UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential For Use of the Commission Only
(as Permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-12
THE INTERGROUP CORPORATION
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(Name of Registrant as Specified In Its Charter)
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THE INTERGROUP CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
___________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 2005
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, 2004, will be held in the Luxe Summit Hotel Bel-Air, 11461
Sunset Boulevard, Los Angeles, California 90049 on February 23, 2005 at 2:30
P.M. for the following purposes:
(1) to elect two Class B Directors to serve until the fiscal 2007
Annual Meeting and until their successors shall have been duly
elected and qualified;
(2) to ratify the retention of PricewaterhouseCoopers LLP as independent
auditors for the Company for the fiscal year ending June 30,
2005; and
(3) to transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 12, 2005
as the record date for determining the shareholders having the right to vote at
the meeting or any adjournments thereof.
Your proxy is important whether you own a few or many shares. Please
complete, sign, date and promptly return the enclosed proxy in the self-
addressed, postage-paid envelope provided. Return the proxy even if you plan
to attend the meeting. You may always revoke your proxy and vote in person.
Dated: January 20, 2005
By Order of the Board of Directors,
/S/ Gary N. Jacobs
Gary N. Jacobs
Secretary
THE INTERGROUP CORPORATION
820 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 889-2500
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PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 23, 2005
The Board of Directors of The InterGroup Corporation ("InterGroup" or the
"Company") is soliciting proxies in the form enclosed with this statement in
connection with its fiscal 2004 Annual Meeting of Shareholders to be held on
February 23, 2005 or at any adjournments thereof. Only shareholders of record
at the close of business on January 12, 2005 are entitled to notice of, and to
vote at, the Annual Meeting.
Each shareholder is entitled to cast, in person or by proxy, one vote for each
share held of record at the close of business on January 12, 2005. As of
January 12, 2005 there were outstanding 2,431,186 shares of common stock, par
value $.01 per share (the "Common Stock"), the only outstanding voting security
of the Company. Of the total 2,431,186 shares outstanding, a majority, or
1,215,594 voting shares will constitute a quorum for the transaction of
business at the meeting. The affirmative vote of the holders of the majority
of the shares of the Common Stock present and represented at the meeting and
entitled to vote is required to elect directors and ratify the selection of the
Company's independent auditors.
The proxies named in the accompanying Form of Proxy will vote the shares
represented thereby if the proxy appears to be valid on its face, and where
specification is indicated as provided in such proxy, the shares represented
will be voted in accordance with such specification. If no specification is
made, the shares represented by the proxies will be voted (1) to elect two
Board nominees for Class B Directors for a three-year term expiring at the
fiscal 2007 Annual Meeting of Shareholders; and (2) for the ratification of the
retention of PricewaterhouseCoopers LLP as the Company's independent auditors
for the fiscal year ending June 30, 2005.
If you give us a proxy, you can revoke it at any time before it is used. To
revoke it, you may file a written notice revoking it with the Secretary of the
Company, execute a proxy with a later date or attend the meeting and vote in
person.
This Proxy Statement and the accompanying Form of Proxy are first being sent to
shareholders on or about January 26, 2005. In addition to mailing this
material to shareholders, the Company has asked banks and brokers to forward
copies to persons for whom they hold stock of the Company and to request
authority for the execution of proxies. The Company will reimburse banks and
brokers for their reasonable out-of-pocket expenses in doing so. Officers of
the Company may, without being additionally compensated, solicit proxies by
mail, telephone, telegram or personal contact. All proxy soliciting expenses
will be paid by the Company. The Company does not expect to employ anyone else
to assist in the solicitation of proxies.
1
PROPOSAL I
Election of Class B Directors
The Company's Certificate of Incorporation provides that the Board of Directors
shall consist of not more than nine nor less than five members. The exact
number of Directors, presently six, 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 nor more than three members. Each
Director is elected to serve for a three-year term, and until the election and
qualification of his or her successor. When vacancies on the Board occur, due
to resignation or otherwise, the Directors then in office may continue to
exercise the powers of the Directors and a majority of such directors may
select a new Director to fill the vacancy. Any Director may resign at any
time. Any Director may be removed by the vote of, or written consent of, the
holders of a majority of the shares of Common Stock outstanding at a special
meeting called for the purpose of removal or to ratify the recommendation of a
majority of the Directors that such Director be removed.
The term of the Class B Directors expires at the fiscal 2004 Annual Meeting to
be held on February 23, 2005. The Board proposes Gary N. Jacobs and William J.
Nance as Class B Directors to serve until the fiscal 2007 Annual Meeting and
until the election and qualification of their successors. The Board of
Directors has been informed that the nominees have consented to being named as
nominees and are willing to serve as Directors if elected. However, if any
nominee should be unable, or declines to serve, it is intended that the proxies
will be voted for such other person as the proxies shall, in their discretion,
designate. Unless otherwise directed in the accompanying Proxy, the person's
name therein will vote FOR the election of this nominee. Election requires the
affirmative vote of a majority of the shares represented and voted at the
Annual Meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company:
Position with
Name the Company Age Term to Expire
------------------ ------------------ --- -----------------
Class A Directors:
John V. Winfield Chairman of the Board; 58 Fiscal 2006 Annual Meeting
(1)(4)(6)(7) President and Chief
Executive Officer
Josef A.
