DEF: Gyrodyne LLC: Annual Meeting, Board Nominee, Proxy Contest Ends

Sentiment:

Definitive Proxy Statement 17 October 2025 4:22 PM

Gyrodyne, LLC announces its 2025 Annual Meeting to elect a director, approve executive compensation, and ratify auditors, following a resolved proxy contest.

Worse than expectedNet Assets declined from $7,339,729 in 2022 to $353,535 in 2023, and further to $(124,721) in 2024, indicating a significant deterioration in financial position.Cumulative Total Shareholder Return (TSR) based on an initial $100 investment decreased from $61.54 in 2023 to $55.51 in 2024, reflecting a negative trend in shareholder value.

Summary

The Annual Meeting of Shareholders will be held on November 5, 2025, at 11:00 a.m. Eastern Time, at Flowerfield Celebrations, Saint James, New York.
Shareholders will vote on three proposals: the election of Richard B. Smith as a director for a three-year term, a non-binding advisory vote to approve executive compensation, and the ratification of Baker Tilly US, LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
The record date for determining shareholders entitled to vote is September 15, 2025, with 2,199,308 common shares of limited liability company interests outstanding as of October 6, 2025.
A proxy contest with Star Equity Fund, LP was resolved on October 16, 2025, through a Cooperation Agreement, which included Star Equity withdrawing its director nominations and agreeing to vote its shares in line with Board recommendations (with specific exceptions).
The Board size will be reduced to four directors, and the Company agreed to reimburse Star Equity for up to $25,000 in expenses.
Significant changes were made to the Retention Bonus Plan in 2023, including directors waiving benefits in exchange for shares under a new Stock Plan, $1,716,436 shifted back to the Company, and the removal of a price floor for property sales.
Executive compensation for Gary J. Fitlin (President, CEO, CFO, Treasurer) was $250,000 in salary for 2024 and $260,000 (including a $10,000 bonus) for 2023.
Executive compensation for Peter Pitsiokos (COO and Secretary) was $200,000 in salary for 2024 and $210,000 (including a $10,000 bonus) for 2023.
Director annual fees are $42,000, with the Chairman receiving an additional $78,000, totaling $120,000 annually.
Audit fees paid to Baker Tilly were $265,538 in 2024 and $139,128 in 2023; tax fees were $46,550 in 2024 and $44,610 in 2023.

Sentiment

Score: 4

Explanation: While the resolution of the proxy contest and the revised bonus plan are positive governance steps, the significant decline in net assets and TSR over the past two years, coupled with the below-market related-party lease, indicates underlying financial challenges and potential governance issues that temper overall sentiment. The liquidation strategy itself implies a finite future for the company.

Positives

The resolution of the proxy contest with Star Equity Fund, LP avoids significant costs and distractions, fostering stability.
The Board's unanimous recommendation for all proposals indicates internal alignment and a clear path forward for governance matters.
Significant changes to the Retention Bonus Plan, including directors waiving benefits and $1,716,436 shifted back to the Company, demonstrate improved alignment of incentives with shareholder interests.
The removal of the price floor hurdle for property sales eliminates a potential perverse incentive and supports the strategic liquidation plan.
The Board is committed to a long-term strategic plan to enhance property values and maximize shareholder distributions during the liquidation process.
All current and nominated Board members are independent directors as defined by Nasdaq listing requirements.

Negatives

A below-market lease agreement with a not-for-profit organization, where the Chairman, Paul L. Lamb, serves as Chairman and director, could be perceived as a conflict of interest or suboptimal asset management.
The company's net assets declined significantly from $7,339,729 in 2022 to $(124,721) in 2024.
The cumulative Total Shareholder Return (TSR) based on an initial $100 investment decreased from $61.54 in 2023 to $55.51 in 2024.
The company agreed to reimburse Star Equity for up to $25,000 in expenses as part of the proxy contest resolution.

Risks

Risks and uncertainties generally relating to efforts to enhance the values of remaining properties and seek their orderly, strategic sale as soon as reasonably practicable.
Risks associated with the Article 78 Proceeding against the Company and any other litigation that may develop in connection with efforts to enhance the value of and sell properties.
Risks relating to the national marketing campaign led by JLL for the sale of Flowerfield and Cortlandt Manor properties.
Risks associated with purchase and sale agreements (e.g., with B2K) that may be contingent on years-long regulatory contingencies, in light of the company's financial condition.
Community activism risk, proxy contests, and other actions of activist shareholders.
Regulatory enforcement risk.
Risks inherent in the real estate markets of Suffolk and Westchester Counties in New York.
Potential residual effects of the COVID-19 pandemic.
Lingering risks relating to the 2023 banking crisis and closure of two major banks (including one with whom the company indirectly had a mortgage loan).
Ongoing inflation risk, ongoing interest rate uncertainty, recession uncertainty, and supply chain constraints or disruptions.

