DEF 14A 1 mccproxy.txt MONMOUTH CAPITAL CORPORATION Juniper Business Plaza 3499 Route 9 North, Suite 3-C Freehold, New Jersey 07728 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS SEPTEMBER 26, 2002 Notice is hereby given that the forty-first Annual Meeting of Shareholders (Annual Meeting) of Monmouth Capital Corporation (the Company) will be held on Thursday, September 26, 2002, at 12:00 noon at the offices of the Company at Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey, for the following purposes: 1. To elect nine Directors, the names of whom are set forth in the accompanying Proxy Statement, to serve for the ensuing year; and 2. To approve the selection by the Board of Directors of Cowan, Gunteski and Co. as Independent Auditors for the Company for the year ending December 31, 2002; and 3. To transact such other business as may properly come before the Annual Meeting and any adjournment thereof. The books containing the minutes of the last Annual Meeting of Shareholders, and the minutes of all meetings of the Directors since the last Annual Meeting of Shareholders, will be presented at the meeting for the inspection of the shareholders. Only shareholders of record at the close of business on July 31, 2002 will be entitled to vote at the meeting and at any adjournments thereof. IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. BY ORDER OF THE BOARD OF DIRECTORS /s/ Ernest V. Bencivenga ERNEST V. BENCIVENGA Secretary August 14, 2002 MONMOUTH CAPITAL CORPORATION Juniper Business Plaza 3499 Route 9 North, Suite 3-C Freehold, New Jersey 07728 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS SEPTEMBER 26, 2002 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Monmouth Capital Corporation (the Company) of proxies to be voted at the Annual Meeting of Shareholders of the Company to be held on September 26, 2002, and at any adjournments thereof (Annual Meeting), for the purposes listed in the preceding Notice of Annual Meeting of Shareholders. This Proxy Statement and the accompanying Proxy card are being distributed on or about August 14, 2002 to shareholders of record on July 31, 2002. A copy of the Annual Report, including financial statements, was mailed to all shareholders of record on or about May 21, 2002. Any shareholder giving the accompanying proxy has the power to revoke it at any time before it is exercised at the Annual Meeting by filing with the Secretary of the Company an instrument revoking it, by delivering a duly executed proxy card bearing a later date, or by appearing at the meeting and voting in person. Shares represented by properly executed proxies will be voted as specified thereon by the shareholder. Unless the shareholder specifies otherwise, such proxies will be voted FOR the proposals set forth in the Notice of Annual Meeting. The cost of preparing, assembling and mailing this Proxy Statement and form of proxy, and the cost of soliciting proxies related to the meeting, will be borne by the Company. The Company does not intend to solicit proxies otherwise than by use of the mail, but certain officers and regular employees of the Company, without additional compensation, may use their personal efforts, by telephone or otherwise, to obtain proxies. VOTING RIGHTS Only holders of the Company's $1.00 par value common stock (Common Stock) of record as of the close of business on July 31, 2002, are entitled to vote at the Annual Meeting of Shareholders. As of the record date, there were 1,945,052 shares of Common Stock outstanding, each share being entitled to one vote on any matter which may properly come before the meeting. Said voting right is non-cumulative. The holders of a majority of the outstanding shares of Common Stock shall constitute a quorum. An affirmative vote of a majority of the votes cast by holders of the Common Stock is required for approval of Proposals 1 and 2. 