Grunwald(2)(3)(7) Director and Vice 56 Fiscal 2006 Annual Meeting
Chairman of the Board
Class B Directors:
Gary N. Jacobs
(1)(6)(7) Secretary; Director 59 Fiscal 2004 Annual Meeting
William J. Nance (1)
(2)(3)(4)(6)(7) Director 60 Fiscal 2004 Annual Meeting
Class C Directors:
Mildred Bond
Roxborough(2)(5) Director 77 Fiscal 2005 Annual Meeting
John C. Love Director 64 Fiscal 2005 Annual Meeting
(3)(4)(5)
Other Executive
Officers:
David C. Gonzalez Vice President 37 N/A
Real Estate
2
David T. Nguyen Treasurer and 31 N/A
Controller
Michael G. Zybala Assistant Secretary 52 N/A
------------------
(1) Member of the Executive Committee
(2) Member of the Administrative and Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Real Estate Investment Committee
(5) Member of the Nominating Committee
(6) Member of the Securities Investment Committee
(7) Member of the Special Strategic Options Committee
Business Experience:
The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as follows:
John V. Winfield -- Mr. Winfield was first appointed to the Board in 1982. He
currently serves as the Company's Chairman of the Board, President and Chief
Executive Officer, having first been appointed as such in 1987. Mr. Winfield
also serves as President, Chairman and Chief Executive Officer of Santa Fe
Financial Corporation ("Santa Fe") and Portsmouth Square, Inc. ("Portsmouth")
both public companies.
Josef A. Grunwald -- Mr. Grunwald is an industrial, commercial and residential
real estate developer. He serves as Chairman of PDG N.V. (Belgium), a hotel
management company, and President of I.B.E. Services S.A. (Belgium), an
international trading company. Mr. Grunwald was first elected to the Board in
1987 and named Vice Chairman on January 30, 2002. Mr. Grunwald is also a
Director of Portsmouth.
William J. Nance -- Mr. Nance is a Certified Public Accountant and private
consultant to the real estate and banking industries. He is also President of
Century Plaza Printers, Inc. Mr. Nance was first elected to the Board in 1984.
He served as the Company's Chief Financial Officer from 1987 to 1990 and as
Treasurer from 1987 to June 2002. Mr. Nance is also a Director of Santa Fe and
Portsmouth.
Mildred Bond Roxborough -- Ms. Roxborough was Director of Development and
Special Programs of the National Association for the Advancement of Colored
People (NAACP) from 1986 to 1997. She also served as Vice Chairman of the Board
of Directors of America's Charities Federation, Chairman of its Membership and
Personnel Committees and member of its Long Range Planning Committee; and
Member of the Board of Directors of Morningside Health and Retirement Service
and Member of Personnel Committee of Morningside Heights Housing Corporation.
Since 1997 Ms. Roxborough has served as a consultant to the NAACP. Ms.
Roxborough was first appointed to the Company's Board in 1984 and served as
Vice Chairman from 1987 through 1994.
Gary N. Jacobs -- Mr. Jacobs was appointed to the Board and as Secretary in
1998. Mr. Jacobs is Executive Vice President, General Counsel, Secretary and a
Director of MGM MIRAGE (NYSE: MGG) and Of Counsel to the law firm of
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP. Through May
31, 2000, he was a partner of said firm and the head of the corporate
department.
John C. Love -- Mr. Love was appointed to the Board in 1998. Mr. Love is an
international hospitality and tourism consultant and a hotel broker. He was
formerly a partner in the national CPA and consulting firm of Pannell Kerr
Forster. He is Chairman Emeritus of the Board of Trustees of Golden Gate
University in San Francisco. Mr. Love is also a Director of Santa Fe and
Portsmouth.
David C. Gonzalez -- Mr. Gonzalez was appointed Vice President Real Estate of
the Company on January 31, 2001. Over the past 14 years, Mr. Gonzalez has
served in numerous capacities with the Company, including Controller and
Director of Real Estate.
3
David T. Nguyen - Mr. Nguyen was appointed as Treasurer of the Company on
February 26, 2003. Mr. Nguyen also serves as Treasurer of Santa Fe and
Portsmouth, having been appointed to those positions on February 27, 2003.
Mr. Nguyen is a Certified Public Accountant and, from 1995 to 1999, was
employed by PricewaterhouseCoopers LLP where he was a Senior Accountant
specializing in real estate. Mr. Nguyen served as the Company's Controller
from 1999 to 2001 and from 2003 to the present.
Michael G. Zybala -- Mr. Zybala was appointed Vice President Operations and
Assistant Secretary of the Company on January 27, 1999 and served as Vice
President Operations until July 15, 2002. Mr. Zybala is an attorney at law and
has served as a special legal consultant to the Company. Mr. Zybala is also
the Vice President and Secretary of Santa Fe and Portsmouth and has served as
their General Counsel since 1995. Mr. Zybala has provided legal services to
Santa Fe and Portsmouth since 1978.
Family Relationships and Involvement in Certain Legal Proceedings: There are
no family relationships among directors, executive officers, or persons
nominated or chosen by the Company to become directors or executive officers,
nor was anyone involved in any legal proceeding requiring disclosure.
BOARD AND COMMITTEE INFORMATION
Board of Directors:
The Board of Directors of InterGroup is comprised of six members. With the
exception of Mr. Winfield, all of the directors meet the standards for
"independence" set forth in the applicable rules of the Securities and Exchange
Commission ("SEC") and The Nasdaq Stock Market, Inc. ("Nasdaq"). The Board of
Directors held six meetings during the 2004 Fiscal Year (in person,
telephonically or by written consent). No Director attended (whether in
person, telephonically, or by written consent) less than 75% of all meetings
held during the period of time he or she served as Director during the 2004
Fiscal Year.
The Board of Directors has not established a formal process for security
holders to send communications to the Board of Directors and the Board has not
deemed it necessary to establish such a procedure at this time. Historically,
almost all communications that the Company receives from security holders are
ministerial in nature and are not directed to the Board of Directors. If the
Company should receive a security holder communication directed to the Board of
Directors, or to an individual director, said communication will be relayed to
the Board of Directors or the individual director as the case may be.
