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Note 12 - Commitments | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Commitments Disclosure [Text Block] |
12. | Commitments
As of December 31, 2020 and 2019, other commitments and contingencies are summarized in the below table:
|  | 2020 |  |  | 2019 |
Management Employment agreements with bonus* and severance commitment contingencies |  | $ | 350,000 |  |  | $ | 350,000 |
Other employee severance commitment contingencies |  |  | 81,716 |  |  |  | 81,716 |
Total |  | $ | 431,716 |  |  | $ | 431,716 |
*Excludes Retention Bonus Payments
Employment agreements - The Company has an employment agreement with its Chief Executive Officer. The agreement provides for a bonus of $125,000 payable upon a change of control as defined in the agreement. In addition, the agreement provides for severance equivalent to 6 months of base salary and the vesting and related payment of the change of control bonus. The Company also has an employment agreement with its Chief Operating Officer (“COO”) executed on May 8, 2014 which provides for severance on a termination without cause equal to 6 months of base salary. On January 25, 2018, Gyrodyne entered into an amendment to the employment agreement with the COO to define with greater specificity the COO's duties and responsibilities with respect to the Company's properties. Under Company policy the aggregate severance commitment contingency to other employees is approximately $81,716. Retention Bonus Plan- In May 2014, the Board of Directors approved a retention bonus plan (as amended, the “Plan”) designed to recognize the nature and scope of the responsibilities of our directors, executives and employees related to the Company's strategic plan to enhance the property values, liquidate and dissolve, to reward and incent performance in connection therewith, to align the interests of directors, executives and employees with our shareholders and to retain such persons during the term of such plan. The Plan provides for bonuses to directors and to officers and employees determined by the gross sales proceeds from the sale of each property and the date of sale. The summary appearing below reflects the terms set forth in the Plan as modified by three amendments. There have been no further amendments to the terms of the Plan during the current reporting period. The Plan provides for a bonus pool funded with an amount equal to 5% of the specified appraised value of such properties (set forth in the Plan), so long as the gross selling price of a property is at least equal to its 2013 appraised value as designated in the bonus plan. Additional funding of the bonus pool will occur on a property-by-property basis only if the gross sales price of a property exceeds the Adjusted Appraised Value defined as the sum of (i) its 2013 appraised value and (ii) land development costs incurred on a property since the date of the 2013 appraisal, as follows: 10% on the first 10% of appreciation, 15% on the next 10% of appreciation and 20% on appreciation greater than 20%. The bonus pool is distributable in the following proportions to the named participants in the bonus plan for so long as they are directors or employees of the Company:
Board Members/Employees |  | Bonus Pool Percentage |
Board Members(a) |  |  | 65.000 | %
Chief Executive Officer |  |  | 15.474 | %
Chief Operations Officer |  |  | 13.926 | %
Officer Discretionary Amount (b) |  |  | 1.750 | %
Other Employees |  |  | 3.850 | %
Total |  |  | 100.000 | %
| (a) | 15% for the Chairman and 10% for each of the other five directors.
| (b) | The officer discretionary amount of 1.75% will be allocated to the officers within the discretion of the Board.
Such shares of the bonus pool are earned only upon the completion of the sale of a property at a gross selling price equal to or greater than its Adjusted Appraised Value and is paid to the named beneficiaries of the Plan or their designees within 60 days of the completion of such sale or, if later, within 60 days of receipt of any subsequent post-completion installment payment related to such sale. The Plan provides that no benefits are to be paid to participants from the sale of any individual post-subdivided lot from either of the Company's Flowerfield or Cortlandt Manor properties until aggregate sale proceeds from all sales of post-subdivided lots from such property exceed a designated aggregate floor for such property. The aggregate floor for each of the Flowerfield and Cortlandt Manor properties is defined in Amendment No. 3 to the Plan as the 2013 appraisal of such property plus land development costs incurred for such property since such appraisal. The Plan provides for vesting of benefits upon the sale of each individual post-subdivision lot at Flowerfield and Cortlandt Manor. It also provides for entitlement to a future benefit in the event of death, voluntary termination following substantial reduction in compensation or board fees, mutually agreed separation to right-size the board or involuntary termination without cause, except that a participant will only be eligible to receive a benefit to the extent that a property is sold within three years following the separation event and the sale produces an internal rate of return equal to at least four percent of the property's value as of December 31 immediately preceding such event and that the sale exceeded the Adjusted Appraised Value. Under the Plan, there were no payments made during the year ended 2020. The payments made during the year ended December 31, 2019 under the Plan relate to the settlement of the master lease from the Sale of the Virginia Health Care Center, were as follows:
RETENTION BONUS PLAN PARTICPANTS |  | 2019 |
Board of Directors |  | $ | 9,471 |
President and Chief Executive Officer |  |  | 2,390 |
Chief Operating Officer |  |  | 2,151 |
Other Employees |  |  | 561 |
Total |  | $ | 14,573 |
Deferred Compensation Plan - On December 6, 2019, the Company's Board of Directors approved the Gyrodyne, LLC Nonqualified Deferred Compensation Plan for Employees and Directors (the “DCP”) effective as of January 1, 2020. The DCP is a nonqualified deferred compensation plan maintained for officers and directors of the Company. Under the DCP, officers and directors may elect to defer a portion of their compensation to the DCP and receive interest on such deferred payments at a fixed rate of 5%. All DCP benefits will be paid in a single lump sum cash payment on December 15, 2026, unless a Plan of Liquidation is established for Gyrodyne before the distribution date in which case all benefits will be paid in a single lump sum cash payment after execution of an amendment to terminate the DCP. Each of the Directors elected (under the DCP) to defer 100% of their director fees for 2020 and 2021.

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- Definition The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 + Details
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