def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
Check the appropriate box:
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-11(c) or
§240.14a-12 |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
CAPITAL PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
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Date Filed: |
Capital Properties, Inc.
100 Dexter Road
East Providence, Rhode Island 02914
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 24, 2007
The 2007 annual meeting of shareholders of Capital Properties, Inc. (the Company) will be held at
the offices of Hinckley, Allen and Snyder LLP, 1500 Fleet Center in Providence, Rhode Island, on
Tuesday, April 24, 2007 at 2:00 oclock P.M., local time, for the following purposes:
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To elect five directors to serve for a term of one year
until their successors are duly elected and qualified; |
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To transact such other business, if any, as may properly
come before the meeting or any adjournment or adjournments thereof. |
Holders of record of the common stock on the books of the Company as of the close of business on
March 1, 2007 will be entitled to vote.
By Order of the Board of Directors
STEPHEN J. CARLOTTI
Secretary
East Providence, Rhode Island
March 22, 2007
Please fill in, date and sign the enclosed proxy and promptly return it in the enclosed addressed
envelope, which requires no postage if mailed in the United States. If you are personally present
at the meeting, the proxy will not be used without your consent.
Capital Properties, Inc.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 24, 2007
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Capital Properties, Inc. (the
Company), in connection with the annual meeting of shareholders to be held April 24, 2007. The
Company will bear the cost of such solicitation. It is expected that the solicitation of proxies
will be primarily by mail. Proxies may also be solicited personally by regular employees of the
Company at nominal cost. The Company may reimburse brokerage houses and other custodians, nominees
and fiduciaries holding stock for others in their names, or in those of their nominees, for their
reasonable out-of-pocket expenses in sending proxy materials to their principals or beneficial
owners and obtaining their proxies. Any shareholder giving a proxy has the power to revoke it at
any time prior to its exercise, but the revocation of a proxy will not be effective until notice
thereof has been given to the Secretary of the Company. Notice of revocation may be delivered in
writing to the Secretary prior to the meeting or may be transmitted orally to the Secretary at the
meeting. Every properly signed proxy will be voted in accordance with the specifications made
thereon.
This proxy statement and the accompanying proxy are expected to be first sent to shareholders on or
about March 22, 2007.
VOTING AT MEETING
Only shareholders of record at the close of business on March 1, 2007, will be entitled to vote at
the meeting. Under the Companys articles of incorporation, as amended, each shareholder has one
vote for every share of common stock owned. On the record date, there were 3,299,956 shares of
Class A Common Stock outstanding. There were no other outstanding securities of the Company
entitled to vote.
The directors will be elected in each case by vote of the holders of a majority of the shares
present or represented at the meeting.
Shares represented by proxies which are marked withhold authority with respect to the election of
any particular nominee for director, or to deny discretionary authority on any other matters will
be counted as shares present and entitled to vote, and accordingly any such marking of a proxy will
have the same effect as a vote against the proposal to which it relates. Brokers who hold shares
in street name may lack authority to vote such shares on certain items, absent specific
instructions from their customers. Shares subject to such broker non-votes will not be treated
as shares entitled to vote on the matters to which they relate and therefore will be treated as not
present at the meeting for those purposes, but otherwise will have no effect on the outcome of the
voting on such matters. It is not presently anticipated that any matter which might be the subject
of a broker non-vote will come before the annual meeting.
1
ELECTION OF DIRECTORS
At the annual meeting, five directors are to be elected to hold office until the next annual
meeting and until their respective successors are elected and qualified. The proxies named in the
accompanying proxy, who have been designated by the Board of Directors, intend to vote, unless
otherwise instructed, for the election to the Board of Directors of the persons named below, all of
whom are now directors of the Company. Certain information concerning such nominees is set forth
below:
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Principal Occupation |
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Director |
Name and Age |
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During Past Five Years |
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Since |
Ronald P. Chrzanowski (64)
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President of the Company, 1998 to present
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1998 |
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Robert H. Eder (74)
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Chairman of the Company, 1995 to present;
Chairman, Providence and Worcester Railroad
Company, 1988 to present
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1995 |
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Alfred J. Corso (70)
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Consultant, 2001 to present;
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2005 |
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Roy J. Nirschel (54)
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President, Roger Williams University,
2001 to present
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2005 |
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Harris N. Rosen (74)
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Consultant and Mediator, 2001 to present;
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2001 |
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Interim Executive Vice President, Jewish
Federation of Rhode Island, January to
October 2006 |
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Mr. Eder is also a director of Providence and Worcester Railroad Company.
