Medalist Diversified, Inc PRE 14A, filed Aug 8, 2024

Medalist Diversified, Inc. (MDRR)

PRE 14A 2024-08-08 For: 2024-09-12

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Added on October 16, 2026

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ABOUT THE PROXY STATEMENT	1
PROPOSAL NO. 1. ELECTION OF DIRECTORS	10
Board Diversity Matrix	12
Board of Directors and Committees	12
Director Independence	16
Stockholder Communications with the Board of Directors	16
Audit Committee Report	16
Board Leadership Structure	17
Role of our Board of Directors in Risk Oversight	17
PROPOSAL NO. 2. ADVISORY VOTE ON EXECUTIVE COMPENSATION	18
PROPOSAL NO. 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION	18
PROPOSAL NO. 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	19
PROPOSAL NO. 5. VOTE ON REVERSE STOCK SPLIT PROPOSAL	20
PROPOSAL NO. 6. OTHER MATTERS	26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	26
OUR MANAGER AND RELATED AGREEMENTS	28
Our Manager	28
Management Agreement	28
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	32
EXECUTIVE OFFICERS	33
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION	33
Executive Officer Compensation	34
Director Compensation	37
Equity Incentive Plan Information	37
PAY VERSUS PERFORMANCE	42
DELINQUENT SECTION 16(A) REPORTS	46
STOCKHOLDER PROPOSALS AND NOMINATIONS	46
ANNUAL REPORT ON FORM 10-K	47


Proposal Number	Subject	Vote Required	Impact of Withhold and Abstain Votes and Broker Non-Votes, if any

1	Election of directors	The director will be elected by a plurality of the votes cast. This means that the nominee receiving the greatest number of “FOR” votes will be elected as a director, even if the number of votes received is less than a majority of the votes present at the Annual Meeting.*	Withhold votes and broker non-votes will not count as votes cast on the proposal and will not affect the outcome of the vote but will be considered “present” for the purpose of determining a quorum.

2	Advisory, Non-Binding Approval of Compensation of our Named Executive Officers	A majority of the votes cast.	Abstentions and any broker non-votes will not count as votes cast on the proposal and will not affect the outcome of the vote but will be considered “present” for the purpose of determining a quorum.

3	Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers	The option that receives the highest number of votes in favor, even if less than a majority, will be the frequency that is selected by the stockholders.	Abstentions and any broker non-votes will not count as votes cast on the proposal and will not affect the outcome of the vote but will be considered “present” for the purpose of determining a quorum.

4	Ratification of Appointment of Independent Auditors	A majority of the votes cast.	Abstentions and any broker non-votes will not count as votes cast on the proposal and will not affect the outcome of the vote but will be considered “present” for the purpose of determining a quorum.

5	Authorization of Reverse Stock Split Proposal	A majority of the votes cast.	Abstentions and any broker non-votes will not count as votes cast on the proposal and will not affect the outcome of the vote but will be considered “present” for the purpose of determining a quorum.


	2024 (As of 8/20/2024)
Total Number of Directors	5
				Did Not
			Non	Disclose
Part I: Gender Identity	Female	Male	Binary	Gender
Directors	—	5	—	—
Part II: Demographic Background
African American or Black	—	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	—	—	—	—
Hispanic or Latinx	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	—	5	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—	—	—	—
Did Not Disclose Demographic Background	—	—	—	—


Board Member	Audit	Compensation	Nominating	Acquisition	Board
Francis P. Kavanaugh					Chairman
Neil P. Farmer	X	Chairman	X	X	Lead Independent Director
Alfred Lee Finley			X	X	X
David Lunin	Chairman	X			X
Emanuel D. Neuman	X	X	Chairman	Chairman	X


	2022		2023
Audit Fees⁽¹⁾	$	228,283	$	212,012
Audit-Related Fees		—		—
Tax Fees⁽²⁾		77,822		90,826
Total	$	306,105	$	302,838