Future Outlook

The company's strategic plan is to pursue zoning and/or entitlement opportunities to increase the values of its two remaining major properties (Flowerfield and Cortlandt Manor) so they can be sold at higher prices than otherwise possible. This is intended to maximize distributions to shareholders during the liquidation process within a reasonable period of time, leading to the eventual dissolution of the Company. The company assumes no obligation to update or revise any forward-looking information.

Management Comments

"We are confident that our Board candidate has the right mix of professional achievements, skill, experience and reputation that qualifies the Company’s candidate to serve as a shareholder representative overseeing the management of the Company."
"We are committed to engaging with our shareholders and continuing to respond to shareholder concerns about the Company, and we believe we are in the best position to oversee the execution of our long-term strategic plan to realize shareholder value."
"The Board unanimously recommends that you vote FOR Richard B. Smith."
"We thank you for your continued support of the Company and look forward to your participation at our Annual Meeting."

Industry Context

The company operates within the real estate market, specifically focusing on properties in Suffolk and Westchester Counties in New York. Its current strategy is a liquidation plan, aiming to enhance property values through zoning and entitlements before selling them. This approach is distinct from typical growth-oriented real estate companies, as it focuses on asset divestment and maximizing returns for shareholders during a finite operational period. The company's risks are tied to the local real estate market conditions, regulatory processes for property development, and broader economic factors like inflation and interest rates.

Comparison to Industry Standards

The resolution of the proxy contest and the subsequent Cooperation Agreement with Star Equity Fund, LP, including the reduction in board size and revised voting commitments, aligns with best practices for shareholder engagement and conflict resolution in corporate governance.
The significant revisions to the Retention Bonus Plan, which included directors waiving benefits and a substantial amount of funds being returned to the company, demonstrate a move towards better alignment of executive and director incentives with overall shareholder value, a key governance benchmark.
The company's continued separation of the Chairman and CEO roles is a governance structure often favored for providing independent oversight of management.
The disclosed below-market lease agreement with a not-for-profit organization, where the Chairman holds a leadership position, deviates from standard arm's-length transactions and could be viewed unfavorably compared to industry best practices for related-party dealings and asset management.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director	Philip F. Palmedo	Jan H. Loeb	July 28, 2023	Resignation due to health concerns.
Director	Paul L. Lamb	N/A (Board size reduced)	After 2025 Annual Meeting	Not continuing as director as part of board size reduction to four directors, agreed upon in Cooperation Agreement.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	Reduction of the board size to four directors, with Paul L. Lamb not continuing, as part of the Cooperation Agreement with Star Equity Fund, LP. Only Richard B. Smith is nominated for election.	After 2025 Annual Meeting	A smaller board may streamline decision-making but could reduce diversity of thought. The agreement with an activist shareholder indicates a response to external pressure for governance changes.
Shareholder Engagement	Resolution of a proxy contest with Star Equity Fund, LP through a Cooperation Agreement, including Star Equity's withdrawal of director nominations and commitment to vote shares in accordance with Board recommendations (with specific exceptions).	October 16, 2025	Reduces potential for disruptive shareholder activism and associated costs, promoting board stability and focus on the liquidation strategy.
Executive Compensation Policy	Amendment No. 5 to the Retention Bonus Plan, shifting $1,716,436 back to the Company, directors waiving bonus benefits for shares under a new Stock Plan, and removal of a property sale price floor.	September 5, 2023	Improves alignment of executive and director incentives with overall shareholder value by reducing potential for excessive payouts and removing disincentives for property sales below a certain threshold.
Director Compensation	Adoption of the Gyrodyne, LLC Restricted Stock Award Plan (Stock Plan) to replace director participation in the Bonus Plan, with 91,628 shares issued to participating directors subject to vesting conditions.	September 5, 2023 (subject to shareholder approval on Oct 12, 2023)	Further aligns director compensation with long-term shareholder interests through equity-based awards, subject to vesting tied to liquidating distributions.
Board Leadership Structure	The current leadership structure maintains a separation of the roles of chairman and principal executive officer.	Ongoing	Intended to provide an appropriate level of independence from management and encourage a high degree of autonomy within the Board.
Hedging Policy	The securities trading policy prohibits Company officers and directors from engaging in hedging or monetization transactions involving the Company's securities.	2004 (most recently amended 2024)	Prevents officers and directors from offsetting the risk of ownership, ensuring their financial interests remain aligned with those of other shareholders.

Legal Proceedings

An Article 78 Proceeding against the Company.
Potential for other litigation to develop in connection with efforts to enhance the value of and sell properties.

