UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
Proxy Statement
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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THE
INTERGROUP CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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THE INTERGROUP
CORPORATION
11620 WILSHIRE
BLVD., SUITE 350
los angeles,
California 90025
(310) 889-2500
Notice of
annual meeting of shareholders
to be held on FEBRUARY 27, 2019
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, 2018, will be held at the Hilton San Francisco Financial District, 750 Kearny Street, San Francisco, CA 94108 on February
27, 2019 at 2:30 P.M. for the following purposes:
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(1)
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To elect two Class A directors to serve until the fiscal 2021 Annual Meeting;
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(2)
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To ratify the retention of Moss Adams LLP as the Company’s independent registered public accounting firm for the fiscal
year ending June 30, 2019; and
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(3)
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To transact such other business as may properly come before the meeting, or any postponements or adjournments thereof.
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The Board of Directors has fixed the close
of business on December 31, 2018 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, 2018 accompanies this Notice of Annual Meeting of Shareholders and Proxy Statement.
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By Order of the Board of Directors,
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/s/ John V. Winfield
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January 15, 2019
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John V. Winfield
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Los Angeles, California
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Chairman of the Board; President and Chief Executive Officer
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Your vote 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 pre-paid
envelope provided. Please return your proxy even if you plan to attend the Annual Meeting. You may always revoke your proxy and
vote in person.
This Proxy Statement is available at
www.intgla.com
.
THE INTERGROUP CORPORATION
11620 WILSHIRE
BLVD., SUITE 350
los angeles,
California 90025
(310) 889-2500
PROXY STATEMENT
annual meeting
of shareholders
to be held on FEBRUARY 27, 2019
The Board of Directors of The InterGroup Corporation (“InterGroup”
or the “Company”) is soliciting proxies in the form enclosed with this proxy statement in connection with its fiscal
2018 Annual Meeting of Shareholders to be held on February 27, 2019 or at any adjournments thereof. Only shareholders of record
at the close of business on December 31, 2018 are entitled to notice of, and to vote at, the Annual Meeting.
Each shareholder is entitled to cast, in person or by proxy,
one vote for each share held of record at the close of business on December 31, 2018. As of December 31, 2018, there were outstanding
2,329,713 shares of common stock, par value $.01 per share (the “Common Stock”). Of the total 2,329,713 shares outstanding,
a majority, or 1,164,857 voting shares will constitute a quorum for the transaction of business at the Annual Meeting. The affirmative
vote of the holders of the majority of the shares of Common Stock present and represented at the meeting and entitled to vote is
required to elect directors, to ratify the retention of the Company’s independent registered public accounting firm, and
to ratify or approve the other proposals being voted on at this time.
The proxies named in the accompanying proxy card 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 two Class A directors to serve until the fiscal 2021 Annual Meeting; and
(2) FOR ratification of the retention of Moss Adams LLP as the Company’s independent registered public accounting firm for
the fiscal year ending June 30, 2019.
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 at least 48 hours before
the date and time of our Annual Meeting, 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 18, 2019. In some cases, these materials will be mailed to banks and brokers
that should forward copies to the persons for whom they hold stock of the Company and to request authority for the execution of
proxies. 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.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company’s Certificate of Incorporation provides that
the Board of Directors shall consist of not less than five nor more than nine members (subject to any vacancies). 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 member and not 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 Board of Directors and a majority of such directors
may select a new director to fill the vacancy, and such replacement director shall serve only until the expiration of the term
of the director whose vacancy he is filling. Any director may resign at any time. Any director may be removed with cause by the
vote of, or written consent of, the holders of a majority of the shares of Common Stock entitled to then vote at an election of
directors 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. A replacement director may be elected at the same special meeting.
The term of current Class A Directors expires at the fiscal
2018 Annual Meeting to be held on February 27, 2019. The Board has proposed John V. Winfield and Jerold R. Babin as Class A Directors
to serve until the fiscal 2021 Annual Meeting (to be held in 2022) and until the election and qualification of his successor. The
Board of Directors has been informed that the nominees have consented to being named as such and are willing to serve as directors
if elected. However, if a nominee should be unable, or declines to serve, it is intended that the proxies will be voted for such
other persons as the proxies shall, in their discretion, designate. Unless otherwise directed in the accompanying proxy card, the
persons named therein will vote FOR the election of the nominee. Election requires a plurality of votes (i.e.: for the number of
seats available for directors at an Annual Meeting, those directors obtaining the highest number of votes shall be elected to fill
those seats).
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect
to the Board of Directors (including the nominees), executive officers and secretary of the Company:
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Name
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Position with the Company
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Age
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Term to Expire
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Class A Directors:
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John V. Winfield
(1)(4)(6)(7)
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Chairman of the Board; President and Chief Executive Officer
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72
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Fiscal 2018 Annual Meeting
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Jerold R. Babin
(3)
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Director
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86
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Fiscal 2018 Annual Meeting
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Class B Directors:
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Yvonne L. Murphy
(1)(5)(7)
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Director
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61
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Fiscal 2019 Annual Meeting
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William J. Nance
(1)(2)(3)(4)(6)
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Director
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74
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Fiscal 2019 Annual Meeting
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Name
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Position with the Company
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Age
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Term to Expire
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Class C Director:
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John C. Love
(2)(3)(4)(5)(6)(7)
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Director
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78
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Fiscal 2020 Annual Meeting
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Executive Officers
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David C. Gonzalez
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Vice President Real Estate
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51
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N/A
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Danfeng Xu
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Treasurer and Controller
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32
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N/A
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Secretary:
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Danfeng Xu
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Secretary
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32
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N/A
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(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 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 the Company’s
subsidiaries, Santa Fe Financial Corporation ("Santa Fe") and Portsmouth Square, Inc. ("Portsmouth"), both
public companies. Mr. Winfield also served as Chairman of the Board of Comstock Mining Inc. (NYSE MKT: LODE) ("Comstock"),
a public company, from June 2011 to September 2015. Mr. Winfield’s extensive experience as an entrepreneur and investor,
as well as his managerial and leadership experience from serving as a chief executive officer and director of public companies,
led to the Board’s conclusion that he should serve as a director of the Company.
