This excerpt taken from the VLG DEF 14A filed Oct 2, 2006.
Compensation Committee Interlocks and Insider Participation
As noted above, the Companys Nominating and Compensation Committee consists of Messrs. West, Indelicato and Riebenack. Mr. West is the Chairman of the Board of Directors and Mr. Indelicato is the Vice Chairman and Chief Executive Officer. During the year ended June 30, 2006, no other interlocking relationship existed between any member of the Companys Compensation Committee and any other member of the Companys Board of Directors. Until January 2006, Mr. Indelicato and ADE Vantage, Inc. (of which Mr. Indelicato serves as President) provided consulting services to the Company. On February 1, 2006, Mr. Indelicato became an employee of the Company. In addition, the Company leases certain buildings and equipment from West Rentals, Inc., a company owned by Mr. West. Employees of West Rentals, Inc. also supply certain services for the Company. The Company leases certain properties from RealEquip-Lease, LLC, a company owned by the daughters of Mr. West. Mr. West is also a director and shareholder of Acetylene Products Corp., a company that leases space to the Company. These transactions are more fully described below.
Indelicato and ADE Vantage, Inc. Consulting Arrangements
Mr. Indelicato provided advisory services to the Company concerning all aspects of the Companys acquisition program, investor relations and bank financing under the terms of a consulting agreement. Mr. Indelicato served as the Acting Chief Executive Officer from February 2002 through October 2002 and has served as Chief Executive Officer since June 2003 under the terms of an agreement. The agreement with Mr. Indelicato provided for a monthly retainer fee of $7,000, reimbursement of out-of-pocket expenses related to the performance of services, plus compensation of $150.00 per hour spent in connection with the acquisition program, up to a maximum of 300 hours. The agreement also provides for annual bonus payments at the discretion of the Nominating and Compensation Committee and the Board of Directors of the Company based on overall Company performance. In addition, the Company retains ADE Vantage, Inc. (ADE) to provide consulting services. Mr. Indelicato is the President of ADE. Payments to Mr. Indelicato and ADE for fiscal 2006 under the consulting agreement totaled $239,084. This agreement was terminated in February 2006 when Mr. Indelicato became an employee of the Company.
West Rentals, Inc.
The Company leases 32 buildings from West Rentals, Inc., a West Virginia corporation (West Rentals), of which 30 are leased pursuant to a Master Lease Agreement (the Master Lease) and two of which are leased pursuant to pass-through subleases. Mr. West is the sole shareholder of West Rentals. The Master Lease terminates on April 30, 2011 and may be renewed for an additional five-year term. Currently, the Company pays an aggregate of $151,066 a month to West Rentals as rent for all real property leased. In addition, the Company pays all utility bills and fees as well as all property and local taxes on the real property leased from West Rentals. The Company also rents cylinders and trailers from West Rentals and currently pays approximately $4,225 a month to West Rentals for such rentals. Employees of West Rentals provide occasional construction and maintenance related services to the Company. West Rentals bills the Company for such services on an hourly basis. Aggregate expenditures by the Company under the Master Lease, for rental of cylinders and trailers and for construction and
maintenance services was approximately $1,659,795 for the fiscal year ended June 30, 2006. During fiscal year 2004, the Company entered into agreements to cancel the lease obligation for three properties of which the Company had discontinued the use. Under this agreement, the Company paid $537,258, which was included in operating expenses for the year ended June 30, 2004, to cancel the remaining term of leases and the remaining obligations of $1,979,668. The Company believes that the amounts it has paid for rental of real property, cylinders and trailers, for construction and maintenance services and for the cancellation of leases have not been less favorable than could have been obtained in arms-length transactions with unaffiliated third parties.
Acetylene Products Corp.
The Company leases two buildings from Acetylene Products Corp. (APC) under ten-year leases expiring in March 2008 for an aggregate amount of $13,151 per month. Mr. West is a director and shareholder of APC. The Company believes that the current arrangements with APC are not less favorable than could be obtained in arms-length transactions with unaffiliated third parties. During fiscal 2006, the Company paid APC $157,812.
RealEquip-Lease, LLC (RealEquip), a company wholly owned by the two daughters of Mr. West, leases three properties to the Company for an aggregate amount of $12,550 per month. Mr. West serves as a non-member manager of RealEquip. During fiscal year 2006, the Company paid RealEquip $149,861. The Company believes that the arrangements with RealEquip have not been less favorable than could have been obtained in arms-length transactions with unaffiliated third parties.
GEW Realty, LLC
GEW Realty, LLC (GEW), a company wholly owned by Mr. West, leases three properties to the Company for an aggregate amount of $4,823 per month. During fiscal year 2006, the Company paid GEW $57,876. The Company believes that the arrangements with GEW have not been less favorable than could have been obtained in arms-length transactions with unaffiliated third parties.