		Number of	Number of
		Shares	OP Units			Percentage
		Beneficially	Beneficially	Percentage		of all Shares
Name of Beneficial Owner⁽⁵⁾	Title of Class	Owned	Owned	of all Shares⁽¹⁾		and OP Units⁽²⁾
Named Executive Officers and Directors⁽⁴⁾
Francis P. Kavanaugh⁽⁶⁾⁽⁷⁾	Common Stock & OP Units	178,670	228,044	16.0	%	36.2	%
Thomas Messier⁽⁸⁾	Common Stock	—	—	—	%	—	%
William Elliott⁽⁸⁾	Common Stock	—	—	—	%	—	%
Colin Elliott⁽⁸⁾	Common Stock	—	—	—	%	—	%
Neil Farmer	Common Stock	10,719	—	1.0	%	1.0	%
David Lunin	Common Stock	2,527	—	*	%	0.2	%
Emanuel Neuman	Common Stock	10,839	—	1.0	%	1.0	%
Alfred Lee Finley⁽³⁾⁽⁵⁾	Common Stock	165,625	—	14.8	%	14.7	%
C. Brent Winn, Jr.	Common Stock	34,724	—	3.1	%	3.1	%
All Current Directors and Executive Officers as a Group (6 persons)⁽⁹⁾		403,104	228,044	36.1	%	56.1	%

Name	Age	Position
Thomas E. Messier	69	Co-Founder and Co-President
William R. Elliott	73	Co-Founder and Co-President


Type		Description
Asset Management Fee		Prior to the termination of the Management Agreement, we paid our Manager a monthly asset management fee equal to 0.125% of our stockholders’ equity payable in arrears in cash. For purposes of calculating the asset management fee, our stockholders’ equity means: (a) the sum of (1) the net proceeds from (or equity value assigned to) all issuances of our Company’s equity and equity equivalent securities (including common stock, common stock equivalents, preferred stock and OP Units issued by our operating partnership) since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (2) our Company’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that our Company has paid to repurchase our common stock issued in this or any subsequent offering. Stockholders’ equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation and amortization) that have impacted stockholders’ equity as reported in our Company’s consolidated financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between our Manager and our independent director(s) and approval by a majority of our independent directors. For the years ended December 31, 2023 and 2022, we incurred $485,897 and $876,049, in asset management fees, respectively. Asset management fees are recorded on our Company’s consolidated statements of operations as (i) retail center property operating expenses ($196,658 and $309,078 for the years ended December 31, 2023 and 2022, respectively) , (ii) hotel property operating expenses ($0 and $20,475 for the years ended December 31, 2023 and 2022, respectively), (iii) flex center property operating expenses ($64,575 and $109,100 for the years ended December 31, 2023 and 2022, respectively) and (iv) legal, accounting and other professional fees ($224,664 and $437,396 for the years ended December 31, 2023 and 2022, respectively).

Property Management Fee		The Company paid Shockoe Properties, LLC, a subsidiary of Dodson Properties, LLC, an entity in which Mr. W. Elliott, one of the owners of the Company’s former Manager, held a 6.32% interest, an annual property management fee of up to 3% of the monthly gross revenues of the Franklin Square, Hanover Square, Ashley Plaza, Brookfield, Lancer Center, Greenbrier Business Center, Parkway and Salisbury properties. These fees were paid in arrears on a monthly basis. During the years ended December 31, 2023 and 2022, the Company paid Shockoe Properties, LLC management fees of $304,179 and $271,334, respectively. In addition, pursuant to a separate agreement dated November 1, 2017 between Dodson Properties, LLC and Mr. W. Elliott, Dodson Properties, LLC paid Mr. W. Elliott 5% of the property management fees paid by the Company to Dodson Properties, LLC or its affiliates.