The Board of Directors has determined that all of the current directors of the Company, which
include each of the nominees standing for election at the 2007 annual shareholders meeting, other
than Ronald P. Chrzanowski and Robert H. Eder, are independent of the Company in that such nominees
have no material relationship with the Company either directly, or as a partner, shareholder or
affiliate of an organization that has a relationship with the Company. The Board has made this
determination based on the following:
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Other than Messrs. Eder and Chrzanowski, no nominee for director is an officer or
employee of the Company or its subsidiaries or affiliates; |
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No nominee for director has an immediate family member who is an officer of the Company
or its subsidiaries or has any current or past material relationship with the Company; |
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No nominee for director, other than Messrs. Eder and Chrzanowski, has worked for,
consulted with, been retained by, or received anything of substantial value from the
Company aside from his compensation as a director; |
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No nominee for director is, or was within the past three years, employed by the
independent registered public accountants for the Company; |
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No executive officer of the Company serves on the Compensation Committee or the Board of
Directors of any corporation that employs a nominee for director or a member of the
immediate family of any nominee for director; |
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No nominee for director is an executive officer of any entity which the Companys annual
sales to or purchases from exceeded one percent of either entitys annual revenues for the
last fiscal year; and |
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No nominee for director serves as a director, trustee, executive officer or similar
position of a charitable or non-profit organization to which the Company or its
subsidiaries made charitable contributions or payments in fiscal year 2006 in excess of
five percent of the organizations consolidated gross revenues, or $200,000, whichever is
more, at any time during the past three years. |
Communications with the Board of Directors
The Board of Directors has established a process for shareholders to communicate with members of
the board. If you have any concern, question or complaint regarding our compliance with any policy
or law, or would otherwise like to contact the Board of Directors, you may reach the Companys
Board of Directors by writing directly to those individuals c/o Capital Properties, Inc., 100
Dexter Road, East Providence, Rhode Island 02914.
All inquiries received shall not be screened by the Company and will be forwarded directly to the
director to whom such inquiry is addressed, unless it is believed that a particular inquiry may
pose a security risk. The Board of Directors sits as a committee of the whole to address any
inquiries made by shareholders.
Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Compensation Committee, both currently
comprised of Messrs. Corso, Nirschel and Rosen, each of whom is independent as defined under
applicable American Stock Exchange (AMEX) listing requirements. Each of the Audit and
Compensation Committees has a written charter approved by the Board of Directors. A copy of each
charter is attached to this Proxy Statement.
The Audit Committee is responsible for overseeing the establishment and maintenance of an effective
financial control environment for the Company, for overseeing procedures for evaluating the system
of internal accounting control and for evaluating audit performance. The Board of Directors has
determined that all three members of the Audit Committee satisfy the financial literacy
requirements of the AMEX listing standards and are independent as defined under the AMEX listing
requirements and applicable rules of the Securities and Exchange Commission (SEC). Additionally,
the Board of Directors has determined that Mr. Corso qualifies as an audit committee financial
expert as defined by the SEC rules.
The Compensation Committee assists the Board of Directors in discharging the Boards
responsibilities relating to director and executive compensation. The Compensation Committees
responsibilities include establishing and reviewing the Companys executive and director
compensation philosophy, strategies, plans and policies, and evaluating the performance and
determining the compensation of the Chairman and Chief Executive Officer (CEO) of the Company and
advising and assisting the CEO in formulating and implementing programs to facilitate the selection
and development of other key managers. The Compensation Committee also reviews and approves the
compensation of other executive officers of the Company except for the President of Capital
Terminal Company.
The Company does not maintain a nominating committee or a committee performing a similar function
due to the fact that Mr. Eder owns a controlling interest in the Company. The Board of Directors
sits as a committee of the whole to consider any recommendations made by shareholders and/or other
directors of persons to be directors of the Company. In determining
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whether to nominate any such person for election by the shareholders, the Board of Directors
considers the experience of such person as it relates to the business of the Company, together with
such persons age, reputation and ability to carry out the requirements to serve as a director of
the Company.
During the fiscal year ended December 31, 2006, the Board of Directors held four meetings, the
Audit Committee held five meetings and the Compensation Committee held one meeting. All directors
attended every meeting of the Board of Directors and meetings of committees on which such director
serves. The Board of Directors has adopted a policy that requires members of the Board of
Directors to make every effort to attend each annual shareholders meeting. All then current
members of the Board of Directors attended the 2006 annual shareholders meeting.
Compensation of Directors
The Board of Directors, upon recommendation of the Compensation Committee, is responsible for
determining compensation of the directors. Directors, other than directors who are employed by the
Company, received a fee for attendance at each meeting of the Board of Directors, together with
related transportation and living expenses. During the 2006 fiscal year, outside directors
received an annual retainer fee of $10,000 payable in quarterly installments and fees per meeting
as follows: Board, $1,000; Audit Committee, $750; and Compensation Committee, $500. The maximum
fees payable for attendance at Board and committee meetings occurring on the same day is $1,500.
These rates were established in 2005 based on the recommendations of Effective Pay Practices, a
compensation consultant retained by the Compensation Committee.
The following Director Compensation table provides information regarding the compensation paid or
accrued by each director during the 2006 fiscal year.
