required by any
applicable law, regulation or stock exchange rule. The Board of Directors may
amend the Plan or any Award Agreement, which amendment may be retroactive, in
order to conform it to any present or future law, regulation or ruling relating
to plans of this or similar nature. No amendment or modification of the Plan or
any award agreement may adversely affect any outstanding award without the
written consent of the participant holding the award.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief
description of certain federal income tax consequences that will generally
apply to awards issued under the Plan, based on current federal income tax
laws. This summary is not intended to be exhaustive and, among other things,
does not describe state, local or foreign income and other tax consequences.
Participants should not rely on this discussion for individual tax advice, as
each participant's situation and the tax consequences of exercising awards and
disposing of the underlying shares of common stock will vary depending upon the
specific facts and circumstances involved. Each participant is advised to
consult with his or her own tax advisor.
In general, the recipient of restricted stock units will not recognize taxable
income at the time of grant as long as the award is nontransferable and is
subject to a substantial risk of forfeiture as a result of performance-based
vesting targets, continued services requirements or other conditions that must
be satisfied before delivery of shares can occur. The recipient will generally
recognize ordinary income when the substantial risk of forfeiture expires, or
is removed, and the shares can be delivered. The Company will generally be
entitled to a corresponding deduction equal to the amount of income the
recipient recognizes. On a subsequent sale of the shares, the recipient will
recognize capital gain or loss equal to the difference between the sales price
and the participant's adjusted basis in those shares, which will generally be
the amount of income previously recognized by the participant.
18
MISCELLANEOUS TAX ISSUES. Compensation to a participant who is an employee
which results from awards under the Plan will constitute wages for purposes of
the Federal Insurance Contributions Act and the Federal Unemployment Tax Act
and thus will result in additional tax liability to the Company, generally with
respect to each award at the time that such award is no longer subject to a
substantial risk of forfeiture or becomes transferable. The Company shall have
the power and the right to deduct or withhold, or require a Participant to
remit to the Company, the minimum statutory amount to satisfy federal, state,
and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the Plan.
NEW PLAN BENEFITS. Pursuant to an exchange offer authorized by the
Compensation Committee, a total of 5,812 RSUs were issued to four holders of
Non-Employee Director stock options in exchange for a total of 36,000 stock
options which were surrendered to the Company on December 7, 2008. The number
of RSUs issued was determined by multiplying the number of options that were
surrendered by the difference between the exercise price of the options
surrendered ($8.00) and the closing price of the Company's common stock on
December 5, 2008 of $9.54, with that product divided by the closing price of
the common stock on December 5, 2009.
On December 15, 2008, the Compensation Committee authorized a similar exchange
offer to the Company's Chief Executive Officer, John V. Winfield, respecting
225,000 stock options issued to him under the Key Officer and Employee Plan
that were expire on December 21, 2008. Pursuant to that exchange offer, Mr.
Winfield surrendered his 225,000 options to the Company on December 21, 2008 in
exchange for 84,628 RSUs. The number of RSUs issued was based on an exercise
price of the options surrendered of $7.917 and the closing price of the
Company's common stock on December 19, 2008 of $12.69, using the same formula
as the exchange offer to the holders of the Non-Employee Director options.
The following table sets forth certain information with respect to restricted
stock units granted since December 3, 2008 through January 9, 2009 to (i) the
Named Executives (as defined under "Executive Compensation"), (ii) all
executive officers as a group, (iii) all non-executive directors as a group,
and (iv) all non-executive officer employees as a group. The RSUs shown below
are not necessarily indicative of the RSUs that may be granted in the future
since the awards are discretionary and cannot be determined at this time.
19
NEW PLAN BENEFITS
2008 RESTRICTED STOCK UNIT PLAN
Name and Position Dollar Value(1) Number of RSUs(2)
-------------------------- --------------- -----------------
John V. Winfield, Chairman, $952,065 84,628
President and CEO
David C. Gonzalez, Vice - -
President, Real Estate
David T. Nguyen, Treasurer - -
and Controller (PFO)
Michael G. Zybala, Asst. - -
Secretary & Counsel
All Executive Officers
as a group (4 persons) $962,065 84,628
All Non-Executive Directors
as a group (4 persons) $ 65,385 5,812
Non-Executive Officer Employees - -
as a group (none)
---------------------
(1) Based on the closing price of the Company's common stock on January 5, 2009
of $11.25 per share.