Acquisition Fee		Prior to the termination of the Management Agreement, our Manager received an acquisition fee of 2.0% of the purchase price plus transaction costs, for each property acquired or investment made on our Company’s behalf at the closing of the acquisition of such property or investment, in consideration for the Manager’s assistance in effectuating such acquisition. Pursuant to a Letter Agreement, dated March 19, 2021, by and among us, our Operating partnership and our Manager (the “2021 Letter Agreement”) and a Letter Agreement, dated March 10, 2023, by and among us, our Operating Partnership and our Manager (the “2023 Letter Agreement,” collectively with the 2021 Letter Agreement, the “Manager Letter Agreements”), our Manager agreed to defer payment of one-half of any acquisition fee payable to the Manager from that date


Type		Description
		until the earlier of: (i) the date that the public trading price of our common stock, as reported on the Nasdaq Capital Market, reaches a closing trading price of at least $40.00 per share (adjusted to reflect the Company’s reverse stock split at a ratio of 1-for-8 completed on May 3, 2023); (ii) the effective date of the termination of the
		Management Agreement as the result of an election by us to terminate the Management Agreement (other than on account of any of the events specified in clauses (i) through (vi) of Section 11(a) of the Management Agreement); and (iii) a Change in Control (the “Deferral Agreement”). For purposes of the Manager Letter Agreements, “Change in Control” means any of the following events: (a) any person or entity, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, other than a wholly-owned subsidiary of our company, becomes the beneficial owner of our securities having 50% or more of the combined voting power of our then outstanding securities; (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination or contested election, or any combination of the foregoing transactions, less than a majority of the combined voting power of our then outstanding securities after such transaction are held in the aggregate by the holders of our securities entitled to vote generally immediately prior to such transaction; (iii) a complete liquidation or dissolution of us; or (iv) the sale or other disposition of a Significant Amount of Assets to any person or entity (other than a transfer to a subsidiary of our company), and the term “Significant Amount of Assets” means more than fifty percent (50%) of the book value of our consolidated assets as of the date of the 2023 Manager Letter Agreement. For the year ended December 31, 2022, we incurred $201,524 in acquisition fees associated with the Salisbury Marketplace Property acquisition, which were allocated and added to the fair value of the Salisbury Marketplace Property tangible assets. One half of the acquisition fee, or $100,762 was paid in cash and one half of the acquisition fee was accrued in connection with the Deferral Agreement. For the year ended December 31, 2021, we incurred $503,910 in acquisition fees associated with the Lancer Center Property, Greenbrier Business Center Property and Parkway Property, which were allocated and added to the fair value of the Lancer Center Property, Greenbrier Business Center Property and Parkway Property tangible assets. One half of the acquisition fees, or $251,955 was paid in cash and one half of the acquisition fee was accrued in connection with the Deferral Agreement. The accrued portion of the acquisition fee is recorded under accounts payable and accrued liabilities our company’s consolidated balance sheets as of December 31, 2023 and 2022. As of December 31, 2023 and 2022, respectively, the Company had accrued a total of $0 and $352,717 in acquisition fees (the “Deferred Acquisition Fee”) in connection with the Deferral Agreement. Pursuant to the Termination Agreement, the Company agreed to pay the Deferred Acquisition Fee immediately upon execution of the Termination Agreement. The Company paid the Deferred Acquisition Fee on July 18, 2023 and, as a result, as of December 31, 2023, had no further Deferred Acquisition Fees accrued on its consolidated balance sheets.

Incentive Fee		Prior to the termination of the Management Agreement, our Manager would have been entitled to an incentive fee, payable quarterly, equal to an amount, not less than zero, equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) our Adjusted Funds from Operations (AFFO) (as further defined below) for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in our 2018 exempt offering and in future offerings and transactions, multiplied by the weighted average number of all shares of our common stock outstanding on a fully-diluted basis (including any restricted stock units, any restricted shares of common stock and common units) in the previous


Type		Description
		12-month period, exclusive of equity securities issued prior to our 2018 exempt offering, and (B) 7%, and (2) the sum of any incentive fee paid to our Manager with respect to the first three calendar quarters of such previous 12-month period. AFFO is calculated by removing the effect of items that do not reflect ongoing property operations.
		We further adjust FFO for certain items that are not added to net income in NAREIT’s definition of FFO, such as acquisition expenses, equity-based compensation expenses, and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of our properties, and subtract recurring capital expenditures (and, when calculating the incentive fee only, we further adjust FFO to include any realized gains or losses on our real estate investments). No incentive fees were earned or paid during the year ended December 31, 2023 or 2022, or at any time during the term of the Management Agreement.