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Fees Earned |
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Option |
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All Other |
Name |
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Total |
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or Paid in Cash |
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Awards |
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Compensation |
Ronald P. Chrzanowski |
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$ |
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$ |
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N/A |
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$ |
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Alfred J. Corso |
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17,000 |
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17,000 |
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N/A |
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Robert H. Eder |
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N/A |
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Roy J. Nirschel |
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17,000 |
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17,000 |
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N/A |
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Harris N. Rosen |
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17,000 |
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17,000 |
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N/A |
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Corporate Governance
The Board of Directors is committed to ethical business practices and believes that strong
corporate governance is important to ensure that the Company is managed for the long-term benefit
of its shareholders. The Company regularly monitors developments in the area of corporate
governance and has implemented a number of best practices, including the following:
Code of Ethics. The Company has adopted a Code of Ethics applicable to all directors,
officers and employees, which meets the requirements of a code of ethics as defined in Item 406
of Regulation S-K.
Procedures for the Receipt, Retention and Handling of Complaints. The Company maintains
procedures for the confidential, anonymous submission by employees of any complaints or concerns
about the Company, including complaints regarding accounting, internal accounting controls or
auditing matters.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
On March 1, 2007, to the best of the Companys knowledge, no person (including any group, as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) was the beneficial owner
of more than five percent of the Companys outstanding Class A Common Stock, $.01 par value, except
as follows:
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Class A |
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Number of |
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Percent |
Name and Address |
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shares held |
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of Class |
Robert H. Eder and Linda Eder
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1,726,710 |
1 |
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52.3 |
% |
120 Sunset Avenue
Palm Beach, Florida 33480 |
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Lance S. Gad
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191,048 |
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5.8 |
% |
1250 Fence Row Drive
Fairfield, Connecticut 06430 |
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The following table reflects as of March 1, 2007, the beneficial ownership of shares of Class A
Common Stock of the Company by directors, nominees for director and officers of the Company, all
shares being owned directly except as otherwise noted:
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Class A |
Name of Individual or |
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Number of |
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Percent |
Identification of Group |
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shares held |
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of Class |
Ronald P. Chrzanowski |
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3,725 |
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Barbara J. Dreyer |
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6,600 |
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Robert H. Eder |
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1,726,710 |
1 |
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52.3 |
% |
Alfred J. Corso |
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1,000 |
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* |
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Roy J. Nirschel |
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100 |
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Avery L. Noe |
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220 |
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Harris N. Rosen |
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5,060 |
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All eight directors and officers
as a group |
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1,743,525 |
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52.8 |
% |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors and
persons who beneficially own more than ten percent of the Companys common stock to file initial
reports of ownership and reports of changes in ownership with the SEC and any national securities
exchange on which the Companys securities are registered. Based solely on a review of the copies
of forms furnished to the Company and written representations from the executive officers and
directors of the Company, the Company believes that, during 2006, its executive
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Robert H. Eder and Linda Eder are husband
and wife, and each holds 863,355 shares of Class A Common Stock directly. |
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officers, directors and greater than ten percent beneficial owners complied with all applicable
Section 16(a) requirements.
TRANSACTIONS WITH MANAGEMENT
Potential conflicts of interest and related party transactions are referred by the Board of
Directors to the Audit Committee for review and approval. In reviewing and evaluating potential
conflicts of interest and related party transactions, the Audit Committee uses applicable AMEX
listing standards and SEC rules as a guide.
The law firm of Hinckley, Allen & Snyder LLP, of which Stephen J. Carlotti is a partner, provides
legal services to the Company. Mr. Carlotti is Secretary of the Company and acts as trustee of the
Robert H. Eder 2005 Trust and Linda Eder 2005 Trust which trusts held in the aggregate greater than
10% of the Companys outstanding common stock during the 2006 fiscal year, during which time Mr.
Carlotti had the sole right to vote and direct the disposition of the Companys common stock held
in these trusts. The total amount of fees paid by the Company to Hinckley, Allen & Snyder LLP for
services rendered to the Company in the 2006 calendar year were $138,074. On February 1, 2007, the
trusts were terminated and the shares held therein distributed to Mr. and Mrs. Eder.
COMPENSATION DISCUSSION & ANALYSIS
The Company has 10 full-time employees, four of whom are classified as executives, the Chairman and
Chief Executive Officer, the President, the Treasurer and the President of Capital Terminal
Company.
The Committee periodically reviews executive officers and directors compensation. The Committee is
charged with determining the compensation of all executive officers excluding the President of
Capital Terminal Company. The Committee considers the executives performance, the compensation of
executives occupying similar positions at comparable companies, any awards, if any, made during
prior years and other relevant factors. Our overall philosophy in terms of executive compensation
program is to fairly reward the executives on a current basis for the services performed by them.