The Company does not have any formal policy with regard to board members
attendance at annual meetings of shareholders but encourages each director to
attend said meetings. Five out of the Company's six directors attended the
fiscal 2003 annual meeting of shareholders.
Committees:
The Company has an Executive Committee that meets in lieu of the Board upon the
request of the Chairman of the Committee. Mr. Winfield is Chairman of the
Executive Committee. The Committee held three meetings (in person,
telephonically or by written consent) during the 2004 Fiscal Year.
The Company's Administrative and Compensation Committee is comprised of
"independent" members of the Board of Directors as independence is defined by
the applicable rules of the SEC and Nasdaq. The Committee reviews and
recommends executive salaries and any stock based compensation plans. Mr.
Nance is Chairman of the Administrative and Compensation Committee. This
committee held two meetings during the 2004 Fiscal Year. This Committee also
oversees the Company's two Stock Option Plans.
The Company has a Real Estate Investment Committee, which is chaired by Mr.
Nance. This committee held four meetings (in person, telephonically or by
written consent) during the 2004 Fiscal Year. The Real Estate Investment
Committee reviews and considers potential acquisitions and dispositions of
property.
4
The Company's Nominating Committee is comprised of two "independent" directors
as independence is defined by the applicable rules of the SEC and Nasdaq. The
Company has not established a charter for the Nominating Committee and the
Committee has no policy with regard to consideration of any director candidates
recommended by security holders. As a small business issuer whose directors
own in excess of fifty percent of the voting shares of the Company, InterGroup
has not deemed it appropriate to institute such a policy. Mr. Love is the
Chairman of the Nominating Committee. The Committee held one meeting during
the 2004 Fiscal Year.
The Company's Securities Investment Committee oversees and establishes certain
investment procedures and reports to the Board of Directors. The Committee's
Chairman is Mr. Winfield. This committee held five meetings (in person,
telephonically or by written consent) during the 2004 Fiscal Year.
The Company's Special Strategic Options Committee is chaired by Mr. Winfield.
This committee held one formal meeting during the 2004 Fiscal Year, but its
members consult with each other frequently on an informal basis. The Special
Strategic Options Committee reviews and considers the Company's strategic
options and provides guidance to accomplish its goals considering both current
and prospective investment opportunities.
The Company is a small business issuer under SEC rules. The Company's Audit
Committee is currently comprised of three members: Directors Nance
(Chairperson), Grunwald and Love, each of who meet the independence
requirements of the SEC and Nasdaq as modified or supplemented from time to
time. Directors Nance and Love also meet the Audit Committee Financial Expert
requirement as defined by the SEC and Nasdaq. The primary function of the
Audit Committee is to assist the Board of Directors in fulfilling its
responsibility of overseeing management's conduct of the financial reporting
process, the annual independent audit of the Company's financial statements,
reviewing the financial reports provided by the Company to any governmental
body or the public; the Company's system of internal controls regarding
finance, accounting, legal compliance and ethics that management and the Board
have established; and the Company's auditing, accounting and financial
processes generally. The Audit Committee is also responsible for the selection
and retention of the Company's independent auditors. The Audit Committee held
six meetings during the 2004 Fiscal Year.
The Company's Board of Directors has adopted a written charter for the Audit
Committee. A copy of that written charter, as amended, is attached as Appendix
A to this proxy statement.
5
EXECUTIVE COMPENSATION
Executive Officers Compensation
The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the named Executive Officers of
the Company who earned more than $100,000 (salary and bonus) for all services
rendered to the Company and its subsidiaries for fiscal years 2004, 2003 and
2002. There are currently no employment contracts with the Executive Officers.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------------------------------- ------------
Awards
------
Securities
Name and Principal Other Annual Underlying
Position Year Salary Bonus Compensation Options/SARs
------------------- ------ ------- ------ ------------- ------------
John V. Winfield
Chairman; President 2004 $522,000(1) $2,077,000(2) $ 52,426(3) -
and Chief Executive 2003 $437,000(1) $ 653,533(2) $786,290(3) -
Officer 2002 $500,750(1) $ - $ 80,359(3) -
David C. Gonzalez 2004 $184,902(4) $ 50,000 $ 70,579(5) -
Vice President 2003 $156,672(4) $ 20,000 - -
Real Estate 2002 $186,672(4) $ 100,000 -
David T. Nguyen 2004 $120,000(6) $ 12,000 - -
Treasurer and 2003 $ 60,000(6) $ - - -
Controller 2002 $ - $ - - -
Michael G. Zybala 2004 $ 84,000(7) $ 8,000 - -
Assistant Secretary 2003 $ 63,000(7) $ 2,600 - -
and Counsel 2002 $117,400(7) $ 4,000 - -
-------------------
(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 salary and directors fees of $251,000, $211,750 and $242,000
from those entities during fiscal years 2004, 2003 and 2002, respectively,
which amounts are included in this item.
(2) These amounts reflect performance bonuses, paid by the Company and its
subsidiary Santa Fe and Santa Fe's subsidiary, Portsmouth, based on the results
of Mr. Winfield's management of the securities portfolios of those companies
for the fiscal years ended June 30, 2004 and 2003. Of the total amount of the
bonus for fiscal 2004, $211,000 was paid by Santa Fe and $407,000 was paid by
Portsmouth. For Fiscal 2003, $242,178 was paid by Santa Fe and $411,355 was
paid by Portsmouth.
(3) For fiscal year 2003 this amount includes $722,683 in forgiveness of debt
on one half of the principal balance and accrued interest on a promissory note
due the Company. Amounts also include an auto allowance and compensation for a
portion of the salary of an assistant. The auto allowance was $14,926, $33,607
and $33,607 during fiscal years 2004, 2003 and 2002, respectively. The amount
of compensation related to the assistant was approximately $37,500, $30,000 and
$46,752 during fiscal years 2004, 2003 and 2002, respectively. During fiscal
2004, 2003 and 2002, the Company also paid annual premiums in the amount of
$42,500 for a split dollar whole life insurance policy owned by, and the
beneficiary of which is, a trust for the benefit of Mr. Winfield's family.
