CTO.NYSECto Realty Growth, INC
DEF 14A: CTO Realty Growth Announces Annual Meeting of Stockholders, Details Executive Compensation and Governance
Sentiment:
Proxy Statement
CTO Realty Growth's proxy statement details the agenda for the 2025 annual meeting, director nominees, executive compensation, and corporate governance practices.
Better than expectedThe company's AFFO per share increased by 4.7% compared to 2023.The executive team achieved the outperform level of performance with respect to the primary financial performance metric under the annual incentive plan.Performance shares awarded in February 2022 vested in early 2025 at the outperform level based on the company's total stockholder return relative to its peer group.
Summary
- CTO Realty Growth, Inc. will hold its annual meeting of stockholders online on June 18, 2025.
- The agenda includes the election of six directors, ratification of Grant Thornton LLP as the independent accounting firm, and an advisory vote on executive compensation.
- Stockholders of record as of April 17, 2025, are entitled to vote.
- In 2024, CTO Realty Growth acquired six retail assets and one land parcel for $226.8 million and originated four structured investments totaling $104.0 million.
- The company issued additional shares of common stock and Series A Preferred Stock, raising almost $200 million of additional equity capital.
- AFFO per share increased by 4.7% compared to 2023.
- The Board recommends voting for all director nominees, ratifying the accounting firm, and approving executive compensation.
- The company's executive compensation program links pay with performance, aligning management's interests with those of stockholders.
- The program consists of base salary, service-based equity incentive compensation, and performance-based cash and equity incentive compensation.
- The company's ESG initiatives include environmental preservation, social responsibility, and corporate governance practices.
Sentiment
Score: 8
Explanation: The document presents a positive outlook with successful acquisitions, increased AFFO, and a strong commitment to ESG, balanced by a net loss and tenant credit challenges.
Positives
- The company achieved a successful year in 2024 with significant acquisitions and structured investments.
- The company increased equity capital through stock issuances.
- AFFO per share increased, indicating improved financial performance.
- The executive compensation program effectively links pay with performance.
- The company has a strong commitment to ESG principles and sustainability.
- The company has a diverse workforce with women representing over half of the employees.
- The company has a clawback policy in place for incentive-based compensation.
- The company's Board is primarily comprised of independent directors.
Negatives
- The company reported a net loss of ($0.35) per diluted share for the full year.
- The company faced several significant tenant credit challenges.
Risks
- The company operates in a competitive real estate market.
- Changes in economic conditions could impact the company's performance.
- Tenant credit challenges could negatively affect revenue.
- Cybersecurity risks could impact the company's operations.
- The company's success depends on the performance of its management team.
Future Outlook
The company aims to continue executing its opportunistic growth and capital recycling strategy, focusing on high-quality retail and mixed-use properties in faster-growing, business-friendly markets.
Management Comments
- The virtual nature of the meeting will enable us to increase stockholder accessibility, while improving meeting efficiency and reducing costs.
- We believe that our compensation program effectively links pay with performance, and aligns managements interests with the interests of the Companys stockholders.
- Our 2024 proved to be a successful year of continued progress towards accomplishing the Companys long term business objectives.
Industry Context
The company operates as a self-managed equity REIT focused on retail and mixed-use properties, aligning with broader trends in the REIT industry towards specialization and strategic asset management.
Comparison to Industry Standards
- The document mentions a peer group of 12 publicly traded REITs used for benchmarking executive compensation, including Armada Hoffler Properties, Chatham Lodging Trust, and others.
- The median market capitalization of the peer group companies was approximately $772 million as of year-end 2024.
- The company's total stockholder return (TSR) is compared against the MSCI US REIT Index, indicating a benchmark for performance relative to the broader REIT market.
- The company's executive compensation practices are benchmarked against the peer group to ensure competitiveness and alignment with industry standards.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Senior Vice President, Chief Financial Officer & Treasurer | Matthew M. Partridge | Philip R. Mays | June 17, 2024 | Matthew M. Partridge resigned from his position. |
| Interim Chief Financial Officer and Treasurer | NA | Lisa M. Vorakoun | April 2024 | Matthew M. Partridge resigned from his position. |
| Senior Vice President and Chief Accounting Officer | Lisa M. Vorakoun | Lisa M. Vorakoun | June 17, 2024 | Lisa M. Vorakoun resumed her role as Senior Vice President and Chief Accounting Officer. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Clawback Policy | The Company adopted the CTO Realty Growth, Inc. Clawback Policy effective as of October 24, 2023. | October 24, 2023 | In the event that the Company is required to prepare a financial restatement, the Compensation Committee shall, to the extent practicable, recoup all incentive-based compensation calculated on a pre-tax basis received after October 2, 2023, by a person (i) after beginning service as an executive officer, (ii) who served as an executive officer at any time during the performance period for that incentive-based compensation; (iii) while the Company had a class of securities listed on a national securities exchange or national securities association; and (iv) during the applicable period, that exceeded the amount of incentive-based compensation that otherwise would have been received had the amount been determined based on the Financial Reporting Measures (as defined in the Clawback Policy), as reflected in the restatement. |
| Stock Ownership Guidelines | In January 2019, we adopted new and enhanced stock ownership guidelines for our directors and executive officers, which were most recently amended in July 2024. | January 2019 | These guidelines require the following minimum ownership levels of the Companys common stock: (i) Directors: the greater of (A) sufficient shares such that their value equals or exceeds five times the directors annual cash retainer fee and (B) 10,000 shares. (ii) CEO: sufficient shares such that their value equals or exceeds six times his or her annual base salary. (iii) Other executive officers: sufficient shares such that their value equals or exceeds two times his or her annual base salary. |
Related Party Transactions
- On August 1, 2024, the Company completed a $10.0 million preferred equity investment in a subsidiary of Seaport Entertainment Group Inc., a publicly traded hospitality, entertainment and real estate company (SEG), with a dividend rate of 14.0%.
