CONSOLIDATED-TOMOKA LAND CO.
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2004
The undersigned hereby appoints William H. McMunn and Bruce W.
Teeters, each or either of them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent, and
to vote, as designated below, all the shares of common stock of
Consolidated-Tomoka Land Co. held of record by the undersigned on
March 1, 2004, at the annual meeting of shareholders to be held April
28, 2004, or any adjournment or postponement thereof.
Election of three Class I Directors for three-year terms ending in
2007 and one Class III Director for a two-year term ending in 2006.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to for all nominees listed
the contrary below) below
To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.
Class I. John C. Adams, Bob D. Allen, and David D. Peterson
Class III. Gerald L. DeGood
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
CONSOLIDATED-TOMOKA LAND CO.
PROXY
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 the proposal.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
signing for a corporation, or partnership, authorized person should
sign full corporation or partnership name and indicate capacity in
which they sign.
Dated
------------------------------------
Signature
--------------------------------
Signature
--------------------------------
(if held jointly)
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSE ENVELOPE.
CONSOLIDATED-TOMOKA LAND CO.
Post Office Box 10809
Daytona Beach, Florida 32120-0809
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 28, 2004
To the Shareholders:
The annual meeting of shareholders of Consolidated-Tomoka Land Co., a
Florida corporation (the "Company"), will be held at the LPGA
International Clubhouse, 1000 Champions Drive, Daytona Beach, Florida,
on Wednesday, April 28, 2004, at ten o'clock in the morning for the
following purposes:
1. To elect three directors to serve for a tree-year term
expiring at the annual meeting of shareholders to be held
in 2007 and to elect one director to serve for a two-year
term expiring at the annual meeting of shareholders to be
held in 2006.
2. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 1, 2004, are
entitled to notice of, and to participate in and vote at the meeting.
A complete list of shareholders as of the record date will be
available for shareholders' inspection at the Corporate Offices at
1530 Cornerstone Boulevard, Suite 100, Daytona Beach, Florida, for at
least ten days prior to the meeting.
By Order of the Board of Directors
/S/ Linda Crisp
----------------------------
Linda Crisp
Corporate Secretary
Daytona Beach, Florida
March 25, 2004
All shareholders are requested to date and sign the enclosed proxy and
return it promptly in the accompanying envelope. This proxy is
revocable by you at any time before it is exercised by notifying the
corporate secretary of the Company in writing or by submitting a
properly executed, later-dated proxy. Signing a proxy will not affect
your right either to attend the meeting and vote your shares in person
or to give a later proxy.
A COPY OF THE COMPANY'S MOST RECENT FORM 10-K ANNUAL REPORT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED, WITHOUT
CHARGE, TO ANY SHAREHOLDER UPON WRITTEN REQUEST DIRECTED TO THE
COMPANY'S SECRETARY, P. O. BOX 10809, DAYTONA BEACH, FLORIDA 32120-0809.
1
CONSOLIDATED-TOMOKA LAND CO.
PROXY STATEMENT
INTRODUCTION
This proxy statement and the enclosed form of proxy are being
sent to the shareholders of Consolidated-Tomoka Land Co., a Florida
corporation (the "Company"), on or about March 25, 2004, in
connection with the solicitation by the Board of Directors of the
Company of proxies to be used at the annual meeting of shareholders to
be held on Wednesday, April 28, 2004 (and at any adjournment or
adjournments thereof), for the purposes set forth in the accompanying
notice of annual meeting. Shareholders who execute proxies retain the
right to revoke them at any time before they are exercised by sending
written notice to the secretary of the Company, by submitting a
properly executed, later-dated proxy, or by attending the annual
meeting and electing to vote in person.
The cost of preparing, assembling, and mailing material in
connection with this solicitation will be borne by the Company.
At the close of business on March 1, 2004, there were 5,634,662
shares of common stock, $1 par value, of the Company outstanding.
Each holder of common stock of record on that date is entitled to one
vote for each share held by such shareholder on every matter submitted
to the meeting. The Company's Articles of Incorporation and Bylaws do
not provide for cumulative voting for the election of directors, which
is permitted but not required by Florida law.
See "Security Ownership of Certain Beneficial Owners and
Management" below for information as to the beneficial ownership of
common stock of the Company as of March 1, 2004 by each director of
the Company and by all directors and executive officers as a group.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of
Directors into three classes, as nearly equal as possible. At the
2004 annual meeting of shareholders, three Class I directors and one
Class III director are to be elected, each to hold office until the
annual meeting of shareholders to be held in 2007 and 2006,
respectively, or until their successors are elected and qualified.
It is the intention of the persons named in the accompanying form
of proxy to vote such proxy for the election as directors of the
persons named below who have been recommended to the Board of
Directors by the Corporate Governance Committee as nominees for Class
I and Class III unless authority to do so is withheld.
All nominees for election as directors are now directors. Each
nominee has indicated his willingness to serve if elected. If any
nominee should be unable to serve, which is not now anticipated, the
proxy will be voted for such other persons as shall be determined by
the persons named in the proxy in accordance with their judgment.
2
The election of Messrs. Adams, Allen, Peterson, and DeGood will
require the affirmative vote of the holders of a plurality of the
shares present or represented at the meeting. The Board of Directors
of the Company recommends a vote "for" the election of Messrs. Adams,
Allen, and Peterson as directors in Class I, and "for" the election of
Mr. DeGood as a director in Class III. Proxies solicited by the Board
will be so voted unless shareholders specify in their proxies a
contrary choice. Abstentions will be treated as shares represented at
the meeting, but not voting, so they will have no effect on the
outcome of the voting to elect directors. Broker non-votes will not
be considered as shares represented at the meeting.
Additional information concerning the nominees and the directors
appears below.
OTHER PUBLIC
NAME, COMPANIES
AGE AT JANUARY 31, 2004, CLASS AND WHERE
AND PRINCIPAL OCCUPATION DIRECTOR EXPIRATION SERVING AS A
SINCE JANUARY 1, 1998 SINCE OF TERM BOARD MEMBER
- ------------------------ --------- ---------- ------------
JOHN C. ADAMS, JR. - AGE 67(1)(2) 1977 I None
Executive vice president of Brown and Brown, 2004
Inc. (an insurance agency) since January 1999.
BOB D. ALLEN - AGE 69(1) 1990 I None
Chairman of the board since April 1998; 2004
chief executive officer of the Company
from March 1990 to April 2001; and president
of the Company from March 1990 to January 2000.