We do not believe it is necessary to structure short or long-term incentive arrangements by way of
either cash compensation or stock options since, given the Companys size, most of the major
decisions with respect to the Companys operations are determined by the Chairman and Chief
Executive Officer who is the majority stockholder. Therefore, a material part of his net worth is
a function of the Companys long-term performance. We do maintain a simplified employee pension
(SEP) to which the Company has historically contributed 7.5% of each employees compensation. The
Chairman and Chief Executive Officer does not participate in this plan. The Companys other
benefits, consisting principally of a medical reimbursement plan, are available to all employees on
a non-discriminatory basis. Each of the executives attends all or a portion of each Board meeting.
In 2005, the Compensation Committee engaged a compensation consultant, Effective Pay Practices of
Gloucester, Massachusetts, to undertake a review of its executive compensation for all executives,
other than the President of Capital Terminal Company, Mr. Avery Noe. The consultants report found
that the compensation for the Chairman, the President and the
Treasurer, based upon survey sources ranging from the Economic Research Institute to data for a
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peer group of 12 real estate operator and lessor companies1, was below the 50% median of
base salary. At the date of the report, as compared to total compensation at peer companies, the
compensation for two of the three executives was below the 25th percentile and for one executive
slightly above the 25th percentile. Based upon the report, our overall compensation philosophy,
our evaluation of the Chief Executives performance and the Chief Executives evaluation of the
performance of the President and the Treasurer, we adjusted the base salaries of the Chairman, the
President and the Treasurer to the 50th percentile of the base compensation of the peer companies.
The Company has historically adjusted annual compensation each year for the covered executives by
the increase in the cost of living. In October, we increased the compensation of the Chairman, the
President and the Treasurer effective January 1, 2007 by the increase in the cost of living for the
period between January 1, 2006 and December 31, 2006 1.78%. We intend to engage a consultant
during 2007 to update the 2005 report with respect to the compensation to be paid during 2008 and
beyond.
Mr. Noes compensation is determined by the Chief Executive Officer based upon his assessment of
Mr. Noes performance and a comparison with the compensation of executives occupying comparable
positions at comparable companies. On October 1, 2006, Mr. Noes compensation was increased by
3.57%. The Company contributes 7.5% of Mr. Noes compensation to the SEP. As with all of the
other executives, there are no short or long-term incentive arrangements for Mr. Noe.
As a result of our overall policy of providing only current cash compensation, we have no need for
policies to allocate between cash and non-cash compensation or between long-term and currently paid
compensation. None of the covered executives has a contract with the Company and the Company has
no change of control or severance provisions for these executives. Due to the Companys
compensation philosophy, accounting and tax treatments have no impact on its compensation policy.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the Compensation Discussion &
Analysis included above. Based on these reviews and discussions, the Compensation Committee has
recommended to the Board of Directors that the Compensation Discussion & Analysis set forth below
be included in the Companys Proxy Statement for the fiscal year ended December 31, 2006 for filing
with the SEC.
Compensation Committee: Alfred J. Corso; Roy J. Nirschel; Harris N. Rosen (Chair).
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid or accrued by the Company during the
twelve-month period ended December 31, 2006, to each of its Chairman & CEO, President and Treasurer
and one other most highly compensated executive officers other than the President and
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The Companies used in the study were Tejon
Ranch Co., American Spectrum Realty, Inc., American REIT, American Communities
Properties Trust, BF Enterprises, Consolidated-Tomoka Land Co., Gladstone
Commercial Corp., Wilkford Real Properties, Inc., JW Meyers, Inc., Stratus
Properties, Inc., Gyrodyne Company of America, Inc., and California Coastal
Communities, Inc. |
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Treasurer who earned more than $100,000 in total compensation in 2006 and were employed by the
Company on December 31, 2006.
Annual Compensation
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Name and Principal |
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Salary and |
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All Other |
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Total |
Position |
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Year |
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Bonus |
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Compensation1 |
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Compensation |
Robert H. Eder, Chairman
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2006 |
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$ |
229,000 |
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$ |
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$ |
229,000 |
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Capital Properties, Inc. |
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Ronald P. Chrzanowski,
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2006 |
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175,000 |
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13,125 |
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188,125 |
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President
Capital Properties, Inc. |
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Barbara J. Dreyer, Treasurer
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2006 |
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155,000 |
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11,625 |
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166,625 |
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Capital Properties, Inc. |
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Avery L. Noe, President
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2006 |
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141,250 |
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10,594 |
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151,844 |
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Capital Terminal Company |
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Contributions by the Company under the Companys SEP are fully vested when made. Each employee
directs the investment of amounts in his or her SEP account. The Company does not have any
employment agreements and has no severance or change of control arrangements with any of its
executive officers.
AUDIT COMMITTEE REPORT
Management is responsible for the Companys internal controls and financial reporting process. The
independent registered public accountants are responsible for performing an audit of the Companys
consolidated financial statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States) and to issue a report thereon. The Audit Committees
responsibility is to monitor and oversee these processes.