Jerold R. Babin —
Mr. Babin was first appointed
as a director of Portsmouth, a subsidiary of the Company, in February 1996. Mr. Babin was elected to the Board of InterGroup in
February 2014. Mr. Babin is a retail securities broker. From 1974 to 1989, he worked at Drexel Burnham and from 1989 to June 30,
2010, he worked for Prudential Securities (later Wachovia Securities and now Wells Fargo Advisors) where he held the title of First
Vice-President. Mr. Babin retired from his position at Wells Fargo advisors in June 2010. Mr. Babin had also served as an arbitrator
for FINRA (formerly NASD) for over 20 years. Mr. Babin’s extensive experience in the securities and financial markets as
well has his experience in the securities and public company regulatory industry led to the Board’s conclusion that he should
serve as a director of the Company.
Yvonne L. Murphy
— Mrs. Murphy was elected to the
Board of InterGroup in February 2014 and has been nominated to serve as a director at Portsmouth. Mrs. Murphy has impressive experiences
in corporate management, legal research and legislative lobbying for over 30 years. She was a member of Governor Kenny C.
Guinn’s executive staff in Nevada, and was employed for years by the prestigious Jones Vargas law firm in Reno, Nevada.
She served in nine legislative sessions during the most challenging years in Nevada’s history. Prior to starting her
own lobbying firm, Ms. Murphy worked for RR Partners in its corporate office in Las Vegas, Nevada and in the Government Affairs
Division in Reno. She has a Doctorate and a Master’s in Business Administration from the California Pacific University.
Mrs. Murphy’s extensive government affairs and business experience led to the Board’s conclusion that she should serve
as a director of the Company.
William J. Nance
— Mr. Nance is a Certified Public
Accountant ("CPA") 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 2002. Mr. Nance is also a director of Santa Fe and Portsmouth. Mr. Nance also serves
as a director of Comstock. Mr. Nance’s extensive experience as a CPA and in numerous phases of the real estate industry,
his business and management experience gained in running his own businesses, his service as a director and audit committee member
for other public companies and his knowledge and understanding of finance and financial reporting, led to the Board’s conclusion
that he should serve as a director of the Company.
John C. Love
— Mr. Love was appointed to the Board
in 1998. Mr. Love is an international hospitality and tourism consultant. He is a retired partner in the national CPA and consulting
firm of Pannell Kerr Forster and, for the last 30 years, a lecturer in hospitality industry management control systems and competition
and strategy at Golden Gate University and San Francisco State University. He is Chairman Emeritus of the Board of Trustees of
Golden Gate University and the Honorary Director of the Hotel and Restaurant Foundation. Mr. Love is also a director of Santa Fe
and Portsmouth. Mr. Love’s extensive experience as a CPA and in the hospitality industry, including teaching at the university
level for the last 30 years in management control systems, and his knowledge and understanding of finance and financial reporting,
led to the Board’s conclusion that he should serve as a director of the Company.
David C. Gonzalez
— Mr. Gonzalez was appointed
Vice President Real Estate of the Company on January 31, 2001. Over the past 29 years, Mr. Gonzalez has served in numerous capacities
with the Company, including Controller and Director of Real Estate.
Danfeng Xu
– Ms. Xu was appointed as Treasurer
and Controller of the Company, Santa Fe, and Portsmouth on October 16, 2017. Effective June 1
st
, 2018, Ms. Xu was elected
as Secretary of the Company, Santa Fe, and Portsmouth. Ms. Xu had served as Controller and other positions, at the Hilton San Francisco
Financial District from July 2010 to February 2017. Ms. Xu obtained her Bachelor of Science degree in Business Administration,
Accounting and Finance from The Ohio State University and her Master of Professional Accounting, with a concentration in Audit
and Assurance from University of Washington. Ms. Xu has successfully passed all sections of The Uniform Certified Public Accountant
Examination.
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 is a Smaller Reporting Company under the rules and
regulations of the U.S. Securities and Exchange Commission (“SEC”). The Company’s Common Stock is listed on the
Capital Market tier of the NASDAQ Stock Market LLC (“NASDAQ”).
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 independent directors also meet in executive sessions at least twice per year. The Board of Directors held two meetings during
the 2018 fiscal year (in person, telephonically or by written consent). No directors, attended (whether in person, telephonically,
or by written consent) fewer than 75% of all Board meetings held during the 2018 fiscal year.
Board Leadership Structure
The Chairman of the Board, Mr. Winfield, also serves as the
Company's Chief Executive Officer. The Board believes that combining the Chairman and Chief Executive officer roles is the most
appropriate structure for the Company at this time because (i) this structure has had a longstanding history with the Company,
which the Board believes has served our shareholders well through many economic cycles and business challenges; (ii) the Board
believes Mr. Winfield’s unique business experience and history with the Company makes it appropriate for him to serve in
both capacities; and (iii) the Board believes its corporate governance processes and committee structures preserve Board independence
by insuring independent discussions among directors and independent evaluation of, and communications with, members of senior management
such that separation of the Chairman and Chief Executive Officer roles is unnecessary at this time.
