<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
U.S. HOME CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
U.S. HOME CORPORATION
1800 WEST LOOP SOUTH
P. O. BOX 2863
HOUSTON, TEXAS 77252-2863
[U.S. HOME LOGO]
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
March 14, 1997
Dear Stockholders:
On behalf of the officers and directors of the Company, you are cordially
invited to attend the U.S. Home Corporation Annual Meeting of Stockholders to be
held at 10:00 a.m., local time, on Wednesday, April 23, 1997, at the Omni Hotel,
Four Riverway, Houston, Texas.
At the meeting, Stockholders will be asked to consider and act upon the
election of directors and ratification of auditors. Stockholders are also being
requested to consider and approve the Company's 1997 Employees' Stock Option
Plan. These matters are described in the formal Notice of Meeting and in the
accompanying Proxy Statement.
The Board of Directors of the Company unanimously recommends that all
Stockholders vote in favor of each proposal. Your vote is important regardless
of the number of shares you own. We strongly encourage all Stockholders to
participate by voting their shares by proxy whether or not they plan to attend
the meeting. Please sign, date and mail the enclosed proxy as soon as possible.
If you do attend the meeting, you may still vote in person.
Sincerely,
/s/ ROBERT J. STRUDLER
Robert J. Strudler
Chairman and Co-Chief
Executive Officer
<PAGE> 3
[U.S. HOME LOGO]
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1997
------------------------------------
The Annual Meeting of the Stockholders of U.S. Home Corporation (the
"Company") will be held on Wednesday, April 23, 1997, at 10:00 a.m., local time,
at the Omni Hotel, Four Riverway, Houston, Texas for the purpose of considering
and acting upon the following proposals as set forth in the accompanying Proxy
Statement:
1. Election of directors.
2. Approval of the Company's 1997 Employees' Stock Option Plan.
3. Ratification of the appointment of Arthur Andersen LLP as auditors of
the Company for the fiscal year ending December 31, 1997.
4. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Only Stockholders of record at the close of business on March 3, 1997 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
RICHARD G. SLAUGHTER
Secretary
March 14, 1997
<PAGE> 4
U.S. HOME CORPORATION
1800 WEST LOOP SOUTH
P. O. BOX 2863
HOUSTON, TEXAS 77252-2863
------------------------------------
PROXY STATEMENT
------------------------------------
Accompanying this Proxy Statement is a Notice of Annual Meeting of
Stockholders of U.S. Home Corporation (the "Company") and a form of Proxy (the
"Proxy") for such meeting solicited by the Board of Directors of the Company
(the "Board"). The Board has fixed the close of business on March 3, 1997 as the
record date (the "Record Date") for the determination of stockholders of the
Company (the "Stockholders") who are entitled to notice of, and to vote at, the
meeting or any adjournment(s) thereof (the "Meeting"). The holders of a majority
of the aggregate outstanding shares of (i) common stock, $.01 par value per
share, of the Company (the "Common Stock") and (ii) convertible redeemable
preferred stock, $.10 par value per share, of the Company (the "Convertible
Preferred Stock") (hereinafter, the Common Stock and the Convertible Preferred
Stock shall be referred to collectively as the "Stock") present in person or
represented by Proxy and entitled to vote shall constitute a quorum at the
Meeting.
On February 11, 1997, the Board authorized the redemption of the remaining
outstanding shares of the Company's Convertible Preferred Stock for $25 per
share on March 18, 1997. The Convertible Preferred Stock may be converted into
Common Stock at a conversion ratio of one share of Common Stock for each share
of Convertible Preferred Stock until the close of business on March 17, 1997. In
accordance with the Company's Restated Certificate of Incorporation, as amended
(the "Certificate of Incorporation"), and the Delaware General Corporation Law,
shares of Convertible Preferred Stock redeemed or converted prior to the Meeting
will no longer be considered outstanding or have any other rights (except that
the holders of shares to be redeemed shall be entitled to receive the redemption
price for such shares). However, the holders of shares of Convertible Preferred
Stock as of the Record Date will be afforded the right to vote such shares at
the Meeting.
As of the Record Date, there were outstanding 11,472,893 shares of Common
Stock and 112,346 shares of Convertible Preferred Stock, or an aggregate of
11,585,239 shares of Stock, the holders of which are entitled to one vote per
share. On all proposals to be submitted to the Stockholders at the Meeting, the
holders of the Common Stock and Convertible Preferred Stock will vote together
as a single class.