(2) All grants of restricted stock units were made subject to shareholder
approval of Proposal No. 3. No awards of RSUs can vest until at least six
months after shareholder approval of the Plan and are subject to such other
restrictions and conditions as may be determined by the Compensation
Committee and set forth in the award agreement to be executed upon approval
of the Plan.
BOARD RECOMMENDATION; INTEREST OF CERTAIN PERSONS
The Board of Directors believes that the Plan will provide a valuable benefit
to the Company by enhancing its ability to attract and retain highly qualified
officers, directors and employees. The Board adopted the Plan and has
recommended that it be submitted to the shareholders at the Annual Meeting for
their approval.
The Company's officers, directors and key employees have an interest in the
proposal to adopt the Plan since each is an eligible participant in such awards
that may be granted under the Plan by the Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE INTERGROUP
CORPORATION 2008 RESTRICTED STOCK UNIT PLAN.
20
OTHER BUSINESS
As of the date of this statement, management knows of no business to be
presented at the meeting that is not referred to in the accompanying notice. As
to other business that may properly come before the meeting, it is intended
that the proxies properly executed and returned will be voted in respect
thereof at the discretion of the person voting the proxies in accordance with
the best judgment of that person.
SHAREHOLDER PROPOSALS
It is presently anticipated that the fiscal 2009 Annual Meeting of Shareholders
will be held on or around February 24, 2010. Any shareholder proposals
intended to be considered for inclusion in the proxy statement for presentation
at the fiscal 2009 Annual Meeting must be received by the Company no later than
October 24, 2009. The proposal must be in accordance with the provisions of
Rule 14a-8 promulgated by the Securities and Exchange Commission under the
Securities Act of 1934. It is suggested that the proposal be submitted by
certified mail - return receipt requested.
FORM 10-KSB and ANNUAL REPORT
The Annual Report to Shareholders for the 2008 fiscal year accompanies this
proxy statement, but is not deemed a part of the proxy solicitation material.
A copy of the Company's Form 10-KSB for the fiscal year ended June 30, 2008, as
required to be filed with the Securities and Exchange Commission, excluding
exhibits, will be mailed to shareholders without charge upon written request
to: John V. Winfield, President, The InterGroup Corporation, 820 Moraga Drive,
Los Angeles, CA 90049. Such requests must set forth a good-faith
representation that the requesting party was either a holder of record or
beneficial owner of the common stock of the Company on January 9, 2009. The
Company's Form 10-KSB and other public filings are also available through the
Securities and Exchange Commission's world-wide-web site (http://www.sec.gov).
By Resolution of the Board of Directors
THE INTERGROUP CORPORATION
Gary N. Jacobs
Secretary
Dated: Los Angeles, California
January __, 2009
21
APPENDIX A
THE INTERGROUP CORPORATION
AUDIT COMMITTEE CHARTER
(As Amended on January 5, 2009)
Purpose:
-------
The primary purpose of the Audit Committee is to assist the Board of Directors
in fulfilling its responsibility of overseeing management's conduct of the
Company's financial reporting process, the Company's systems of internal
accounting and financial controls, and the annual independent audit of the
Company's financial statements.
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention and shall have full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and the
Committee are in place to represent the Company's shareholders, and the
Company's independent registered public accounting firm is ultimately
accountable to the Board and the Committee as such representatives of
shareholders. It is the responsibility of the Committee to maintain free and
open means of communication between the Board, the independent registered
public accounting firm and the financial management and internal auditors of
the Company.
The Committee shall review the adequacy of this Charter on an annual basis.
