As of
and
other commitments and contingencies are summarized in the below table:
| | | 2019 | | | 2018 | |
| Management Employment agreements with bonus* and severance commitment contingencies | | $ | 350,000 | | | $ | 350,000 | |
| Other employee severance commitment contingencies | | | 81,716 | | | | 81,716 | |
| Total | | $ | 431,716 | | | $ | 431,716 | |
*Excludes Retention Bonus Payments |
The Company has an employment agreement with its Chief Executive Officer. The agreement provides for a bonus of
$125,000
payable upon a change of control as defined in the agreement. In addition, each agreement provides for severance equivalent to
6
months of base salary and the vesting and related payment of the change of control bonus.
The Company also has an employment agreement with its Chief Operating Officer (
“COO”) executed on
which provides for severance on a termination without cause equal to
6
months of base salary. On
Gyrodyne entered into an amendment to the employment agreement with the COO to define with greater specificity the COO’s duties and responsibilities with respect to
the Company’s properties.
Under Company policy the aggregate severance commitment contingency to other employees is approximately
$81,716.
In
May 2014,
the Board of Directors approved a retention bonus plan (as amended, the
“Plan”) designed to recognize the nature and scope of the responsibilities of our directors, executives and employees related to
the Company’s strategic plan to enhance the property values, liquidate and dissolve, to reward and incent performance in connection therewith, to align the interests of directors, executives and employees with our shareholders and to retain such persons during the term of such plan. The Plan provides for bonuses to directors and to officers and employees determined by the gross sales proceeds from the sale of each property and the date of sale. The summary appearing below reflects the terms set forth in the Plan as modified by
three
amendments. There were
no
further amendments to the terms of the Plan during the current reporting period.
The Plan provides for a bonus pool funded with an amount equal to
5%
of the specified appraised value of such properties (set forth in the Plan), so long as the gross selling price of a property is at least equal to its
2013
appraised value as designated in the bonus plan. Additional funding of the bonus pool will occur on a property-by-property basis only if the gross sales price of a property exceeds the Adjusted Appraised Value defined as the sum of (i) its
2013
appraised value, in which case additional funding will occur and (ii) land development costs incurred on a property since the date of the
2013
appraisal, as follows:
10%
on the
first
10%
of appreciation,
15%
on the next
10%
of appreciation and
20%
on appreciation greater than
20%.
The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are directors or employees of
the Company:
| | | | |
| Board Members(a) | | | 65.000 | % |
| Chief Executive Officer | | | 15.474 | % |
| Chief Operations Officer | | | 13.926 | % |
| Officer Discretionary Amount (b) | | | 1.750 | % |
| Other Employees | | | 3.850 | % |
| Total | | | 100.000 | % |
| | (a) | 15% for the Chairman and 50% for the directors other than the Chairman ( 10% for each of the other five directors). |
| | (b) | The officer discretionary amount of 1.75% is vested but not allocated and will be allocated to the officers within the discretion of the Board. |
Such shares of the bonus pool are earned only upon the completion of the sale of a property at a gross selling price equal to or greater than its Adjusted Appraised Value and is paid to the named beneficiaries of the Plan or their designees within
60
days of the completion of such sale or, if later, within
60
days of receipt of any subsequent post-completion installment payment related to such sale.
The Plan provides that
no
benefits are to be paid to participants from the sale of any individual post-subdivided lot from either of
the Company’s Flowerfield or Cortlandt Manor properties until aggregate sale proceeds from all sales of post-subdivided lots from such property exceed a designated aggregate floor for such property. The aggregate floor for each of the Flowerfield and Cortlandt Manor properties is defined in Amendment
No.
3
to the Plan as the
2013
appraisal of such property plus land development costs incurred for such property since such appraisal.
The Plan provides for vesting of benefits upon the sale of each individual post-subdivision lot at Flowerfield and Cortlandt Manor. It also provides for entitlement to a future benefit in the event of death, voluntary termination following substantial reduction in compensation or board fees, mutually agreed separation to right-size the board or involuntary termination without cause, except that a participant will only be eligible to receive a benefit to the extent that a property is sold within
three
years following the separation event and the sale produces an internal rate of return equal to at least
four
percent of the property’s value as of
December 31
immediately preceding such event and that the sale exceeded the Adjusted Appraised Value.
The payments made during the
twelve
months ended
and
under the Plan relate to the settlement of the master lease from the Sale of the Virginia Health Care Center and the sale of
one
building in the Port Jefferson Professional Park, respectively, were as follows:
| RETENTION BONUS PLAN PARTICPANTS | | 2019 | | | 2018 | |
| Board of Directors | | $ | 9,471 | | | $ | 56,497 | |
| President and Chief Executive Officer | | | 2,390 | | | | 14,250 | |
| Chief Operating Officer | | | 2,151 | | | | 12,824 | |
| Other Employees | | | 561 | | | | 3,346 | |
| Total | | $ | 14,573 | | | $ | 86,917 | |
Deferred Compensation Plan
On
the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the
“DCP”) effective as of
The plan is a nonqualified deferred compensation plan maintained for officers and directors of
the Company. Under the DCP, officers and directors
may
elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of
5%.
All DCP benefits will be paid in a single lump sum cash payment on
unless a
plan of liquidation is established for Gyrodyne before the distribution date in which case all benefits will be paid in a single lump sum cash payment after execution of an amendment to terminate the DCP. Each of the Directors elected (under the DCP) to defer
100%
of their director fees for
2020.