A Proxy that is properly submitted to the Company may be revoked at any
time before it is exercised by written notice to the Secretary of the Company.
Any Stockholder attending the Meeting may vote in person and by doing so revokes
any Proxy previously submitted by him or her. With respect to Proposal 1, unless
authority to vote for all nominees for director or any individual nominee is
withheld, all the shares of Stock represented by the Proxy will be voted for the
election as director of the nominees set forth in this Proxy Statement. Where a
Stockholder has specified a choice on his or her Proxy with respect to other
proposals or matters, that direction will be followed. If no direction is given,
all of the shares of Stock represented by the Proxy will be voted in favor of
such proposal or matter. However, shares of Stock represented by Proxies marked
as abstentions on any matter will not be voted on that matter, although they
will be counted for quorum purposes; shares held by brokers in "street name" and
not voted by them will not be counted in tabulating votes.
The cost of soliciting Proxies will be paid by the Company, which will
reimburse brokerage firms, custodians, nominees and fiduciaries for their
expenses in forwarding proxy materials to the beneficial owners of Stock.
Officers and regular employees of the Company may solicit Proxies personally and
by telephone. In addition, the Company has retained D.F. King & Co., Inc., to
aid in the solicitation of Proxies from brokers, nominees and institutional
holders for a fee of $6,500, plus out-of-pocket expenses.
<PAGE> 5
The Annual Report of the Company for the year ended December 31, 1996,
containing audited financial statements for such year, is enclosed with this
Proxy Statement.
This Proxy Statement and the enclosed Proxy are being sent to Stockholders
on or about March 14, 1997.
IN ORDER THAT YOUR SHARES OF STOCK MAY BE REPRESENTED AT THIS MEETING, YOU
ARE REQUESTED TO:
PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Certificate of Incorporation provides that all directors serve for
one-year terms, and nominations for election of all directors are made by the
affirmative vote of a majority of the entire Board. The Certificate of
Incorporation also provides that the number of directors constituting the entire
Board is determined by a resolution adopted by a majority of the entire Board,
but such number will not be less than 7 or more than 15. On February 14, 1996,
the Board adopted a resolution setting the number of directors at 11.
The Nominating Committee of the Board will consider candidates for director
recommended by Stockholders, pursuant to the Company's Amended and Restated
By-Laws (the "By-Laws"), (i) if such recommendations are submitted in writing to
the Secretary of the Company not less than 90 days prior to the first
anniversary of the preceding year's annual meeting, giving all information
relating to such recommended candidates required to be disclosed in solicitation
of proxies for election of directors, the background and qualifications of the
candidates and certain information relating to the Stockholders making such
recommendations specified in Sections 1.14 and 1.15 of the By-Laws and (ii) such
Stockholders deliver, or otherwise cause to be delivered, to all Stockholders
certain information relating to the recommended candidates specified in Sections
1.14 and 1.15 of the By-Laws not less than 30 days prior to the date of the
annual meeting.
The following persons, comprising all of the current directors
("Directors"), have been nominated for reelection at the Meeting to serve until
the annual meeting of Stockholders in 1998, and until their successors are
elected and qualified:
Glen Adams
Steven L. Gerard
Kenneth J. Hanau, Jr.
Isaac Heimbinder
Malcolm T. Hopkins
Jack L. McDonald
Charles A. McKee
George A. Poole, Jr.
Herve Ripault
James W. Sight
Robert J. Strudler
Unless authority to vote for the election of all nominees for Director or
any individual nominee is specifically withheld by appropriate designation on
the Proxy, it is the intention of the persons named in the accompanying Proxy to
vote such Proxy for the election as Directors of the persons named above.
All nominees have consented to serve, if so elected. The Company does not
anticipate that any of the nominees for Director will be unable to serve, but if
such a situation should arise, it is the intention of the persons named in the
accompanying Proxy to vote for the election of such other person or persons as
the remaining Directors may nominate.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE DIRECTOR NOMINEES NAMED
HEREIN, AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO
VOTED.
The election of Directors requires the affirmative vote of the holders of a
plurality of the shares of Stock voting at the Meeting.
