| (a) | Executive Compensation |
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The following table sets forth the total compensation awarded to, earned by or paid to each of the Company’s executive officers for services rendered during the years ended December 31, 2024 and 2023.
SUMMARY COMPENSATION TABLE
| Name and principal position | Year | Salary ($) | Bonus ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) |
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| Gary Fitlin | 2024 | 250,000 | - | - | - | - | - | - | 250,000 |
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| President, CEO, CFO and Treasurer | 2023 | 250,000 | 10,000 | - | - | - | - | - | 260,000 |
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| Peter Pitsiokos | 2024 | 200,000 | - | - | - | - | - | - | 200,000 |
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| COO and Secretary | 2023 | 200,000 | 10,000 | - | - | - | - | - | 210,000 |
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The Registrant has concluded that aggregate amounts of perquisites and other personal benefits, securities or property to any of the current executives does not exceed $10,000 and that the information set forth in tabular form above is not rendered materially misleading by virtue of the omission of such personal benefits.
On May 17, 2013, the Company entered into a new employment agreement with Gary J. Fitlin (the “Employment Agreement”) dated May 15, 2013 and effective April 1, 2013, pursuant to which Mr. Fitlin continued to serve as President and Chief Executive Officer and Chief Financial Officer. Pursuant to the Employment Agreement, Mr. Fitlin earns a base salary at the rate of $250,000 per year plus a discretionary bonus, as determined and approved by the Board based upon the profitability and/or performance of Gyrodyne. Additionally, Mr. Fitlin is entitled to a bonus equal to $125,000 if he is employed by the Company as of the effective date of a change-in control (the “Change-in-Control Bonus”). The Employment Agreement defines a change-in-control as the first to occur of a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as each such term is defined under Section 409A of the Code. Pursuant to the terms of the Employment Agreement, there is no required minimum period of employment, and either the Company or Mr. Fitlin may terminate at any time, with or without cause. If Mr. Fitlin is terminated without cause, the Company must provide him with at least 60 days’ prior written notice of termination and must pay him (i) the pro rata share of his base salary through those 60 days, (ii) the Change-in-Control Bonus, and (iii) severance pay equal to six months’ base salary from the date of termination. If Mr. Fitlin is terminated for cause (as defined in the Employment Agreement), he will be paid the pro rata share of his base salary through the date of termination. Mr. Fitlin may also terminate upon 60 days’ prior written notice. The foregoing description of the Employment Agreement is only a summary of its material terms, does not purport to be complete and is qualified in its entirety by reference to that agreement. A copy of the Employment Agreement was filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
On May 8, 2014, Gyrodyne entered into a new employment agreement with Peter Pitsiokos effective May 15, 2014, pursuant to which Mr. Pitsiokos continues to serve as Executive Vice-President, Chief Operating Officer, Chief Compliance Officer and Secretary. Pursuant to the agreement, Mr. Pitsiokos earns a base salary at the rate of $200,000 per year plus a discretionary bonus, as determined and approved by the Board based upon the profitability and/or performance of Gyrodyne. There is no required minimum period of employment, and either Gyrodyne or Mr. Pitsiokos may terminate at any time, with or without cause. If Mr. Pitsiokos is terminated without cause, Gyrodyne must provide him with at least 60 days’ prior written notice of termination and must pay him the pro rata share of his base salary through those 60 days and severance pay equal to six months’ base salary from the date of termination. On January 25, 2018, Gyrodyne entered into an amendment to the employment agreement with Mr. Pitsiokos effective January 25, 2018, to define with greater specificity Mr. Pitsiokos’ duties and responsibilities with respect to the Company’s properties.
| (b) | Outstanding Equity Awards at Fiscal Year End |
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As of the year ended December 31, 2024, there were no unexercised options and/or stock that has not vested or equity incentive plan awards held by any of the Company’s named executive officers.
| (c) | Severance and Change-in-Control Benefits |
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Pursuant to the Employment Agreement with Mr. Fitlin, Mr. Fitlin earns a bonus equal to $125,000 if he is employed by the Company as of the effective date of a change-in-control (the “Change-in-Control Bonus”). The Employment Agreement defines a change-in-control as the first to occur of a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as each such term is defined under Section 409A of the Code. Pursuant to the terms of the Employment Agreements, there is no required minimum period of employment, and either the Company or the executive may terminate at any time, with or without cause. If the executive is terminated without cause, the Company must provide him with at least 60 days’ prior written notice of termination and must pay him (i) the pro rata share of his base salary through those 60 days, (ii) the Change-in-Control Bonus, and (iii) severance pay equal to six months’ base salary from the date of termination. If the executive is terminated for cause (as defined in the Employment Agreements), he will be paid the pro rata share of his base salary through the date of termination. Each of the executives may also terminate upon 60 days’ prior written notice.