Gerald L. DeGood - Age 61(3) 2004 III Bairnco
Consultant since June 1999; partner in Arthur 2004 Corporation (a
Anderson LLP from 1974 to June 1999. designer,
manufacturer
and Seller of
engineered
materials
and
replacement
products and
services)
WILLIAM O. E. HENRY - AGE 76(3) 1977 III None
Practicing attorney and partner 2006
in law firm of Holland & Knight LLP.
ROBERT F. LLOYD - AGE 68(2) (4) 1991 II None
Chairman of the board and chief executive 2005
officer of Lloyd Buick-Cadillac Inc.
3
OTHER PUBLIC
NAME, COMPANIES
AGE AT JANUARY 31, 2004, CLASS AND WHERE
AND PRINCIPAL OCCUPATION DIRECTOR EXPIRATION SERVING AS A
SINCE JANUARY 1, 1998 SINCE OF TERM BOARD MEMBER
- ------------------------ --------- ---------- ------------
WILLIAM H. McMUNN - AGE 57(1) 1999 II None
President of the Company since January 2000 2005
and chief executive officer since April 2001;
chief operating officer of the Company from
January 2000 to April 2001; president,
Indigo Development Inc., a subsidiary of
the Company, since December 1990.
DAVID D. PETERSON - AGE 72(1)(2)(4) 1984 I None
Retired president and chief executive 2004
officer of Baker, Fentress & Company
(a publicly owned, closed-end investment company)
since June 1996.
BRUCE W. TEETERS - AGE 58 1990 II None
Senior vice president-finance and treasurer 2005
of the Company since January 1988
WILLIAM J. VOGES - AGE 49(3)(4) 2001 III None
President, chief executive officer since 1997, 2006
and general counsel from 1990 of The Root
Organization (a private investment company with
diversified holdings).
(1) Member of the Executive Committee, which held no meetings in
2003. The Executive Committee has the authority during intervals
between meetings of the Board of Directors to exercise power on
matters designated by the Board.
(2) Member of the Compensation and Stock Option Committee.
(3) Member of the Audit Committee.
(4) Member of the Corporate Governance Committee.
All members of the Board attended all of the meetings of the
Board and all committees on which they served during 2003.
Board Compensation. During 2003, the Board of Directors held
one regular and three special meetings. Each non-employee director
received a fee of $1,500 for each board meeting he attended in 2003.
Each non-employee director received, in addition to meeting fees, an
annual retainer of $15,000, payable quarterly. Mr. Allen received, as
Chairman of the Board, an annual fee of $50,000, payable quarterly,
4
in addition to receiving regular directors' fees. Members of the
Board's Executive, Compensation and Stock Option, and Corporate
Governance Committees also received $1,000 for each meeting of those
committees attended in 2003, and audit committee members received
$1,500 for each committee meeting attended. Chairmen of those
committees received $2,000 per meeting attended, except that the Audit
Committee Chairman received $2,500 for each such committee meeting he
attended.
CORPORATE GOVERNANCE AND
COMMITTEES OF THE BOARD OF DIRECTORS
The Company regularly monitors developments in the area of
corporate governance. The Company has taken steps to comply with the
Sarbanes-Oxley Act of 2002 and the recent changes to the corporate
governance and listing requirements of the American Stock Exchange.
Independent Directors
- ---------------------
A majority of the members of the Company's Board of Directors are
independent under the listing standards of the American Stock
Exchange.
The Company's independent directors intend to hold at least annually a
formal meeting, separate from management and non-independent
directors.
Audit Committee
- ---------------
The Audit Committee, which held four meetings in 2003, provides
assistance to the Board of Directors in fulfilling its oversight
responsibilities with respect to the integrity of the Company's
financial statements, the Company's compliance with legal and
regulatory requirements, the qualifications, independence and
performance of the Company's independent auditor, the Company's
systems of internal controls regarding finance and accounting
established by management and the Board, and the Company's auditing,
accounting and financial reporting processes generally. KPMG LLP, the
Company's independent auditors, reports directly to the Audit
Committee.
The Audit Committee acts under a written charter adopted by the Board
of Directors, which was amended during 2003, and is attached to this
proxy statement as Exhibit A.
All members of the Audit Committee are independent under the listing
standards of the American Stock Exchange and Rule 10A-3 promulgated
under the Securities Exchange Act of 1934, except that Mr. William O.
E. Henry is not independent under Rule 10A-3 and is resigning from the
Audit Committee effective immediately prior to the annual meeting of
shareholders on April 28, 2004.
All Audit Committee members possess the level of financial literacy
required by the listing standards of the American Stock Exchange.
5
Mr. DeGood meets the current standard of requisite financial
management expertise as required by the American Stock Exchange and is
an "audit committee financial expert" as defined by the rules adopted
by the Securities and Exchange Commission.
The Audit Committee has adopted Policies and Procedures for Complaints
and Concerns Regarding Accounting, Internal Accounting Controls, and
Auditing Matters to enable confidential and anonymous reporting to the
Audit Committee.
Compensation and Stock Option Committee
- ---------------------------------------
The Compensation and Stock Option Committee, which held one meeting in
2003, assists the Board of Directors in discharging its
responsibilities relating to the compensation of the Company's chief
executive officer and other officers, makes compensation
recommendations to management and the Board of Directors, and
administers the 2001 Stock Option Plan.
All members of the Executive Compensation Committee are independent
under the listing standards of the American Stock Exchange.
Corporate Governance Committee
- ------------------------------
The Corporate Governance Committee, which was recently formed to
perform the functions of a nominating committee and held no meetings
during 2003, recommends to the Board individuals qualified to become
members of the Board based on criteria approved by the Committee and
nominees for the Board for annual meetings of the shareholders and
recommends to the Board the corporate governance guidelines
appropriate to the Company.
All members of the Corporate Governance Committee are independent
under the listing standards of the American Stock Exchange.
The Corporate Governance Committee operates under a formal charter
that governs its duties and standards of performance. The charter is
attached to this proxy statement as Exhibit B.
Consideration of Director Nominees
- ----------------------------------
The policy of the Corporate Governance Committee is to consider
nominations from shareholders for candidates for membership on the
Board of Directors. To recommend a candidate to the Committee,
shareholders should submit the nominee's name and qualifications for
Board membership in writing to the Company's Secretary at Post Office
Box 10809, Daytona Beach, Florida 32120-0809.
The Corporate Governance Committee has established specific, minimum
qualifications that must be met by a Committee-recommended nominee.