6
The Company has a secured right to receive, from any proceeds of the policy,
reimbursement of all premiums paid prior to any payment to the beneficiary.
During fiscal years 2004, 2003 and 2002 Santa Fe and Portsmouth also paid
annual premiums on split dollar policies in the total amount of $42,500.
(4) Includes $4,902 for an auto lease for fiscal 2004 and $17,922 for an auto
lease in fiscal 2003 and 2002.
(5) Amount shown reflects cost of automobile purchased by the Company for Mr.
Gonzalez.
(6) Mr. Nguyen rejoined the Company in December 2002. His salary and bonuses
are allocated approximately 50% to the Company and 50% to Santa Fe and
Portsmouth.
(7) Mr. Zybala also served as Vice President Operations from in January 1999 to
July 15, 2002. His salary and bonuses are allocated approximately 25% to the
Company and 75% to Santa Fe and Portsmouth.
On July 18, 2003, the disinterested members of the respective Boards of
Directors of the Company's subsidiary, Santa Fe and Santa Fe's subsidiary,
Portsmouth, established a performance based compensation program for the
Company's CEO, John V. Winfield, to keep and retain his services as a direct
and active manager of the securities portfolios of those companies. On January
12, 2004, the disinterested members of the Securities Investment Committee of
InterGroup also established a performance based compensation program for Mr.
Winfield, which was ratified by the Board of Directors. The Company's previous
experience and results with outside money managers was not acceptable.
Pursuant to the criteria established the Board of Directors, Mr. Winfield is
entitled to performance compensation for his management of the securities
portfolios of the Company and its subsidiaries equal to 20% of all net
investment gains generated in excess of an annual return equal to the Prime
Rate of Interest (as published by the Wall Street Journal) plus 2%.
Compensation amounts are earned, calculated and paid quarterly based on the
results of the Company's investment portfolio for that quarter. Should the
companies have a net investment loss during any quarter, Mr. Winfield would not
be entitled to any further performance-based compensation until any such
investment losses are recouped by the Company. This performance based
compensation program may be modified or terminated at the discretion of the
respective Boards of Directors.
Internal Revenue Code Limitations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that, in the case of a publicly held corporation, the corporation is
not generally allowed to deduct remuneration paid to its chief executive
officer and certain other highly compensated officers to the extent that such
remuneration exceeds $1,000,000 for the taxable year. Certain remuneration,
however, is not subject to disallowance, including compensation paid on a
commission basis and, if certain requirements prescribed by the Code are
satisfied, other performance based compensation. Since InterGroup, Santa Fe
and Portsmouth are each public companies, the $1,000,000 limitation applies
separately to the compensation paid by each entity. For fiscal 2003 and 2002
no compensation paid by the Company to its CEO or other executive officers was
subject the deduction disallowance prescribed by Section 162(m) of the Code.
For fiscal 2004, approximately $798,700 could be subject to disallowance.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The Company did not have any individual grants of stock options or Stock
Appreciation Rights ("SARs") during the fiscal year ended June 30, 2004 to any
named executive officer.
7
AGGREGATE OPTIONS/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table contains information concerning each exercise of stock
options (or tandem SARs) and freestanding SARs during the last completed fiscal
year by each of the named executive officers and the fiscal year-end value of
unexercised options and SARs (adjusted for March 31, 2003 stock split):
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options/SARs as of In-the-Money Options/
Name Exercise (#) Realized ($) June 30, 2004 at June 30, 2004
---- ------------ ----------- ----------------------- --------------------
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- ------------------------
John V.
Winfield - $ - 225,000/0 $861,750/0(1)
David C.
Gonzalez - $ - 3,000/12,000 $ 0/0(1)
--------------
(1) Based on the closing price of the Company's Common Stock on June 30, 2004
of $11.75 per share.
1998 Stock Option Plan for Non-Employee Directors
On December 8, 1998, the Board of Directors of the Company adopted, subject to
stockholder approval and ratification, a 1998 Stock Option Plan for Non-
employee Directors (the "Plan"). The stockholders ratified that Plan on
January 27, 1999.
The stock to be offered under the Plan shall be shares of the Company's Common
Stock, par value $.01 per share, which may be unissued shares or treasury
shares. Subject to certain adjustments upon changes in capitalization, the
aggregate number of shares to be delivered upon exercise of all options granted
under the Plan shall not exceed 150,000 shares (adjusted for March 31, 2003
stock split). The Plan shall terminate on the earliest to occur of (i) the
dates when all of the Common Stock available under the Plan shall have been
acquired through the exercise of options granted under the Plan; (ii) 10 years
after the date of adoption of the Plan by the Board; or (iii) such other date
that the Board may determine.
Pursuant to the Plan, each non-employee director as of the adoption date of the
Plan shall be granted on the date thereof: (i) if he or she became a non-
employee director prior to January 1, 1998, an option to purchase 8,000 shares
of Common Stock; and (ii) if he or she became a non-employee director on or
after January 1, 1998, an option to purchase 4,000 shares of Common Stock.
Each new non-employee director who is elected to the Board shall automatically
be granted an option to purchase 4,000 shares of Common Stock upon the initial
date of election to the Board. On each July 1 following the adoption date,
each non-employee director shall be granted an option to purchase 3,000 shares
of Common Stock (adjusted for stock split) provided he or she holds such
position on that date and the number of Common Shares available for grant under
the Plan is sufficient to permit such automatic grant.