2
<PAGE> 6
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
SERVED AS BOARD
NAME, AGE, PRINCIPAL OCCUPATION, DIRECTOR COMMITTEE
OTHER DIRECTORSHIPS(1) SINCE MEMBERSHIP
-------------------------------- --------- ----------------------
<S> <C> <C>
Glen Adams (58 yrs.) Private investor and a director of Conflict of Interest;
several companies(2)...................................... 1993 Nominating
Steven L. Gerard (51 yrs.) Chairman and CEO of Ocean View Compensation and Stock
Capital, Inc.(3).......................................... 1993 Option; Finance
Audit; Compensation
Kenneth J. Hanau, Jr. (70 yrs.) Chairman of K&H Corrugated and Stock Option;
Case Corporation(4)....................................... 1976 Executive
Isaac Heimbinder (53 yrs.) President, Co-Chief Executive Conflict of Interest;
Officer and Chief Operating Officer of the Company(5)..... 1984 Executive; Finance
Malcolm T. Hopkins (69 yrs.) Private investor and a director Audit; Executive
of several companies(6)................................... 1993
Jack L. McDonald (63 yrs.) Private investor, consultant and Conflict of Interest;
a director of several companies(7)........................ 1993 Finance
Charles A. McKee (78 yrs.) Former Chairman and Chief Audit; Compensation
Executive Officer of Electrolux Corporation(8)............ 1978 and Stock Option
George A. Poole, Jr. (65 yrs.) Private investor and a Audit; Nominating
director of several companies(9).......................... 1993
Herve Ripault (56 yrs.) Associate of Optigestiom S.A., a Finance; Nominating
French fund management company(10)........................ 1982
Compensation and Stock
James W. Sight (41 yrs.) Private investor and a director of Option; Conflict of
several companies(11)..................................... 1993 Interest; Nominating
Robert J. Strudler (54 yrs.) Chairman and Co-Chief Executive Executive
Officer of the Company(12)................................ 1984
</TABLE>
- ---------------
(1) Unless otherwise indicated, directors have held the position with the
Company or have been engaged in the principal occupation indicated for at
least five years.
(2) Mr. Adams has been a private investor and a director of several companies
since August, 1996. Mr. Adams was previously Chairman, President and Chief
Executive Officer of Southmark Corporation from August 1990 until August
15, 1996. Southmark, a real estate and financial services company, is
engaged in the liquidation of its assets pursuant to a Chapter 11 plan of
reorganization which became effective in August 1990. Prior to joining
Southmark, Mr. Adams served as Chairman, President and Chief Executive
Officer of The Great Western Sugar Company, a sugar manufacturer, from 1986
to 1989 during its bankruptcy case. He previously served from 1983 to 1986
as Vice President and General Counsel of Hunt International Resources
Corp., a holding company for Great Western and other entities. Mr. Adams
serves as a director of Zale Corporation.
(3) Mr. Gerard has been Chairman and Chief Executive Officer of Ocean View
Capital, Inc. (formerly known as Triangle Wire & Cable Inc.) since
September, 1992. Ocean View Capital, Inc. is engaged in managing the
proceeds and specific liabilities resulting from the sale of substantially
all of Triangle's operating assets in October, 1996. Mr. Gerard was
previously Chief Executive Officer and Director of Mountleigh Group, PLC, a
London-based company engaged in property management and retailing, from
April 1992 to July 1992. Mr. Gerard was hired in connection with the
restructuring of Mountleigh. In connection with the restructuring,
Mountleigh was placed in U.K. receivership on May 23, 1992. From July 1990
until April 1992, Mr. Gerard was a Senior Managing Director of Citibank,
N.A.,
3
<PAGE> 7
responsible for credit, portfolio and risk management for Citibank's
corporate and investment banking activities in the United States, Japan,
Europe and Australia; from August 1987 to July 1990, he was Division
Executive for the National Corporate Finance Division of Citibank and prior
thereto, he was the Senior Corporate Workout Officer of the Institutional
Recovery Management Division of Citibank. Mr. Gerard is also a director of
Banner Aerospace, Inc. and DeepTech International, Inc.
(4) Mr. Hanau is Chairman of K&H Corrugated Case Corporation, a manufacturer of
corrugated packaging materials, located in Walden, New York, and has been
associated with that company for more than five years. Mr. Hanau is also a
director of Cosco Industries and Tinque, Brown, Inc.