Under these criteria, a majority of the Board should be independent
under the listing standards of the American Stock Exchange. In
addition, a nominee should demonstrate high ethical standards and
integrity in his or her personal and professional dealings and be
willing to act on and remain accountable for boardroom decisions;
6
should have the ability to provide wise, thoughtful counsel on a broad
range of issues; should possess high intelligence and wisdom and apply
it in decision making; should be financially literate; should value
board and team performance over individual performance; should be open
to other opinions and willing to listen; should approach others
assertively, responsibly and supportively and raise tough questions in
a manner that encourages open discussion; should have a history of
achievements that reflect high standards for themselves and others;
should be committed to seeking exceptional performance of the company,
both in absolute terms and relative to its peers; and should have the
ability to commit sufficient time and attention to the activities of
the Company.
The Corporate Governance Committee assesses the size and membership of
the Board and determines whether any vacancies are to be expected. In
the event of any vacancies, the Committee considers potential
candidates for director, which may come to the Committee's attention
through current Board members, shareholders, professional search firms
or other persons. In addition to the specific, minimum qualifications
described above, the Committee seeks to ensure that the Board as a
whole will possess the following specific qualities or skills:
expertise in management or oversight of financial accounting and
control; a record of making sound business decisions; cognizance of
current general management trends and "best practices;" relevant
knowledge specific to the industries in which the Company operates;
ability and willingness to motivate and require high-performance by
management; and capability of questioning, approving, and monitoring
the Company's strategic plans, providing insight and directional
focus. The Committee meets to review and report to the Board on
possible candidates for membership and annually recommends a slate of
nominees to the Board with respect to nominations for the Board at the
annual meeting of shareholders.
Mr. DeGood is the only nominee for the Board who is neither an
executive officer nor a director standing for re-election. The
nomination of Mr. De Good was recommended by Bruce W. Teeters, Sr.
Vice President and Director of the Company.
Codes of Ethics
- ---------------
The Company has adopted a Code of Ethics for Principal Executive
Officer and Senior Financial Officers, violations of which may be
reported to the Audit Committee. The Company will provide a copy of
this code to any person without charge upon request. Any such request
should be made in writing to the Company's Secretary at Post Office
Box 10809, Daytona Beach, Florida 32120-0809.
The Company will adopt a Code of Business Conduct and Ethics that
includes provisions ranging from legal compliance to conflicts of
interest, at the April 28, 2004, Board of Directors' meeting. All
employees and directors are subject to this code.
Communication with the Board of Directors
- -----------------------------------------
Individuals may communicate with the Board of Directors by writing to
Bob D. Allen, Chairman of the Board, Consolidated-Tomoka Land Co.,
Post Office Box 10809, Daytona Beach, Florida 32120-0809.
7
Policy on Board Attendance at Annual Meeting of Shareholders
- ------------------------------------------------------------
The policy of the Company is to encourage members of the Board of
Directors to attend the annual meeting of shareholders. ALL directors
attended the prior year's annual meeting.
Security Ownership of
Certain Beneficial Owners and Management
The following table contains information at March 1, 2004, on the
number of shares of common stock of the Company, of which each
director and each officer named in the Summary Compensation Table set
forth elsewhere in this Proxy Statement had outright ownership, or,
alone or with others, any power to vote or dispose of the shares, or
to direct the voting or disposition of the shares by others, and the
percentage of the aggregate of such shares to all of the outstanding
shares of the Company. The table also sets forth information with
respect to all persons known by the Company to own beneficially more
than 5% of the Company's common stock as of March 1, 2004:
Power over Voting
or Disposition Aggregate
Name Sole Shared Shares Percent
- ------------------------------------------- ----------------- -----------------
Third Avenue Management LLC (1) 697,853 -- 697,853 12.4%
622 Third Avenue, 32nd Floor
New York, NY 10017
John C. Adams, Jr. 11,600 (2) -- 11,600 (2) *
Bob D. Allen 88,634 -- 88,634 1.6%
Robert F. Apgar 1,200 (3) 7,302 8,502 (3) *
Gerald L. DeGood - -- - *
William O. E. Henry 500 -- 500 *
Robert F. Lloyd 500 -- 500 *
William H. McMunn 39,314 (3) -- 39,314 (3) 1.0%
David D. Peterson 4,887 -- 4,887 *
Bruce W. Teeters 23,308 (3) 57 23,365 (3) *
William J. Voges 1,380 489(4) 1,869 *
Directors and Executive Officers
as a group (10 persons) 171,323 (3) 7,848 179,171(3) 3.2%
*Less than 1%.
(1) Registered investment adviser with offices at the above address.
Information derived from an amendment to Schedule 13G, dated
January 20, 2004, filed with the Securities and Exchange
Commission.
(2) Does not include 4,400 shares held in trust for his wife who has
sole voting and disposition power over these shares.
(3) Includes shares subject to options that are currently
exercisable within 60 days of March 1, 2004: Robert F. Apgar,
1,200 shares; William H. McMunn, 4,000 shares; Bruce W. Teeters,
1,600 shares; and executive officers as a group, 6,800 shares.
(4) Includes 200 shares held jointly with his wife, for which Mr.
Voges does not have voting power.
8
CERTAIN TRANSACTIONS
William O. E. Henry, a director of the Company, is a partner in
the law firm of Holland & Knight LLP, which served as counsel to the
Company during the fiscal year ended December 31, 2003.
EXECUTIVE COMPENSATION
The sections which follow provide extensive information
pertaining to the compensation of the executive officers of the
Company. This information is introduced in the Compensation Committee
Report on Executive Compensation set forth below, which describes the
policies and components of the Company's Compensation Program.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN AMONG
CONSOLIDATED-TOMOKA LAND CO., AMERICAN STOCK EXCHANGE INDEX,
AND REAL ESTATE INDUSTRY INDEX
The following performance graph shows a comparison of cumulative
total shareholder return from a $100 investment in the stock of the
Company over the five-year period ending December 31, 2003, with the
cumulative shareholder return of the American Stock Exchange Composite
Index and the Real Estate Industry Index (MG Industry Group). Note
that historic stock price performance is not necessarily indicative of
future price performance.