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at the
time of the grant of the option. The term of the option shall be for ten
years. Options granted to any non-employee director will not vest 100% until
such person has been a member of the Board for four (4) years or more. Non-
employee directors who have been a member of Board less than four (4) years,
shall be vested with respect to 20% of the options on the date of grant and 20%
on each anniversary of such person having become a member of the Board,
provided that the optionee is on each such date serving as a member of the
Board or as an employee or consultant to the Company.
8
Pursuant to the Plan, the following non-employee directors of the Company were
granted options during fiscal 2004 to purchase 3,000 shares each of the Common
Stock of the Company: Josef A. Grunwald; William J. Nance; Mildred Bond
Roxborough; Gary N. Jacobs; and John C. Love. The exercise price for the
options is $9.52 per share, which was the closing price (adjusted for stock
split) of the Company's Common Stock on the Nasdaq National Market System as of
the date of grant on July 1, 2003.
1998 Stock Option Plan for Selected Key Officers, Employees and Consultants
On December 8, 1998, the Board of Directors of the Company adopted, subject to
shareholder approval and ratification, a 1998 Stock Option Plan for selected
key officers, employees and consultants (the "Key Employee Plan"). The Key
Employee Plan was ratified by the stockholders on January 27, 1999.
The stock to be offered under the Key Employee Plan shall be shares of the
Company's Common Stock, par value $.01 per share, which may be unissued shares
or treasury shares. Subject to certain adjustments upon changes in
capitalization, the aggregate number of shares to be delivered upon exercise of
all options granted under the Key Employee Plan shall not exceed 300,000 shares
(adjusted for stock split). The Key Employee Plan shall terminate on the
earliest to occur of (i) the dates when all of the Common Stock available under
the Key Employee Plan shall have been acquired through the exercise of options
granted under the Key Employee Plan; (ii) 10 years after the date of adoption
of the Key Employee Plan by the Board; or (iii) such other date that the Board
may determine.
The Key Employee Plan is administered by the Administrative and Compensation
Committee appointed by the Board of Directors, which consists of two or more
disinterested persons within the meaning of Rule 16b-3 promulgated pursuant to
the Securities Exchange Act of 1934 (the "Exchange Act"). Persons eligible to
receive options under the Key Employee Plan shall be employees who are selected
by the Committee. In determining the Employees to whom options shall be
granted and the number of shares to be covered by each option, the Committee
shall take into account the duties of the respective employee, their present
and potential contribution to the success of the Company, their anticipated
number of years of active service remaining and other factors as it deems
relevant in connection with accomplishing the purposes of the Key Employee
Plan. An employee who has been granted an option may be granted an additional
option or options as the Committee shall so determine.
The exercise price of the option shall be determined at the time of grant and
shall not be less than 100% of the fair market value of the Common Stock at the
time of the grant of the option. The term of the option shall not exceed 10
years from the date on which the option is granted. The vesting schedule for
the options and the method or time when the option may be exercised in whole or
in part shall be determined by the Committee. However, in no event shall an
option be exercisable within six months of the date of grant in the case of an
optionee subject to Section 16(b) of the Exchange Act. Subject to certain
exceptions, the option shall terminate six months after the optionee's
employment with the Company terminates. No options to purchase shares were
granted pursuant to the Key Employee Plan during fiscal 2004.
Compensation of Directors
Each director is paid a fee of $1,500 per quarter for a total annual
compensation of $6,000. The Chairman of the Board of Directors is eligible to
receive $9,000 per annum. Directors also are eligible to receive $500 for each
committee meeting attended and $600 for each committee meeting chaired.
Members of the Audit Committee receive a fee of $500 per quarter. Directors
who are also Executive Officers do not receive any fee for attending Board or
Committee meetings. As an Executive Officer, the Company's Chairman has also
elected to forego his annual board fee. The Directors are also eligible for
grants of options to purchase shares of the Company's Common Stock pursuant to
the 1998 Stock Option Plan for Non-Employee Directors.
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.
9
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and each beneficial owner of more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. Based upon a review of the copies of such reports received by it,
or written representations from certain reporting persons that no Form 5's were
required for those persons, the Company believes that during fiscal 2004 all
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On March 31, 2003, the Company effectuated a three-for-two stock split of its
Common Stock in the form of a 50% stock dividend. Any resulting fractional
shares were paid in cash.
The following table sets forth, as of January 12, 2005, certain information
with respect to the beneficial ownership of Common Stock of the Company
(adjusted for stock split) owned by (i) those persons or groups known by the
Company to own more than five percent of the outstanding shares of Common
Stock, (ii) each Director and Executive Officer, and (iii) all Directors and
Executive Officers as a group.
Name and Address of Amount and Nature
Beneficial Owner (1) of Beneficial Owner(2) Percentage(3)
-------------------- ---------------------- -------------
John V. Winfield 1,613,907(4) 50.1%
Josef A. Grunwald 139,567(3) 5.7%
William J. Nance 75,297(3) 3.1%
Mildred Bond Roxborough 33,525(3) 1.4%
Gary N. Jacobs 27,375(3)(5) 1.1%
John C. Love 24,000(3) *
David C. Gonzalez 18,750(6) *
Michael G. Zybala 0 *
David T. Nguyen 0 *
All Directors and
Executive Officers as a
Group (9 persons) 1,932,421 69.1%
------------------
* Ownership does not exceed 1%.
(1) Unless otherwise indicated, the address for the persons listed is
820 Moraga Drive, Los Angeles, CA 90049.
(2) Unless otherwise indicated and subject to applicable community property
laws, each person has sole voting and investment power with respect to the
shares beneficially owned.