The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the
Companys independent registered public accountants. Additionally, and as appropriate, the Audit
Committee reviews and evaluates, and discusses and consults with the Companys management and
independent registered public accountants regarding the scope of the audit plan, the results of the
audit, the Companys financial statement disclosure documents, the adequacy and effectiveness of
the Companys accounting and financial controls and changes in accounting principles.
In connection with these responsibilities, the Audit Committee reviewed and discussed the audited
consolidated financial statements with management and the Companys independent registered public
accountants, Lefkowitz, Garfinkel, Champi & DeRienzo P.C. The Audit Committee also discussed with
such firm the matters required by Statement on Auditing Standards No. 61. The Audit Committee
received from Lefkowitz, Garfinkel, Champi & DeRienzo P.C. written disclosures and the letter
regarding its independence as required by Independence Standards Board Standard No. 1. The Audit
Committee discussed this information
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1 Amounts paid directly to the retirement
accounts of employees under the Companys SEP. |
8
with Lefkowitz, Garfinkel, Champi & DeRienzo P.C. and also considered the compatibility of
non-audit services provided by such firm with its independence. Based on the review of the audited
consolidated financial statements and these various discussions, the Audit Committee recommended to
the Board of Directors that the audited consolidated financial statements be included in the
Companys Annual Report on Form 10-K, to be filed with the SEC.
Audit Committee: Alfred J. Corso (Chair), Roy J. Nirschel and Harris N. Rosen.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has sole authority to engage, manage and discharge
the Companys independent registered public accountants. The Committee engaged Lefkowitz,
Garfinkel, Champi & DeRienzo P.C. as independent registered public accountants of the accounts of
the Company for the year 2007. The Company has recently been advised by Lefkowitz, Garfinkel,
Champi & DeRienzo P.C. that they have no direct financial interest or any material indirect
financial interest in the Company, nor have they had any connection during the past three years
with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or
employee.
It is expected that a representative of Lefkowitz, Garfinkel, Champi & DeRienzo P.C. will be
present at the annual meeting and will be provided the opportunity to make a statement if he so
desires and that such representative will be available to respond to appropriate questions.
Audit and Non-Audit Fees:
The aggregate fees for professional services rendered for the Company by Lefkowitz, Garfinkel,
Champi & DeRienzo P.C. for fiscal years ended December 31, 2006 and 2005 are set forth below.
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2006 |
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2005 |
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Audit fees |
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$ |
83,000 |
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$ |
88,000 |
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Audit-related fees |
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Tax fees |
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11,000 |
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17,000 |
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All other fees |
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Total |
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$ |
94,000 |
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$ |
105,000 |
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Audit Fees for fiscal years ended December 31, 2006 and 2005 were for professional services
rendered for the audits of the Companys annual financial statements and the reviews of interim
financial statements included in the Companys Quarterly Reports on Form 10-QSB, consents and other
assistance required to complete the year end audit of the Companys financial statements.
Audit-Related Fees for the fiscal years ended December 31, 2006 and 2005: there were no
audit-related fees.
Tax Fees for the fiscal years ended December 31, 2006 and 2005 were for services related to tax
return preparation, tax planning and assistance with an Internal Revenue Service audit.
All Other Fees for the fiscal years ended December 31, 2006 and 2005: there were no other fees.
9
The Audit Committee pre-approves all audit and non-audit services provided by the independent
auditors prior to the engagement of the independent auditors with respect to such services.
The Audit Committee has determined that the provision of such services is compatible with
maintaining Lefkowitz, Garfinkel, Champi & DeRienzo P.C.s independence.
FINANCIAL STATEMENTS
A copy of the Companys annual report to the SEC on Form 10-K for the year ended December 31, 2006
is enclosed. Such report is not part of this proxy statement.
PROPOSALS FOR 2008 ANNUAL MEETING
The 2008 annual meeting of the shareholders of the Company is scheduled to be held April 29, 2008.
If a shareholder intending to present a proposal at that meeting wishes to have a proper proposal
included in the Companys proxy statement and form of proxy relating to the meeting, the
shareholder must submit the proposal to the Company not later than November 30, 2007.
OTHER MATTERS
No business other than that set forth in the attached Notice of Meeting is expected to come before
the annual meeting, but should any other matters requiring a vote of shareholders arise, including
a question of adjourning the meeting, the persons named in the accompanying proxy will vote thereon
according to their best judgment in the interests of the Company. In the event any of the nominees
for the office of director should withdraw or otherwise become unavailable for reasons not
presently known, the persons named as proxies will vote for other persons in their place in what
they consider the best interests of the Company.
By Order of the Board of Directors
STEPHEN J. CARLOTTI
Secretary
Dated: March 22, 2007
10
CAPITAL PROPERTIES, INC.