FISCAL YEAR ENDING
------------------
COMPANY/INDEX/MARKET 12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002 12/31/2003
- -------------------- ---------- ---------- ---------- ---------- ---------- ----------
CONSOLIDATED-TOMOKA LAND CO. $100.00 $ 92.46 $ 87.55 $148.32 $145.15 $248.77
AMEX MARKET VALUE $100.00 $113.40 $114.57 $105.96 $ 88.17 $106.89
PEER GROUP $100.00 $ 94.18 $ 65.36 $ 80.16 $ 68.90 $117.78
9
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of
Directors consists solely of independent, outside directors. The
Committee met once during 2003. The Committee reviews and recommends
salary adjustments for officers and key personnel with salaries in
excess of $75,000, administers the Company's 2001 Stock Option Plan,
and makes recommendations to the Board with respect to the Company's
Compensation Program for the executive officers named in the following
Summary Compensation Table. The three individuals named in the
Summary Compensation Table are the only persons earning more than
$100,000 in annual compensation who fall within the Securities and
Exchange Commission definition of executive officers.
The annual compensation program includes base pay plus an
incentive program to reward key management employees who are in a
position to make substantial contributions to the success or the
growth of the Company and its subsidiaries. The Company seeks to
provide through this program compensation opportunities that are
competitive and directly related to Company performance. All
participants in the incentive plan were approved by the Compensation
Committee. There were nine participants in the plan during 2003.
The executive officers are evaluated on performance, corporate
and individual, based on a pay-for-performance system. Corporate
performance is based on the Company's growth in earnings per share and
progress on projects and activities which will have a major effect on
future earnings. Individual performance includes implementation of
goals and objectives, strategic planning, civic involvement, and
public affairs. Base pay is designed to provide competitive rewards
for the normal duties associated with the individual's job
description. The incentive pay component is designed to stimulate
actions that contribute to improved operating and financial results.
The Summary Compensation Table shows the incentive awards (under
"Bonus" in the Table) to the named executive officers for the past
three years. For 2003, the goals for all executive officers included
an overall operating and financial performance target measured by net
income plus additional quantitative indicators. In addition to the
2003 quantified objectives, the Committee evaluated performance
against predetermined qualitative objectives in determining the amount
of incentive awards. Qualified objectives are incorporated in an
annual operating plan approved by the Board of Directors. The annual
real estate sales goal is the most significant operating item and has
the greatest effect on earnings per share. Qualitative objectives
include action which maximize real estate sales prices and sales
absorption rates, maximize returns from income properties, enhance
relations with local government staff to achieve favorable
entitlements, improve productivity and control expenses, and involve
participation in community activities.
The Summary Compensation Table shows the Options/SAR (Stock
Appreciation Right) Grants to the named executive officers for the
past three years. The exercise price of the options granted was equal
to the market value of the underlying common stock on the date of the
grant. Therefore, the value of these grants to the officers is
dependent solely upon the future growth in share value of the
10
Company's common stock. The stock appreciation right entitles the
optionee to receive a supplemental payment, which at the election of
the Committee may be paid in whole or in part in cash or in shares of
common stock equal to a portion of the spread between the exercise
price and the fair market value of the underlying shares at the time
of exercise.
The Company's CEO, Mr. McMunn, received a 4% increase in base
pay, which the committee determined was appropriate to maintain a
competitive salary structure. Mr. McMunn also received a bonus of
$160,000 for 2003 based on his performance as it relates to
improvements in the Company's earnings per share and net income, as
well as the continuing growth of the Company's business. Commercial
real estate land sales increased by 25% over the 2002 results.
Earnings per share and earnings before depreciation, amortization and
deferred taxes both increased by 42% for the year. The Company ended
the year with its largest sales backlog ever. Mr. McMunn's management
of the strategy to reinvest real estate sales proceeds into income
properties has been successful to date. He has been actively involved
with local government staff maintaining an effective working
relationship. He has been active in several community activities.
The Committee believes that the components of salary, Stock
Options/SARs, and incentive awards are fair, competitive, and in the
best interest of the Company. Specific salary and incentives are
disclosed in the Summary Compensation Table and the Options/SAR Grants
in Last Fiscal Year Table.
By the Compensation Committee: John C. Adams, Jr., Chairman; Robert
F. Lloyd; and David D. Peterson.
11
SUMMARY COMPENSATION TABLE
The following table sets forth the annual, long-term and other
compensation for the Company's Chief Executive Officer and each of the
other executive officers during the last fiscal year, as well as the
total annual compensation for each such individual for the two
previous fiscal years.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL COMPEN- OPTIONS/SAR COMPENSATION
POSITION YEAR(1) SALARY BONUS SATION(2) AWARDS (3)
- ------------------ ------ ------- ------- --------- -------------- ------------
William H. McMunn 2003 $242,190 $160,000 $ -- $20,000 $1,121
President and 2002 $234,000 $120,000 $ -- $20,000 $1,148
Chief Executive Officer 2001 $219,336 $ -- $ -- $20,000 $1,053
Bruce W. Teeters 2003 $210,312 $ 80,000 $ -- $ 8,000 $1,121
Senior Vice President 2002 $203,202 $ 60,000 $ -- $ 8,000 $1,148
Finance and Treasurer 2001 $195,387 $ -- $ -- $ 8,000 $1,053
Robert F. Apgar 2003 $140,000 $ 80,000 $ -- $ 8,000 $1,121
Senior Vice President 2002 $132,504 $ 60,000 $ -- $ 6,000 $1,148
General Counsel 2001 $125,000 $ -- $ -- $ 6,000 $1,053
(1) Fiscal year ends December 31.
(2) In this column, the aggregate amount of perquisites and other
personal benefits did not exceed the lesser of $50,000 or 10%
of the executive's salary and bonus, and the executive had no
other compensation reportable under this category.
(3) Premium for term life insurance.
12
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options granted
to executive officers named in the Summary Compensation Table during
the fiscal year ended December 31, 2003:
Individual Grants
-----------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/SARs VALUE AT ASSUMED
UNDERLYING GRANTED TO EXERCISE ANNUAL RATES OF STOCK
OPTIONS/SARs EMPLOYEES IN PRICE EXPIRATION PRICE APPRECIATION
NAME GRANTED (1) FISCAL YEAR ($/Sh) DATE FOR OPTION TERM (2)
- ------------------ ------------ ------------ ------- --------- --------------------
5% 10%
--------- --------
William H. McMunn 20,000 34.5% 20.12 01/22/13 $253,067 $641,322
Bruce W. Teeters 8,000 13.8% 20.12 01/22/13 $101,227 $256,529
Robert F. Apgar 8,000 13.8% 20.12 01/22/13 $101,227 $256,529
(1) Each of these options was granted pursuant to the 2001 Stock
Option Plan and is subject to the terms of such plan. These options
are exercisable to no more than one-fifth of the total number of
shares covered by the option during each twelve month period
commencing twelve months after the date of grant on January 22, 2003.