								All Other
Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)⁽¹⁾		Compensation ($)		Total
Francis P. Kavanaugh, CEO and President⁽²⁾	2023	$	—	$	—	$	—	$	—	$	—
C. Brent Winn, Jr., Chief Financial Officer	2023		250,000	$	—	$	—	$	—		250,000
	2022		200,000		50,000		126,600	$	—		426,600
Thomas E. Messier, Former Chief Executive Officer, Secretary and Treasurer	2023	$	—	$	—	$	—	$	—	$	—
	2022	$	—	$	—		63,000	$	—		63,000
William R. Elliott, Former President and Chief Operating Officer	2023	$	—	$	—	$	—	$	—	$	—
	2022	$	—	$	—		63,300	$	—		63,300
Colin M. Elliott, Former Vice President	2023		88,710	$	—	$	—	$	—		88,710
	2022		64,516		50,000		30,000	$	—		144,516


	Fees
	Earned or
	Paid in
Name⁽¹⁾⁽²⁾	Cash ($)		Stock Awards ($)		Total ($)
Francis P. Kavanaugh	$	—	$	—	$	—
Timothy O’Brien		—		—		—
Neil P. Farmer		—		—		—
Alfred Lee Finley		—		—		—
David Lunin		—		—		—
Emanuel D. Neuman		—		—		—
Charles S. Pearson, Jr.		—		—		—
	$	—	$	—	$	—


													Value of Initial
	Summary				Summary				Average Summary		Average		Fixed $100
	Compensation		Compensation		Compensation		Compensation		Compensation		Compensation		Investment
	Table Total		Actually Paid		Table Total		Actually Paid		Table Total		Actually Paid		Based on Total
	for PEO		to PEO		for PEO		to PEO		for Non-		to Non-PEO		Shareholder		Net Income
Year	(Kavanaugh)^1,2		(Kavanaugh)³		(Messier)^1,2		(Messier)⁴		PEO NEOs⁵		NEOs⁶		Return⁷		(Loss)⁸
(a)		(b)		(c)		(d)		(e)		(f)		(g)		(f)		(g)
2023	$	—	$	—	$	—	$	—	$	112,903	$	112,903	$	30.60	$	(4,571,279)
2022		—		—		63,300		63,300		211,472		211,472		32.55	$	(4,769,241)
2021		—		—		—		—		142,494		142,494		55.28	$	(4,364,264)


	FY2023		FY2022		FY2021
Total Compensation for PEO as reported in the Summary Compensation Table for the covered fiscal year	$	—	$	63,300		—
Deduct pension values reported in the “Change in Pension and Nonqualified Deferred Compensation Earnings” column in the Summary Compensation Table for the covered fiscal year		—		—		—
Deduct grant date fair value of equity awards reported in the “Stock Awards” column in the Summary Compensation Table for the covered fiscal year		—	$	63,300		—
Add actuarial present value of pension value attributable to covered fiscal year’s service		—		—		—
Add the entire cost of benefits granted (or credit for benefits reduced) in a plan amendment (or initiation) during the covered fiscal year that are attributed by the benefit formula to services rendered in periods prior to the plan amendment or initiation		—		—		—
Add fair value as of the end of the covered fiscal year of all equity awards granted during the covered fiscal year that are outstanding and unvested as of the end of such covered fiscal year		—		—		—
Add fair value as of the vesting date of any awards granted in the covered fiscal year that vested during the covered fiscal year		—	$	63,300		—
Add dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year		—		—		—
Add the change in fair value (whether positive or negative) as of the end of the covered fiscal year (from the end of the prior fiscal year) of any equity awards granted in any prior fiscal year that are outstanding and unvested as of the end of such covered fiscal year		—		—		—
Add the change in fair value (whether positive or negative) as of the vesting date (from the end of the prior fiscal year) of any equity awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied during the covered fiscal year		—		—		—
Subtract the fair value of any equity awards granted in a prior fiscal year that failed to meet the applicable vesting conditions in the covered fiscal year determined as of the end of the prior fiscal year		—		—		—
Compensation Actually Paid to PEO	$	—	$	63,300	$	—