Role of the Board in Oversight of
Risk
The Board of Directors does not have a separate risk oversight
body, but rather manages risk directly. The Board mitigates risk through discussing with management the appropriate level of risk
for the Company and evaluating the risk information received by management. These risks include financial, competitive and operational
risks. Further, on a quarterly basis, management reports to the Audit Committee regarding the Company’s various risk areas
as part of the Audit Committee’s oversight role over financial reporting in accordance with the Audit Committee charter.
In addition, other committees of the Board of Directors consider risks within their areas of responsibility.
We do not believe that our compensation policies encourage excessive
risk-taking. The design of our compensation policies encourages employees to remain focused on both short-term and long-term financial
and operational goals. Our equity awards typically vest over a number of years, which we believe encourages employees to focus
on sustained stock price appreciation over time and the intrinsic value of the Company instead of short-term financial results.
Communications with the Board of Directors
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 have been administrative
in nature and are not directed to the Board of Directors. Any communications to the Board of Directors may be submitted in writing
to the following address: Board of Directors, The InterGroup Corporation, 11620 Wilshire Blvd., Suite 350, Los Angeles, CA 90025.
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.
Board Attendance at Annual Meetings
of Shareholders
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 such meetings. All of the Company’s
directors attended the fiscal 2017 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 Executive Committee, if time does not permit the entire Board to convene. Mr.
Winfield is Chairman of the Executive Committee. The purpose of the Executive Committee is to review time-sensitive, major issues
facing the Company until the entire Board can meet and deliberate on such matters. The Executive Committee held two meetings (in
person, telephonically or by written consent) during the 2018 fiscal year.
The Company’s Administrative and Compensation Committee
(the “Compensation Committee”) is comprised of “independent” members of the Board of Directors. In order
for a director to be considered “independent” by the Board of Directors, he or she must (i) be free of any relationship
that, applying the rules of NASDAQ, would preclude a finding of independence, and (ii) not have any material relationship with
the Company or any of its affiliates or any of its executive officers. Mr. Nance and Mr. Love were members of the Compensation
Committee during fiscal year 2018. Neither of the members of the Compensation Committee is an executive officer of the Company.
Mr. Nance previously served as the Company's Chief Financial Officer from 1987 to 1990 and as the Company's Treasurer from 1987
to 2002.
Mr. Nance serves as Chairman of 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 or director compensation, but does review and monitor published compensation surveys and studies.
The Compensation Committee held two meetings (in person, telephonically or by written consent) during the 2018 fiscal year. The
Compensation Committee also oversees the Company’s 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”).
The Company’s 2008 Restricted Stock Unit Plan (the “2008 RSU Plan”) expired on December 3, 2018.
The Company’s Board of Directors has adopted a written
charter for the Compensation Committee, which is reviewed on an annual basis. A copy of that written charter, as amended, is posted
on the Company’s website at
www.intgla.com
.
The Company has a Real Estate Investment Committee, which is
chaired by Mr. Winfield. The Real Estate Investment Committee held one meeting (in person, telephonically or by written consent)
during the 2018 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 NASDAQ. The Company has not established a charter for the Nominating
Committee. The Company has no policy or procedure with regard to consideration of any director candidates recommended by security
holders. As a Smaller Reporting Company that has more than 68% of its voting securities controlled by management, the Company has
not deemed it appropriate to institute such a policy, since any nominee that is unacceptable to the Board of Directors would be
unlikely to ever be elected. There have not been any material changes to the procedures by which security holders may recommend
nominees to the Company’s Board of Directors during the last fiscal year. Mrs. Murphy is the Chairwoman of the Nominating
Committee. The Nominating Committee held one meeting during the 2018 fiscal year.
The Company’s Securities Investment Committee oversees
and establishes certain investment procedures and reports to the Board of Directors. The Securities Investment Committee’s
Chairman is Mr. Winfield. The Securities Investment Committee held three meetings (in person, telephonically or by written consent)
during the 2018 fiscal year.
The Company’s Special Strategic Options Committee is chaired
by Mr. Winfield. The Special Strategic Options Committee held three meetings during the 2018 fiscal year, and its members also
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’s Audit Committee is currently comprised of
three members: Mr. Nance (Chairperson), Mr. Love and Mr. Babin, each of whom meet the independence requirements of the SEC and
NASDAQ. Messrs. Nance and Love also meet the Audit Committee Financial Expert requirement as defined by the SEC based on their
qualifications and business experience discussed above. 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 registered public accounting
firm. The Audit Committee held four meetings during the 2018 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 posted on
the Company’s website at www.intgla.com.
Code of Ethics
The Company has adopted a Code of Ethics that applies to its
principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions. A copy of the Code of Ethics is posted on the Company’s website at www.intgla.com. The Company will provide to
any person without charge, upon request, a copy of its Code of Ethics by sending such request to: The InterGroup Corporation, Attn:
Treasurer, 11620 Wilshire Blvd., Suite 350, Los Angeles, CA 90025. The Company will promptly disclose any amendments or waivers
to its Code of Ethics on Form 8-K and will post such information on its website.
EXECUTIVE 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 $100,000 for all services rendered to the Company and its subsidiaries for each
of the Company’s last two completed fiscal years ended June 30, 2018 and June 30, 2017. There was no non-equity incentive
plan compensation or nonqualified deferred compensation earnings. There are currently no employment contracts with the executive
officers.