In addition, each of these option grants included a tandem SAR,
exercisable only to the extent that the related option is exercisable.
Upon the exercise of a tandem SAR, the holder is entitled to
receive the value of the SAR, calculated by subtracting the excess of
the fair market value of the common stock over the exercise price of
the related option from the quotient obtained by dividing such amount
by one minus the holders' personal income tax rate. The tandem SAR is
payable upon exercise in cash or common stock, at the discretion of
the stock option committee. The tandem SAR can be exercised only
until the later of the end of (a) the 90-day period following the
exercise of the related option or (b) the 10-day period beginning on
the 3rd business day after the date on which the Company releases its
official financial data for the quarter in which the related option
was exercised.
(2) Potential gains are calculated net of the exercise price but
before taxes associated with the exercise. These amounts represent
hypothetical gains that could be achieved for the options if they were
exercised at the end of the option term. The assumed 5% and 10%
rates of stock appreciation are based on appreciation from the
exercise price per share. These rates are provided in accordance with
the rules of the SEC and do not represent the Company's estimate or
projection of the Company's future common stock price. Actual gains,
if any, on stock option exercises are dependent on the Company's
future financial performance, overall stock market conditions and the
option holders' continued employment through the vesting period.
These amounts do not include the value of the options' tandem
SARs because the value of such SARs will not be determinable until the
time of exercise.
13
AGGREGATE OPTION/SAR EXERCISES DURING FISCAL YEAR 2003
AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information related to options
exercised by the named executive officers during the fiscal year ended
December 31, 2003 and the number of options at fiscal year end which
are currently exercisable.
NUMBER OF
SECURITIES NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS/SARs REALIZED OPTIONS AT DECEMBER 31, 2003(1) DECEMBER 31, 2003 (2) ($)
EXERCISED(#) ($) EXERCISABLE UNEXERCISABLE (#) EXERCISABLE UNEXERCISABLE
- ----------------- ----------- -------- ----------- ---------------- ----------- -------------
William H. McMunn
Stock Options 8,000 96,600 4,000 48,000 50,600 673,000
SARs 8,000 48,168
Bruce W. Teeters
Stock Options 3,200 34,576 1,600 19,200 20,240 269,200
SARs 3,200 16,192
Robert F. Apgar
Stock Options 2,400 25,920 1,200 16,400 15,180 227,060
SARs 2,400 9,330
(1) These amounts do not include tandem SARs.
(2) These amounts do not include the value of the options' tandem
SARs because the value of such SARs will not be determinable until the
time of exercise. The value of unexercised in-the-money options
represents the aggregate amount of the excess of $32.70, the closing
price of the Company's Common Stock on December 31, 2003, over the
exercise price of all options held on such a date.
EQUITY COMPENSATION PLANS
The following table summarizes share and exercise price information
about the Company's equity compensation plans as of December 31, 2003:
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected
Plan Category warrants and rights warrants and rights in the first column)
- ------------- ----------------------- ------------------- -----------------------
(a) (b) (c)
Equity compensation
plans approved by
security holders 152,000 $18.86 396,000
Equity compensation
plans not approved
by security holders 0 -- 0
======= ====== =======
Total 152,000 $18.86 396,000
14
DEFERRED COMPENSATION PLANS
Under the Company's Unfunded Deferred Compensation Plan,
effective July 1, 1981, fees earned by directors for service on the
Board and its committees may be deferred until the director attains
seventy years of age or ceases to be a member of the Board, whichever
occurs first. Under a similar plan effective October 25, 1982,
officers and key employees of the Company may elect to defer all or a
portion of their earnings until such time as the participant ceases
to be an officer or key employee. All sums credited to a
participating director, officer, or employee under either of these
plans may be distributed in a lump sum or in installments over not
more than ten calendar years following the end of the deferral
period. The participant will be entitled to elect the size of the
installments and the period over which they will be distributed. The
deferred compensation accrues interest annually at the average rate
of return earned by the Company on its short-term investments.
Compensation deferred pursuant to these plans during 2003, by
officers named in the compensation table above is included in the
table.
PENSION PLAN
The Company maintains a defined benefit plan for all employees
who have attained the age of 21 and completed one year of service.
Pension benefits are based primarily on years of service and the
average compensation for the five highest years during the final ten
years of employment. The benefit formula generally provides for a
life annuity benefit. The amount of the Company's contributions or
accrual on behalf of any particular participant in the pension plan
cannot readily be determined. The following table shows the
estimated annual benefit payable under the pension plan (utilizing
present levels of Social Security benefits) upon retirement to
persons in a range-of-salary and years-of-service classification:
PENSION PLAN TABLE
YEARS OF SERVICE
----------------
REMUNERATION 10 15 20 25 30 35
------------ ------- ------- ------- ------- ------- --------
$ 50,000 $ 6,362 $ 9,543 $12,724 $15,905 $ 19,086 $ 22,267
$ 75,000 $10,862 $16,293 $21,724 $27,155 $ 32,586 $ 38,017
$100,000 $15,362 $23,043 $30,724 $38,405 $ 46,086 $ 53,767
$125,000 $19,862 $29,793 $39,724 $49,655 $ 59,586 $ 69,517
$150,000 $24,362 $36,543 $48,724 $60,905 $ 73,086 $ 85,267
$160,000 $26,162 $39,243 $52,324 $65,405 $ 78,486 $ 91,567
$170,000 $27,962 $41,943 $55,924 $69,905 $ 83,886 $ 97,867
$175,000 $28,862 $43,293 $57,724 $72,155 $ 86,586 $101,017
$200,000 & Greater $33,362 $50,043 $66,724 $83,405 $100,086 $116,767
Pension Benefit is Subject to IRC Section 415 Benefit Limitation of
$160,000.
Pensionable Earnings are Subject to IRC Section 401(a)17 Salary
Limitation of $200,000.
The above benefits are not subject to Social Security or other offset amounts.
15
As of December 31, 2003, the executive officers named in the
compensation table above are expected to be credited with years of
service for benefit purposes under the amended plan as follows: Mr.
Apgar, 12 years; Mr. McMunn, 12 years; and Mr. Teeters, 23 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee, except Mr.
David D. Peterson, has ever served as an officer or employee of the
Company or any of its subsidiaries or had any relationship with the
Company requiring disclosure under applicable SEC regulations. Mr.