- On November 15, 2023, an affiliate of Alpine originated a $24.0 million loan (the Alpine Portfolio Loan) secured by a first mortgage encumbering a portfolio of 41 assets and related improvements owned by a third party (the AM Portfolio).
- On December 4, 2023, we entered into an asset management agreement (the Asset Management Agreement) directly with the owner of the AM Portfolio to manage the portfolio of assets securing the Alpine Portfolio Loan.
- On December 4, 2023, the Company entered into a revenue sharing agreement with Alpine (the Revenue Sharing Agreement) whereby the Company agreed to pay to Alpine a share of the asset management fees, disposition management fees, leasing commissions, and other fees earned by the Company under the Asset Management Agreement.
Stakeholder Impact
- Stockholders are provided with information to make informed decisions on director elections, executive compensation, and auditor ratification.
- Employees are impacted by the company's compensation policies, benefits, and ESG initiatives.
- The company's operations and investments impact the communities in which it operates.
- Tenants are supported through sustainability programs and energy-efficient facilities.
Next Steps
- Stockholders are urged to vote by telephone or online as instructed in the Notice of Internet Availability of Proxy Materials.
- The Board will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
Key Dates
| Date | Description |
|---|---|
| 1997 | The Company conveyed over 11,000 acres of its undeveloped land near Daytona Beach to the State of Florida. |
| 2010 | The 2010 Equity Incentive Plan was originally adopted. |
| August 1, 2011 | John P. Albright became President and CEO of the Company. |
| March 2, 2012 | Grant Thornton LLP was appointed as the Company's independent registered public accounting firm. |
| October 22, 2014 | Daniel E. Smith became Senior Vice President, General Counsel and Corporate Secretary. |
| February 26, 2016 | Steven R. Greathouse became Senior Vice President-Investments. |
| May 2017 | Laura M. Franklin became Chairman of the Board of the Company. |
| 2018 | The Company entered into a transaction that led to the formation of a conservation mitigation bank on approximately 2,500 acres of its land. |
| August 2019 | Alpine Income Property Trust, Inc. (PINE) was formed. |
| November 26, 2019 | The Company and Alpine entered into an exclusivity and right of first offer agreement. |
| July 29, 2020 | Christopher W. Haga became Chairman of the Compensation Committee. |
| July 29, 2020 | R. Blakeslee Gable became Chairman of the Governance Committee. |
| May 26, 2021 | George R. Brokaw became Chairman of the Audit Committee. |
| September 2021 | Philip R. Mays became Chief Financial Officer of Shadow Box Studios. |
| November 2022 | Christopher W. Haga became an Operating Partner at MGG Investment Group. |
| January 2023 | Christopher W. Haga became Chairman of MGG RMC SPV LLC. |
| October 24, 2023 | The CTO Realty Growth, Inc. Clawback Policy became effective. |
| November 15, 2023 | An affiliate of Alpine originated a $24.0 million loan secured by a first mortgage encumbering a portfolio of 41 assets. |
| December 4, 2023 | The Company entered into an asset management agreement with the owner of the AM Portfolio. |
| April 1, 2024 | Matthew M. Partridge resigned from his position as CFO of the Company. |
| April 2024 | Lisa M. Vorakoun was appointed Interim Chief Financial Officer and Treasurer. |
| May 29, 2024 | The Company and Mr. Mays entered into an employment agreement. |
| June 17, 2024 | Philip R. Mays began serving as Senior Vice President, Chief Financial Officer and Treasurer of the Company. |
| June 17, 2024 | Lisa M. Vorakoun resumed her role as Senior Vice President and Chief Accounting Officer. |
| July 19, 2024 | The Alpine Management Agreement was amended to extend the initial expiration date to January 31, 2025. |
| August 1, 2024 | The Company completed a $10.0 million preferred equity investment in a subsidiary of Seaport Entertainment Group Inc. |
| October 22, 2024 | The Company entered into an employment agreement with Ms. Vorakoun. |
| December 31, 2024 | Women represented 51% of the company's full-time workforce. |
| December 31, 2024 | Approximately 32% of the company's full-time workforce self-identified as being racially/ethnically diverse. |
| February 5, 2025 | BlackRock, Inc. filed a statement on Schedule 13G/A with the SEC. |
| February 20, 2025 | The Company filed its Annual Report on Form 10-K with the SEC. |
| April 17, 2025 | The record date for determining stockholders entitled to vote at the Annual Meeting. |
| April 28, 2025 | Date of the notice of annual meeting of stockholders. |
| May 6, 2025 | The company will mail the Notice of Internet Availability of Proxy Materials. |
| June 13, 2025 | Deadline for Legal Proxy registration with Computershare. |
| June 18, 2025 | Date of the Annual Meeting of Stockholders. |
| December 29, 2025 | Deadline for stockholder proposals to be included in the 2026 proxy statement. |
| November 20, 2025 | Earliest date for written notice of stockholder nominations and proposals for the 2026 annual meeting. |
| January 19, 2026 | Latest date for written notice of stockholder nominations and proposals for the 2026 annual meeting. |
| April 19, 2026 | Deadline for stockholders to provide notice of intent to solicit proxies in support of director nominees for the 2026 annual meeting. |
Keywords
executive compensation, corporate governance, annual meeting, real estate, directors, AFFO, ESG, REIT, stockholders, incentive plan
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