Membership:
----------
The Committee shall be comprised of at least three (3) "independent" directors
that meet the composition requirements as defined by the rules of the
Securities and Exchange Commission ("SEC") and The NASDAQ Stock Market LLC
("NASDAQ") as may be modified and supplemented from time to time. Accordingly,
all of the members of the Committee will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company;
2. Are not affiliates of the Company;
3. Do not receive any compensation from the Company other than in the capacity
as director; and
4. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will qualify as an audit
committee financial expert as defined by the Securities and Exchange
Commission.
The members of the Committee shall be elected by the Board at the annual
meeting of the Board and shall serve until their successors shall be duly
elected and qualified. Unless a Chairman of the Committee is elected by the
full Board, the members of the Committee may designate a Chairman of the
Committee by majority vote of the full Committee Membership.
Meetings:
--------
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. Minutes of each meeting of
the Committee should be recorded by the Secretary to the Committee. Approval by
a majority of the members present at a meeting at which a quorum is present
shall constitute approval by the Committee. The Committee may also act by
A-1
unanimous written consent without a meeting. As part of its job to foster open
communication, the Committee should meet at least annually with management and
the Company's independent registered public accounting firm in separate
executive sessions to discuss any matters that the Committee or each of these
groups believe should be discussed privately. In addition, the Committee or at
least its Chairman should meet with the Company's independent registered public
accounting firm and management quarterly to review the Company's financials
consistent with #2 below. The Committee may request any officer or employee of
the Company or the Company's outside counsel or the Company's independent
registered public accounting firm to attend a meeting of the Committee or to
meet with any members of, or consultants to, the Committee.
Key Responsibilities:
--------------------
The Committee's job is one of oversight, and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the Company's independent registered public accounting firm is responsible
for auditing those financial statements pursuant to professional standards.
Additionally, the Committee recognizes that financial management has more time,
knowledge and detailed information about the Company than do Committee members.
Consequently, 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 outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this
guide as appropriate given the circumstances.
1. The Committee shall review with management and the Company's
independent registered public accounting firm the audited financial statements
to be included in the Company's Annual Report on Form 10-K (or the Annual
Report to Shareholders if distributed prior to the filing of the Form 10-K)
prior to the filing of the Form 10-K or, if deemed appropriate, prior to any
year-end earnings release. The Committee shall review and consider with
Company's independent registered public accounting firm the all matters
required to be discussed by Statement of Auditing Standards ("SAS") No. 61, as
amended by SAS No.90, by auditors with audit committees.
2. As a whole, or through the Committee chair, the Committee shall review
with the Company's independent registered public accounting firm the Company's
interim financial results to be included in the Company's quarterly reports to
be filed with Securities and Exchange Commission and the matters required to be
discussed by SAS No. 61, as amended by SAS No. 90 with respect to quarterly
financial statements. Such review will occur prior to the Company's filing of
the Form 10-Q or, if deemed appropriate, prior to any quarterly earnings
releases.
3. Review disclosures made to the Committee by the Company's CEO and CFO
during their certification process for the Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company's internal controls.
4. The Committee shall:
(a) request from the Company's independent registered public
accounting firm annually a formal written statement delineating
all relationships between the independent registered public
accounting firm and the Company consistent with Independence
Standards Board Standard No. 1;
(b) discuss with the Company's independent registered public
accounting firm any disclosed relationships or services which
may impact that firm's objectivity or independence; and
(c) recommend that the Board take appropriate action in response
to the Company's independent registered public accounting firm's
report to satisfy itself of that firm's independence.
A-2
5. The Committee shall have the sole authority to appoint or replace the
Company's independent registered public accounting firm (subject, if
applicable, to shareholder ratification). The Committee shall be directly
responsible for the compensation and oversight of the work of the Company's
independent registered public accounting firm (including resolution of
disagreements between management and the Company's independent registered
public accounting firm regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work. The Company's
independent registered public accounting firm shall report directly to the
Committee.