1 PROPOSAL 1 ELECTION OF DIRECTORS It is proposed to elect a Board of nine Directors. The proxy will be voted for the election of the nine nominees named herein, all of whom are members of the present Board, to serve for a one-year term for which they have been nominated, unless authority is withheld by the shareholder. Subsequent to the 2001 Annual Meeting, the Board of Directors increased the number of Directors from eight to nine and appointed Neal Herstik as Director. The nominees have agreed to serve, if elected, for the new term. If for any reason any of the said nine nominees shall become unavailable for election, the proxy will be voted for any substitute nominee who may be selected by the Board of Directors prior to or at the meeting, or, if no substitute is selected by the Board of Directors, for a motion to reduce the membership of the Board to the number of the following nominees who are available. In the event the membership of the Board is reduced, it is anticipated that it would be restored to the original number at the next annual meeting. In the event a vacancy occurs on the Board of Directors after the Annual Meeting, the by-laws provide that any such vacancy shall be filled for the unexpired term by a majority vote of the remaining Directors. The Company has no knowledge that any of the nine nominees shall become unavailable for election. The proxies solicited cannot be voted for a greater number of persons than the nominees named. Some of the nominees for Director are also Officers and/or Directors of other companies, including Monmouth Real Estate Investment Corporation and United Mobile Homes, Inc., both publicly-owned companies. In addition, the Officers and Directors of the Company may engage in real estate transactions for their own account, which transactions may also be suitable for Monmouth Capital Corporation. In most respects, the activities of Monmouth Capital Corporation, Monmouth Real Estate Investment Corporation and United Mobile Homes, Inc. are not in conflict, but rather complement each other. However, the activities of the Officers and Directors on behalf of the other companies, or for their own account, may on occasion conflict with those of the Company and deprive the Company of favorable opportunities. It is the opinion of the Officers and Directors of the Company that there have been no conflicting transactions since the beginning of the last fiscal year. 2 Committees of the Board of Directors and Meeting Attendance During the last year, there were four meetings of the Board of Directors. No Director attended fewer than 75% of the meetings. The Company has a standing Audit Committee, a Compensation Committee and a Stock Option Committee of the Board of Directors. The Audit Committee, which recommends to the Directors the independent public accountants to be engaged by the Company and reviews with management the Company's internal accounting procedures and controls, had four meetings, including telephone meetings, during the last year. Charles P. Kaempffer, Eugene D. Rothenberg and Robert G. Sampson, all of whom are outside Directors, serve on the Audit Committee. The Compensation Committee, which makes recommendations to the Directors concerning compensation, had one meeting during the last year. Charles P. Kaempffer, Eugene D. Rothenberg and Robert G. Sampson serve on the Compensation Committee. The Stock Option Committee, which administers the Company's Stock Option Plan, had one meeting during the last year. Charles P. Kaempffer, Eugene D. Rothenberg and Robert G. Sampson serve on the Stock Option Committee. 3 NOMINEES FOR DIRECTOR Present Position with the Company; Business Experience During Past Five Director Nominee; Age Years; Other Directorships Since Ernest V. Treasurer (1961 to present), Secretary 1961 Bencivenga (1967 to present) and Director. (84) Financial Consultant (1976 to present); Treasurer and Director (1968 to present) of Monmouth Real Estate Investment Corporation; Secretary/Treasurer (1984 to present) and Director (1969 to present) of United Mobile Homes, Inc. Anna T. Chew Vice President (2001 to present) 1994 (43) Controller (1991 to present) and Director. Certified Public Accountant; Vice President and Chief Financial Officer (1995 to present), Controller (1991 to 1995) and Director (1994 to present) of United Mobile Homes, Inc.; Controller (1991 to present) and Director (1993 to present) of Monmouth Real Estate Investment Corporation. Neal Herstik Attorney at Law, Gross, Truss & 2002 (43) Herstik, PC (1997 to present); First Vice President, Marlboro Community Players, Inc., a non-profit corporation (2000 to present); Co-founder and former President, Manalapan-Englishtown Education Foundation, Inc., a non- profit corporation (1995 to 2001). Charles P. Director. Investor; Director (1974 to 1970 Kaempffer present) of Monmouth Real Estate (64) Investment Corporation; Director (1969 to present) of United Mobile Homes, Inc.; Vice Chairman and Director (1996 to present) of Community Bank of New Jersey. Eugene W. Landy President (1961 to present) and 1961 (68) Director. Attorney at Law; Chairman of the Board (1995 to present), President (1969 to 1995) and Director (1969 to present) of United Mobile Homes, Inc.; President and Director (1968 to present) of Monmouth Real Estate Investment Corporation. Michael P. Landy Investor. President (1998 to 2001) of 2001 (40) Siam Records, L.L.C.; Chief Engineer and Technical Director (1987 to 1998) of GRP Recording Company. 