SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
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AMREP CORPORATION
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AMREP CORPORATION
(An Oklahoma corporation)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 21, 2004
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Shareholders of AMREP
Corporation (the "Company") will be held at the Conference Center at Normandy
Farm, Route 202 and Morris Road, Blue Bell, Pennsylvania on September 21, 2004
at 9:00 A.M. for the following purposes:
(1) To elect two directors; and
(2) To consider and act upon such other business as may properly come
before the meeting.
In accordance with the By-Laws, the Board of Directors has fixed the close
of business on July 27, 2004 as the record date for the determination of
shareholders of the Company entitled to notice of and to vote at the meeting and
any adjournment thereof. The list of such shareholders will be available for
inspection by shareholders during the ten days prior to the meeting at the
offices of the Company, 641 Lexington Avenue, Sixth Floor, New York, New York.
Whether or not you expect to be present at the meeting, please mark, date
and sign the enclosed proxy and return it to the Company in the self-addressed
envelope enclosed for that purpose. The proxy is revocable and will not affect
your right to vote in person in the event you attend the meeting.
By Order of the Board of Directors
Peter M. Pizza, Secretary
Dated: July 29, 2004
New York, New York
AMREP CORPORATION
641 Lexington Avenue
New York, New York 10022
__________________________
PROXY STATEMENT
__________________________
ANNUAL MEETING OF SHAREHOLDERS
To be Held at 9:00 A.M. on September 21, 2004
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of AMREP Corporation (the "Company") for use
at the Annual Meeting of Shareholders of the Company to be held on September 21,
2004, and at any continuation or adjournment thereof (the "Annual Meeting").
Anyone giving a proxy may revoke it at any time before it is exercised by giving
the Secretary of the Company written notice of the revocation, by submitting a
proxy bearing a later date or by attending the Annual Meeting and voting. This
Proxy Statement and the accompanying Notice of Annual Meeting and proxy form are
first being sent to shareholders on or about August 3, 2004.
All properly executed, unrevoked proxies in the enclosed form which are
received in time will be voted in accordance with the shareholders' directions
and, unless contrary directions are given, will be voted for the election as
directors of the nominees named below. The presence, in person or by proxy, of
the holders of a majority of the outstanding shares of Common Stock authorized
to vote will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions will be counted in determining whether a quorum is present
at the Annual Meeting. Directors are elected by a plurality of the votes of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors, and abstentions have no effect.
A copy of the 2004 Annual Report of the Company for the fiscal year ended
April 30, 2004, including financial statements, accompanies this Proxy
Statement. Such Annual Report does not constitute a part of the proxy
solicitation material.
Only shareholders of record at the close of business on July 27, 2004, the
date fixed by the Board of Directors in accordance with the By-Laws, are
entitled to vote at the Annual Meeting. As of July 27, 2004, the Company had
issued and outstanding 6,611,112 shares of Common Stock, par value $.10 per
share. Each share of Common Stock is entitled to one vote on matters to come
before the Annual Meeting.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth in the following table is information concerning the ownership as
of July 27, 2004 of the Common Stock of the Company by the persons who, to the
knowledge of the Board of Directors, own beneficially more than 5% of the
outstanding shares. The table also sets forth the same information concerning
the beneficial ownership by all directors and executive officers. Unless
otherwise indicated, the beneficial owners have sole voting and investment power
with respect to the shares beneficially owned by them. In the case of directors
and executive officers, the information below has been provided by such persons
at the request of the Company.
Name and Address Shares Owned % of
of Beneficial Owner Beneficially(1) Class
------------------- ------------ -----
Nicholas G. Karabots (Director) 3,632,453 (2) 55.0
P.O. Box 736
Fort Washington, PA 19034
Albert V. Russo (Director) 1,261,970 (3) 19.1
Lena Russo, Clifton Russo,
Lawrence Russo
American Simlex Company
401 Broadway
New York, NY 10012
Dimensional Fund Advisors Inc. 458,136 (4) 6.9
1299 Ocean Avenue
Santa Monica, CA 90401
Other Directors and
Executive Officers
Jerome Belson 7,250 *
Edward B. Cloues II 9,250 *
Lonnie A. Coombs 6,250 *
Michael P. Duloc 5,000 (5) *
Peter M. Pizza - -
Samuel N. Seidman 7,250 *
James Wall 8,057 (6) *
Directors and Executive Officers
as a Group (9 persons) 4,937,480 (2),(3),(5),(6) 74.6
_____________________________
* Indicates less than 1%.
(1) The shareholdings include the following shares which certain of the named
shareholders have the right to acquire pursuant to options issued under the
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Company's Non-Employee Directors Option Plan: 500 shares for each of
Messrs. Karabots, Albert V. Russo, Belson, Cloues, Coombs and Seidman which
are subject to options which will become exercisable on September 23, 2004,
and an additional 1,000 shares for Mr. Russo which are subject to presently
exercisable options.
(2) Includes 580,165 shares owned by The Karabots Foundation, a private
non-profit corporation founded by Mr. Karabots and of which he is the
President, Foundation Manager and one of two directors. Mr. Karabots
disclaims beneficial ownership of the shares owned by The Karabots
Foundation.
