Cto Realty Growth, Inc. · NYSE:CTO
Cto Realty Growth — Consolidated Tomoka Land — Proxy Contest (April 2018)
36 slides from Cto Realty Growth's proxy contest presentation, Apr 19, 2018
Slide 1: Consolidated-Tomoka's Continued Refusal to Meaningfully Address the Real Issues
CONSOLIDATED-TOMOKA’s CONTINUED REFUSAL TO MEANINGFULLY ADDRESS THE REAL ISSUES April 19, 2018
Slide 2: Real Issues: REIT
CTO Continues to Refuse to Meaningfully Address the Real Issues: REIT CTO’s Letter to Shareholders, from its 2017 Annual Report, provides a possible date and tax impact for its potential REIT conversion. Source: CTO 2017 Annual Report, dated 2/28/18, page 5
Slide 3: Real Issues: REIT
CTO Continues to Refuse to Meaningfully Address the Real Issues: REIT Yet, in our opinion, CTO omits any meaningful discussion of the risks and impacts to shareholders of the potential REIT conversion in its10-K (the Company’s 2017 Annual Report), and its 2018 Proxy (filed 3/12/18). Source: CTO 10-K
Slide 4: Real Issues: REIT
CTO Continues to Refuse to Meaningfully Address the Real Issues: REIT Also, Wintergreen believes a REIT conversion of a company as small as CTO is not profitable to shareholders because of the high overheadWe believe a REIT conversion is a less favorable tax structure since the 2017 federal tax law
Slide 5: Real Issues: REIT
CTO Continues to Refuse to Meaningfully Address the Real Issues: REIT Source: Bloomberg, RMZ Index, 4/17/17-4/17/18 The MSCI US REIT Index performance chart below shows how REIT performance, since the federal tax laws were changed, has negatively affected REIT performance: The MSCI REIT Index is dow
Slide 6: Real Issues: REIT
CTO Continues to Refuse to Meaningfully Address the Real Issues: REIT National Retail Properties, Inc., which has a market cap of over $6 billion, and Realty Income Corp, which has a market cap of over $14.5 billion, are examples of REITS that could acquire a company of CTO’s size. Source: Bloomberg
Slide 7: Real Issues: REIT
CTO Continues to Refuse to Meaningfully Address the Real Issues:REIT We believe the REIT background of CTO’s recent Board additions, including the Chair, suggests they are REIT proponents Casey R. Wold “Laura’s knowledge and experience from over two decades as an executive officer of a public REIT a
Slide 8: Proposal 3: CTO wants bonuses for flawed criteria
Wintergreen believes that if a factor has little or no realized benefit for shareholders, it should be removed as a factor for bonus criteria. CTO Continues to Refuse to Meaningfully Address the Real Issues:Proposal 3: CTO wants bonuses for flawed criteria “While land transactions under contract is
Slide 9: Proposal 3: CTO wants bonuses for flawed criteria
Wintergreen’s actions benefitted all shareholders! CTO Continues to Refuse to Meaningfully Address the Real Issues:Proposal 3: CTO wants bonuses for flawed criteria “A vote AGAINST this proposal is warranted…the company did not engage with shareholders following the low vote, discern their concerns,
Slide 10: Proposal 4: Amended Plan allows CTO to forgo all metrics
CTO’s amended Equity Incentive Plan allows the Compensation Committee to award shares with absolutely no criteria:Where shareholder action is to be taken with respect to any equity incentive plan, such as the CTO plan, federal securities law provides that individuals who are eligible for the equity
Slide 11: Proposal 4: Amended Plan allows CTO to forgo all metrics
It is interesting to note that in the forty pages of the 2018 CTO Proxy Statement describing the Election of Directors (pages 14-54), gives no indication of the hefty raise that CTO would be allowed to award to themselves. From our perspective, it is egregious for a board to hide in the fine print t
Slide 12: Proposal 4: Amended Plan allows CTO to forgo all metrics
Wintergreen’s actions benefitted all shareholders! “the Board determined that for 2018 the director compensation program and levels were to remain the same as in 2017” and“The Board and its Compensation Committee have no plans or intentions to increase director compensation”-2018 CTO Investor Presen
Slide 13: Proposal 4 doesn't comply with SEC guidelines and should be withdrawn
We believe Proposal 4 does not comply with the SEC’s disclosure requirements for proxy statements, which require that CTO provide details about the participants that are eligible for the plan.Since shareholders are not being provided with information that is necessary to make an informed decision on
Slide 14: John Albright's history of selling CTO stock
CTO Continues to Refuse to Meaningfully Address the Real Issues:John Albright’s history of selling CTO stock Date Number of Company Shares or Options Purchased or Sold Nature of Transaction 8/11/2016 764 Open market sale 8/24/2016 836 Open market sale 9/7/2016 3,000 Open market sale 9/8/2016 2,000 O
Slide 15: John Albright's history of selling CTO stock
CTO Continues to Refuse to Meaningfully Address the Real Issues:John Albright’s history of selling CTO stock Source: CTO 2018 Proxy, aggregate sum of all Albright CTO stock sales, measured quarterly.