6. The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the company by its independent registered public accounting firm, subject to
the de minimus exceptions for non-audit services described in Section 10A
(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the
completion of the audit. The Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including the
authority to grant preapprovals of audit and permitted nonaudit services,
provided that decisions of such subcommittee to grant preapprovals shall be
presented to the full Committee at its next scheduled meeting.
7. Review and discuss quarterly reports from the Company's independent
registered public accounting firm:
(a) All critical accounting policies and practices to be
used.
(b) All alternative treatments of financial information
within generally accepted accounting principles that have
been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the
treatment preferred by the independent registered public
accounting.
(c) Other material written communications between the
independent registered public accounting firm and management,
such as any management letter or schedule of unadjusted
differences.
8. Periodically consult with the Company's independent registered public
accounting firm, out of the presence of management, about internal controls and
the fullness and accuracy of the organization's financial statements.
9. Recommend to the Board policies for the Company's hiring of employees
or former employees of the independent registered public accounting firm who
participated in any capacity in the audit of the Company.
10. Discuss with management the Company's use of "pro forma" or
"adjusted" non-GAAP information, as well as financial information and earnings
guidance provided to analysts and rating agencies. Such discussion may be done
generally (consisting of discussing the types of information to be disclosed
and the types of presentations to be made).
11. Establish regular and separate systems of reporting to the Committee
by each of management, the independent registered public accounting firm, and
the internal accountants regarding any significant judgments made in
management's preparation of the financial statements, and the view of each as
to appropriateness of such judgments.
12. Following completion of the annual audit, review separately with each
of management and the independent registered public accounting firm any
significant difficulties encountered during the course of the audit, including
any restrictions on the scope of work or access to required information.
13. Review any significant disagreement among management and the
independent registered public accounting firm in connection with the
preparation of the financial statements.
A-3
14. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
15. Establish, review, and update periodically a Code of Ethical Conduct,
and ensure that management has established a system to enforce this Code.
16. Review and approve any transactions between the Company and its
officers, directors or 5% shareholders.
17. The Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding, as determined by
the Committee, for payment of compensation to the Company's independent
registered public accounting firm for the purpose of rendering or issuing an
audit report and to any advisors employed by the Committee.
Reporting Responsibilities:
--------------------------
The Committee shall prepare the report required by the rules of the Securities
and Exchange Commission to be included in the Company's annual proxy statement.
The Committee shall prepare such other reports for the full Board of Directors
and others as it shall deem necessary to discharge its responsibilities under
this Charter.
A-4
APPENDIX B
THE INTERGROUP CORPORATION
2008 RESTRICTED STOCK UNIT PLAN
Article 1.
Establishment, Purpose and Duration
1.1 Establishment. The InterGroup Corporation, a Delaware Corporation
(hereinafter referred to as the "Company"), establishes a equity-based
incentive compensation plan to be known as The InterGroup Corporation 2008
Restricted Stock Unit Plan (hereinafter referred to as the "Plan") as set forth
in this document. This Plan permits the grant of Restricted Stock Units
("RSUs") to Officers, Directors and Key Employees of the Company.
1.2 Purpose of this Plan. The purpose of this Plan is to provide a means
whereby Officers, Directors and Key Employees of the Company develop a sense of
proprietorship and personal involvement in the development and financial
success of the Company, and to encourage them to devote their best efforts to
the business of the Company, thereby advancing the interests of the Company and
its shareholders. A further purpose of this Plan is to provide a means through
which the Company may attract able individuals to become Employees or serve as
Directors of the Company and to provide a means for such individuals to acquire
and maintain stock ownership in the Company, thereby strengthening their
concern for the welfare of the Company. The Plan will also provide flexibility
for the Company to exchange RSUs for stock options granted under Prior Plans
which will reduce the number of Shares of common stock subject to equity
awards, thereby reducing potential dilution to the Company's shareholders in
the event of significant increases in the value of its common stock.