10
(3) Percentages are calculated on the basis of 2,431,186 shares of Common Stock
outstanding at January 12, 2005, plus any securities that person has the right
to acquire within 60 days pursuant to options, warrants, conversion privileges
or other rights. The following options are included in director's shares:
Josef A. Grunwald-30,000; William J. Nance-30,000; Mildred Bond Roxborough-
30,000; Gary N. Jacobs-24,000; John C. Love-24,000.
(4) Includes 225,000 shares of which Mr. Winfield has the right to acquire
pursuant to options
(5) Other than his options, all shares of Mr. Jacobs are held by the Gary and
Robin Jacobs Family Trust.
(6) Includes 3,000 shares of which Mr. Gonzalez has the right to acquire
pursuant to options.
As of January 12, 2005, InterGroup's Common Stock was held by 563 registered
shareholders and approximately 1500 beneficial owners.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 4, 1998, the Administrative and 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 2004 and 2003, the Company paid annual premiums in the amount of
approximately $42,500 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
approximately 4.0% interest in the outstanding shares of the Santa Fe common
stock.
In May 1996, the Company's Chairman and President exercised options to purchase
187,500 shares of Common Stock at a price of $7.67 per share through a full
recourse note in the principal amount of $1,437,500 due to the Company on
demand with an original due date of May 16, 2001. Interest on the note was at
floating rate at the lower of 10% or the prime rate with interest payable
quarterly. On May 2, 2001, the Company extended the due date to May 16, 2003.
On May 16, 2003, the Chairman settled his related party promissory note by
making a cash payment to the Company in the amount of $722,683.50, which was
equal to one half of the principal and accrued interest due on the note. The
balance of the obligation was satisfied through the forgiveness of debt. The
transaction was approved by the disinterested members of the Company's Board of
Directors and by its Audit Committee. The amounts due on the note had been
reflected as a reduction in shareholders' equity on the Company's balance
sheet. During the fiscal year ended June 30, 2003, the Chairman of the Company
made interest payments of approximately $55,500 on the note.
As Chairman of the Securities Investment Committee, the Company's President and
Chief Executive officer, John V. Winfield, oversees the investment activity of
the Company in public and private markets pursuant to authority granted by the
Board of Directors. Mr. Winfield also serves as Chief Executive Officer and
Chairman of Santa Fe and Portsmouth and oversees the investment activity of
those companies. Depending on certain market conditions and various risk
factors, the Chief Executive Officer, his family, Santa Fe and Portsmouth may,
at times, invest in the same companies in which the Company invests. The
Company encourages such investments because it places personal resources of the
Chief Executive Officer and his family members, and the resources of Santa Fe
and Portsmouth, at risk in connection with investment decisions made on behalf
of the Company. Under the direction of the Securities Investment Committee,
the Company has instituted certain modifications to its procedures to reduce
the potential for conflicts of interest.
The Company, its subsidiary Santa Fe and Santa Fe's subsidiary, Portsmouth,
have established performance based compensation programs for Mr. Winfield's
management of the securities portfolios of those companies. For the fiscal
years ended June 30, 2004 and 2003, Mr. Winfield received, in the aggregate,
performance based compensation in the amounts of $2,077,000 and $653,533,
respectively. Of the total amount of the bonus for fiscal
11
2004, $211,000 was paid by Santa Fe and $407,000 was paid by Portsmouth. For
fiscal 2003, $242,178 was paid by Santa Fe and $411,355 was paid by Portsmouth.
The performance based compensation was approved by the disinterested members of
the respective Boards of Directors of the Company and its subsidiaries.
Gary N. Jacobs, a Director of the Company, is Of Counsel to the law firm of
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP. Through May
31, 2000 he was a senior partner of said firm, which provided legal services to
the Company during the years ended June 30, 2004 and 2003. During the year
ended June 30, 2003, the Company made payments of approximately $689,000 to
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP. For fiscal
2004, approximately $38,000 in such fees were incurred.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF GARY N. JACOBS AND
WILLIAM J. NANCE AS CLASS B DIRECTORS OF THE COMPANY.
PROPOSAL II
Ratification of Appointment of Independent Auditors
The Audit Committee of the Board of Directors has selected the firm of
PricewaterhouseCoopers LLP, certified public accountants, to continue as the
Company's independent auditors for the fiscal year ending June 30, 2005 and
recommends to the shareholders that they vote for the ratification of this
selection. Ratification requires the affirmative vote of a majority of the
shares represented and voted at the Annual Meeting. The Board expects that
representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to respond to appropriate questions from Shareholders, and the Board
will provide these representatives with an opportunity to make a statement if
they desire 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 OF
1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY REFERENCE IN ANY
DOCUMENT SO FILED.
AUDIT COMMITTEE REPORT
The Audit Committee's responsibilities are described in a written charter
adopted by the Board of Directors, which is attached as Appendix A to this
Proxy Statement. The Audit Committee primary duties and responsibilities are
to: serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; appoint and approve
the compensation of the Company's independent auditors; review and appraise the
audit efforts of the Company's independent auditors; and provide an open avenue
of communications among the independent auditors, financial and senior
management, and the Board of Directors. During fiscal year ended June 30,
2004, the Company retained its independent auditors, PricewaterhouseCoopers
LLP, to provide audit and audit related services. There were no fees paid for
non-audit services.
The Audit Committee reviewed and discussed the audited financial statements
with management and PricewaterhouseCoopers LLP and management represented to
the Audit Committee that the consolidated financial statements were prepared in
accordance with generally accepted accounting principals. The discussions with
PricewaterhouseCoopers LLP also included the matters required by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), as amended by
SAS No. 90 with respect to quarterly financial statements. The Audit Committee
has also received the written disclosures and the letter from
PricewaterhouseCoopers LLP regarding its independence as required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), which was discussed with PricewaterhouseCoopers LLP.