Slide 16: John Albright's history of selling CTO stock
CTO Continues to Refuse to Meaningfully Address the Real Issues:John Albright’s history of selling CTO stock makes us question his commitment to CTO Source: Bloomberg
Slide 17: Compensation Scheme
CTO Continues to Refuse to Meaningfully Address the Real Issues:Compensation Scheme We believe CTO is being operated as a compensation scheme to benefit Company insiders.Wintergreen believes that enacting the Wintergreen proposal to eliminate the massive discount to NAV would benefit all shareholder
Slide 18: Wintergreen has repeatedly tried to work with CTO
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO We believe CTO’s allegation of “greenmail” is completely false and is misleading.Our clients are long-term investors with interests that are aligned with that of other shareholders.We ar
Slide 19: Wintergreen has repeatedly tried to work with CTO
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO Wintergreen has repeatedly reached out to CTO, but instead of working together, CTO has rebuffed our efforts.In June 2017, representatives of the Company and Wintergreen met privately in
Slide 20: Wintergreen has repeatedly tried to work with CTO
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO An email from Laura Franklin on August 19, 2017 stated “You will note the statement from John in the third paragraph is the one we agreed on from the July 24th version”, which was in ref
Slide 21: Wintergreen has repeatedly tried to work with CTO
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO CTO then reversed course and reneged on the release of the press release. It was only at this point that Wintergreen felt compelled to submit the Wintergreen Proposal to maximize value f
Slide 22: Wintergreen has repeatedly tried to work with CTO
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO Throughout the 2017 proxy solicitation and leading up to the 2018 annual meeting, CTO repeatedly stated that the Company was interested in “having the Company repurchase, at an appropria
Slide 23: Wintergreen has repeatedly tried to work with CTO
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO Representatives of CTO made an initial below market offer, that referred to a discount to “to an average trailing closing price*” without providing further specific detail. No dollar amo
Slide 24: The Wintergreen Proposal benefits all shareholders
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has repeatedly tried to work with CTO Wintergreen believes that its Proposal benefits all shareholders! The Wintergreen Proposal:“for CTO to take immediate steps to narrow the discount between NAV and the Company’s share pri
Slide 25: Proposal 5: The Wintergreen Proposal
CTO Continues to Refuse to Meaningfully Address the Real Issues:Proposal 5: The Wintergreen Proposal
Slide 26: Wintergreen has no representation on the Board
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has no representation on the Board We believe the Company's ongoing impression of current directors Howard Serkin and Thomas Warlow as Wintergreen directors, is misleading. Wintergreen has not voted for these board members i
Slide 27: Carlson Capital's Share Ownership since Q2 2011
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has no representation on the Board Carlson Capital’s Share Ownership since Q2 2011: Source: Bloomberg
Slide 28: Wintergreen's three nominated director candidates
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has no representation on the Board Wintergreen has nominated three highly qualified director candidates, Liz Cohernour, Evan Ho and David Winters, who are committed to working in the best interests of all shareholders.Winter
Slide 29: Nominee experience: Pacific Forest Products
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has no representation on the Board Mr. Winters and Ms. Cohernour have worked together for over 25 years and have substantial experience investing in the securities of real estate companies over their careers. In connection w
Slide 30: Nominee experience: Florida East Coast, Weyerhaeuser
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has no representation on the Board Florida East Coast Industries, Inc.: While Mr. Winters worked as Franklin Mutual Advisers, Inc.’s (“FMA”) lead analyst on Florida East Coast's vast array of developed and undeveloped real e
Slide 31: Evan Ho's experience
CTO Continues to Refuse to Meaningfully Address the Real Issues:Wintergreen has no representation on the Board Mr. Ho has over 20 years of experience in the securities and banking industry, including domestic and international roles at BNP Paribas and Bankers Trust. He has gained broad expertise in
Slide 32: Share Buy Backs
CTO Continues to Refuse to Meaningfully Address the Real Issues:Share Buy Backs We find it curious that in 2017 CTO conveniently appeared to execute its buy back plan when it needed votes for its compensation plans, ahead of the Annual Meeting.This year, despite the stock price varying between $59-$
Slide 33: Share Buy Backs
CTO Continues to Refuse to Meaningfully Address the Real Issues:Share Buy Backs When market trading volume of CTO increased in Q4, CTO stepped away, despite a material gap between NAV and share price.When questioned about the failure of the Company to buy back stock on the Q4 Investor Call, we belie
Slide 34: The Board's Self-Interests
CTO Continues to Refuse to Meaningfully Address the Real Issues:The Board’s Self-Interests Serious Questions for CTO:What caused the dramatic rise in trading volume in the fourth quarter of 2017? What was said at the investor meetings that took place behind closed doors?CTO’s management insiders wer
Slide 35: Conclusion
CTO Continues to Refuse to Meaningfully Address the Real Issues:Conclusion Wintergreen believes its interests are aligned with all shareholders:Take immediate steps to narrow the discount to NAVIncluding the possibility of buying back stock or tendering for stock when a material discount to NAV exis
Slide 36: Additional Information
ADDITIONAL INFORMATIONIn accordance with Rule 14a-12(a)(1)(i) under the Securities Exchange Act of 1934, as amended, the following persons are, or may be deemed to be, participants in any such proxy solicitation: Wintergreen Partners Fund, LP, Wintergreen Partners Offshore Master Fund, Ltd., Winterg
Consolidated Tomoka Land — Proxy Contest (April 2018) on 6ix