4 NOMINEES FOR DIRECTOR (continued) Present Position with the Company; Business Experience During Past Five Director Nominee; Age Years; Other Directorships Since Samuel A. Landy Director. Attorney at Law; President 1994 (42) (1995 to present), Vice President (1991 to 1995) and Director (1992 to present) of United Mobile Homes, Inc.; Director (1989 to present) of Monmouth Real Estate Investment Corporation. Eugene Director. Investor; Director (1977 to 2001 Rothenberg present) of United Mobile Homes, Inc. (69) Robert Director. Investor; Director (1968 to 1963 Sampson 2001) of Monmouth Real Estate (76) Investment Corporation; Director (1969 to present) of United Mobile Homes, Inc.; General Partner (1983 to present) of Sampco, Ltd., an investment group. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL PROPOSAL 2 APPROVAL OF INDEPENDENT AUDITORS It is proposed to approve the appointment of Cowan, Gunteski & Co. as Independent Auditors for the purpose of making the annual audit of the books of account of the Company for the year ending December 31, 2002, and shareholder approval of said appointment is requested. Cowan, Gunteski & Co. has served as Independent Auditors of the Company since 1990. There are no affiliations between the Company and Cowan, Gunteski & Co., its partners, associates or employees, other than its employment as Independent Auditors for the Company. Cowan, Gunteski & Co. has informed the Company that it has no direct or indirect financial interest in the Company. The Company does not expect any representative of Cowan, Gunteski & Co. to attend the Annual Meeting. 5 The approval of the appointment of the Independent Auditors must be by the affirmative vote of a majority of the votes cast at the Annual Meeting. In the event that Cowan, Gunteski & Co. does not receive an affirmative vote of the majority of the votes cast by the holders of shares entitled to vote, then another firm will be appointed as Independent Auditors and the shareholders will be asked to ratify the appointment at the next annual meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL PRINCIPAL SHAREHOLDERS As of the record date, no person owned of record, or was known by the Company to own beneficially, more than five percent (5%) of the common stock of the Company, except the following: Shares Owned Name of Beneficial Owner Beneficially Percent of Class Eugene W. Landy 226,375 11.64% 20 Tuxedo Road Rumson, NJ 07760 6 INFORMATION RESPECTING DIRECTORS AND OFFICERS As of the record date, the Officers and Directors, individually and as a group, beneficially owned Common Stock of the Company as follows: Name of Beneficial Shares Owned Percent of Owner Beneficially Class Ernest V. Bencivenga 7,155 (2) 0.37% Anna T. Chew 13,129 (3) 0.67% Neal Herstik 500 0.03% Charles P. Kaempffer 15,331 (4) 0.79% Eugene W. Landy 226,375 (5) (8) (9) 11.64% Michael P. Landy 36,176 (6) 1.86% Samuel A. Landy 65,417 (7) 3.36% Eugene D. Rothenberg 4,308 0.22% Robert G. Sampson 16,986 0.87% _________ Directors and Officers as a Group 385,377 (8) (9) 19.81% (1) Beneficial ownership, as defined herein, includes Common Stock as to which a person has or shares voting and/or investment power. (2) Includes 5,653 shares held by Mr. Bencivenga's wife. (3) Held jointly with Ms. Chew's husband. (4) Includes (a) 726 shares in joint name with Mrs. Kaempffer; (b) 270 shares held by Mrs. Kaempffer; and (c) 7,000 shares held in joint name of Mrs. Kaempffer as Trustees for the Charles Kaempffer Pension Plan. (5) Includes (a) 8,019 shares held by Mr. Landy's wife; (b) 32,835 shares held in the Landy & Landy Employees' Pension Plan, of which Mr. Landy is a Trustee with power to vote; (c) 69,051 shares held in the Landy & Landy Employees' Profit Sharing Plan of which Mr. Landy is a Trustee with power to vote; (d) 14,545 shares held by Landy Investments, Ltd. of which Mr. Landy has power to vote; and (e) 10,000 shares held in the Eugene W. and Gloria Landy Family Foundation, a charitable trust, of which Mr. Landy