CHARTER OF AUDIT COMMITTEE
1. |
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ORGANIZATION |
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The Audit Committee (the Committee) of Capital Properties, Inc. (the Company) shall be
appointed by the Board of Directors (the Board) of the Company. The Committee shall be
composed of at least three directors each of whom satisfies the independence standards
specified in Rule 121A of the Amex Company Guide and Rule 10A-3 of the Securities Exchange
Act of 1934 and all other legal requirements. Each member shall be free of any relationship
which, in the opinion of the Board, would interfere with their exercise of independent
judgment as members of the Committee. |
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All members of the Committee shall have a working familiarity with basic finance and
accounting practices and be able to read and understand fundamental financial statements.
At least one member shall have an accounting or related financial management expertise, such
that he or she is financially sophisticated within the meaning of Rule 121B(2) of the Amex
Company Guide. |
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Determination of independence, audit committee financial expertise, financial literacy and
accounting or related financial management expertise shall be made by the Board as the Board
interprets such qualifications in its business judgment and in accordance with applicable
law and the listing requirements of the Amex. |
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The Committee shall have the power to adopt its own operating rules and procedures and to
call upon assistance from officers and employees of the Company and outside counsel and
consultants without the consent of management. |
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2. |
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STATEMENT OF POLICY |
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The Committee shall provide assistance to the directors of the company in fulfilling their
responsibilities to the shareholders and investment community relating to corporate
accounting, reporting practices of the Company and the quality and integrity of the
financial reports of the Company. In so doing, the Committee shall maintain free and open
means of communication between the directors, the Companys independent auditor, and the
financial management of the Company. |
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The Committee, and each member of the Committee in his or her capacity as such, shall be
entitled to rely, in good faith, on information, opinions, reports or statements, or other
information prepared or presented to them by officers and employees of the Company, whom
such member believes to be reliable and competent in the matters presented and on counsel,
public accountants or other persons as to matters which the member believes to be within the
professional competence of such person. |
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3. |
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RESPONSIBILITIES |
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The Committee shall have responsibility for overseeing the establishment and maintenance of
an effective financial control environment for the Company, for overseeing procedures for
evaluating the system of internal accounting control, and for evaluating audit performance.
The Committee shall report on its actions to the full Board at each regular quarterly
meeting and at the annual meeting of the Board. |
11
In carrying out the foregoing responsibilities, the Committee shall:
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(a) |
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Be directly responsible for the appointment, compensation,
retention and oversight of any independent auditor engaged for the purpose of
preparing or issuing an audit report or performing other audit, review or
attest services. The accounting firm shall report directly to the Committee. |
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(b) |
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Approve on an annual basis the estimated fees to be paid to the
independent auditor for the annual audit of the consolidated financial
statements of the Company and limited reviews of its quarterly financial
statements and in this connection, review the independent auditors engagement
letter and discuss the general audit approach. |
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(c) |
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Pre-approve audit and non-audit services performed on behalf of
the Company by the independent auditor that are not prohibited by law or
regulation pursuant to such processes as the Committee determines to be
advisable. The Committee may delegate pre-approval authority for any
permissible non-audit service to one or more members of the Committee, provided
that any pre-approval granted by such member or members pursuant to such
delegated authority is presented to the Committee at its next scheduled
meeting. |
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(d) |
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Review any non-audit services performed on behalf of the
Company by the independent auditor that meet the de minimis exception under
applicable law and regulations. |
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(e) |
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Meet with the independent auditor and the financial management
of the Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof review
such audit, including any comments or recommendations of the independent
auditor. |
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(f) |
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Review with the independent auditor and the Companys financial
and accounting personnel, the adequacy and effectiveness of the internal
accounting and financial controls of the Company, and solicit from the
independent auditor any recommendations for the improvement of such internal
control procedures. Particular emphasis shall be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. |
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(g) |
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Review the internal audit functions of the Company, the
proposed audit plans for the current year and the coordination of such plans
with the independent auditor. |
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(h) |
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Review annually with management and the independent auditor the
basis for the disclosures made in the annual report to shareholders regarding
the Companys internal controls for financial reporting. |
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(i) |
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Review any deficiencies identified by management in the design
and operation of internal control for financial reporting and at least annually
consider, in consultation with management and the independent auditor, the
adequacy of the Companys internal control for financial reporting, including
the resolution of identified material weaknesses and reportable conditions, if
any. |
12
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(j) |
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Review with management and the independent auditor the
financial statements proposed to be contained in the annual report to
shareholders to determine that the independent auditor is satisfied with the
disclosure and content of such financial statements, and review and discuss: |
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Changes in accounting standards or rules promulgated by the Financial
Accounting Standards Board or the SEC that have an impact on the
financial statements; |
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Estimates made by management having a material impact on the financial
statements; |
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Analyses of the effect of alternative assumptions, estimates or GAAP
methods on the Companys financial statements; |
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Any changes from prior years in accounting principles applied in the
preparation of such financial statements; and |
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Any material written communications between the independent auditor
and the Companys management, including any management letter provided by
the independent auditor and the Companys response to that letter. |
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(k) |
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Ensure that retention of the independent auditor to perform
audit and nonaudit services is properly disclosed in the Companys proxy
statement and filings with the SEC. |
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(l) |
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Review, at least annually, with management and with the
independent auditor, the qualifications, performance and independence and
objectivity of the independent auditor. In connection with such review and
evaluation, the Committee should: |
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Obtain and review a written report from the independent auditor at least
annually regarding the independent auditors internal quality-control
procedures and any material issues raised by the most recent
quality-control review; |
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Obtain an annual written statement from the independent auditor
delineating all relationships, both direct and indirect, between the
independent auditor and the Company, including each non-audit service
provided to the Company and at least the matters set forth in Independence
Standards Board No. 1; |
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Consider whether the provision of non-audit services is compatible with
maintaining the independent auditors independence, taking into account the
opinions of management; |
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Discuss any relationships that may impair the independent auditors
independence and take such actions as it deems appropriate or make
recommendations to the Board regarding actions to be taken to remedy such
impairment; and |
13
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Ensure appropriate audit and concurring partner rotation as required by
law. |
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(m) |
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Provide sufficient opportunity for the independent auditor to
meet with the members of the Committee without members of management present.