Related Party Transactions

Indemnification agreements have been entered into with directors, providing for indemnification and advancement of expenses to the fullest extent permitted by New York law and the LLC Agreement.
A Consolidated Lease Agreement was signed in March 2022 with a not-for-profit organization where the Company's Chairman, Paul L. Lamb, serves as Chairman and a director (uncompensated). This lease, extended to December 2027, is described as a below-market lease, with annual rent of $8,829 and a total commitment of $44,144 during the extended period. Rental revenue from this lease was $54,160 in 2024 and $52,583 in 2023. The Chairman's law firm also provided pro bono legal representation to the not-for-profit on the lease.

Stakeholder Impact

Shareholders: Directly impacted by the resolution of the proxy contest, which reduces uncertainty and potential costs. The revised executive compensation and bonus plan aim to better align management incentives with shareholder value maximization during the liquidation process. However, the decline in net assets and TSR indicates challenges in value realization.
Management and Directors: Board composition changes, including a reduction in size and the non-continuation of the Chairman, will alter dynamics. Executive compensation structures have been revised to align with the liquidation strategy, and directors' compensation now includes equity-based awards tied to vesting.
Employees: The Retention Bonus Plan is designed to incentivize and retain key employees for the duration of the strategic plan to enhance property values, liquidate, and dissolve the company.
Creditors: The mention of a mortgage loan transferred by the FDIC following a bank closure highlights potential exposure to financial institution stability, which could impact creditors.

Next Steps

Shareholders are urged to vote on the proposals for the Annual Meeting by November 4, 2025 (Internet) or by mail before the meeting on November 5, 2025.
The Board will oversee the execution of the long-term strategic plan to enhance property values, seek orderly sales, maximize distributions to shareholders, and eventually dissolve the Company.
Final voting results from the Annual Meeting will be reported in a Current Report on Form 8-K filed with the SEC within four business days after the meeting.
Shareholders wishing to submit proposals for the 2026 Annual Meeting must do so by specific deadlines, with the earliest being June 8, 2026, and the latest being July 8, 2026, for written notice.

