UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date of
Report
(Date of
earliest event reported):
November
2, 2009
Consolidated-Tomoka
Land Co.
(Exact
name of registrant as specified in its charter)
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Florida
(State
or other jurisdiction of incorporation)
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01-11350
(Commission
File Number)
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59-0483700
(IRS
Employer Identification No.)
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1530
Cornerstone Boulevard, Suite 100
Daytona
Beach, Florida
(Address
of principal executive offices)
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32117
(Zip
Code)
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Registrant’s
telephone number, including area code: (386)
274-2202
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Not
Applicable
(Former
name or former address, if changed since last report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item
5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On October 28, 2009, the Board of
Directors (the “Board”) of Consolidated-Tomoka Land Co. (the “Company”),
following the recommendation of the Compensation and Stock Option Committee (the
“Committee”) of the Board, amended the Annual Executive Cash Bonus Criteria for
the fiscal year ending December 31, 2009 (the “Cash Bonus Plan”) that had been
adopted and approved by the Board on January 28, 2009.
Modification of the Cash Bonus
Plan reflects the following:
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·
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operating
losses from self-development projects will be calculated in basic earnings
per share (“EPS”) and will reduce current EPS and potential bonuses under
the Cash Bonus Plan;
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·
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if
a participant had received a prior bonus under the Cash Bonus Plan based
on an increase in land value, that increased land value would become the
new adjusted land basis when determining any subsequent equivalent EPS for
bonuses under the Cash Bonus Plan;
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·
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although
bonuses are not normally awarded at earnings levels of less than $1.50 per
share, upon recommendation of the Compensation Committee, the Board of
Directors, in its discretion, may also award discretionary cash bonuses to
participants whose performance is determined to have been outstanding
during the plan year or otherwise merits a special one-time cash
bonus.
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·
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the
Committee reviews CEO recommendations regarding bonuses to be awarded to
other participants under the Cash Bonus Plan and makes its recommendations
to the Board for final approval. The Committee also recommends to the
Board any bonus to be awarded to the CEO under the Cash Bonus Plan;
and
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·
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the
Board may, upon the recommendation of the Committee, award discretionary
cash bonuses under the Cash Bonus Plan to participants whose performance
is determined to have been outstanding during the plan year or otherwise
merits a special one-time cash
bonus.
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The
description of the revisions to the Cash Bonus Plan contained herein is a
summary of the material amendments to the Cash Bonus Plan, does not purport to
be complete, and is qualified in its entirety by reference to the Cash Bonus
Plan. A copy of the Cash Bonus Plan is attached to this Current Report on Form
8-K as Exhibit 10.1.
Item
9.01. Financial Statements and Exhibits.
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(d)
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Exhibits
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: November
2, 2009
Consolidated-Tomoka
Land Co.
By: /s/William
H.
McMunn
William
H. McMunn, President and Chief Executive
Officer
CONSOLIDATED-TOMOKA
LAND CO.
Annual
Executive Cash Bonus Plan
The
Executive Cash Bonus Plan for Consolidated-Tomoka Land Co. is designed to
provide incentive compensation for eligible Company officers and managers, whose
participation has been approved by the Compensation Committee of the Board of
Directors. To be eligible for the bonus, an officer or manager must
be employed as a full-time employee from January 31 through December 31 of the
bonus plan year unless otherwise recommended by the Compensation
Committee and approved by the Board of Directors. The
discretionary award will be based on the overall profitability of the Company
and each participant’s overall performance in contributing to the profitability
of the Company for that given year. Bonuses will be paid no later
than March 15 following the end of the preceding bonus plan year.
The
Annual Executive Cash Bonus Plan is provided at the discretion of
Consolidated-Tomoka Land Co. and its Board of Directors. The Company
reserves the right to modify, or terminate the Plan with or without
notice.
Prior to
2008, the Company’s annual cash bonuses have been based on the Company’s
after-tax earnings per share (“EPS”) in general conformity with the current cash
incentive policy attached as Exhibit A. Annual Company revenues were
primarily generated from third-party land sales.
Net
income from operations, including the sale of property to third parties in any
calendar year, were calculated in conformity with U.S. generally accepted
accounting principles, as reported in the Company’s Annual Report and
accompanying Form 10-K, filed with the SEC. Land leases, build-to-suit lease
projects, and self-development projects were not part of the
calculation.
Beginning
in 2008, the Compensation and Stock Option Committee and Board of
Directors determined that it was equally important to motivate and
reward management for achievements in those three additional areas, which are
also a part of the Company’s adopted business plan. This revision to the current
cash bonus plan is intended to provide an incentive to management to also engage
in land leases, build-to-suit lease projects, and self-development projects by
providing equivalent cash incentives, which would be realized from third-party
land sales and conversion into 1031 income properties.