Peterson served as Chairman of the Board from 1987 to 1998, and was
Acting President and Chief Executive Officer from 1989 to 1990.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in fulfilling
its oversight responsibilities with respect to the integrity of the
Company's financial statements, the Company's compliance with legal
and regulatory requirements, the qualifications, independence and
performance of the Company's independent auditors, the Company's
systems of internal controls regarding finance and accounting
established by management and the Board, and the Company's auditing,
accounting and financial reporting processes generally.
Among other things, the Audit Committee contracts with the
independent auditors to audit the financial statements of the Company;
inquires as to the independence of the auditors, and obtains at least
annually the auditors' written statement describing their independent
status; meets with the independent auditors, with and without
management present, to discuss their examination, their evaluation of
the Company's internal controls, and the overall quality of the
Company's financial reporting; and investigates any matter brought to
its attention within the scope of its duties, with the power to retain
outside counsel for this purpose, as deemed necessary by the Audit
Committee.
In connection with the preparation and filing of the Company's
Annual Report on Form 10-K for the year ended December 31, 2003:
(1) The Audit Committee reviewed and discussed the audited
financial statements with management;
(2) The Audit Committee discussed with the independent auditors
the matters required to be discussed by Statement of
Auditing Standards 61; and
(3) The Audit Committee reviewed the written disclosures and
the letter from the independent auditors required by the
Independence Standards Board Standard No. 1 and discussed
with the auditors any relationships that may impact their
objectivity and independence and satisfied itself as to the
auditors' independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors of the Company that
the audited financial statements be included in the Annual Report on
Form 10-K for the year ended December 31, 2003.
By the Audit Committee: Gerald L. DeGood, Chairman; William O. E.
Henry; and William J. Voges
16
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Company has selected the firm of KPMG LLP to serve as the
independent auditors for the Company for the current fiscal year
ending December 31, 2004. That firm served as the Company's
independent auditors for its fiscal year ended December 31, 2003.
Representatives of KPMG LLP are expected to be present at the annual
meeting of shareholders, and will have the opportunity to make a
statement if they desire to do so and are expected to be available to
respond to questions.
KPMG LLP served as the Company's independent auditors beginning
July 24, 2002, for its fiscal year ended December 31, 2002. On July
24, 2002, the Company dismissed Arthur Andersen LLP as the Company's
independent auditors. This decision was approved by the Company's
Board of Directors upon the recommendation of the Audit Committee.
The reports of Arthur Andersen LLP for the fiscal years ended December
31, 2000 and December 31, 2001, did not contain an adverse opinion,
disclaimer of opinion, qualifications, or modification as to
uncertainty, audit scope or accounting principles. There were no
disagreements with Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure for the fiscal years ended December 31, 2000 and
December 31, 2001, or in the interim periods subsequent to December
31, 2001, that, if not resolved to Arthur Andersen LLP's satisfaction,
would have caused Arthur Andersen LLP to make reference to the subject
matter of the disagreement in their report on the financial
statements; and, during such periods, there were no "reportable
events," as that term is defined in Item 304 of Regulation S-K and the
related instructions to Item 304 of Regulation S-K. For the fiscal
years ended December 31, 2000 and December 31, 2001, and the interim
period subsequent to December 31, 2001, the Company did not consult
with KPMG LLP regarding (i) either the application of accounting
principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the
registrant's financial statements, where either a written report or
oral advice was provided to the Company by KPMG LLP that KPMG LLP
concluded was an important factor considered by the registrant in
reaching a decision as to the accounting, auditing, or financial
reporting issue; or (ii) any matter that was either the subject of a
"disagreement" or "reportable event," as those terms are used in Item
304 of Regulation S-K and the related instructions to Item 304 of
Regulation S-K.
Auditor Fees
The following table presents fees billed by KPMG LLP for
professional services for fiscal years 2003 and 2002, by category as
described in the notes to the table.
2003 2002
---- ----
Audit Fees (1) $62,500 $51,000
Audit-Related Fees -0- -0-
Tax Fees (2) $33,450 $51,600
All other Fees -0- -0-
17
(1) Aggregate fees billed for professional services rendered by KPMG
LLP for the audit of the Company's annual financial statements, by
year, review of interim financial statements included in the Company's
Quarterly Reports on Form 10-Q and other services normally provided in
connection with the Company's statutory and regulatory filings or
engagements.
(2) Aggregate fees billed for professional services rendered by KPMG
LLP for tax compliance, tax advice and tax planning, including
preparation of tax forms, including federal and state income tax
returns, and income tax consulting services.
All fees were pre-approved by the Audit Committee.
Pre-approval Policy
In 2003, the Audit Committee adopted a Pre-approval Policy
("Policy") governing the pre-approval of all audit and non-audit
services performed by the independent auditor in order to ensure that
the performance of such services does not impair the auditor's
independence.
According to the Policy, the Audit Committee will annually
review and pre-approve the audit services and fees that may be
provided by the independent auditor during the following year and may
from time-to-time review and pre-approve audit-related services, tax
services and all other services to be provided by the independent
auditor. The term of any pre-approval is 12 months from the date of
pre-approval, unless the Audit Committee specifically provides for a
different period. For pre-approval, the Audit Committee will consider
whether the service is consistent with the SEC's rules on auditor
independence, as well as whether the independent auditor is in the
best position to provide the service for reasons such as its
familiarity with the Company's business, people, culture, accounting
system, risk profile and other factors. All such factors will be
considered as a whole, with no single factor being determinative.
The Audit Committee may delegate pre-approval authority to one
or more of its members. The member or members to whom such authority
is delegated will report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Committee does not
delegate its responsibilities to pre-approve services performed by the
independent auditor to management.
Pre-approval fee levels or budgeted amounts for all services to
be provided by the independent auditor will be established
periodically by the Audit Committee. Any proposed services exceeding
these levels will require separate pre-approval by the Audit
Committee.