Key Dates

Date	Description
1990	Baker Tilly (successor to Holtz Rubenstein Reminick LLP) first ratified as auditor.
1997	Paul L. Lamb became a director.
March 14, 1999	Paul L. Lamb became Chairman of the Board.
May 2000	Richard B. Smith began serving as Senior Vice President for Private Banking at Suffolk County National Bank.
2002	Richard B. Smith first became a director.
June 2003	Ronald J. Macklin first became a director.
2003	Richard B. Smith and Ronald J. Macklin were elected by shareholders.
May 2004	Board adopted a securities trading policy.
2004	Peter Pitsiokos became Executive Vice President, Chief Operating Officer, and Chief Compliance Officer.
February 2005	Richard B. Smith concluded serving as Senior Vice President for Private Banking at Suffolk County National Bank.
June 2005	Gary J. Fitlin began serving as Vice President and Corporate Controller for Source Media.
July 2006	Gary J. Fitlin concluded serving as Vice President and Corporate Controller for Source Media and began serving as Director of Accounting Implementation for Lexington Realty Trust.
October 2006	Nader G.M. Salour first became a director and was elected by shareholders.
2007	Jan H. Loeb became Managing Member of Leap Tide.
March 2008	Gary J. Fitlin concluded serving as Director of Accounting Implementation for Lexington Realty Trust.
August 2009	Jan H. Loeb began serving as a Director of TAT Technologies, Ltd.
October 2009	Gary J. Fitlin joined the Company as Chief Financial Officer and Treasurer.
August 2012	Gary J. Fitlin began serving as interim President and Chief Executive Officer.
February 24, 2013	Gary J. Fitlin concluded serving as interim President and Chief Executive Officer.
April 1, 2013	Effective date of new employment agreement with Mr. Fitlin.
May 17, 2013	Company entered into a new employment agreement with Mr. Fitlin.
July 8, 2013	Jan H. Loeb began serving as Lead Director of American Pacific Corporation.
February 27, 2014	Jan H. Loeb concluded serving as Lead Director of American Pacific Corporation.
May 8, 2014	Company entered into a new employment agreement with Mr. Pitsiokos.
May 15, 2014	Effective date of new employment agreement with Mr. Pitsiokos.
May 2014	Board approved the Retention Bonus Plan.
August 31, 2015	Merger of Gyrodyne Company of America, Inc. and Gyrodyne Special Distribution, LLC into the Company.
September 1, 2015	Company adopted the liquidation basis of accounting.
January 2016	Jan H. Loeb became President and CEO of Acorn Energy Corp.
December 2016	Jan H. Loeb began serving as a Director of Keweenaw Land Association, Ltd.
December 21, 2016	Jan H. Loeb concluded serving as a Director of TAT Technologies, Ltd.
May 1, 2017	Gary J. Fitlin appointed President and Chief Executive Officer.
January 25, 2018	Company entered into an amendment to the employment agreement with Mr. Pitsiokos.
December 2018	Richard B. Smith concluded serving as Vice President in Commercial Banking Division of First National Bank of Long Island.
May 2019	Jan H. Loeb concluded serving as a Director of Keweenaw Land Association, Ltd.
June 2018	Jan H. Loeb became President, Executive Chairman, and board member of Novelstem International Corp. and Chairman of Newstem Ltd.
December 2019	Jan H. Loeb became CEO of Omnimetrix, LLC.
December 6, 2019	Board approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan (DCP), effective January 1, 2020.
March 2022	A Consolidated Lease Agreement was signed, extending a related-party lease to December 2027.
July 26, 2023	Company entered into the Loeb Cooperation Agreement with Leap Tide and Mr. Loeb.
July 28, 2023	Jan H. Loeb was appointed to the Board to fill a vacancy created by Philip F. Palmedo's resignation.
August 1, 2023	Current Report on Form 8-K filed with the SEC regarding the Loeb Cooperation Agreement.
September 5, 2023	Board approved Amendment No. 5 to the Bonus Plan and the adoption of the Gyrodyne, LLC Restricted Stock Award Plan (Stock Plan).
September 11, 2023	Form 8-K filed with the SEC regarding the Stock Plan.
October 12, 2023	Stock Plan approved at the 2023 annual shareholders meeting; Jan Loeb elected to a three-year term.
November 14, 2023	Directors received grants, awards, or other acquisitions of common shares.
December 2023	FDIC transferred a mortgage loan to a new holder following a bank closure.
March 12, 2024	Directors had other acquisitions or dispositions of common shares.
March 14, 2024	Schedule 13G/A filed by Lance Gad Revocable Trust.
March 21, 2024	Amendment No. 12 to Schedule 13D filed by GAMCO Investors, Inc.
April 1, 2024	Paul L. Lamb had an open market sale of common shares.
December 31, 2024	Fiscal year end for which the Annual Report on Form 10-K was filed.
August 26, 2025	Amendment No. 7 to Schedule 13D filed by Star Equity.
September 8, 2025	Form 4 filed by Towerview LLC.
September 15, 2025	Record date for determining shareholders entitled to notice of, and to vote at, the Annual Meeting.
October 6, 2025	Date for beneficial ownership information presented in the filing.
October 16, 2025	Cooperation Agreement entered into with Star Equity Fund, LP.
October 17, 2025	Proxy statement and proxy card first made available to shareholders; Current Report on Form 8-K filed with SEC regarding Cooperation Agreement.
October 27, 2025	Deadline to request documents from the company to receive them before the Annual Meeting.
November 4, 2025	Deadline for Internet voting (11:59 p.m. Eastern Time).
November 5, 2025	Annual Meeting of Shareholders at 11:00 a.m. Eastern Time.
December 15, 2026	Expected payment date for Nonqualified Deferred Compensation Plan (DCP) benefits, unless a plan of liquidation is established earlier.
December 31, 2026	Star Equity's obligations under the Cooperation Agreement continue until this date (or December 31, 2027, under certain conditions).
June 8, 2026	Earliest date for written notice of shareholder nominations or proposals for the 2026 Annual Meeting.
June 19, 2026	Deadline for shareholder proposals for inclusion in the 2026 Annual Meeting proxy statement.
July 8, 2026	Latest date for written notice of shareholder nominations or proposals for the 2026 Annual Meeting.
September 6, 2026	Deadline for notice of shareholder director nominees under universal proxy rules for the 2026 Annual Meeting.
2028	Richard B. Smith's proposed term as director ends at the 2028 annual meeting of shareholders.

Recommendation

hold

The company is actively pursuing a liquidation strategy to maximize shareholder distributions from property sales. The recent resolution of a proxy contest and significant revisions to the executive bonus plan demonstrate improved corporate governance and alignment with shareholder interests, which are positive. However, the company has experienced a notable decline in net assets and total shareholder return over the past two fiscal years, indicating challenges in value realization. The disclosed below-market related-party lease also raises questions about optimal asset management. Given the company's finite operational horizon and mixed financial performance during its liquidation phase, a 'hold' position is appropriate for investors to monitor the execution of the strategic property sales and the resulting distributions, while acknowledging the inherent risks and past performance.

Keywords

SEC filing, proxy statement, annual meeting, corporate governance, director election, executive compensation, auditor ratification, real estate, property sales, liquidation, shareholder value, proxy contest, Gyrodyne LLC, DEF 14A

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