Among the items to be discussed at such meetings are the independent auditors
evaluation of the Companys financial and accounting personnel and the
cooperation received by the independent auditor during the course of the audit. |
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(n) |
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Establish procedures for the receipt, retention and anonymous
treatment of complaints relating to internal accounting controls or auditing
matters. The Committee shall be responsible for designating the individual(s)
responsible for receiving such complaints. |
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(o) |
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Review and approve any related party transactions entered into
by the Company. |
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(p) |
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Administer the Companys Code of Ethics for Chief Executive
Officer and Senior Financial Officers, including consideration of any waivers
and investigation of any alleged violations thereof. |
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(q) |
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Investigate any matter brought to the Committees attention
within the scope of its responsibilities, with the power to retain outside
legal, accounting or other advisors and determine funding for this purpose if,
in its judgment, such retention is appropriate. |
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(r) |
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Meet on at least a quarterly basis, cause minutes of all
meetings of the Committee to be kept and submit the minutes of each Committee
meeting to the Board. |
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(s) |
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Take such other actions as it deems necessary or appropriate
from time to time. |
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(t) |
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Review and assess this Charter at least annually and amend it
as appropriate. |
Adopted: January 27, 2004
14
CAPITAL PROPERTIES, INC.
COMPENSATION COMMITTEE CHARTER
STATEMENT OF PURPOSE
The Board of Directors (the Board) of Capital Properties, Inc. (the Company) has established
the Compensation Committee (the Committee) for the purpose of providing guidance, oversight and
monitoring for all director and executive officer compensation and benefit policies related to
executive compensation.
ORGANIZATION and GENERAL
The Committee shall be composed of at least three independent outside directors. Each member of
the Committee shall be a Non-Employee Director as defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission (SEC) or any successor provisions and an Outside Director as
defined in the regulations under Section 162(m) of the Internal Revenue Code or any successor
provisions. Each member of the Committee shall also meet the listing standards of the AMEX Stock
Market (AMEX) relating to independence of compensation committee members and all other applicable
legal requirements. Determinations of independence shall be made by the Board in its business
judgment and in accordance with applicable law and the listing requirements of AMEX.
The members of the Committee shall be appointed by the Board and shall serve until their successors
are duly elected and qualified or until their earlier resignation or removal. The members of the
Committee may be removed, with or without cause, by a majority vote of the Board.
The Committee shall have a Chairman, appointed by the Board. The Chairman will chair all regular
sessions of the Committee and set the agendas for Committee meetings. The agenda for each meeting
will provide time during which the Committee can meet separately in executive session.
The Committee shall meet sufficiently often to discharge its responsibilities hereunder, but at
least as often as required by applicable SEC rules and AMEX listing requirements. Meetings of the
Committee may be called by the Chairman of the Board or Chairman of the Committee and may be held
telephonically. A majority of Committee members will constitute a quorum for the transaction of
business. The Chief Executive Officer (CEO) and other officers of the Company may be invited to
Committee meetings. The Committee shall maintain a written record of its proceedings.
RESOURCES and AUTHORITY
The Committee shall have the resources and authority it deems necessary and appropriate to
discharge its responsibilities, at the Companys expense. The Committee shall have the power to
adopt its own operating rules and procedures and to call upon assistance from officers and
employees of the Company and outside counsel and other advisers without the consent of management.
The Committee, and each member of the Committee in his or her capacity as such, shall be entitled
to rely, in good faith, on information, opinions, reports or statements, or other information
prepared or presented to them by officers and employees of the Company, whom
15
such member believes to be reliable and competent in the matters presented and on counsel,
compensation consultants or other persons as to matters which the member believes to be within the
professional competence of such person.