Requests or applications to provide services that require pre-
approval by the Audit Committee will be submitted to the Audit
Committee by both the independent auditor and the Chief Financial
Officer and must include (1) a joint statement as to whether, in their
view, the request or application is consistent with the SEC's rules on
auditor independence, and (2) with respect to each proposed pre-
approved service, detailed back-up documentation regarding the
specific service to be provided. Requests or applications for
services to be provided by the independent auditor that do not require
18
separate approval by the Audit Committee will be submitted to the
Treasurer and will include a description of the services to be
rendered. The Treasurer will determine whether such services are
included within the list of services that have previously received the
pre-approval of the Audit Committee. The Audit Committee will be
informed on a timely basis of any such services rendered by the
independent auditor.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
directors and executive officers and persons who beneficially own more
than 10% of the Company's common stock to file with the SEC and
American Stock Exchange initial reports of beneficial ownership and
reports of changes in beneficial ownership of the Company's common
stock. Directors, executive officers and beneficial owners of more
than 10% of the Company's common stock are required by SEC rules to
furnish the Company with copies of all such reports. To the
Company's knowledge, based solely upon a review of the copies of such
reports furnished to the Company and written representations from
directors and executive officers that no other reports were required,
the Company believes that Section 16(a) filing requirements
applicable to all directors and executive officers were reported
timely during the fiscal year ended December 31, 2003.
SHAREHOLDER PROPOSALS
Shareholders are hereby notified that if they wish a proposal to
be included in the Company's proxy statement and form of proxy
relating to the 2004 annual meeting, a written copy of their proposal
must be received at the principal executive offices of the Company no
later than November 12, 2004. Proposals submitted outside the
provisions of Rule 14a-8 will be considered untimely if submitted
after January 28, 2005. To ensure prompt receipt by the Company,
proposals should be sent certified mail, return receipt requested.
Proposals must comply with the proxy rules relating to shareholder
proposals in order to be included in the Company's proxy materials.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2003, accompanies this proxy statement. Additional
copies may be obtained by writing to the Company at Post Office Box
10809, Daytona Beach, Florida 32120-0809.
OTHER MATTERS
The Board of Directors of the Company does not intend to bring
any other matters before the meeting, and it does not know of any
proposals to be presented to the meeting by others. If any other
matters properly come before the meeting, however, the persons named
in the accompanying proxy will vote thereon in accordance with their
best judgment.
19
EXHIBIT A
CONSOLIDATED-TOMOKA LAND CO.
AUDIT COMMITTEE CHARTER
Role and Purpose
- ----------------
There shall be a committee of the Board of Directors to be known as
the "Audit Committee." The purpose of the Audit Committee is to
provide assistance to the Board of Directors in fulfilling its
oversight responsibilities with respect to (1) the integrity of the
Company's financial statements, (2) the Company's compliance with
legal and regulatory requirements, (3) the qualifications,
independence and performance of the Company's independent auditor, (4)
the Company's systems of internal controls regarding finance and
accounting established by management and the Board, and (5) the
Company's auditing, accounting and financial reporting processes
generally. In so doing, it is the responsibility of the Audit
Committee to maintain free and open means of communication between the
Board, the independent auditors and management. The Company's
independent auditors, in their capacity as independent public
accountants, shall be responsible to the Board of Directors and the
Audit Committee as representatives of the shareholders.
Composition
- -----------
Members of the Audit Committee shall be elected annually by the full
board and shall hold office until the earlier of (1) the election of
their respective successors, (2) the end of their service as a
director of the Company (whether through resignation, removal,
expiration of term, or death), or (3) their resignation from the
Committee. The chairperson of the Committee may be selected by the
Board of Directors or, if it does not do so, the Committee members may
elect a chairperson by vote of a majority of the full Committee.
The Audit Committee shall be composed entirely of independent
directors. The membership of the Committee shall consist of at least
three directors, each of whom shall satisfy the independence,
financial literacy and experience requirements of the Securities
Exchange Act of 1934 and the American Stock Exchange, as in effect
from time to time. The chairperson of the Committee shall satisfy the
financially sophistication requirements of the American Stock
Exchange. At least one member of the committee shall be an "audit
committee financial expert" (as such term may be defined by the
Securities and Exchange Commission).
Authority and Resources
- -----------------------
The Committee has the sole authority to hire and fire independent
auditors and to approve any significant non-audit relationship with
the independent auditors.
The Committee shall have the authority to retain outside legal,
accounting or other advisors, as it determines necessary to carry out
its duties. The Committee shall determine the extent of funding
necessary for payment of compensation to the independent auditor for
the purpose of rendering or issuing an audit report and to any
independent legal, accounting or other advisors retained to advise the
Committee.
The Committee shall preapprove all auditing services and permissible
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 the
Securities Exchange Act of 1934 and the rules promulgated thereunder
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 non-audit
services, provided that decisions of such subcommittee to grant
preapprovals shall be presented to the full Committee at its next
scheduled meeting.
Duties and Responsibilities
- ---------------------------
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react
to changing conditions and to ensure that the corporate accounting and
reporting practices of the Company are in accordance with all
requirements and are of the highest quality.
The Audit Committee's duties and responsibilities shall be to:
Financial Statement and Disclosure Matters
- ------------------------------------------
Discuss the annual audited financial statements and quarterly
financial statements with management and the independent
auditor.
Periodically discuss with management and the independent
auditor significant financial reporting issues and judgments
made in connection with the preparation of the Company's
financial statements, including any significant changes in
the Company's selection or application of accounting
principles and any difficulties encountered in the course of
audit work, including any restrictions on the scope of
activities or access to required information.
Discuss with the independent auditor the following matters:
Methods used to account for significant unusual transactions.
Effects of significant accounting policies in controversial
or emerging areas for which there is a lack of authoritative
guidance or consensus.
Processes used by management in formulating particularly
sensitive accounting estimates and the basis for the
independent auditor's conclusions regarding the
reasonableness of those estimates.
Material audit adjustments proposed and immaterial
adjustments not recorded by management.
Auditor's judgments about the quality of the company's
accounting principles.
Disagreements with management over the application of
accounting principles, the basis for management's accounting
estimates, and the disclosures in the financial statements.
All critical accounting policies and practices used.
All alternative accounting and disclosure treatments of
material financial information within generally accepted
accounting principles (GAAP) that have been discussed with
management, including the ramifications of the use of such
alternative treatments and disclosures and the treatment
preferred by the independent auditor.
Other material written communications between the independent
auditor and management.
Periodically discuss with management and the independent auditor
the quality and adequacy of the Company's internal controls.
Review with the independent auditor and management the
coordination of audit efforts to assure completeness of coverage,
reduction of redundant efforts, and the effective use of audit
resources.
Oversight of Relationship with Independent Auditor
- --------------------------------------------------
Be directly responsible for the selection and appointment,
retention, compensation, termination and oversight of the work of
the Company's independent auditor, including the approval of all
audit engagement fees and terms and resolution of disagreements
between management and the independent auditor regarding
financial reporting.