SUMMARY COMPENSATION TABLE
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Other
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Name and Position
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Fiscal Year
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Salary
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Bonus
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Compensation
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Total
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John V. Winfield
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2018
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$
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844,000
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(1)
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$
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-
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$
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63,000
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(2)
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$
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907,000
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Chairman, President and Chief Executive Officer
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2017
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$
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784,000
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(1)
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$
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-
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$
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151,000
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(2)
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$
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935,000
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David C. Gonzalez
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2018
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$
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324,000
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$
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200,000
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$
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-
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$
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524,000
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Vice President Real Estate
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2017
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$
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252,000
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$
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-
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$
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28,000
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(4)
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$
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280,000
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Nguyen
|
|
|
2018
|
|
|
$
|
70,000
|
(3)
|
|
$
|
-
|
|
|
$
|
180,000
|
(5)
|
|
$
|
250,000
|
|
|
Treasurer and Controller (Principal Financial Officer, resigned October 2017)
|
|
|
2017
|
|
|
$
|
240,000
|
(3)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Danfeng Xu
|
|
|
2018
|
|
|
$
|
130,000
|
(3)
|
|
$
|
6,000
|
|
|
$
|
-
|
|
|
$
|
136,000
|
|
|
Treasurer and Controller (Principal Financial Officer, effective October 2017)
|
|
|
2017
|
|
|
$
|
46,000
|
(3)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
46,000
|
|
(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 $440,000 and $447,000 from those
entities for the fiscal years 2018 and 2017, respectively. The amounts include director’s fees totaling $12,000 for each
year.
(2)
Amounts include annual premiums 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 and
compensation for a portion of the salary of an assistant. The amount of compensation related to the assistant was approximately
$63,000 and $54,000 for the fiscal years 2018 and 2017, respectively. The annual insurance premiums paid were $85,000 for fiscal
year 2017. Santa Fe and Portsmouth paid $43,000 of that amount. The Company did not pay any premiums during fiscal year 2018 and
the policy benefiting the Company has expired as of June 30, 2018.
(3)
Salary is allocated approximately 50% to the
Company and 50% to Santa Fe and Portsmouth.
(4)
For fiscal 2017, the dollar amount reflects aggregate
grant date fair value of options expected to vest, computed in accordance with FASB ASC Topic 718, of 18,000 stock options granted
to Mr. Gonzalez on March 2, 2017 pursuant to the Company’s 2010 Incentive Plan.
(5)
Includes severance received from the Company’s
subsidiary, Santa Fe, in the amount of $90,000. Mr. Nguyen resigned as Treasurer and Controller of the Company, InterGroup and
Portsmouth effective October 16, 2017 and received $180,000 in total severance pay.
Performance Based Compensation
For the fiscal year ended June 30, 2018, the independent members
of the respective Boards of Directors of the Company and 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. 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, 2018
or 2017.
Outstanding Equity Awards at Fiscal Year
Ended June 30, 2018
The following table sets forth information
concerning option awards and stock awards for each named executive officer that were outstanding as of the end of the Company’s
last completed fiscal year ended June 30, 2018. There were no other equity incentive plan awards that were outstanding.
|
|
|
Option Awards
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
securities
|
|
|
securities
|
|
|
|
|
|
|
|
|
|
|
underlying
|
|
|
underlying
|
|
|
|
|
|
|
|
|
|
|
unexercised
|
|
|
unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
|
options (#)
|
|
|
options (#)
|
|
|
exercise
|
|
|
expiration
|
|
|
Name
|
|
exercisable
|
|
|
unexercisable
|
|
|
price $
|
|
|
date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John V. Winfield
|
|
|
100,000
|
(1)
|
|
|
-
|
|
|
$
|
10.30
|
|
|
|
3/16/20
|
|
|
John V. Winfield
|
|
|
90,000
|
(2)
|
|
|
-
|
|
|
$
|
19.77
|
|
|
|
2/28/22
|
|
|
John V. Winfield
|
|
|
106,556
|
(3)
|
|
|
26,639
|
(3)
|
|
$
|
18.65
|
|
|
|
12/26/23
|
|
|
John V. Winfield
|
|
|
21,444
|
(3)
|
|
|
5,361
|
(3)
|
|
$
|
20.52
|
|
|
|
12/26/18
|
|
|
David C. Gonzalez
|
|
|
3,600
|
(4)
|
|
|
14,400
|
(4)
|
|
$
|
27.30
|
|
|
|
3/2/22
|
|
(1)
Stock options issued to Mr. Winfield pursuant
to the Company’s 2010 Incentive Plan are subject to both time and performance-based vesting requirements, each of which must
be satisfied before the options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options
vest over a period of five years, with 20,000 options vesting upon each one year anniversary of the date of grant, March 16, 2010.
Pursuant to the performance vesting requirements, the options vest in increments of 20,000 shares upon each increase of $2.00 or
more in the market price of the Company’s common stock above the exercise price ($10.30) of the options. To satisfy this
requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter.
As of June 30, 2018, the performance vesting requirements of the options were satisfied.
(2)
Stock options issued to Mr. Winfield pursuant
to the Company’s 2010 Incentive Plan are subject to both time and performance-based vesting requirements, each of which must
be satisfied before the options are fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options
vest over a period of five years, with 18,000 options vesting upon each one year anniversary of the date of grant, February 28,
2012. Pursuant to the performance vesting requirements, the options vest in increments of 18,000 shares upon each increase of $2.00
or more in the market price of the Company’s common stock above the exercise price ($19.77) of the options. To satisfy this
requirement, the common stock must trade at that increased level for a period of at least ten trading days during any one quarter.