(3) Albert V. Russo, Lena Russo, Clifton Russo and Lawrence Russo have reported
that they share voting power as to these shares and that each of them has
sole dispositive power as to the following numbers of such shares
representing the indicated percentages of the outstanding Common Stock:
Albert V. Russo - 677,491 (10.3%); Lena Russo - 58,740 (0.9%); Clifton
Russo - 270,617 (4.1%); and Lawrence Russo - 255,122 (3.9%).
(4) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of these shares, all of
which are held in portfolios of four registered investment companies or
other investment vehicles, including commingled group trusts, for which
Dimensional serves as investment manager or investment advisor. Dimensional
disclaims beneficial ownership of all such shares.
(5) Held jointly with Mr. Duloc's spouse.
(6) Includes 287 shares held in the Company's Savings and Salary Deferral Plan
allocated to the account of Mr. Wall.
ELECTION OF DIRECTORS
The Board of Directors of the Company is a classified board divided into
three classes - Class I consisting of two directors, Class II consisting of two
directors and Class III consisting of three directors. Each class of directors
serves for a term of three years. At this Annual Meeting, two Class II directors
will be elected to serve until the 2007 Annual Meeting and until their
successors are elected and qualified. Although the Board of Directors does not
expect that either of the persons named will be unable to serve as a director,
should either of them become unavailable for election it is intended that the
shares represented by proxies in the accompanying form will be voted for the
election of a substitute nominee or nominees selected by the Board.
The following table sets forth information regarding the nominees of the
Board of Directors for election and the directors whose terms of office do not
expire this year.
-3-
Year First
Elected As Principal Occupation For Past
Name Age A Director Five Years and Current Directorships
---- --- ---------- ------------------------------------
Nominees to serve until the 2007 Annual Meeting (Class II)
Samuel N. Seidman 70 1977 President of Seidman & Co., Inc.,
economic consultants and investment
bankers; Director, Chairman of the
Board and Chief Executive Officer
of Productivity Technologies Corp.,
manufacturer of metal forming and
handling automation equipment and a
wirer of control panels.
Lonnie A. Coombs 56 2001 Certified Public Accountant, Lonnie
A. Coombs, CPA, accounting, tax and
business consulting services.
Directors continuing in office until the 2005 Annual Meeting (Class III)
Jerome Belson 78 1967 Chairman of the Board and President
of Associated Builders and Owners of
Greater New York, Inc., a trade
association; and, through 2003,
Chairman of the Board of WE Media,
Inc.(magazine on lifestyle of people
with disabilities)
Nicholas G. Karabots 71 1993 Chairman of the Board and Chief
Executive Officer of Kappa Media
Group, Inc., Spartan Organization,
Inc., Jericho National Golf Club,
Inc. and other private companies,
which companies are engaged
primarily in the publishing,
printing, recreational sports and
real estate businesses.
Albert V. Russo 50 1996 Managing Partner, Russo Associates,
Pioneer Realty, 401 Broadway Realty
Company and related real estate
entities; Partner, American Simlex
Company, textile exports.
-4-
Year First
Elected As Principal Occupation For Past
Name Age A Director Five Years and Current Directorships
---- --- ---------- ------------------------------------
Directors continuing in office until the 2006 Annual Meeting (Class I)
Edward B. Cloues II 56 1994 Chairman and Chief Executive Officer
of K-Tron International, Inc., a
material handling equipment
manufacturer; Director of K-Tron
International, Inc., Penn Virginia
Corporation and Penn Virginia
Resource GP, the general partner of
Penn Virginia Resource Partners,
L.P.
James Wall 67 1991 Chairman of the Board, President and
Chief Executive Officer of AMREP
Southwest Inc., a wholly-owned
subsidiary of the Company; Senior
Vice President of the Company.
Each director has served continuously since the year in which he was first
elected.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Common Stock is listed on the New York Stock Exchange and the
Company is subject to the Exchange's Corporate Governance Standards (the
"Governance Standards"). The Governance Standards, among other things, generally
require a listed company to have independent directors within the meaning of the
Governance Standards as a majority of its board of directors and for the board
to have a nominating/corporate governance committee and a compensation committee
composed entirely of independent directors. However, the Company is a
"controlled company" within the meaning of the Governance Standards because
Nicholas G. Karabots and entities related to him have the power to vote more
than a majority of the outstanding Common Stock, and the Governance Standards
permit a controlled company to choose not to comply with those requirements. The
Board has chosen not to have a nominating/corporate governance committee. Also,
the Board has chosen not to comply with the Governance Standards applicable to
compensation committees. Although the Board's Human Resources Committee acts a
compensation committee, not all of its members are independent directors as is
required by the Governance Standards.
Mr. Karabots does not qualify as an independent director under the
Governance Standards because his son-in-law, Michael P. Duloc, is the President
of Kable News Company, Inc., a principal subsidiary of the Company.
Additionally, Kable News Company, Inc. provides distribution and fulfillment
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services to publishers owned by Mr. Karabots (see "Compensation Committee
Interlocks and Insider Participation" at page 11 of this Proxy Statement).
The Board has determined that Messrs. Belson, Cloues, Coombs, Russo and
Seidman are independent directors. In making these determinations, the Board
concluded that none of these directors has had any material relationship with
the Company other than as a director for more than the past three years. The
Board has been informed that Mr. Coombs, who is a certified public accountant,
for many years has provided, and expects to continue to provide, business and
tax consulting services to companies owned by Mr. Karabots, including companies
which are customers of Kable News Company, Inc., and that the revenues from such
services have accounted for from 6.9% to 16.5% of Mr. Coombs' annual
professional service revenues over the past three years. However, the Board has
concluded that Mr. Coombs' relationship with Mr. Karabots and his companies is
as an independent contractor, and not as an employee, partner, shareholder or
officer, and would not interfere with Mr. Coombs' independence from the
Company's management.