12
Based on the Audit Committee's review of the audited financial statements, and
the review and discussions with management and PricewaterhouseCoopers LLP
referred to above, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2004 for filing
with the Securities and Exchange Commission.
THE AUDIT COMMITTEE:
WILLIAM J. NANCE, CHAIRPERSON
JOHN C. LOVE
Audit Fees
The aggregate fees billed for each of the last two fiscal years ended June 30,
2004 and 2003 for professional services rendered by PricewaterhouseCoopers LLP,
the principal auditor for the audit of the Company's annual financial
statements and review of financial statements included in the Company's Form
10-QSB or services normally provided by the auditor in connection with
statutory and regulatory filings or engagements for those fiscal years, were as
follows:
Fiscal Year
-------------------------
2004 2003
-------- --------
Audit Fees $207,000 $183,000
Audit Related Fees - -
Tax Fees - -
All Other Fees - -
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 auditor, subject to any de minimus exceptions that
may be set for non-audit services described in Section 10A(i)(1)(B) of the
Exchange Act which are approved by the Committee prior to the completion of the
audit. The Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to
grant pre-approvals of audit and permitted non-audit services, provided that
decisions of such subcommittee to grant pre-approvals shall be presented to the
full Committee at its next scheduled meeting.
All of the services described herein were approved by the Audit Committee
pursuant to its pre-approval policies.
None of the hours expended on the principal auditor's engagement to audit the
Company's financial statements for the most recent fiscal year were attributed
to work performed by persons other than the principal auditor's full-time
permanent employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT AUDITORS FOR THE
COMPANY.
13
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,
other than the approval of the minutes of the last shareholders' meeting, which
action will not amount to ratification of the actions taken at that meeting.
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 2005 Annual Meeting of Shareholders
will be held on or around February 22, 2006. Any shareholder proposals
intended to be considered for inclusion in the proxy statement for presentation
at the fiscal 2005 Annual Meeting must be received by the Company no later than
October 22, 2005. The proposal must be in accordance with the provisions of
Rule 14a-8 promulgated by the Securities and Exchange Commission under the
Securities Act of 1934. It is suggested that the proposal be submitted by
certified mail - return receipt requested.
FORM 10-KSB and ANNUAL REPORT
The Annual Report to Shareholders for the 2004 fiscal year accompanies this
proxy statement, but is not deemed a part of the proxy solicitation material.
A copy of the Company's Form 10-KSB for the fiscal year ended June 30, 2004, as
required to be filed with the Securities and Exchange Commission, excluding
exhibits, will be mailed to shareholders without charge upon written request
to: John V. Winfield, President, The InterGroup Corporation, 820 Moraga Drive,
Los Angeles, CA 90049. Such requests must set forth a good-faith
representation that the requesting party was either a holder of record or
beneficial owner of the common stock of the Company on January 12, 2005. The
Company's Form 10-KSB and other public filings are also available through the
Securities and Exchange Commission's world-wide-web site (http://www.sec.gov).
By Resolution of the Board of
Directors
THE INTERGROUP CORPORATION
Gary N. Jacobs
Secretary
Dated: Los Angeles, California
January 20, 2005
14
APPENDIX A
THE INTERGROUP CORPORATION
AUDIT COMMITTEE CHARTER
(As Amended January 20, 2005)
Purpose:
-------
The primary purpose of the Audit Committee is to assist the Board of Directors
in fulfilling its responsibility of overseeing management's conduct of the
Company's financial reporting process, the Company's systems of internal
accounting and financial controls, and the annual independent audit of the
Company's financial statements.
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention and shall have full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and the
Committee are in place to represent the Company's shareholders, and the outside
auditor is ultimately accountable to the Board and the Committee as such
representatives of shareholders. It is the responsibility of the Committee to
maintain free and open means of communication between the Board, the outside
auditor and the financial management and internal auditors of the Company.
The Committee shall review the adequacy of this Charter on an annual basis.
Membership:
----------
The Committee shall be comprised of at least three (3) "independent" directors
that meet the composition requirements as defined by the rules of the
Securities and Exchange Commission ("SEC") and The Nasdaq Stock Market
("Nasdaq") as may be modified and supplemented from time to time. Accordingly,
all of the members of the Committee will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company;
2. Are not affiliates of the Company;
3. Do not receive any compensation from the Company other than in the capacity
as director; and
4. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will qualify as an audit
committee financial expert as defined by the Securities and Exchange
Commission.
The members of the Committee shall be elected by the Board at the annual
meeting of the Board and shall serve until their successors shall be duly
elected and qualified. Unless a Chairman of the Committee is elected by the
full Board, the members of the Committee may designate a Chairman of the
Committee by majority vote of the full Committee Membership.
Meetings:
--------
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. Minutes of each meeting of
the Committee should be recorded by the Secretary to the Committee. Approval by
a majority of the members present at a meeting at which a quorum is present
shall constitute approval by the Committee. The Committee may also act by
15
unanimous written consent without a meeting. As part of its job to foster open
communication, the Committee should meet at least annually with management and
the independent auditors in separate executive sessions to discuss any matters
that the Committee or each of these groups believe should be discussed
privately. In addition, the Committee or at least its Chairman should meet with
the independent auditors and management quarterly to review the Company's
financials consistent with #2 below. The Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
Key Responsibilities:
--------------------
The Committee's job is one of oversight, and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditor is responsible for auditing those financial statements
pursuant to professional standards. Additionally, the Committee recognizes that
financial management has more time, knowledge and detailed information about
the Company than do Committee members. Consequently, in carrying out its
oversight responsibilities, the Committee is not providing any expert or
special assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this
guide as appropriate given the circumstances.