As of June 30, 2018, 90,000 options have met the performance vesting requirements.
(3)
On December 26, 2013, the Compensation Committee
authorized, subject to shareholder approval, a grant of non-qualified and incentive stock options for an aggregate of 160,000 shares
(the “Option Grant”) to the Company’s President and Chief Executive Officer, John V. Winfield. The stock option
grant was approved by shareholders on February 19, 2014. The grant of stock options was made pursuant to, and consistent with,
the 2010 Incentive Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and have a term of ten
years, expiring on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are for 26,805 shares
and have a term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. On December 26, 2018,
Mr. Winfield exercised the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock
at fair value as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation
expense was recorded related to that issuance. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were
based on 100% and 110%, respectively, of the fair market value of the Company’s common stock as determined by reference to
the closing price of the Company’s common stock as reported on the NASDAQ Capital Market on the date of grant. The stock
options are subject to time vesting requirements, with 20% of the options vesting annually commencing on the first anniversary
of the grant date.
(4)
Mr. Gonzalez’s stock options vest over
a period of five years, with 3,600 options vesting upon each one-year anniversary of the date of grant, March 2, 2017.
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.
EQUITY COMPENSATION PLANS
The Company currently has one equity compensation plan, which
has been approved by the Company’s stockholders. However, any outstanding stock options issued under the Company’s
prior equity compensation plans remain effective in accordance with their terms.
The purpose of the Company’s equity compensation 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 InterGroup Corporation 2008 Restricted Stock Unit Plan
On December 3, 2008, the Board of Directors adopted, subject
to shareholder approval, an equity compensation plan for its officers, directors and key employees entitled, The InterGroup Corporation
2008 Restricted Stock Unit Plan (the “2008 RSU Plan”). The 2008 RSU Plan was approved and ratified by the shareholders
on February 18, 2009.
The 2008 RSU 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 of the Company. 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. 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. Subject to certain adjustments upon changes in capitalization,
a maximum of 200,000 shares of the common stock are available for issuance to participants under the 2008 RSU Plan. The 2008 RSU
Plan will terminate ten (10) years from December 3, 2008, unless terminated sooner by the Board of Directors. After the 2008 RSU
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.
The shares of common stock to be delivered upon the vesting
of an award of RSUs have been registered under the Securities Act, pursuant to a registration statement filed on Form S-8 by the
Company on June 16, 2010. The grant of RSUs is personal to the recipient and is not transferable. Once received, shares of common
stock issuable upon the vesting of the RSUs are freely transferable subject to any requirements of Section 16(b) of the Exchange
Act. Under the 2008 RSU 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.
As of June 30, 2018, there were no RSUs outstanding and the
2008 RSU Plan expired on December 3, 2018.
The InterGroup Corporation 2010 Omnibus Employee Incentive
Plan
On February 24, 2010, the shareholders of the Company approved
The Intergroup Corporation 2010 Omnibus Employee Incentive Plan (the “2010 Incentive Plan”), which was formally adopted
by the Board of Directors following the annual meeting of shareholders. The Company believes that such awards better align the
interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to
the market price of the Company’s stock at the date of grant; those option awards generally vest based on 5 years of continuous
service. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the 2010
Incentive Plan. The 2010 Incentive plan as modified in December 2013, authorizes a total of up to 400,000 shares of common stock
to be issued as equity compensation to officers and employees of the Company in an amount and in a manner to be determined by the
Compensation Committee in accordance with the terms of the 2010 Incentive Plan. The 2010 Incentive Plan authorizes the awards of
several types of equity compensation including stock options, stock appreciation rights, performance awards and other stock-based
compensation. The 2010 Incentive Plan will expire on February 23, 2020, if not terminated sooner by the Board of Directors upon
recommendation of the Compensation Committee. Any awards issued under the 2010 Incentive Plan will expire under the terms of the
grant agreement.
The shares of common stock to be issued under the 2010 Incentive
Plan have been registered under the Securities Act, pursuant to a registration statement filed on Form S-8 by the Company on June
16, 2010. Once received, shares of common stock issued under the Plan will be freely transferable subject to any requirements of
Section 16 (b) of the Exchange Act.
On March 16, 2010, the Compensation Committee authorized the
grant of 100,000 stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up
to 100,000 shares of the Company’s common stock pursuant to the 2010 Incentive Plan. The exercise price of the options is
$10.30, which is 100% of the fair market value of the Company’s Common Stock as determined by reference to the closing price
of the Company’s Common Stock as reported on the NASDAQ Capital Market on March 16, 2010, the date of grant. The options
expire ten years from the date of grant, unless earlier terminated in accordance with the terms of the 2010 Incentive Plan. The
options shall be subject to both time and market based vesting requirements, each of which must be satisfied before options are
fully vested and eligible to be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years,
with 20,000 options vesting upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the
options vest in increments of 20,000 shares upon each increase of $2.00 or more in the market price of the Company’s common
stock above the exercise price ($10.30) of the options. To satisfy this requirement, the common stock must trade at that increased
level for a period of at least ten trading days during any one quarter. As of June 30, 2018, all the market vesting requirements
have been met.