Pursuant to the employment agreement with Mr. Pitsiokos, Mr. Pitsiokos may be terminated at any time, with or without cause. If Mr. Pitsiokos is terminated without cause, Gyrodyne must provide him with at least 60 days’ prior written notice of termination and must pay him the pro rata share of his base salary through those 60 days and severance pay equal to six months’ base salary from the date of termination.
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.
As a result of feedback we received from shareholders during our shareholder listening tours in 2022 and 2023, the Company evaluated various possible changes to the Plan to better align the interests of the Plan participants with those of the shareholders. Effective September 5, 2023, the Board of Directors approved Amendment No. 5 (“Amendment No. 5”) to the Plan. Amendment No. 5 is intended to create better alignment of interests between Plan participants and all shareholders.
The primary features of Amendment No. 5 are as follows:
| ● | $1,137,108 forfeited by retired directors returned to the Company: Prior to Amendment No. 5, the Plan provided that Bonus Plan benefits forfeited by retired director participants would be re-allocated among the remaining director participants pro rata. Nevertheless, under Amendment No. 5, such forfeited Bonus Plan benefits in the estimated amount of $1,137,108 have been removed from the pool and returned to the Company. |
| ● | Waiver of plan benefits by directors: Director participants agreed to waive all Plan benefits in exchange for 91,628 shares issuable under the Stock Plan (defined and described below), which received shareholder approval on October 12, 2023. All benefits so waived by the director participants were deemed void and not reallocated to any other participants in the Plan. |
| ● | Bonus rate: Bonus rate on property sale proceeds was modified for employees to 4.12% on up to $50,985,000 of net proceeds (net of commissions) and 6.72% for incremental net sales above $50,985,000 |
| ● | Delayed vesting: An employee participant will only vest in Plan benefits triggered by property sales if he or she remains continuously employed through both the date of closing and the date of the Board’s irrevocable determination of a shareholder distribution; if employment terminates by death, disability or voluntary termination following substantial reduction in compensation (assuming no “cause” grounds for involuntary termination), however, the employee participant remains entitled to benefits only with respect to any property sales occurring within three years and yielding an internal rate of return of at least 4% (IRR ceases to apply to periods beginning after the property is under contract) |
| ● | Benefits generally not payable until shareholders paid: Benefits are not payable until liquidating cash distributions are paid to shareholders, except that employee participants will receive early payments if the cumulative amounts credited to the bonus pool bookkeeping account for employee participants equals or exceeds $500,000. |
| ● | Early sale incentive: If any property is sold on or before June 30, 2024, the bonus pool for employee participants will be funded with an additional 1% of net sale price. |
| ● | Removal of price floor: The price floor hurdle for the sale of properties was removed for all participants to eliminate the perception of any perverse incentive to avoid particular property sales that may not exceed the floor but which otherwise may be in the best interests of shareholders. |
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:
| Bonus Pool Percentage |
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| Board Members/Employees · Prior to Amend. No 5 · Amendment No. 5 RSP approved |
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| Board Members(a) | | 45.000% | 0.000% |
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| Board Discretionary Amount | 20.000 | %(b) | 0.000% |
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| Chief Executive Officer | | 15.474% | 44.211% |
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| Chief Operations Officer | | 13.926% | 39.789% |
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| Officer Discretionary Amount (c) | | 1.750% | 5.000% |
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| Other Employees(d) | | 3.850% | 11.000% |
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| Total | | 100.000% | 100.000% |
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| (a) | 15% (18.75%) for the Chairman and 10% (12.5%) for each of the other three remaining participant directors. Jan Loeb (appointed to the Board on July 28, 2023) is not a participant in the Plan. |
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| (b) | Amount forfeited upon departure of two directors, which would have been reallocated to the remaining directors pursuant to the Plan. |
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| (c) | The officer discretionary amount will be allocated to the officers within the discretion of the Board. |
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| (d) | Other employees will receive 0.75% prior to amendment 5 or 2.143% after amendment No. 5 and the approval of the restricted stock plan. The remaining 3.10% (prior to amendment 5) or 8.857% (after amendment 5) will be allocated to officers and employees within the discretion of the Board. |
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Under the Plan, there were no payments made during the years ended 2024 and 2023.