1.3 Effective Date. The Plan shall become effective upon adoption by the
Board of Directors of the Company (the "Effective Date"); however, no RSUs that
may be granted shall vest until the Plan is approved by the holders of a
majority of the outstanding Common Stock of the Company present or represented
and entitled to vote on the Plan at a stockholders' meeting or by written
consent of the holders of a majority of the outstanding Common Stock. The Plan
shall be rescinded and all equity compensation granted hereunder shall be null
and void unless within six months from the date of the adoption of the Plan by
the Board it shall have been approved by the holders of a majority of the
outstanding Common Stock of the Company.
1.4 Duration of this Plan. Unless sooner terminated as provided herein,
this Plan shall terminate ten (10) years from the Effective Date. After this
Plan is terminated, no Awards may be granted but Awards previously granted
shall remain outstanding in accordance with their applicable terms and
conditions and this Plan's terms and conditions.
Article 2.
Definitions
Whenever used in this Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.
2.1 "Award" means, individually or collectively, a grant under this Plan
of Restricted Stock Units, subject to the terms of this Plan.
B-1
2.2 "Award Agreement" means either (i) a written agreement entered into
by the Company and a Participant setting forth the terms and provisions
applicable to an Award granted under this Plan, or (ii) a written or electronic
statement issued by the Company to a Participant describing the terms and
provisions of such Award, including any amendment or modification thereof. The
Committee may provide for the use of electronic, internet or other non-paper
Award Agreements, and the use of electronic, internet or other non-paper means
for the acceptance thereof and actions thereunder by a Participant.
2.3 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
2.4 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.5 "Code" means the U.S. Internal Revenue Code of 1986, as amended from
time to time. For purposes of this Plan, references to sections of the Code
shall be deemed to include references to any applicable regulations thereunder
and any successor or similar provision.
2.6 "Committee" means the Administrative and Compensation Committee of the
Board or a subcommittee thereof, or any other committee designated by the Board
to administer this Plan. The Committee shall consist of at least three members
that shall be appointed from time to time by, and shall serve at the discretion
of, the Board. If the Committee does not exist or cannot function for any
reason, the Board may take any action under the Plan that would otherwise be
the responsibility of the Committee.
2.7 "Company" means The InterGroup Corporation, a Delaware corporation,
and any successor thereto as provided in Article 11 herein.
2.8 "Director" means any individual who is a member of the Board of
Directors of the Company.
2.9 "Effective Date" has the meaning set forth in Section 1.3.
2.10 "Employee" means Officers, employees and consultants of the Company
and/or its subsidiaries, as determined by the Committee from time to time.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.12 "Fair Market Value" or "FMV" means fair market value of a share of
Common Stock on a given date, as determined by the Committee; provided,
however, that if the Common Stock on such date is (i) traded on a tier of the
NASDAQ Stock Market ("NASDAQ"), the Fair Market Value shall be the NASDAQ
Official Closing Price ("NOCP") closing price of the Common Stock on such
system; or (ii) traded on an established securities exchange, the Fair Market
Value shall be the closing price of the Common Stock in the reported
consolidated trading of such exchange. If there are no Common Stock
transactions reported for such date, the determination shall be made as of the
last immediately preceding date on which the Common Stock transactions
were reported. If there shall be any material alteration in the present system
of reporting sales prices of the Common Stock, or if the Common Stock shall no
longer be traded or listed as set forth above, the Fair Market Value of the
Common Stock as of a particular date shall be determined under such method as
shall be determined by the Committee.
B-2
2.13 "Insider" means an individual who is, on the relevant date, an
officer, or Director of the Company, or a more than ten percent (10%)
Beneficial Owner of any class of the Company's equity securities that is
registered pursuant to Section 12 of the Exchange Act, as determined by the
Board in accordance with Section 16 of the Exchange Act.
2.14 "Non-Employee Director" means a Director who is not an Employee of
the Company or any of its subsidiaries.
2.15 "Participant" means any eligible individual as set forth in Article 5
to whom an Award is granted.
2.16 "Performance-Based Compensation" means compensation under an Award
that is intended to satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for other
purposes, including Code Section 409A.
2.17 "Performance Measures" means measures as described in Article 12 on
which the performance goals are based and which are approved by the Company's
shareholders pursuant to this Plan in order to qualify Awards as Performance-
Based Compensation.