In February 2012, the Compensation Committee awarded 90,000
stock options to the Company’s Chairman, President and Chief Executive, John V. Winfield to purchase up to 90,000 shares
of common stock. The per share exercise price of the options is $19.77 which is the fair value of the Company’s Common Stock
as reported on NASDAQ on February 28, 2012. The options expire ten years from the date of grant. The options are subject to both
time and market based vesting requirements, each of which must be satisfied before the options are fully vested and eligible to
be exercised. Pursuant to the time vesting requirements, the options vest over a period of five years, with 18,000 options vesting
upon each one-year anniversary of the date of grant. Pursuant to the market vesting requirements, the options vest in increments
of 18,000 shares upon each increase of $2.00 or more in the market price of the Company’s common stock above the exercise
price ($19.77) of the options. To satisfy this requirement, the common stock must trade at that increased level for a period of
at least ten trading days during any one quarter. As of June 30, 2018, 90,000 of these options have met the market vesting requirements.
On December 26, 2013, the Compensation Committee authorized,
subject to shareholder approval, a grant of non-qualified and incentive stock options for an aggregate of 160,000 shares (the “Option
Grant”) to the Company’s President and Chief Executive Officer, John V. Winfield. The stock option grant was approved
by shareholders on February 19, 2014. The grant of stock options was made pursuant to, and consistent with, the 2010 Incentive
Plan, as proposed to be amended. The non-qualified stock options are for 133,195 shares and have a term of ten years, expiring
on December 26, 2023, with an exercise price of $18.65 per share. The incentive stock options are for 26,805 shares and have a
term of five years, expiring on December 26, 2018, with an exercise price of $20.52 per share. On December 26, 2018, Mr. Winfield
exercised the 26,805 vested incentive stock options by surrendering 17,439 shares of the Company’s common stock at fair value
as payment of the exercise price, resulting in a net issuance to him of 9,366 shares. No additional compensation expense was recorded
related to that issuance. In accordance with the terms of the 2010 Incentive Plan, the exercise prices were based on 100% and 110%,
respectively, of the fair market value of the Company’s common stock as determined by reference to the closing price of the
Company’s common stock as reported on the NASDAQ Capital Market on the date of grant. The stock options are subject to time
vesting requirements, with 20% of the options vesting annually commencing on the first anniversary of the grant date.
In March 2017, the Compensation Committee awarded 18,000 stock
options to the Company’s Vice President of Real Estate, David C. Gonzalez, to purchase up to 18,000 shares of common stock.
The per share exercise price of the options is $27.30 which is the fair value of the Company’s Common Stock as reported on
NASDAQ on March 2, 2017. The options expire ten years from the date of grant. Pursuant to the time vesting requirements, the options
vest over a period of five years, with 3,600 options vesting upon each one-year anniversary of the date of grant.
Change in Controls Provisions in Equity
Compensation Plans
Under the Company’s 2008 RSU Plan and its 2010 Incentive
Plan, RSUs, stock options and other incentive awards may vest upon a change in control of the Company in accordance with their
respective grant agreements. Outstanding stock options issued pursuant to the Company’s 2010 Incentive Plan will also immediately
vest and become exercisable upon a change in control. Except for the foregoing, there are no employment contracts between the Company
and its officers or directors or any change in control arrangements.
SHAREHOLDER ADVISORY VOTES ON EXECUTIVE
COMPENSATION
At its fiscal 2016 Annual Meeting of Shareholders held on March
2, 2017, the Company submitted to its shareholders two proposals regarding executive compensation. The first proposal to approve,
in a non-binding vote, the compensation of the Company’s named executive officers was approved by the shareholders, having
received more than 99% of the shares voted at the meeting in favor of the proposal. The second proposal was to determine, in a
non-binding vote, whether a shareholder advisory vote to approve the compensation of the Company’s executive officers should
occur every one, two or three years. The shareholders overwhelmingly voted in favor of three years as the frequency in which the
Company should have an advisory vote on executive compensation with more than 89% of the shares voted at the meeting being in favor
of three years. The Board of Directors considered the guidance provided by those advisory votes and set three years as the frequency
in which it will have a non-binding vote on executive compensation.
The Board of Directors will continue to focus on responsible
executive compensation practices that attract, motivate and retain high performance executives, reward those executives for the
achievement of long-term performance and support our other executive compensation objectives.
COMPENSATION OF DIRECTORS
Non-employee directors receive an annual
cash retainer in the amount of $12,000. With the exception of members of the Audit Committee, non-employee directors do not receive
any additional fees for attending Board or Committee meetings, but are entitled to reimbursement of their reasonable expenses to
attend such meetings. Members of the Audit Committee are paid a fee of $1,000 per quarter, with the Chair of that Committee to
receive $1,500 per quarter. As an executive officer, the Company’s Chairman has elected to forego his annual board fees.
Non-employee directors are also eligible for an annual cash payment of $22,000.
The following table sets forth the compensation
paid to directors for the fiscal year ended June 30, 2018:
DIRECTOR COMPENSATION
|
Name
|
|
Fees Earned
or Paid in
Cash
(1)
|
|
|
Stock Awards
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Love
|
|
$
|
54,000
|
(2)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
54,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Nance
|
|
$
|
56,000
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
56,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerold R. Babin
|
|
$
|
44,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
44,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yvonne L. Murphy
|
|
$
|
34,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
34,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John V. Winfield
|
|
$
|
12,000
|
(4)
|
|
|
-
|
|
|
|
-
|
|
|
$
|
12,000
|
|
(1)
Amounts shown include board retainer fees, committee
fees and meeting fees.
(2)
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.
(3)
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.
(4)
As Chief Executive Officer, the Company’s
Chairman, John V. Winfield, was not paid any board, committee or meetings fees by the Company. Mr. Winfield did receive a total
of $12,000 in regular board fees from the Company’s subsidiaries.