The nominees of the Board of Directors for election as directors are
selected by the whole Board. The Board has no charter addressing the director
nomination process nor any specific qualifications for nominees to meet. If the
Board determines in the future to seek any new director it will consider the
qualifications for the position at that time. The Board will consider candidates
for director recommended by shareholders on the same basis as any other proposed
nominees. Any shareholder desiring to propose a candidate for selection as a
nominee of the Board for election at the 2005 Annual Meeting may do so by
sending a written communication no later than May 1, 2005 to AMREP Corporation,
641 Lexington Ave., New York, NY 10022, Attention: Corporate Secretary,
identifying the proposing shareholder, specifying the number of shares of Common
Stock held and stating the name and address of the proposed nominee and the
information concerning such person which Securities and Exchange Commission
regulations require be included in a proxy statement relating to such person's
election as a director. Shareholders should recognize that so long as Mr.
Karabots remains the Company's controlling shareholder, his concurrence is
necessary for the election of any director.
In July 2004 in response to the Governance Standards, the Board adopted
Corporate Governance Guidelines (the "Guidelines") which address various matters
involving the Board and the conduct of its business. The Board also adopted a
new Code of Business Conduct and Ethics setting forth principles of business
conduct applicable to the directors, officers and employees of the Company. The
Guidelines and Code of Business Conduct and Ethics may be viewed on the
Company's website at amrepcorp.com, and written copies will be provided upon
request to the Company at AMREP Corporation, 641 Lexington Ave., New York, NY
10022, Attention: Corporate Secretary. The Company intends to disclose on its
website any amendment to or waiver of any provision of the Code of Business
Conduct and Ethics that applies to any of its executive officers, including its
principal financial and accounting officer.
-6-
Directors are expected to attend Annual Meetings of Shareholders and all of
them attended last year's Annual Meeting, except Mr. Belson who was unable to
attend because of illness. The Board held six meetings during the last fiscal
year, and all of the directors attended at least 75% of the total of those
meetings and the meetings during such year of the Board Committees of which they
were members. Pursuant to the Guidelines, the Board has established a policy
that the non-management directors meet in executive session at least two times
per year and that the independent directors also meet in executive session at
least twice per year. The Chairman of the Board (currently, Edward B. Cloues
II), if in attendance, will be the presiding director at each such executive
session; otherwise, those attending will select a presiding director.
Any shareholder wishing to communicate with the Board or any of the
directors may send a written communication to AMREP Corporation, 641 Lexington
Ave., New York, NY 10022, Attention: Corporate Secretary for forwarding to the
intended person or persons.
The Board has an Executive Committee which generally has the power of the
Board and acts as needed between meetings of the Board. Also, in the absence of
a Chief Executive Officer (the Company has not had a CEO since January 1996),
the Committee is charged with the oversight of the Company's business. The
current members of the Committee are Messrs. Cloues, Karabots and Russo, with
Mr. Cloues as Chairman. Mr. Cloues is compensated for his services as Chairman
of the Board and as Committee Chairman at the rate of $135,000 per year, such
amount being in addition to the fees paid him as a director and member of other
Committees. During the last fiscal year, the Executive Committee met frequently
on an informal basis but held no formal meetings.
The Board also has an Audit Committee and a Human Resources Committee. The
Human Resources Committee acts as a compensation committee. For fiscal 2004, the
fee payable to members of the Audit Committee for each Committee meeting
attended was $1,000. For fiscal 2004, the fee payable to members of the Human
Resources Committee for each Committee meeting attended was $750.
Each member of the Audit Committee is an independent director as defined by
the Governance Standards. The Committee operates under a written charter adopted
by the Board of Directors, most recently on July 13, 2004, a copy of which is
attached as Appendix A to this Proxy Statement and may also be viewed on the
Company's website at amrepcorp.com. A shareholder may obtain a written copy upon
request to the Company at AMREP Corporation, 641 Lexington Avenue, New York, NY
10022, Attention: Corporate Secretary. The duties of the Audit Committee include
(i) appointing the Company's independent auditors, approving the services to be
provided by the independent auditors and their compensation and reviewing the
auditors' independence and performance of services, (ii) reviewing the scope and
results of the yearly audit by the independent auditors, (iii) reviewing the
Company's system of internal controls and procedures, (iv) reviewing with
management and the independent auditors the Company's annual and quarterly
financial statements, (v) reviewing the Company's financial reporting and
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accounting standards and principles, and (vi) overseeing the administration of
the Guidelines. This Committee reports regularly to the Board concerning its
activities. The current members of this Committee are Messrs. Belson, Coombs and
Seidman (Chairman), each of whom has been determined by the Board to be
independent and financially literate within the meaning of the Governance
Standards. The Board has also determined that Mr. Coombs, who is a certified
public accountant, qualifies as an audit committee financial expert within the
meaning of Securities and Exchange Commission regulations. The Audit Committee
held five meetings during the last fiscal year.
The Human Resources Committee makes recommendations to the Board concerning
compensation and other matters relating to employees and reports regularly to
the Board concerning its activities. The current members of this Committee are
Messrs. Cloues, Karabots (Chairman) and Russo. This Committee held two meetings
during the last fiscal year.