	By order of the Board of Directors
	/s/ Francis P. Kavanaugh
	Francis P. Kavanaugh
	President, Chief Executive Officer, Secretary and Treasurer

Name		Principal Occupation
Francis P. Kavanaugh		President and Chief Executive Officer, Secretary and Treasurer
C. Brent Winn, Jr.		Chief Financial Officer


Name	Date	Number of Shares	Nature of Transaction	Transaction Description
Neil P. Farmer	1/18/2024	1,527	Grant	Common Stock
Neil P. Farmer	3/11/2024	1,317	Purchase	Common Stock
Francis P. Kavanaugh	3/11/2024	10,095	Purchase	Common Stock
Francis P. Kavanaugh	3/11/2024	8,305	Purchase	Common Stock
Francis P. Kavanaugh	3/13/2024	3,374	Purchase	Common Stock
Francis P. Kavanaugh	3/14/2024	3,852	Purchase	Common Stock
Francis P. Kavanaugh	3/19/2024	686	Purchase	Common Stock
Francis P. Kavanaugh	5/17/2024	20,800	Purchase	Common Stock
Francis P. Kavanaugh	5/20/2024	497	Purchase	Common Stock
Francis P. Kavanaugh	5/22/2024	3,851	Purchase	Common Stock
Francis P. Kavanaugh	5/23/2024	3,627	Purchase	Common Stock
Francis P. Kavanaugh	5/24/2024	3,792	Purchase	Common Stock
Francis P. Kavanaugh	6/13/2024	3,836	Purchase	Common Stock
Francis P. Kavanaugh	6/14/2024	4,833	Purchase	Common Stock
Francis P. Kavanaugh	7/17/2023	7,307	Purchase	Preferred Stock
Francis P. Kavanaugh	8/14/2023	393	Purchase	Preferred Stock
Francis P. Kavanaugh	8/16/2023	1,250	Purchase	Preferred Stock
Francis P. Kavanaugh	8/16/2023	5,600	Purchase	Preferred Stock
Francis P. Kavanaugh	8/16/2023	1,271	Purchase	Preferred Stock
Francis P. Kavanaugh	8/17/2023	12,500	Purchase	Preferred Stock
Francis P. Kavanaugh	8/22/2023	6,864	Purchase	Preferred Stock
Francis P. Kavanaugh	8/23/2023	1,012	Purchase	Preferred Stock
Francis P. Kavanaugh	8/23/2023	1,486	Purchase	Preferred Stock
Francis P. Kavanaugh	8/28/2023	2,000	Purchase	Preferred Stock
Francis P. Kavanaugh	8/31/2023	100	Purchase	Preferred Stock
Francis P. Kavanaugh	9/6/2023	217	Purchase	Preferred Stock
Francis P. Kavanaugh	9/6/2023	1,000	Purchase	Preferred Stock
Francis P. Kavanaugh	9/6/2023	1,000	Purchase	Preferred Stock
Francis P. Kavanaugh	9/6/2023	500	Purchase	Preferred Stock
Francis P. Kavanaugh	9/26/2023	2,500	Purchase	Preferred Stock
Francis P. Kavanaugh	12/18/2023	5,000	Purchase	Preferred Stock
David Lunin	12/7/2023	2	Purchase	Common Stock
David Lunin	12/8/2023	297	Purchase	Common Stock
David Lunin	12/11/2023	700	Purchase	Common Stock
David Lunin	1/18/2024	1,527	Grant	Common Stock
Emanuel D. Neuman	8/25/2023	1,037	Purchase	Common Stock
Emanuel D. Neuman	8/29/2023	1,376	Purchase	Common Stock
Emanuel D. Neuman	8/30/2023	59	Purchase	Common Stock
Emanuel D. Neuman	8/31/2023	579	Purchase	Common Stock
Emanuel D. Neuman	9/1/2023	1,465	Purchase	Common Stock
Emanuel D. Neuman	9/6/2023	24	Purchase	Common Stock
Emanuel D. Neuman	9/7/2023	100	Purchase	Common Stock
Emanuel D. Neuman	9/8/2023	100	Purchase	Common Stock
Emanuel D. Neuman	9/11/2023	36	Purchase	Common Stock
Emanuel D. Neuman	9/12/2023	1,156	Purchase	Common Stock
Emanuel D. Neuman	9/13/2023	879	Purchase	Common Stock
Emanuel D. Neuman	11/28/2023	57	Purchase	Common Stock