RESPONSIBILITIES and DUTIES
In carrying out its purposes, the Committee shall have the following duties, responsibilities and
authority:
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Establish and periodically review the Companys executive officer and director
compensation philosophy and strategies and the specific plans and policies adopted to
implement the strategies. |
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Make recommendations to the Board with respect to any Company incentive compensation
plans and equity-based plans, oversee generally the administration of those plans, and
discharge any responsibilities imposed on the Committee by any of those plans, including
the grant of awards thereunder. |
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Determine the Chairman and CEOs compensation, taking into consideration the Boards
assessment of his or her performance, the Companys performance and relative shareholder
return, the compensation of chief executive officers at comparable companies, the awards
given to the Chairman and CEO in past years and other relevant factors. Review and agree
upon goals and objectives for the CEO for the upcoming year as reflected in the Companys
budget and recommend approval of such goals and objectives to the Board. |
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Review and approve management objectives and establish performance criteria for
incentive compensation plans, if any. |
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Review and approve all aspects of compensation of the Companys other executive
officers, excluding the President of Capital Terminal Company, taking into account
corporate and individual performance, as well as peer group practices and any special
considerations. |
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Provide oversight of managements decisions concerning the performance and compensation
of other Company officers. |
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Execute in its sole discretion the powers and duties vested in it by the terms of any
corporate qualified or nonqualified pension, profit-sharing, savings plan, deferred
compensation plan or stock ownership plan affecting employees of the Company or any of its
subsidiaries, including an annual review of the operations of the Companys qualified
pension and savings plans, if any. |
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Oversee the preparation and review and discuss with management the Companys
Compensation Discussion & Analysis (CD&A) and related disclosures required by the SEC,
including specific Committee review and input regarding: |
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o |
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the discussion of factors important to understanding the objectives,
policies and philosophy underlying the executive compensation programs; |
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o |
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the allocation of various types of compensation, including short-term
and long-term compensation; |
16
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o |
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the specific items of corporate performance taken into account in
setting compensation policies and decisions; |
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o |
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the factors considered in decisions to increase or decrease executive
compensation; |
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o |
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the information presented in the Companys Summary Compensation Table
and other supporting tabular disclosures, including narrative descriptions as
required under SEC rules; and |
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o |
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information and descriptive narrative provided in other disclosures,
including post-employment payments, director compensation and committee governance. |
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Review and decide whether to recommend the final CD&A to the Board for inclusion in the
Companys annual proxy statement. |
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Conduct an annual evaluation of the adequacy of this Charter and recommend any proposed
amendments to the Board for approval. |
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Report to the Board on a regular basis so that the Board is informed of the Committees
activities. |
Adopted: February 26, 2007
17
CAPITAL PROPERTIES, INC.
CLASS A COMMON STOCK PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of Capital Properties, Inc., a Rhode Island corporation, hereby
appoints ROBERT H. EDER and STEPHEN J. CARLOTTI, or either of them, the proxies of the undersigned,
each with the power to appoint his substitute, and hereby authorizes them to represent and to vote
for the undersigned all the Capital Properties, Inc. Class A Common Shares held of record on March
1, 2007 by the undersigned at the Annual Meeting of Shareholders to be held on April 24, 2007 or
any adjournment thereof as follows on the reverse side of this proxy card:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS. PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
( X )
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1.
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ELECTION OF DIRECTORS: |
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( )
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FOR ALL NOMINEES
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( )
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Ronald P. Chrzanowski |
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( )
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Robert H. Eder |
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( )
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Alfred J. Corso |
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( )
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WITHHOLD AUTHORITY
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( )
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Roy J. Nirschel |
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FOR ALL NOMINEES
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( )
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Harris N. Rosen |
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( )
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FOR ALL EXCEPT |
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(See instructions below) |
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INSTRUCTION:
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To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here: ( X ) |
2. |
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In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before the Meeting. |
THE PROXY REPRESENTED BY THIS PROXY CARD, 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 EACH OF THE NOMINEES LISTED AND FOR EACH OF THE PROPOSALS.
IF BOTH THE PROXIES SHALL BE PRESENT IN PERSON OR BY SUBSTITUTE, EITHER OF THE PROXIES SO PRESENT
AND VOTING SHALL HAVE AND MAY EXERCISE ALL THE POWERS HEREBY GRANTED.
Please check here if you plan to attend the meeting ( ).
To change the address on your account, please check the box at right and indicate your new address
in the address space above. Please note that changes to the registered name(s) on the account may
not be submitted via this method. ( )
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Signature
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of Shareholder
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Signature
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of shareholder |
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Date:
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Date: |
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NOTE:
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This proxy must be signed exactly as the name appears hereon. When shares are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in partnership name by
authorized person. |