For fiscal 2004 each non-employee director of the Company was paid a fee of
$20,000 in addition to fees paid to such director as a member of one or more
Board Committees. Additionally, under the 2002 Non-Employee Directors' Stock
Plan, each non-employee director receives a grant from the Company of 1,250
shares of its Common Stock on each March 15 and September 15 as partial payment
for services for the preceding six months. The last sales prices for the Common
Stock on the New York Stock Exchange on September 15, 2003 and March 15, 2004,
the fiscal 2004 grant dates, were $14.50 and $15.81, respectively. Also, under
the Non-Employee Directors Option Plan, on the first business day following the
Company's Annual Meeting of Shareholders each non-employee director is granted
an option covering 500 shares of Common Stock of the Company. The price per
share payable upon exercise of such option is either (i) the mean between the
highest and lowest reported sale price of the Common Stock on the date of grant
on the New York Stock Exchange, or (ii) the price of the last sale of Common
Stock on that date as quoted on the New York Stock Exchange, whichever is
higher. For the options granted following the 2003 Annual Meeting, the exercise
price is $15.19 per share. Each option becomes exercisable as to all or any
portion of the shares covered thereby one year after the date of grant and
expires five years after the date of grant.
-8-
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth certain information
concerning the compensation of the Company's executive officers.*
SUMMARY COMPENSATION TABLE
Annual Compensation
----------------------------------
Other Annual
Compensation
Name and Principal Position Year Salary($) Bonus($) ($) (a)(b)
--------------------------- ---- --------- -------- ------------
James Wall 2004 277,572 35,000 4,552
Senior Vice President; 2003 273,801 20,000 3,567
Chairman of the Board, 2002 271,281 12,000 (c) 3,500
President and CEO of the
Company's AMREP Southwest
Inc. subsidiary
Peter M. Pizza 2004 171,692 10,000 1,639
Vice President and 2003 165,538 10,000 -0-
Chief Financial Officer, 2002 160,000 7,500 (c) -0-
Treasurer and Secretary
Michael P. Duloc 2004 217,042 12,500 4,298
President and COO of the 2003 206,153 7,500 3,227
Company's Kable News 2002 200,000 12,750 (c) 2,496
Company, Inc. subsidiary
_____________________________________
(a) Includes amounts contributed by the Company to the Company's Savings and
Salary Deferral Plan.
(b) Other compensation in the form of personal benefits to the named persons
has been omitted because it does not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus as to each.
(c) The determination to award bonuses for fiscal 2002 was first made after the
2002 Annual Meeting and therefore not disclosed in the Proxy Statement for
that Meeting.
Options
No stock options were granted to or exercised by any of the officers named
in the Summary Compensation Table during the fiscal year ended April 30, 2004.
No stock options were held by any of such officers at April 30, 2004.
Human Resources Committee Executive Compensation Report
The Human Resources Committee (the "HRC"), consisting entirely of
non-management directors, is the Company's Compensation Committee. Its current
members are Messrs. Cloues, Karabots and Russo. The HRC's recommendations
____________________________
* Since January 1996, the Company has not had a CEO.
-9-
regarding executive compensation must be approved by the Board of Directors or
its Executive Committee.
Compensation Policy for Executive Officers
------------------------------------------
The HRC's compensation policy for executive officers is to pay
competitively while balancing pay versus performance and otherwise to be fair
and equitable in the administration of compensation. In determining the salary
to be paid to a particular individual, the HRC applies the above criteria while
also using its best judgment of compensation applicable to other executives
holding comparable positions both within the Company and at other companies.
With respect to salaries, bonuses and other compensation and benefits, the
decisions and recommendations of the HRC are subjective and are not based on any
list of specific criteria. We believe that the compensation received by each of
the executive officers for fiscal 2004 was reasonable. The Company has not had a
Chief Executive Officer since January 1996 when the employment of the then CEO
was terminated due to disability, and senior management now operates under the
supervision of the Executive Committee of the Board and its Chairman, who is
also the Chairman of the Board.
In fiscal 2004, the HRC recommended the payment of bonuses to the executive
officers based on the HRC's evaluation of the officers' fiscal 2003 performance
and also recommended salary increases based on this and other factors. These
recommendations were accepted by the Board of Directors and implemented in the
summer of 2003 as to bonuses and the fall of 2003 as to salary increases. Early
in fiscal 2005, the HRC recommended and the Board of Directors approved the
payment of bonuses to the executive officers based on the HRC's evaluation of
their performance in fiscal 2004.
There have been no stock options granted to executive officers since fiscal
1995.
Payments during fiscal 2004 to the Company's executives as discussed above
were made with regard to the provisions of Section 162(m) of the Internal
Revenue Code. Section 162(m) limits the deduction that may be claimed by a
"public company" for compensation paid to certain individuals to $1 million
except to the extent that any excess compensation is "performance-based
compensation". It is the HRC's intention that compensation will not be awarded
which exceeds the deductibility limits of Section 162(m).
Bases for Chief Executive Officer's Compensation
------------------------------------------------
Since January 1996, the Company has not had a CEO.