2.18 "Performance Period" means the period of time during which the
performance goals must be met in order to determine the degree of payout and/or
vesting with respect to an Award.
2.19 "Period of Restriction" means the period when Restricted Stock Units
are subject to a substantial risk of forfeiture (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, in its discretion), as provided in Article 6.
2.20 "Plan" means The InterGroup Corporation 2008 Restricted Stock Unit
Plan.
2.21 "Plan Year" means the Company's fiscal year.
2.22 "Prior Plans" means The InterGroup Corporation 1998 Stock Option Plan
for Key Officers and Employees and The InterGroup Corporation 1998 Stock Option
Plan for Non-Employee Directors.
2.23 "Restricted Stock Unit" means an Award granted to a Participant
pursuant to Article 6, except no Shares are actually awarded to the Participant
on the date of grant.
2.24 "Share" means a share of common stock of the Company, $.01 par value
per share.
2.25 "Subsidiary" means any corporation or other entity, whether domestic
or foreign, in which the Company has or obtains, directly or indirectly, a
proprietary interest of more than fifty percent (50%) by reason of stock
ownership or otherwise.
B-3
Article 3.
Administration
3.1 General. The Committee shall be responsible for administering this
Plan, subject to this Article 3 and the other provisions of this Plan. The
Committee may employ attorneys, consultants, accountants, agents, and other
individuals, any of whom may be an Employee, and the Committee, the Company,
and its officers and Directors shall be entitled to rely upon the advice,
opinions, or valuations of any such individuals. All actions taken and all
interpretations and determinations made by the Committee shall be final and
binding upon the Participants, the Company, and all other interested
individuals.
3.2 Authority of the Committee. The Committee shall have full and
exclusive discretionary power to interpret the terms and the intent of this
Plan and any Award Agreement or other agreement or document ancillary to or in
connection with this Plan, to determine eligibility for Awards and to adopt
such rules, regulations, forms, instruments, and guidelines for administering
this Plan as the Committee may deem necessary or proper. Such authority shall
include, but not be limited to, selecting Award recipients, establishing all
Award terms and conditions, including the terms and conditions set forth in
Award Agreements, granting Awards as an alternative to, or as the form of,
payment for grants or rights earned or due under compensation plans or
arrangements of the Company, including an exchange of awards granted under
Prior Plans, construing any ambiguous provision of the Plan or any Award
Agreement, and, subject to Article 9, adopting modifications and amendments to
this Plan or any Award Agreement, including without limitation, any that are
necessary to comply with the laws of the countries and other jurisdictions in
which the Company and/or its Subsidiaries operate.
3.3 Exchange Program. The Committee shall also have the power and
authority to establish and implement an exchange program that would permit the
Company to offer holders of awards issued under Prior Plans to exchange certain
of their options for new RSUs on terms and conditions to be set by the
Committee. The exchange program would be designed to increase the retention and
motivational value of awards granted under Prior Plans. In addition, by
exchanging options for RSUs, the Company will reduce the number of shares of
common stock subject to equity awards, thereby reducing potential dilution to
stockholders in the event of significant increases in the value of its common
stock.
3.4 Delegation. The Committee may delegate to one or more of its members
or to one or more officers of the Company, and/or its Subsidiaries such
administrative duties or powers as it may deem advisable, and the Committee or
any individuals to whom it has delegated duties or powers as aforesaid may
employ one or more individuals to render advice with respect to any
responsibility the Committee or such individuals may have under this Plan. The
Committee may, by resolution, authorize one or more officers of the Company to
do one or both of the following on the same basis as can the Committee: (a)
designate Employees to be recipients of Awards; and (b) determine the size of
any such Awards; provided, however, (i) the Committee shall not delegate such
responsibilities to any such officer for Awards granted to an Employee who is
considered an Insider; (ii) the resolution providing such authorization sets
forth the total number of Awards such officer(s) may grant; and (iii) the
officer(s) shall report periodically to the Committee regarding the nature and
scope of the Awards granted pursuant to the authority delegated.