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 OF 1934
Section 16(a) of the Exchange Act requires the Company’s
officers and directors, and each beneficial owner of more than ten percent of the Common Stock of the Company, to file reports
of ownership and changes in ownership with the SEC. Officers, directors and greater than ten-percent shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of Forms 3 and 4 and
amendments thereto filed with the SEC or furnished to the Company during its most recent fiscal year and Forms 5 and amendments
thereto filed with the SEC or furnished to the Company with respect to its most recent fiscal year, or written representations
from certain reporting persons that no Forms 5 were required for those persons, the Company knows of two Form 4 not filed on a
timely basis.
William Nance did not timely file Form 4 with respect to transactions that
occurred on September 18, 2017 and October 17, 2017.
All other filing requirements applicable to its officers, directors,
and greater than ten-percent beneficial owners were complied with during fiscal year ended June 30, 2018.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 2018, certain
information with respect to the beneficial ownership of Common Stock of the Company owned by (i) each director and each of the
named executive officers and (ii) all directors and executive officers as a group. The Company knows of no persons or groups which
own more than five percent of the outstanding shares of Common Stock. Unless otherwise indicated, the business address for each
director and named executive officer is: 11620 Wilshire Blvd., Suite 350, Los Angeles, CA 90025.
Name of
Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(1)
|
|
|
Percent
of Class
(2)
|
|
|
|
|
|
|
|
|
|
|
John V. Winfield
|
|
|
1,721,468
|
(3)
|
|
|
64.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
William J. Nance
|
|
|
50,346
|
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
John C. Love
|
|
|
19,161
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Gonzalez
|
|
|
30,369
|
(4)
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Jerold R. Babin
|
|
|
2,282
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Yvonne L. Murphy
|
|
|
2,282
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group (6 persons)
|
|
|
1,825,908
|
|
|
|
68.7
|
%
|
* Ownership does not exceed 1%.
(1)
Unless otherwise
indicated and subject to applicable community property laws, each person has sole voting and investment power with respect to
the shares beneficially owned.
(2)
Percentages are calculated
on the basis of 2,329,713 shares of Common Stock outstanding at December 31, 2018, plus any securities that person has the right
to acquire within 60 days pursuant to options, warrants, conversion privileges or other rights.
(3)
Includes 323,195 shares
that Mr. Winfield has a right to acquire pursuant to vested stock options.
(4)
Includes 3,600 shares that
Mr. Gonzalez has a right to acquire pursuant to vested stock options.
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 2017, 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 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, Mr. Winfield, 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 Mr. Winfield 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, 2018 and 2017.
Director Independence
The Common Stock is listed on the NASDAQ Capital Market tier
of NASDAQ. InterGroup is a Smaller Reporting Company under the rules and regulations of the 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 V. WINFIELD AND JEROLD R. BABIN AS CLASS A DIRECTORS OF THE COMPANY.
PROPOSAL NO. 2
RATIFICATION OF THE RETENTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed
the firm of Moss Adams LLP (“Moss Adams”) as the Company’s independent registered public accounting firm for
the fiscal year ending June 30, 2019. 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.
We expect that a representative of Moss Adams 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.
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 OR THE EXCHANGE ACT 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. 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, 2018, the Company retained Hein & Associates LLP (“Hein”) as its independent registered public accounting
firm to provide audit and audit related services. Effective November 16, 2017, Hein combined with Moss Adams LLP (“Moss Adams”).
As a result of this transaction, on November 16, 2017, Hein resigned as the independent registered public accounting firm for the
Company. Concurrent with such resignation, the Company’s audit committee approved the engagement of Moss Adams as the new
independent registered public accounting firm for the Company. All fees and expenses paid to Hein and Moss Adams were approved
by the Audit Committee.
The Audit Committee reviewed and discussed the audited financial
statements with Hein and Moss Adams, and management represented to the Audit Committee that the consolidated financial statements
were prepared in accordance with accounting principles generally accepted in the United States. The discussions with Hein and Moss
Adams also included the matters required by Statement on Auditing Standards No. 114 (AICPA,
Professional Standards
, Vol. 1,
AU Section 380), as adopted by the U.S. Public Company Accounting Oversight Board ("PCAOB") in Rule 3200T regarding “
Communication
with Audit Committees
.”
The Audit Committee has also received written disclosures and
letters from Hein and Moss Adams, as required by applicable requirements of the PCAOB regarding the independent accountants’
communications with the Audit Committee concerning independence, which was also discussed with Hein and Moss Adams.
Based on
the Audit Committee’s review of the audited financial statements, and the review and discussions with management and Hein
and Moss Adams 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-K for the fiscal year ended June 30, 2018 for filing with
the Securities and Exchange Commission.
THE AUDIT COMMITTEE:
WILLIAM J. NANCE, CHAIRPERSON
JOHN C. LOVE
JEROLD R. BABIN
Audit Fees
On November 16, 2017, the Audit Committee appointed Moss Adams
LLP (“Moss Adams”) as the Company’s independent registered public accounting firm for the fiscal year ended June
30, 2018. Prior to the appointment of Moss Adams, Hein & Associates LLP (“Hein”) served as our independent registered
public accounting firm for fiscal year ended June 30, 2017. Burr Pilger Mayer, Inc. (“BPM”) also provided services
in connection with the audit of the Company’s annual financial statements for fiscal year ended June 30, 2017.