In order
to provide an annual plan that balances executive performance, the Company, for
purposes of determining eligibility and potential bonus pool amounts, will now
include in the annual executive bonus criteria a one-time per project
equivalency calculation that represents the after-tax net income, which would
have been recognized on the land portion of any approved land lease,
build-to-suit lease, or self-development project occurring in that year had the
property instead been sold to a third party at market value. The market value of
the unimproved land shall be determined by using the unimproved land value used
in the calculation of the land lease or in the build-to-suit lease projects, or
in the case of self-development projects the unimproved land value stated in the
Board-approved proforma less any costs to date allocated to the unimproved
land.
Operating
losses from any self-development projects will be calculated in basic EPS and
will reduce current EPS and potential bonuses.
Annual
Executive Cash Bonus Plan (continued)
Page
- -2-
Examples of Projects
Qualifying for Bonus Eligibility:
Example
1: If land was leased to a third party and the lease payments were based on a
value of $2,000,000, then the calculation would be as follows:
$2,000,000,
less the land’s cost basis, less the applicable federal and state tax rate,
divided by the average outstanding number of shares during the
year.
Example
2: If a build-to-suit lease was based on a value of $8,000,000 and the land
component was $2,250,000, then the calculation would be as follows:
$2,250,000
less the land’s cost basis, less the applicable federal and state tax rate,
divided by the average
outstanding number of shares during the year.
Example
3: If the land value used in the Board-approved self-development proforma was
$1,950,000 then the calculation would be as follows:
$1,950,000
less the land’s cost basis, less the applicable federal and state tax rate,
divided by the average
outstanding number of shares during the year.
If in any
of the above examples the participant had received a prior bonus based on an
increase in land value, that increased land value would become the new adjusted
land basis when determining any subsequent equivalent EPS for
bonuses.
Example
The
following example illustrates how equivalent earnings per share would be added
to basic earnings to determine adjusted EPS for executive bonus
calculations:
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Basic Earnings per Share in conformity
with
Generally accepted accounting
principles
(Includes negative adjustments to EPS from any operating
losses attributed to non-performing assets)
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$2.37
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Add (Land sales equivalency earnings per
share)
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$.19
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Project “A” a third party land lease
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$.21
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Project “B” a build to suit lease back
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$.17
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Project “C” a self development project
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$.57
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$
.57
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Deduct (the adjusted land value equal to
the amount
used to calculate any
prior bonus payout
previously
recognized)
Self-development project sold less
previous gain on undeveloped land recognition
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-.12
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Equivalent earnings per share for
eligibility
determination and calculation of executive
bonus (per exhibit “A”) would be:
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$2.82
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Adopted: January
28, 2009
REVISED: October
28, 2009
EXHIBIT
A
CONSOLIDATED-TOMOKA
LAND CO.
Criteria
for Cash Bonus Plan
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1)
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The
Company’s annual cash bonus plan was instituted to reward short-term
performance. Awards are currently tied to the Company’s
Earnings Per Share (“EPS”) achievement for the plan
year.
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2)
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Bonus
payouts are limited as follows:
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Chief
Executive Officer
Senior
VP and Executive Officers
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up
to 200% of base annual salary
up to 100% of base annual
salary
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Vice
Presidents
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up
to 75% of base annual
salary
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Managers
designated in the plan
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up
to 50% of base annual
salary
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3)
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Annually,
the bonus pool is established based on the target EPS, and is adjusted for
the number of employees in the plan at each
level.
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4)
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Estimated
pay out guidelines as a percentage of employees’ base salary are as
follows:
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EPS
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CEO
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SR VP
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VP
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Managers
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$1.50
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43%
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22%
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16-20%
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6-20%
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$2.00
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52%
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27%
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20-24%
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8-25%
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$2.50
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65%
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33%
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25-30%
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10-32%
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$3.00
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78%
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40%
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30-36%
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12-38%
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$3.50
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94%
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48%
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36-43%
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15-50%
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$4.00
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112%
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58%
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43-52%
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18-50%
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$4.50
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135%
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70%
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52-62%
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22-50%
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$5.00
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162%
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84%
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62-75%
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27-50%
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$5.50
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194%
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100%
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75%
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33-50%
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$6.00
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200%
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100%
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75%
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40-50%
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Bonuses
are not normally awarded to participants at earnings levels of less than
$1.50 per share
unless the Board determines that an individual participant’s contribution
was
outstanding
when compared to industry peers.
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5)
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Actual
awards are based on two factors--the Company’s EPS achieved for the plan
year and the individual participant’s performance. The CEO makes
recommendations to the Compensation Committee based on each participant’s
performance, and the Compensation Committee then reviews these
recommendations and makes its recommendations to the Board of Directors
for final approval. The Compensation Committee makes a
recommendation to the Board of Directors for the CEO’s bonus based on EPS
and individual performance. A participant’s actual award may be
increased, decreased, or eliminated if, in the judgment of the
Compensation Committee, his/her performance or other issues warrant this
action. Awards may be pooled and reallocated between two are more
participants, and in certain instances awards to an individual participant
may be increased above these
guidelines.
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6)
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Upon
the recommendation of the Compensation Committee, the Board of Directors,
in its discretion, may also award discretionary cash bonuses to
participants whose performance is determined to have been outstanding
during the plan year or otherwise merits a special one-time cash
bonus.
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