B-4
Article 4.
Shares Subject to this Plan and Maximum Awards
4.1 Number of Shares Available for Awards. Subject to adjustment as
provided in Section 4.3 herein, the maximum number of Shares available for
issuance to Participants under this Plan (the "Share Authorization") shall be
two hundred thousand (200,000) Shares.
4.2 Share Usage. Shares covered by an Award shall only be counted as used
to the extent they are actually issued. Any Shares related to Awards which
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of such Shares, shall be available again for grant under this Plan.
Moreover, if the tax withholding requirements with respect to any Award granted
under this Plan are satisfied by tendering Shares to the Company (by either
actual delivery or by attestation), only the number of Shares issued, net of
the Shares tendered, if any, will be deemed delivered for purposes of
determining the maximum number of Shares available for delivery under this
Plan. The Shares available for issuance under this Plan may be authorized and
unissued Shares or treasury Shares.
4.3 Adjustments in Authorized Shares. Notwithstanding the limitations set
forth in Section 4.1, in the event of a merger, consolidation, reorganization,
stock dividend, stock split or other change in corporate structure or
capitalization affecting the Common Stock, the Committee shall make an
appropriate adjustment in the maximum number of shares available under the Plan
and in the number of shares of Common Stock to be granted under the Plan.
Article 5.
Eligibility and Participation
5.1 Eligibility. Individuals eligible to participate in this Plan include
all Employees, Officers and Directors and holders of awards from Prior Plans.
5.2 Actual Participation. Subject to the provisions of this Plan, the
Committee may, from time to time, select from all eligible individuals, those
individuals to whom Awards shall be granted and shall determine, in its sole
discretion, the nature of, any and all terms permissible by law, and the amount
of each Award.
Article 6.
Restricted Stock Units
8.1 Grant of Restricted Stock Units. Subject to the terms and provisions
of this Plan, the Committee, at any time and from time to time, may grant
Restricted Stock Units to Participants in such amounts as the Committee shall
determine. Restricted Stock Units are not actual Shares of the Company's common
stock, but rather promises to deliver common stock in the future, subject to
certain vesting requirements and restrictions as may be determined by the
Committee.
8.2 Restricted Stock Unit Agreement. Each Restricted Stock Unit grant
shall be evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Restricted Stock Units granted, and such other
provisions as the Committee shall determine. No Awards of Restricted Stock
Units shall vest until at least six months after shareholder approval of the
Plan.
B-5
8.3 Registration of Shares. The Shares to be delivered pursuant to the
RSUs has not been registered under the Securities Act of 1933, as amended (the
"1933 Act"). Following ratification of the plan by the stockholders, the
Company may, but shall not be obligated to, register the shares subject to the
plan under the 1933 Act or any other applicable law. Shares of stock issued
pursuant to the plan may bear an appropriate restrictive legend as determined
by the Committee.
8.4 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Restricted Stock Units granted pursuant to this Plan
as it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Restricted Stock Unit,
restrictions based upon the achievement of specific performance goals, time-
based restrictions on vesting following the attainment of the performance
goals, time-based restrictions, restrictions under applicable laws or under the
requirements of any stock exchange or market upon which such Shares are listed
or traded, and/or holding requirements or sale restrictions placed on the
Shares by the Company upon vesting of Restricted Stock Units.
8.5 Voting Rights. A Participant shall have no voting rights at any time
with respect to any Restricted Stock Units granted hereunder.
8.6 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Restricted Stock
Units following termination of the Participant's employment with or provision
of services to the Company and/or its Subsidiaries, or services as a member of
the Company's Board of directors, as the case may be. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among
all Restricted Stock Units issued pursuant to this Plan, and may reflect
distinctions based on the reasons for termination.
8.7 Transferability of Restricted Stock Units. Restricted Stock Units are
personal to the Participant and may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated.
Article 9.
Amendment and Discontinuance.