On an annual basis, review and discuss with the independent
auditor all relationships between the independent auditor and the
Company in order to evaluate the independent auditor's continued
independence. The Committee shall ensure annual receipt of a
formal written statement from the independent auditor consistent
with the standards set by the Independence Standards Board and
shall discuss with the independent auditor all relationships or
services that may affect auditor independence or objectivity.
Review all reports required to be submitted by the independent
auditor to the committee under the Securities Exchange Act of
1934.
Evaluate the independent auditor's qualifications, performance
and independence, including the review and evaluation of the lead
partner of the independent auditor, and taking into account the
opinions of management, and present its conclusions with respect
to the independent auditor to the full Board of Directors.
General
- -------
Provide an open avenue of communication between the independent
auditor, management and the Board of Directors.
Meet periodically with the independent auditor and management in
separate executive sessions to discuss any matters that the
Committee or these groups believe should be discussed privately
with the Audit Committee.
Establish procedures for (1) the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and (2) the
confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
Prepare the report required by the Securities and Exchange
Commission to be included in the Company's annual proxy statement
and any other committee reports required by applicable securities
laws or stock exchange listing requirements or rules.
Oversee all related party transactions entered into by the
Company to the extent required by the rules of the American Stock
Exchange.
Meet as circumstances require, but at least on a quarterly basis.
Report regularly to the Board of Directors, by means of written
or oral reports, submission of minutes of Committee meetings or
otherwise, from time to time or whenever it shall be called upon
to do so, including a review of any issues that arise with
respect to the quality or integrity of the Company's financial
statements, the Company's compliance with legal or regulatory
requirements or the performance and independence of the Company's
independent auditor.
Inquire of management and the independent auditor about
significant risks or exposures and assess the steps management
has taken to minimize such risk.
Review and update this Charter annually.
Interpretations and Determinations
- ----------------------------------
The Committee shall have the power and authority to interpret this
Charter and make any determinations as to whether any act taken has
been taken in compliance with the terms hereof.
Limitations
- -----------
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to
plan or conduct audits or to determine that the Company's financial
statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and
applicable rules and regulations. These are the responsibilities of
management and the independent auditor.
Dated: July 23, 2003
EXHIBIT B
CONSOLIDATED-TOMOKA LAND CO.
GOVERNANCE COMMITTEE CHARTER
Role and Purpose
- ----------------
The purpose of the governance committee (the "Committee")of the board
of directors of Consolidated-Tomoka Land Co. (the "Company") is to
recommend to the board of directors (1) individuals qualified to
become members of the board of directors (based on criteria approved
by the Committee) and the director nominees for the next annual
meeting of the shareholders of the Company or at any such time that
there is a vacancy on the board, and (2) recommend to the Board the
corporate governance guidelines appropriate for the Company.
Composition
- -----------
The Committee shall consist of at least three directors, each of whom
shall satisfy the independence requirements of the American Stock
Exchange. Members of the Committee shall be elected annually by the
full board and each member shall hold office until the earlier of
(1) the election of that member's successor, (2) the end of that
member's service as a director of the Company (whether through
resignation, removal, expiration of term, or death), or (3) that
member's resignation from the Committee. The chairperson of the
Committee may be selected by the board of directors or, if it does not
do so, the Committee members may elect a chairperson by vote of a
majority of the full Committee. The Committee may form and delegate
authority to subcommittees when appropriate.
Director Nominee Criteria
- -------------------------
Individuals should meet the following specific minimum
qualifications to be considered for board membership:
Independence - A majority of the board of directors should be
independent, as defined from time to time by the American Stock
Exchange listing standards.
Integrity and Accountability - Directors must demonstrate high
ethical standards and integrity and be accountable for their
board decisions and actions.
Judgment - Directors should be able to provide thoughtful
counsel on a broad range of issues.
Financial Literacy - All board members should have financial
literacy sufficient to monitor the Company's financial
performance.
Openness - Board members should be willing to listen and be open
to the consideration of other opinions, as well as the ability
to communicate their own ideas.
Performance Standards - Directors should be committed to Company
achievement of exceptional performance standards to benefit
customers, shareholders, employees, and its communities.
Time Commitment - Directors must have the willingness and
ability to commit sufficient time and attention to the
activities of the Company.
In addition to the specific minimum qualifications listed above, the
Committee will consider a range of desirable core competencies as
beneficial to the board. The board as a whole should possess the
following specific qualities or skills:
Accounting and Finance - The board should include directors with
expertise in management or oversight of financial accounting and
control.
Business Judgement - Directors should have a record of making
sound business decisions.
Management Knowledge - Board members should be cognizant of
current general management trends and "best practices."
Industry Knowledge - It is desirable for one or more board
members to have relevant knowledge specific to the industries in
which it operates.
Leadership - The board should include directors who can and will
motivate and require high-performance by management.
Strategy and Vision - Directors should be capable of
questioning, approving, and monitoring the Company's
strategic plans, providing insight and directional focus.
Duties and Responsibilities
The Committee's duties and responsibilities shall be to:
Review and update, from time to time, the criteria set forth in
this charter for the board of directors and its members.
Review and report on possible candidates for membership on the
board of directors consistent with the Committee's criteria for
selecting new directors and establish a process for identifying
and evaluating such nominees.
Establish a policy as to whether the Committee will consider
recommendations of director nominees by shareholders and, if it
will consider such recommendations, establish procedures for
shareholders to submit recommendations.
Annually recommend a slate of nominees to the board of directors
with respect to nominations for the board at the annual meeting
of shareholders.
Review compliance, including conflicts of interest and code of
ethics, and recommend changes as necessary.
Report to the board of directors, by means of written or oral
reports, submission of minutes of Committee meetings or
otherwise, from time to time or whenever it shall be called upon
to do so.
Review this charter annually for possible revision.
Process for Selecting Directors
- -------------------------------
The Committee will evaluate all director candidates brought to its
attention by all sources in accordance with the minimum and specific
criteria described in the charter.
Resources
- ---------
The Committee shall have the authority to obtain advice and seek
assistance from outside legal, accounting or other advisors, including
search firms, as it determines necessary to carry out its duties. The
Committee shall have sole authority to retain and terminate any search
firm to be used to identify director candidates and to retain and
terminate any compensation consultant used to assist establishing
director compensation, including sole authority to approve such each
search firm's fees and other retention terms.
Interpretations and Determinations
- ----------------------------------
The Committee shall have the power and authority to interpret this
Charter and make any determinations as to whether any act taken has
been taken in compliance with the terms hereof.
Dated: February 13, 2004