The aggregate fees billed for each of the last two fiscal years
ended June 30, 2018 and 2017 for professional services rendered by the Company’s independent registered public accounting
firms are set forth in the tables below. These fees were billed for audit of the Company’s annual financial statements, review
of financial statements included in the Company’s Form 10-Q reports, and services provided in connection with statutory and
regulatory filings and engagements for those fiscal years.
|
|
|
Fiscal Year
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Audit fees - Moss Adams
|
|
$
|
240,000
|
|
|
$
|
-
|
|
|
Audit fees – Hein
|
|
|
32,000
|
|
|
|
300,000
|
|
|
Audit fees – BPM
|
|
|
-
|
|
|
|
41,000
|
|
|
Tax fees - Moss Adams
|
|
|
43,000
|
|
|
|
-
|
|
|
Tax fees – Hein
|
|
|
-
|
|
|
|
48,000
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
$
|
315,000
|
|
|
$
|
389,000
|
|
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 minimis 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 Audit Committee prior to the completion of the audit. The Audit 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 Audit 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 RETENTION OF MOSS ADAMS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS.
The following table sets forth information
as of June 30, 2018 with respect to compensation plans (including individual compensation arrangements) under which equity securities
of the Company are authorized for issuance, aggregated as follows:
|
Plan category
|
|
Number
of securities
to be issued upon
exercise of outstanding
options, warrants and
rights
|
|
|
Weighted-average
exercise price of
outstanding options
warrants and
rights
|
|
|
Remaining available for
future issuance under
equity compensation plans -
excluding securities
reflected in column (a)
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans approved by
security holders
|
|
|
368,000
|
|
|
$
|
17.21
|
|
|
|
111,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved by security holders
|
|
|
-
|
|
|
|
N/A
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
368,000
|
|
|
$
|
17.21
|
|
|
|
111,847
|
|
(a) There
were 368,000 stock options outstanding as of June 30, 2018.
(b) Reflects the weighted average exercise price of all outstanding
options.
(c) As of June 30, 2018, The Company had 79,847 RSUs available
for future issuance under the 2008 RSU Plan. The 2008 RSU Plan expired on December 3, 2018. As of June 30, 2018, there were 32,000
shares available for future issuance under the 2010 Omnibus Employee Incentive Plan.
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 2019 Annual Meeting
of Shareholders will be held on February 29, 2020. Shareholder proposals intended to be considered for inclusion in the proxy statement
and form of proxy for presentation at the fiscal 2019 Annual Meeting of Shareholders must be received by the Company not less than
120 calendar days before the one-year anniversary of the date that this proxy statement is mailed. However, if the date of the
fiscal 2019 Annual Meeting of Shareholders is changed by more than 30 days from the date of the fiscal 2018 Annual Meeting, then
the deadline will be a reasonable time before the Company begins to print and send its proxy materials. In addition, all proposals
must comply with the provisions of the Company’s charter and bylaws and Rule 14a-8 adopted under Section 14(a) of the Exchange
Act. Any proposals must be submitted in writing to the following address: Corporate Secretary, The InterGroup Corporation, 11620
Wilshire Blvd., Suite 350, Los Angeles, CA 90025. It is suggested that the proposal be submitted by certified mail –
return receipt requested.
ANNUAL REPORT ON FORM 10-K
The Company’s Annual Report for the fiscal year ended
June 30, 2018 accompanies this proxy statement, but is not deemed a part of the proxy solicitation material. A copy of the Company’s
Form 10-K for the fiscal year ended June 30, 2018, as required to be filed with the SEC, excluding exhibits, will be mailed to
shareholders without charge upon written request to: John V. Winfield, President, The InterGroup Corporation, 11620 Wilshire Blvd.,
Suite 350, Los Angeles, CA 90025. 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 on December 31, 2018. The Company’s Form 10-K and other public
filings are also available on the Company’s website at www.intgla.com and through the SEC’s website www.sec.gov.
|
|
By Resolution of the Board of Directors
|
|
|
|
|
|
THE INTERGROUP CORPORATION
|
|
|
|
|
|
/s/ John V. Winfield
|
|
|
John V. Winfield
|
|
|
Chairman of the Board; President and Chief Executive Officer
|
|
|
|
|
Dated: January 15, 2019
|
|
|
Los Angeles, California
|
|
ANNUAL MEETING OF
SHAREHOLDERS OF THE INTERGROUP CORPORATION February 27, 2019 NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of
Meeting, Proxy Statement, Proxy Card are available at www.intgla.com Please date, sign and mail your proxy card in the envelope
provided as soon as possible. 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 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. To change the address on your account, please check the box at 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. 1. To elect two
Class A Directors to serve until the fiscal 2021 Annual Meeting; or, if earlier, until his successor shall have been duly elected
and qualified; 2. To ratify Moss Adams LLP as the Company's independent registered public accounting firm for the fiscal year
ending June 30, 2019. 3. To transact such other business as may properly come before the meeting, or any postponements or adjournments
thereof. This proxy is solicited on behalf of the Board of Directors. 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 and 2.
FOR AGAINST ABSTAIN PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK
AS SHOWN HERE x Please detach along perforated line and mail in the ------------------ e n v e l o p e p r o v i d e d . ----------------
20230000000000000000 0 022719 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy
material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com
to enjoy online access. O John V. Winfield O Jerold R. Babin FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES NOMINEES: FOR
ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR
ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:
0 ------------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---------------- 14475
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 27, 2019 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 11, 2019; (b) appoints John V. Winfield and William J. Nance, as proxies, each with the power to
appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this
Form of Proxy, all of the shares of Common Stock of The InterGroup Corporation held of record by the undersigned on December 31,
2018 at the Annual Meeting of Shareholders to be held on February 27, 2019 or at any adjournment thereof. (Continued and to be
signed on the reverse side) 1.1
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