Nicholas G. Karabots, Chairman
Edward B. Cloues II
July 13, 2004 Albert V. Russo
-10-
Compensation Committee Interlocks and Insider Participation
On August 4, 1993, pursuant to an agreement with Nicholas G. Karabots and
two corporations he then owned, the Company acquired for its Kable News Company
subsidiary ("Kable") various rights to distribute magazines, and in payment
issued a total of 575,593 shares of the Company's Common Stock. The distribution
rights covered various magazines published by unaffiliated publishers as well as
magazines published by publishers controlled by Mr. Karabots.
As a distributor, Kable purchases magazines from publishing companies,
including those owned or controlled by Mr. Karabots, and resells them to
wholesalers. During the fiscal year ended April 30, 2004, Kable purchased
magazines from Mr. Karabots' companies for a total of approximately $25.5
million and resold them at higher prices. Kable reports as revenues only the
spread between the prices it pays publishers and the prices it receives for
copies sold to its wholesaler customers. The $25.5 million paid to Mr. Karabots'
companies represents 18.4% of the approximately $138.7 million Kable paid all
publishers in fiscal 2004. Consistent with industry practice, Kable makes
advance payments to publishers, including Mr. Karabots' companies, based upon
its estimates of the amounts that will be due them from the sales of their
publications to the buying public. If the actual sales are less than estimated,
overadvances will result which the publishers are obligated to repay promptly,
without interest. The total overadvance to Mr. Karabots' companies at June 30,
2004 was approximately $68,000, and its highest amount between May 1, 2003 and
June 30, 2004 was approximately $311,000.
Kable's distribution agreements with publishing companies owned or
controlled by Mr. Karabots were scheduled to expire August 1, 2003. A special
committee of the Board of Directors comprised of Messrs. Belson, Russo and
Seidman (the "Special Committee") was appointed, with full power to act for the
Company, to consider and, if deemed appropriate, approve the terms and
conditions of extensions of those agreements as well as the terms and conditions
of any and all new contracts or other material modifications to existing
contracts between Kable and Mr. Karabots' companies. During fiscal 2004 the
agreements were extended on terms that provided for higher payments to the
publishing companies than previously pertained. Effective July 1, 2004, the
agreements were extended for an additional eleven months on the same payment
terms as were then in effect and amended to increase the level of advance
payments for the first four months of the extension and to add additional
publications for distribution. The Special Committee believes that the terms and
conditions of such extensions and amendments are fair and reasonable and no less
favorable to Kable than would be obtained in comparable arm's length
transactions with an unaffiliated publisher having the same volume of business
as Mr. Karabots' companies.
Kable also performs fulfillment services for publishing companies owned or
controlled by Mr. Karabots which, in recent years until August 2003, were
provided on a month-to-month basis under the terms of contracts for such
services which had expired on October 6, 2000. In accordance with the approval
of the Special Committee, those contracts have been extended to August 1, 2006,
and from year to year thereafter unless terminated at the election of either
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party, on substantially the same terms except that Kable may receive certain
annual rate increases based on cost of living changes. In authorizing the
extensions, the Special Committee concluded that the terms were no less
favorable to Kable than would be obtained in a comparable arm's length
transaction with an unaffiliated publisher. For fiscal 2004, Kable's revenues
for these services were $339,000.
Mr. Karabots is a director, Chairman of the Human Resources Committee and
the father-in-law of Michael P. Duloc, one of the executive officers of the
Company.
Performance Graph
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return of the Standard & Poor's
500 Index and 27 companies with market capitalizations similar to that of the
Company ("Similar Cap Issuers"), for the five years ended April 30, 2004
(assuming the investment of $100 in the stock of the Company, the S&P 500 and
the Similar Cap Issuers on April 30, 1999, and the reinvestment of all
dividends). The Company cannot identify an index of issuers engaged in
operations similar to those in which it is currently engaged and therefore has
determined to use the Similar Cap Issuers for purposes of comparison.
1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
AMREP CORP 100 86.96 67.83 139.13 163.48 307.11
S&P 500 INDEX 100 110.13 83.74 83.74 72.60 89.21
SIMILAR CAP ISSUERS 100 134.79 123.21 123.21 87.21 145.91
-12-
The Similar Cap Issuers are: America First Apartment Investors, Inc.,
Codorus Valley Bancorp, Inc., Conrad Industries, Inc., DNB Financial
Corporation, Eagle Supply Group, Inc., Edge Petroleum Corporation, Inc.,
Exponent, Inc., Featherlite, Inc., Genta Incorporated, Harold's Stores, Inc.,
Intest Corporation, Irvine Sensors Corporation, JMAR Technologies, Inc., KCS
Energy, Inc., KMG Chemicals, Inc., LSB Corporation, Mesabi Trust, The Middleton
Doll Company, Nano-Proprietary, Inc., Nobility Homes, Inc., North America
Scientific, Inc., Onspan Networking, Inc., PVF Capital Corp., Quality Dining,
Inc., Startech Environmental Corporation, Thomas Group, Inc. and Westbank
Corporation.