Upon recommendation of the Committee, the Board may, at any time and
from time to time and in any respect, amend or modify the Plan. The Board must
obtain stockholder approval of any material amendment to the Plan if required
by any applicable law, regulation or stock exchange rule. The Board of
Directors may amend the Plan or any Award Agreement, which amendment may be
retroactive, in order to conform it to any present or future law, regulation or
ruling relating to plans of this or similar nature. No amendment or
modification of the Plan or any award agreement may adversely affect any
outstanding award without the written consent of the participant holding the
award.
Article 10
Withholding
10.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, the
minimum statutory amount to satisfy federal, state, and local taxes, domestic
or foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.
B-6
10.2 Share Withholding. With respect to withholding required upon the
lapse of restrictions on Restricted Stock Units, or any other taxable event
arising as a result of an Award granted hereunder, Participants may elect,
subject to the approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having
a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction. All such
elections shall be irrevocable, made in writing, and signed by the Participant,
and shall be subject to any restrictions or limitations that the Committee, in
its sole discretion, deems appropriate.
Article 11.
Successors
All obligations of the Company under this Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
Article 12.
General Provisions
12.1 Legend. The certificates for Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer of such
Shares.
12.2 Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
12.3 Requirements of Law. The granting of Awards and the issuance of
Shares under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
12.4 Investment Representations. The Committee may require any individual
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the individual is acquiring the Shares for investment and
without any present intention to sell or distribute such Shares.
12.5 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award. The Committee shall determine
whether cash, Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
12.6 Governing Law. The Plan and each Award Agreement shall be governed
by the laws of the State of California, excluding any conflicts or choice of
law rule or principle that might otherwise refer construction or interpretation
of this Plan to the substantive law of another jurisdiction. Unless otherwise
provided in the Award Agreement, recipients of an Award under this Plan are
deemed to submit to the exclusive jurisdiction and venue of the federal or
state courts of California, to resolve any and all issues that may arise out of
or relate to this Plan or any related Award Agreement.
B-7
FORM OF PROXY
THE INTERGROUP CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of The InterGroup Corporation to be held on February
18, 2009 at 2:30 P.M. at the Hilton San Francisco Financial District, 750
Kearny Street, San Francisco, CA 94108 and the Proxy Statement in connection
therewith each dated January 16, 2009; (b) appoints John V. Winfield and Gary
N. Jacobs, as proxies, each with the power to appoint his or her substitute,
and hereby authorizes them to represent and to vote, as designated on the
reverse side of this Form of Proxy, all of the shares of Common Stock of The
InterGroup Corporation held of record by the undersigned on January 9, 2009 at
the Annual Meeting of Shareholders to be held on February 18, 2009 or at any
adjournment thereof.
(Continued and to be signed on reverse side)
Annual Meeting of Shareholders Of
THE INTERGROUP CORPORATION
FEBRUARY 18, 2009
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
----------------------------------------------------------------------------
Please sign, date and return promptly in the enclosed envelope. Please mark
your vote in blue or black ink as shown here [x]
1. Election of Class C Director
[ ] FOR THE NOMINEE Nominee: John C. Love
[ ] WITHHOLD AUTHORITY
FOR THE NOMINEE
2. PROPOSAL TO APPROVE THE RETENTION FOR AGAINST ABSTAIN
OF BURR, PILGER & MAYER LLP AS
AS THE COMPANY'S INDEPENDENT REGISTERED [ ] [ ] [ ]
PUBLIC ACCOUNTANTS
3. PROPOSAL TO APPROVE THE INTERGROUP FOR AGAINST ABSTAIN
CORPORATION 2008 RESTRICTED STOCK
UNIT PLAN [ ] [ ] [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy
will be voted FOR Proposals 1, 2, 3 and 4.
To change the address on your account, please check the box at the right
and indicate your new address in the address space above. Please note [ ]
that changes to the registered name(s) on the account may not be
submitted via this method.
Signature of Shareholder _____________________ Date: ____________
Signature of Shareholder _____________________ Date: ____________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held by jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If
signer is a partnership, please sign in partnership name by authorized
person.