2024 DIRECTOR COMPENSATION
The following table shows the compensation earned by each of the Company’s non-officer directors for the year ended December 31, 2024:
| Name (a) · Fees earned or paid in cash (b) · Stock awards (c) · Option awards (d) · Non-equity incentive plan compensation (e) · Nonqualified deferred compensation earnings (f) · All other compensation (g) · Total (h) |
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| Paul L. Lamb | $120,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $120,000 |
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| Jan H. Loeb | 42,000 | | - | | - | | - | | - | | - | 42,000 |
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| Richard B. Smith | 42,000 | | - | | - | | - | | - | | - | 42,000 |
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| Ronald J. Macklin | 42,000 | | - | | - | | - | | - | | - | 42,000 |
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| Nader G.M. Salour | 42,000 | | - | | - | | - | | - | | - | 42,000 |
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| Total | $288,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $288,000 |
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Deferred Compensation Plan. ** **On December 6, 2019, the Company’s Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020. The DCP 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 December 15, 2031, 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. The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP. Each of the Directors, excluding Jan Loeb who was appointed to the Board in July 2023, elected (under the DCP) to defer 100% of their director fees for 2020, 2021, 2022, 2023, 2024 and 2025.
***Restricted Stock Award Plan.***The Gyrodyne, LLC Restricted Stock Award Plan (the “Stock Plan”) was approved by the Board on September 5, 2023 and by the shareholders of the Company on October 12, 2023 and became effective on October 12, 2023. Under the Stock Plan, the Company issued to the former director participants in the Retention Bonus Plan (the “Bonus Plan”), in exchange for the waiver and forfeiture of their Bonus Plan benefits, an aggregate of 91,628 Gyrodyne shares, subject to vesting, effective November 14, 2023.
| ● | Purpose: The purpose of adoption of the Stock Plan was to incentivize the former director participants in the Bonus Plan to exchange their interests in the Bonus Plan for shares in the Company issuable under the Stock Plan, which would allow for compensation plan separation between directors and employees and better alignment of interests between director participants and shareholders. |
| ● | Eligibility: Directors of the Company who were participants in the Bonus Plan are eligible to receive grants under the Stock Plan. The eligible directors were Paul Lamb, Ronald Macklin, Nader Salour and Richard Smith. All such individuals agreed to exchange their Bonus Plan benefits for shares under the Stock Plan, subject to shareholder approval of the Stock Plan. Jan Loeb was not a participant in the Bonus Plan and was not eligible to participate in the Stock Plan. |
| ● | Maximum Shares: The total number of shares that were authorized for issuance under the Stock Plan is 91,628 shares, or approximately 5.8% of the common shares outstanding at the effective time of the Stock Plan after giving effect to the issuance of the Stock Plan shares. All 91,628 Stock Plan shares were issued effective November 14, 2023 to Stock Plan participants. There are no remaining shares issuable in the Stock Plan. |
| ● | Administration: Pursuant to the terms of the Stock Plan, the Stock Plan is administered and interpreted by a committee consisting of either (i) the Board, or (ii) the President and at least two other directors appointed by the Board. The committee has full power and authority to administer and interpret the Stock Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Stock Plan and for the conduct of its business as it deems necessary or advisable, to waive requirements relating to formalities or other matters that do not modify the substance of rights of participants or constitute a material amendment of the Stock Plan, to correct any defect or supply any omission of the Stock Plan or any grant document and to reconcile any inconsistencies in the Stock Plan or any grant document. |
| ● | Restricted Stock: Incentives under the Stock Plan consisted of grants of restricted stock. No shares issued under the Stock Plan, or any interest therein, are transferrable by a participant, whether voluntarily or involuntarily, unless and until a liquidating distribution is made to the shareholders, except by will or by the laws of descent or distribution, and may not be subject to any voluntary or involuntary pledge, assignment, alienation, attachment, or similar encumbrance or transfer. All shares issued in connection with a grant will be subject to the terms, conditions, and restrictions set forth in the Company’s articles of organization, amended and restated limited liability company agreement, or other governing documents of the Company, as amended. |
| ● | Vesting: Vesting of shares issued under the Stock Plan occurs (i) in equal one-third tranches on each of the first three anniversaries of the grant date, and (ii) at such time as a liquidating distribution is made to the shareholders of the Company, subject to acceleration upon a liquidating distribution. Unvested Stock Plan shares will be forfeited by a participant if such participant is no longer serving on the Board at or prior to such time that liquidating distributions are paid to the shareholders other than as a result of death, disability or failure to be reelected. |
| ● | Amendments: The Board may amend, suspend or terminate the Stock Plan at any time, in its discretion, except that shareholder approval is required for any amendment that increases the number of shares available for grant, accelerates vesting or results in a material increase in benefits or a change in eligibility requirements. |
| Board Member | Shares of Restricted Stock |
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| Paul Lamb | 30,542 |
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| Ronald Macklin | 20,362 |
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| Nader Salour | 20,362 |
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| Richard Smith | 20,362 |
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| Total | 91,628 |
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