As a result of changes in market capitalizations from year to year, none of
the companies comprising the Similar Cap Issuer index in the Company's 2003
Proxy Statement met the criteria for inclusion in the Similar Cap Issuer index
in this Proxy Statement. The 2003 Similar Cap companies were: Alliance Financial
Corporation, American Science and Engineering, Inc., Avanir Pharmaceuticals,
Capital Corp. of the West, The Eastern Company, Featherlite, Inc., Federal Screw
Works, Finishmaster, Inc., First Midwest Financial, Inc., First State
Bancorporation, FSF Financial Corp., Gold Reserve Inc., Hawthorne Financial
Corporation, Hemispherx Biopharma, Inc., ID Biomedical Corporation, K-Swiss
Inc., Lynx Therapeutics, Inc., Monarch Casino & Resort, Inc., Neogen
Corporation, Nyfix, Inc., Orphan Medical, Inc., The Stephan Co., Stratasys,
Inc., TTI Team Telecom International Limited, Universal Display Corporation,
Utah Medical Products, Inc. and Xenova Group PLC.
Equity Compensation Plan Information
The following table sets forth information as of April 30, 2004 concerning
Common Stock of the Company which is issuable under its compensation plans.
(C)
(A) (B) Number of securities
Number of securities Weighted average remaining available for
to be issued upon exercise price of future issuance under equity
exercise of outstanding compensation plans (excluding
outstanding options, options, warrants securities reflected in
Plan Category warrants and rights and rights column (A))
------------- ------------------- ---------- -----------
Equity compensation plans approved by
shareholders 9,500 $9.12 15,000 (1)
Equity compensation plans not
approved by shareholders - - 42,500 (2)
----- ------
Total 9,500 57,500
===== ======
____________________________
(1) Consists of shares available for options to be issued under the
Non-Employee Directors Option Plan.
(2) Consists of shares available for issuance under the 2002 Non-Employee
Directors' Stock Plan.
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On December 5, 2002, the Board of Directors adopted the AMREP Corporation
2002 Non-Employee Directors' Stock Plan and reserved 65,000 shares of Common
Stock of the Company for issuance thereunder. Under this Plan, each non-employee
director receives a grant from the Company of 1,250 shares on each March 15 and
September 15 as partial payment for services for the preceding six months.
Retirement Benefits
The Company's executive officers participate in a Retirement Plan (the
"Plan") which was amended effective January 1, 1998 and subsequently frozen
effective March 1, 2004 so that in the determination of the benefit payable, a
participant's compensation from and after March 1, 2004 is not taken into
account. Prior to the 1998 amendment, the Plan provided a monthly benefit
payable at age 65 to employees with five or more years of service in an amount
equal to 1.125% of the employee's highest consecutive 60-month average monthly
earnings up to a specified amount related to the social security wage base plus
1.5% of such earnings in excess of such specified amount, multiplied by years of
service not to exceed 35. From and after January 1, 1998 through February 29,
2004, each participant's benefit was the amount of the monthly benefit accrued
for that participant as of December 31, 1997 under the terms of the Plan prior
to the 1998 amendment, plus an additional benefit determined by establishing a
cash balance account for the participant to which was allocated annually 2% of
the participant's compensation plus an annual interest credit of 5% of the
amount in such account. The cash balance account may be converted to a life
annuity or may be taken in a lump sum. After February 29, 2004, a participant's
benefit under the Plan is the sum of (i) the actuarial equivalent of the
participant's cash balance account as of February 29, 2004, plus interest on the
cash balance account at the rate of 5% per year, and (ii) the participant's
monthly pension benefit under the Plan as at December 31, 1997.
Mr. Wall has passed the normal retirement age of 65 under the Plan. His
annual retirement benefit under the Plan had he elected to receive the life
annuity pension at normal retirement age would have been $54,290. Mr. Pizza has
eight years of credited service and Mr. Duloc has eleven years of credited
service. Assuming that (i) they continue to be employed until age 65, and (ii)
they elect the life annuity form of pension, their annual retirement benefits
are estimated to be: Mr. Pizza - $5,732 and Mr. Duloc - $11,518.
Certain Transactions
See "Compensation Committee Interlocks and Insider Participation" for
information concerning transactions involving Nicholas G. Karabots.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of its
Common Stock to file initial reports of ownership and reports of changes of
ownership of the Common Stock with the Securities and Exchange Commission and
the New York Stock Exchange. The related regulations require copies of the
reports to be provided to the Company.
Based upon a review of the copies of the reports received by the Company
and certain written representations from the directors and executive officers,
the Company believes that for the fiscal year ended April 30, 2004 all required
Section 16(a) reports were filed on time.
AUDITORS
The consolidated financial statements of the Company and its subsidiaries
included in the Annual Report to Shareholders for the fiscal year ended April
30, 2004 have been examined by McGladrey & Pullen, LLP, independent public
accountants. No representative of McGladrey & Pullen, LLP is expected to attend
the Annual Meeting. The Audit Committee has not yet acted with respect to the
selection of auditors for fiscal 2005.
Audit Committee Report
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management, which has primary responsibility for the
financial statements. McGladrey & Pullen, LLP, as the Company's independent
auditors, are responsible for expressing an opinion on the conformity of the
Company's audited financial statements with generally accepted accounting
principles. The Committee has discussed with McGladrey & Pullen, LLP the matters
that are required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees). McGladrey & Pullen, LLP have provided to
the Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
and the Committee has discussed with McGladrey & Pullen, LLP that firm's
independence. Based on these considerations, the Audit Committee recommended to
the Board of Directors that the consolidated financial statements audited by
McGladrey & Pullen, LLP be included in the Company's annual report on Form 10-K
for fiscal 2004.