has power to vote. (6) Includes 9,653 shares in custodial accounts for Mr. Landy's children under the Uniform Gifts to Minor's Act in which he disclaims any beneficial interest, but has power to vote. (7) Includes (a) 13,443 shares held by Mr. Landy's wife; (b) 14,688 shares in custodial accounts for Mr. Landy's children under the Uniform Gifts to Minor's Act in which he disclaims any beneficial interest but has power to vote; and (c) 25,659 shares in the Samuel Landy Family Limited Partnership. (8) Excludes 34,252 shares (1.76%) owned by United Mobile Homes, Inc. Eugene W. Landy beneficially owns approximately 13% of the shares of United Mobile Homes, Inc. (9) Excludes 11,852 shares (0.60%) owned by Monmouth Real Estate Investment Corporation. Eugene W. Landy beneficially owns approximately 5.37% of the shares of Monmouth Real Estate Investment Corporation. 7 EXECUTIVE COMPENSATION Summary Compensation Table The following Summary Compensation Table shows compensation paid by the Company to its Chief Executive Officer for services rendered during the short year ended December 31, 2001 and the fiscal years ended March 31, 2001 and 2000. Because no executive officers received total annual salary and bonus exceeding $100,000, only the compensation paid to the Chief Executive Officer is to be disclosed under the Securities and Exchange Commission disclosure requirements. Name and Principal Annual Compensation Position Year Salary Bonus Other (1) Eugene W. Landy 12/31/01 $37,500 None $1,600 Chief Executive Officer 3/31/01 $50,000 None $3,200 3/31/00 $50,000 None $3,200 (1) Represents base compensation and Director's fees. Compensation of Directors The Directors receive a fee of $800 for each Board meeting attended. Directors appointed to house committees receive $150 for each meeting attended. Those specific committees are Compensation Committee, Audit Committee and Stock Option Committee. Stock Option Plan On July 14, 1994, the shareholders approved and ratified the Company's 1994 Stock Option Plan authorizing the grant of options to officers and key employees to purchase up to 300,000 shares of common stock. Options may be granted any time up to December 31, 2003. No option shall be available for exercise beyond ten years. All options are exercisable after one year from the date of grant. The option price shall not be below the fair market value at date of grant. Canceled or expired options are added back to the "pool" of shares available under the Plan. 8 As of December 31, 2001, there were 140,000 shares outstanding and 160,000 shares available for grant under the Plan. The following is a summary of stock options outstanding: Date of Number of Number of Option Expiration Grant Employees Shares Price Date 4/8/98 2 20,000 $2.75 4/8/2003 9/28/98 1 50,000 $3.00 9/28/2003 10/4/00 2 20,000 $2.625 10/4/2005 10/4/01 1 50,000 $3.30 10/4/2009 ______ 140,000 Other Information Except for specific agreements, the Company has no retirement plan in effect for officers, directors or employees and, at present, has no intention of instituting such a plan. Report of Compensation Committee on Executive Compensation Overview and Philosophy The Company has a Compensation Committee consisting of three independent outside Directors. This Committee is responsible for making recommendations to the Board of Directors concerning executive compensation. The Compensation Committee takes into consideration three major factors in setting compensation. The first consideration is the overall performance of the Company. The Committee believes that the financial interests of the executive officers should be aligned with the success of the Company and the financial interests of its shareholders. The second consideration is the individual achievements made by each officer. The Company is a small real estate investment trust (REIT). The Committee is aware of the contributions made by each officer and makes an evaluation of individual performance based on their own familiarity with the officer. The final criteria in setting compensation is comparable wages in the industry. In this regard, the REIT industry maintains excellent statistics. 