Emanuel D. Neuman	11/29/2023	1,130	Purchase	Common Stock
Emanuel D. Neuman	11/30/2023	1	Purchase	Common Stock
Emanuel D. Neuman	12/1/2023	167	Purchase	Common Stock
Emanuel D. Neuman	12/6/2023	118	Purchase	Common Stock
Emanuel D. Neuman	12/7/2023	161	Purchase	Common Stock
Emanuel D. Neuman	12/8/2023	100	Purchase	Common Stock
Emanuel D. Neuman	12/11/2023	182	Purchase	Common Stock
Emanuel D. Neuman	12/12/2023	583	Purchase	Common Stock
Emanuel D. Neuman	1/18/2024	1,527	Grant	Common Stock
Timothy O'Brien	8/17/2023	500	Purchase	Common Stock
Timothy O'Brien	8/18/2023	500	Purchase	Common Stock
Timothy O'Brien	12/1/2023	250	Purchase	Common Stock
Timothy O'Brien	12/4/2023	250	Purchase	Common Stock
Timothy O'Brien	1/18/2024	1,527	Grant	Common Stock
Timothy O'Brien	3/14/2024	250	Purchase	Common Stock
Charles Pearson	1/18/2024	1,527	Grant	Common Stock
C. Brent Winn, Jr.	8/14/2023	1,005	Purchase	Common Stock
C. Brent Winn, Jr.	8/14/2023	300	Purchase	Common Stock
C. Brent Winn, Jr.	8/14/2023	250	Purchase	Common Stock
C. Brent Winn, Jr.	8/14/2023	50	Purchase	Common Stock
C. Brent Winn, Jr.	8/14/2023	25	Purchase	Common Stock
C. Brent Winn, Jr.	8/14/2023	113	Purchase	Common Stock
C. Brent Winn, Jr.	8/14/2023	236	Purchase	Common Stock
C. Brent Winn, Jr.	11/27/2023	192	Purchase	Common Stock
C. Brent Winn, Jr.	11/29/2023	307	Purchase	Common Stock
C. Brent Winn, Jr.	3/14/2024	102	Purchase	Common Stock
C. Brent Winn, Jr.	3/14/2024	242	Purchase	Common Stock
C. Brent Winn, Jr.	3/15/2024	655	Purchase	Common Stock
C. Brent Winn, Jr.	5/14/2024	1,125	Purchase	Common Stock
C. Brent Winn, Jr.	5/15/2024	452	Purchase	Common Stock
C. Brent Winn, Jr.	5/15/2024	125	Purchase	Common Stock
C. Brent Winn, Jr.	5/15/2024	50	Purchase	Common Stock