The foregoing report is provided by the following directors who constitute
the Audit Committee:
Samuel N. Seidman, Chairman
Jerome Belson
July 13, 2004 Lonnie A. Coombs
-15-
Audit Fees
The following table sets forth certain information concerning the fees of
McGladrey & Pullen, LLP for the Company's last two fiscal years. The reported
fees, except the Audit Fees, are amounts billed to the Company in the indicated
fiscal years. The Audit Fees are for services for those fiscal years.
Fiscal Year Ended April 30,
---------------------------
2004 2003 (4)
---- ----
Audit Fees (1).......................... $ 112,368 $ 94,691
Audit-Related Fees (2).................. 106,609 22,826
Tax Fees (3)............................ 46,276 54,424
All Other Fees.......................... - -
___________________
(1) Includes fees for the audit of the Company's annual financial statements
and for review of the unaudited financial statements included in the
Company's quarterly reports to the Securities and Exchange Commission on
Form 10-Q.
(2) Includes fees for benefit plan audits and, in fiscal 2004, an acquisition
audit and an information systems controls review.
(3) Includes fees for tax compliance, tax advice and tax planning services.
Such services principally involved reviews of the Company's federal income
tax returns and advice on the tax treatment of certain transactions.
(4) The reported fees for fiscal 2003 have been reclassified from those
reported in last year's Proxy Statement to conform with the revised
presentation now called for by Securities and Exchange Commission
regulations.
Pre-Approval Policies and Procedures
The Audit Committee pre-approves all audit services to be provided by the
independent public accountants and, separately, all permitted non-audit services
to be performed by the independent public accountants.
OTHER MATTERS
The Board of Directors knows of no matters which will be presented for
consideration at the Annual Meeting other than the matters referred to in this
Proxy Statement. Should any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgment.
SOLICITATION OF PROXIES
The Company will bear the cost of this solicitation of proxies. In addition
to solicitation of proxies by mail, the Company may reimburse brokers and other
nominees for the expense of forwarding proxy materials to the beneficial owners
-16-
of stock held in their names. Directors, officers and employees of the Company
may solicit proxies on behalf of the Board of Directors but will not receive any
additional compensation therefor.
SHAREHOLDER PROPOSALS
From time to time shareholders present proposals which may be proper
subjects for inclusion in the Proxy Statement and for consideration at an annual
meeting. Shareholders who intend to present proposals at the 2005 Annual Meeting
and who wish to have such proposals included in the Company's Proxy Statement
for the 2005 Annual Meeting must be certain that such proposals are received by
the Company's Secretary at the Company's executive offices, 641 Lexington
Avenue, New York, New York 10022, not later than April 1, 2005. Such proposals
must meet the requirements set forth in the rules and regulations of the
Securities and Exchange Commission in order to be eligible for inclusion in the
Proxy Statement. For any proposal that is not submitted for inclusion in next
year's Proxy Statement but is instead sought to be presented directly at the
2005 Annual Meeting, Securities and Exchange Commission rules permit management
to vote proxies in its discretion if the Company does not receive notice of the
proposal prior to the close of business on June 24, 2005.
By Order of the Board of Directors
Peter M. Pizza, Secretary
Dated: July 29, 2004
Upon the written request of any shareholder of the Company, the Company
will provide to such shareholder a copy of the Company's annual report on Form
10-K for 2004, including the financial statements and the schedules thereto,
filed with the Securities and Exchange Commission. Any request should be
directed to Peter M. Pizza, Secretary, AMREP Corporation, 641 Lexington Avenue,
New York, New York 10022. There will be no charge for such report unless one or
more exhibits thereto are requested, in which case the Company's reasonable
expenses of furnishing exhibits may be charged.
-17-
APPENDIX A
AMREP CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Adopted July 13, 2004
Membership
The Audit Committee (the "Committee") shall consist of three or more directors
all of whom shall (i) have been determined by the Board of Directors (the
"Board") to be independent within the meaning of the New York Stock Exchange
Corporate Governance Standards and (ii) meet the independence requirements of
the Securities Exchange Act of 1934, as amended, and the Rules of the Securities
and Exchange Commission. Each Committee member shall in the judgment of the
Board be financially literate. In addition, at least one Committee member shall
in the judgment of the Board be an "audit committee financial expert" within the
meaning of the rules and regulations of the Securities and Exchange Commission,
and at least one Committee member (who may also be an audit committee financial
expert) shall in the judgment of the Board have accounting or related financial
management expertise.
Purpose
The purpose of the Committee is to (A) assist the Board with the oversight of
(a) the integrity of the Company's financial statements, (b) the Company's
compliance with legal and regulatory requirements, (c) the independent auditor's
qualifications and independence, and (d) the performance of the Company's
internal audit function and the independent auditor, and (B) perform the duties
set forth below.
Duties
The Committee shall:
1. Appoint and retain, and when appropriate terminate, the public accounting
firm ("independent auditor") engaged by the Company for the purpose of
preparing or issuing an audit report or preparing audit review or attest
services, set the independent auditor's compensation, oversee its work, and
resolve any disagreement between management and the independent auditor
regarding financial reporting.
2. Establish policies and procedures for the engagement of the independent
auditor to provide audit and permitted non-audit services.
3. Pre-approve all audit services to be provided by the independent auditor
and, separately, all permitted non-audit services to be performed by the
independent auditor.
4. At least annually, obtain and review a report by the independent auditor
describing (i) the independent auditor's internal quality-control
A-1
procedures, (ii) any material issues raised by the most recent internal
quality-control review, peer review or Public Company Accounting Oversight
Board review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the firm, and any
steps taken to deal with any such issues.