9 Evaluation The Committee reviewed the progress made by Eugene W. Landy, Chief Executive Officer, in locating alternative business and investment opportunities. The Committee decided to continue Mr. Landy's annual compensation of $50,000. Compensation Committee: Charles P. Kaempffer Eugene D. Rothenberg Robert G. Sampson Report of Audit Committee The Board of Directors has adopted a written charter for the Audit Committee. The Company has an Audit Committee consisting of three "independent" Directors, as defined by the listing standards of the National Association of Securities Dealers (NASD). The Audit Committee's role is to act on behalf of the Board of Directors in the oversight of all material aspects of the Company's reporting, internal control and audit functions. We have reviewed and discussed with management the Company's audited financial statements as of and for the short year ended December 31, 2001. We have discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees. We have received and reviewed the written disclosures and the letter from the independent auditors required by Independence Standard No. 1, Independence Discussions with Audit Committees and have discussed with the auditors the auditors' independence. Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in the Company's Annual Report on Form 10-K for the short year ended December 31, 2001. Audit Fees The aggregate fees billed by Cowan, Gunteski & Co., for professional services rendered for the audit of the Company's annual financial statements for the short year ended December 31, 2001 and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q for that year were $16,140. 10 Financial Information Systems Design and Implementation Fees There were no fees billed by Cowan, Gunteski & Co. for professional services rendered for information technology services relating to financial information systems design and implementation for the short year ended December 31, 2001. All Other Fees The aggregate fees billed by Cowan, Gunteski & Co., for services rendered to the Company for the short year ended December 31, 2001, other than for services described above, were $12,525.75. The Audit Committee has determined that the provision of the non-audit services described above is compatible with maintaining Cowan, Gunteski & Co.'s independence. Audit Committee: Charles P. Kaempffer Eugene D. Rothenberg Robert G. Sampson COMPARATIVE STOCK PERFORMANCE The following line graph compares the total return of the Company's Common Stock for the last five fiscal years to the NASDAQ Total Return Index and the NASDAQ Financial Stocks Total Return Index. The total return reflects stock price appreciation and dividend reinvestment for all three comparative indices. The information herein has been obtained from sources believed to be reliable, but neither its accuracy nor its completeness is guaranteed. 11 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Since the beginning of the Company's last fiscal year, there have been no transactions or proposed transactions in which any of the Officers and Directors have a material interest. The only family relationships between any of the Directors or executive officers of the Company are that of Samuel A. Landy and Michael P. Landy, who are brothers and are the sons of Eugene W. Landy, President and a Director of the Company. Eugene W. Landy and Samuel A. Landy are partners in the law firm of Landy & Landy, which firm, or its predecessor firms, have been retained by the Company as legal counsel since the formation of the Company, and which firm the Company proposes to retain as legal counsel for the current fiscal year. The New Jersey Supreme Court has ruled that the relationship of directors also serving as outside counsel is not per se improper, but the attorney should fully discuss the issue of conflict with the other Directors and disclose it as part of the proxy statement so that shareholders can consider the conflict issue when voting for or against the attorney/director nominee. Transactions with United Mobile Homes, Inc. Management currently operates Monmouth Real Estate Investment Corporation and United Mobile Homes, Inc. (United), two real estate investment trusts. Certain overhead expenses are shared among these companies. Prior to April 1, 2001, the Company, through its then wholly- owned subsidiary, The Mobile Home Store, Inc. (MHS), engaged in the sales of manufactured homes primarily into manufactured home communities owned by United. This business has been terminated, and MHS merged into the Company. MHS had rental expenses to United. United owns and operates manufactured home communities. Seven Directors of the Company are also Directors and shareholders of United. MHS paid United market rent on