1. The Committee shall review with management and the outside auditor the
audited financial statements to be included in the Company's Annual Report on
Form 10-KSB (or the Annual Report to Shareholders if distributed prior to the
filing of the Form 10-KSB) prior to the filing of the Form 10-KSB or, if deemed
appropriate, prior to any year-end earnings release. The Committee shall review
and consider with the outside auditors all matters required to be discussed by
Statement of Auditing Standards ("SAS") No. 61, as amended by SAS No.90, by
auditors with audit committees.
2. As a whole, or through the Committee chair, the Committee shall review
with the outside auditor the Company's interim financial results to be included
in the Company's quarterly reports to be filed with Securities and Exchange
Commission and the matters required to be discussed by SAS No. 61, as amended
by SAS No. 90 with respect to quarterly financial statements. Such review will
occur prior to the Company's filing of the Form 10-QSB or, if deemed
appropriate, prior to any quarterly earnings releases.
3. Review disclosures made to the Committee by the Company's CEO and CFO
during their certification process for the Form 10-KSB and Form 10-QSB about
any significant deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company's internal controls.
4. The Committee shall:
(a) request from the outside auditor annually a formal written
statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard No. 1;
(b) discuss with the outside auditor any disclosed relationships or
services which may impact the outside auditor's objectivity or
independence; and
(c) recommend that the Board take appropriate action in response to
the outside auditor's report to satisfy itself of the auditor's
independence.
16
5. The Committee shall have the sole authority to appoint or replace the
independent auditor (subject, if applicable, to shareholder ratification). The
Committee shall be directly responsible for the compensation and oversight of
the work of the independent auditor (including resolution of disagreements
between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work. The
independent auditor shall report directly to the Committee.
6. The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the company by its independent auditor, subject to the de minimus exceptions
for non-audit services described in Section 10A (i)(1)(B) of the Exchange Act
which are approved by the Committee prior to the completion of the audit. The
Committee may form and delegate authority to subcommittees consisting of one or
more members when appropriate, including the authority to grant preapprovals of
audit and permitted nonaudit services, provided that decisions of such
subcommittee to grant preapprovals shall be presented to the full Committee at
its next scheduled meeting.
7. Review and discuss quarterly reports from the independent auditors
on:
(a) All critical accounting policies and practices to be
used.
(b) All alternative treatments of financial information
within generally accepted accounting principles that have
been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the
treatment preferred by the independent auditor.
(c) Other material written communications between the
independent auditor and management, such as any management
letter or schedule of unadjusted differences.
8. Periodically consult with the independent auditors, out of the
presence of management, about internal controls and the fullness and accuracy
of the organization's financial statements.
9. Recommend to the Board policies for the Company's hiring of employees
or former employees of the independent auditor who participated in any capacity
in the audit of the Company.
10. Discuss with management the Company's use of "pro forma" or
"adjusted" non-GAAP information, as well as financial information and earnings
guidance provided to analysts and rating agencies. Such discussion may be done
generally (consisting of discussing the types of information to be disclosed
and the types of presentations to be made).
11. Establish regular and separate systems of reporting to the Committee
by each of management, the independent auditors, and the internal accountants
regarding any significant judgments made in management's preparation of the
financial statements, and the view of each as to appropriateness of such
judgments.
12. Following completion of the annual audit, review separately with each
of management and the independent auditors any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.
13. Review any significant disagreement among management and the
independent auditors in connection with the preparation of the financial
statements.
14. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
17
15. Establish, review, and update periodically a Code of Ethical Conduct,
and ensure that management has established a system to enforce this Code.
16. Review and approve any transactions between the Company and its
officers, directors or 5% shareholders.
17. The Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding, as determined by
the Committee, for payment of compensation to the independent auditor for the
purpose of rendering or issuing an audit report and to any advisors employed by
the Committee.
Reporting Responsibilities:
--------------------------
The Committee shall prepare the report required by the rules of the Securities
and Exchange Commission to be included in the Company's annual proxy statement.
The Committee shall prepare such other reports for the full Board of Directors
and others as it shall deem necessary to discharge its responsibilities under
this Charter.
18
FORM OF PROXY
THE INTERGROUP CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of The InterGroup Corporation to be held on February
23, 2005 at 2:30 P.M. at the Luxe Summit Hotel Bel-Air, 11461 Sunset Boulevard,
Los Angeles, California 90049 and the Proxy Statement in connection therewith
each dated January 20, 2005; (b) appoints John V. Winfield and Gary N. Jacobs,
as proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side of
this Form of Proxy, all of the shares of Common Stock of The InterGroup
Corporation held of record by the undersigned on January 12, 2005 at the Annual
Meeting of Shareholders to be held on February 23, 2005 or at any adjournment
thereof.
(Continued and to be signed on reverse side)
Annual Meeting of Shareholders Of
THE INTERGROUP CORPORATION
FEBRUARY 23, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
----------------------------------------------------------------------------
Please sign, date and return promptly in the enclosed envelope. Please mark
your vote in blue or black ink as shown here [x]
1. Election of Class B Directors
[ ] FOR ALL NOMINEES Nominees:
( ) Gary N. Jacobs
( ) William J. Nance
[ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: 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 (x).
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE THE RETENTION
OF PRICEWATERHOUSECOOPERS LLP AS
AS THE INDEPENDENT PUBLIC AUDITORS [ ] [ ] [ ]
OF THE INTERGROUP CORPORATION.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy
will be voted FOR Proposals 1, 2 and 3.
To change the address on your account, please check the box at the right
and indicate your new address in the address space above. Please note [ ]
that changes to the registered name(s) on the account may not be
submitted via this method.
Signature of Shareholder _____________________ Date: ____________
Signature of Shareholder _____________________ Date: ____________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held by jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If
signer is a partnership, please sign in partnership name by authorized
person.