5. At least annually, consider the qualifications and independence of the
independent auditor, including whether the provision by the independent
auditor of permitted non-audit services is compatible with its
independence, and obtain and review a report from the independent auditor
describing all relationships between the independent auditor and the
Company and its subsidiaries.
6. Review with the independent auditor: (a) the scope, timing, and results of
each audit, (b) any problems or difficulties that the independent auditor
encountered in the course of the audit work and management's response, and
(c) any questions, comments, or suggestions the independent auditor may
have relating to the internal controls, and accounting practices and
procedures, of the Company or its subsidiaries.
7. Review with the independent auditor at least annually, the scope and
results of the internal audit program, including then current and future
programs of the Company's internal auditor, procedures for implementing
accepted recommendations made by the independent auditor, and any
significant matters contained in reports from the internal auditor.
8. Review with the independent auditor, with the Company's internal auditor,
and with management (a) the adequacy and effectiveness of the systems of
internal controls (including any significant deficiencies and significant
changes in internal controls reported to the Committee by the independent
auditor or management), accounting practices, and disclosure controls and
procedures (and management reports thereon), of the Company and its
subsidiaries; and (b) current accounting trends and developments, and take
such action with respect thereto as may be deemed appropriate.
9. Review with management and the independent auditor the annual audited
financial statements and quarterly unaudited financial statements of the
Company, including (a) the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
(b) any material changes in accounting principles or practices used in
preparing the financial statements prior to the filing of a report on Form
10-K or 10-Q with the Securities and Exchange Commission, and (c) the items
required by Statements on Auditing Standards 61 and 100 (or any superseding
Statements).
10. Recommend to the Board of Directors, based on the reviews set forth above,
whether the annual audited financial statements should be included in the
Company's annual report on Form 10-K.
11. Review the Company's earnings press releases as well as financial
information and earnings guidance provided to analysts and rating agencies.
A-2
12. Discuss Company policies with respect to risk assessment and risk
management, and review contingent liabilities and risks that may be
material to the Company and its subsidiaries on a consolidated basis and
major legislative and regulatory developments which could materially impact
the Company's contingent liabilities and risks.
13. Establish procedures for the confidential and anonymous receipt, retention,
and treatment of complaints regarding the Company's accounting, internal
controls, and auditing matters, as well as for the confidential, anonymous
submissions by Company employees of concerns regarding questionable
accounting or auditing matters.
14. Establish clear policies for the hiring of employees and former employees
of the independent auditor.
15. Obtain the advice and assistance, as appropriate, of independent counsel
and other advisors as necessary to fulfill the responsibilities of the
Committee, and receive appropriate funding from the Company, as determined
by the Committee, for the payment of compensation to any such advisors.
16. Conduct an annual performance evaluation of the Committee and annually
evaluate the adequacy of its charter.
17. Oversee the administration and enforcement of the Company's Code of
Business Conduct and Ethics and the Company's Corporate Governance
Standards.
Meetings
The Committee shall meet at least four times each year and at such other times
as it deems necessary to fulfill its responsibilities. The Committee shall
periodically meet separately, in executive session, with management, the
internal auditor and the independent auditor. The Committee shall report
regularly to the Board of Directors with respect to its activities and make
recommendations to the Board of Directors as appropriate.
Report
The Committee shall prepare a report each year for inclusion in the Company's
annual proxy statement relating to the election of directors.
A-3
PROXY AMREP CORPORATION PROXY
SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
The Conference Center at Normandy Farm
Route 202 and Morris Road, Blue Bell, Pennsylvania
September 21, 2004, 9:00 A.M. Local Time
The undersigned hereby appoints Edward B. Cloues II and Peter M. Pizza, and
each of them acting alone, with full power of substitution, proxies to vote the
Common Stock of the undersigned at the 2004 Annual Meeting of Shareholders of
AMREP Corporation, and any adjournment thereof, for the election of directors as
set forth in the Proxy Statement of the Board of Directors dated July 29, 2004,
and upon all other matters which come before said meeting or any continuation or
adjournment thereof.
Receipt of the Notice of Annual Meeting of Shareholders and accompanying
Proxy Statement of the Board of Directors is acknowledged.
Unless otherwise specified, this proxy will be voted FOR the election of
directors as set forth in the Proxy Statement.
(Continued and to be dated and signed on reverse side.)
PLEASE MARK, DATE SIGN
AND MAIL YOUR PROXY |X|
PROMPTLY IN THE ENVELOPE Votes MUST be indicated
PROVIDED. (x) in Black or Blue ink.
A vote FOR ITEM 1 is recommended by the Board of Directors.
1. FOR ELECTION OF TWO (2) DIRECTORS AS DESCRIBED IN THE PROXY STATEMENT OF
THE BOARD OF DIRECTORS.
_ _ _
FOR all nominees|_| WITHHOLD AUTHORITY to vote|_| * Exceptions|_|
listed below for all nominees listed below
Nominees: Samuel N. Seidman, Lonnie A. Coombs
(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
_
*Exceptions _________________________________ To change your address, please|_|
mark this box.
If stock is held in the name of more than one person, all holders
should sign. Sign exactly as name or names appear at left. Persons
signing in a fiduciary capacity should include their title as such.
______________________________ _____________________________
Date Share owner sign here Co-Owner sign here