sites where MHS had a home for sale. Total site rental expense to United amounted to $22,690, $82,087, and $161,377, respectively, for the short year ended December 31, 2001 and for the years ended March 31, 2001 and 2000. MHS also leased space from United to be used as sales lots, at market rates, at most of United's communities. Total rental expense relating to these sales lots amounted to $-0-, $153,480, and $145,670 for the short year ended December 31, 2001 and for the years ended March 31, 2001 and 2000, respectively. During the years ended March 31, 2001 and 2000, MHS acquired certain inventory from United. These purchases amounted to $124,890 and $64,984, representing 3% and 2%, respectively, of total purchases made by MHS during fiscal 2001 and 2000. This inventory was available through United, but could have been acquired from a third party at approximately the same cost. 12 During the years ended March 31, 2001 and 2000, MHS sold to United 10 and 21 homes, respectively, for a total sales price of $161,487 and $437,137, respectively, at MHS's cost. These sales represented 3% and 9%, respectively, of total sales made by MHS. These manufactured homes were available through MHS, but could have been acquired by United from a third party at approximately the same price. In addition to the above sales, on March 30, 2001, United purchased at carrying value all of the remaining inventory of MHS. This amounted to $2,261,624. United also assumed the inventory financing of $1,833,871. Payments to Affiliated Persons Total payments to all Officers, Directors and affiliated persons during the short year ended December 31, 2001 and the fiscal years ended March 31, 2001, and 2000 amounted to $50,300, $98,000 and $98,800, respectively. Eugene W. Landy, President of the Company, received $39,100, $53,200 and $53,200, respectively, in salary, management and Director's fees. COMPLIANCE WITH EXCHANGE ACT FILING REQUIREMENTS Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's Officers and Directors, and persons who own more than 10% of the Company's Common Stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, Directors and greater than 10% shareholders are required by Securities and Exchange Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such forms furnished to the Company, the Company believes that, during the year, all Section 16(a) filing requirements applicable to its Officers, Directors and greater than 10% beneficial owners were met. OTHER MATTERS As of the date of this Proxy Statement, the Board of Directors of the Company knows of no other matters, other than those stated in this Proxy Statement, that are to be presented for action at the Annual Meeting. If any other matters should properly come before the Annual Meeting, it is intended that proxies in the accompanying form will be voted on any such matters in accordance with the judgment of the persons voting such proxies. Discretionary authority to vote on such matters is conferred by such proxies upon the persons voting them. The Company will provide, without charge, to each person being solicited by this Proxy Statement on the written request of any such person, a copy of the Annual Report of the Company on Form 10-K for the short year ended December 31, 2001 (as filed with the Securities and Exchange Commission), including the financial statements and schedules thereto. All such requests should be directed to Monmouth Capital Corporation, Attention: Secretary, Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey 07728. 13 SHAREHOLDER PROPOSALS In order for Shareholder Proposals for the 2003 Annual Meeting of Shareholders to be eligible for inclusion in the Company's 2003 Proxy Statement, they must be received by the Company at its principal office at Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey 07728 not later than March 31, 2003. BY ORDER OF THE BOARD OF DIRECTORS /s/ Ernest V. Bencivenga Ernest V. Bencivenga Secretary Dated: August 14, 2002 Important: Shareholders can help the Directors avoid the necessity and expense of sending follow-up letters to insure a quorum by promptly returning the enclosed proxy. The proxy is revocable and will not affect your right to vote in person in the event you attend the meeting. You are earnestly requested to sign and return the enclosed proxy in order that the necessary quorum may be represented at the meeting. The enclosed addressed envelope requires no postage and is for your convenience. 14