(5) Mr. Heimbinder has served as President, Co-Chief Executive Officer and
Chief Operating Officer of the Company since April 26, 1995; prior thereto
he had been President and Chief Operating Officer of the Company since May
12, 1986; Senior Vice President and Chief Financial Officer of the Company
since December 14, 1979; and Secretary from August 23, 1984 until June 26,
1986, and from October 13, 1976 until January 26, 1984.
(6) Mr. Hopkins has been a private investor and a director of several companies
for more than the past five years. He served as Vice Chairman and Chief
Financial Officer of the former St. Regis Corporation, a paper and forest
products company with interests in oil and gas and insurance, from 1980 to
1984. Mr. Hopkins is a director of The Columbia Gas System, Inc., MAPCO,
Inc., The Metropolitan Series Fund, Inc., various State Street Research
Mutual Funds, Phar-Mor, Inc. and EMCOR Group, Inc.
(7) Mr. McDonald has been a private investor and consultant for more than the
past five years. He served as President and Chief Operating Officer of
Centex Corporation, a homebuilding, general construction and cement-making
company, from 1978 to 1984, and as a director of that company from 1974
until 1985. He is also a director of Amre, Inc., Bally's Grand Inc.,
Triangle Pacific, Inc. and American Homestar Corp.
(8) Mr. McKee retired as Chairman and Chief Executive Officer of Electrolux
Corporation, a manufacturer of vacuum cleaners and floor care products,
located in Stamford, Connecticut on June 30, 1983 and as Executive Vice
President and Director of Sara Lee Corporation (formerly Consolidated Foods
Corporation) on October 31, 1983 after having served in such capacities for
more than five years. Mr. McKee is a director of Magnetic Analysis Corp.
(9) Mr. Poole has been a private investor for more than the past five years.
Mr. Poole serves as a director of Anacomp, Inc., Bucyrus International,
Inc. and The Bibb Company.
(10) Mr. Ripault has been an Associate of Optigestiom S.A., a French fund
management company, since November 1991. Mr. Ripault retired in October
1991 as Chairman of the Board of Delahaye - Ripault, S.A., Agent de Change,
a member of the Paris Stock Exchange, Paris, France. Mr. Ripault had been
associated with such firm from June 1985 until his retirement. Mr. Ripault
was associated with Societe des Maisons Phenix, a homebuilding company in
France, from 1979 to 1985, during which time he was Executive Vice
President -- Finance.
(11) Mr. Sight has been a private investor for more than the past five years. He
has also served as Vice President and a director of Sight Leasing Co. Inc.,
a car leasing company, from 1978 until its dissolution in December 1992.
Mr. Sight served as Co-Chairman and a director of Metro Airlines, Inc., a
former regional feeder airline from December 1992 until its liquidation in
1995. Mr. Sight is also a director of United Recycling Industries and
Westmoreland Coal Co.
(12) Mr. Strudler has served as Chairman and Co-Chief Executive Officer of the
Company since April 26, 1995; prior thereto he had been Chairman and Chief
Executive Officer of the Company since May 12, 1986; President and Chief
Operating Officer of the Company since August 23, 1984; Senior Vice
President, Asset Management, and Secretary of the Company from January 26,
1984 to August 23, 1984; and Senior Vice President of the Company since
December 15, 1978. Mr. Strudler also served as a director of the Company
from January 27, 1983 until March 22, 1984.
4
<PAGE> 8
COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board include the following:
The Audit Committee reviews and approves the scope of the annual audit
undertaken by the Company's independent public accountants and meets with them
on a regular basis to review the progress and results of their work as well as
any recommendations they may make. The Audit Committee also reviews the fees of
the independent public accountants, and reviews and approves the annual
financial statements of the Company prior to issuance of such statements. In
addition, the Audit Committee reviews and approves any significant non-audit
services undertaken by the Company's independent public accountants. In
connection with the internal accounting controls of the Company, the Audit
Committee reviews internal audit procedures and reporting systems, as well as
reports of the Audit Department of the Company and the management action taken
in response to such reports.
The Compensation and Stock Option Committee (the "Compensation Committee")
reviews the salaries and all compensation plans for corporate officers,
presidents of operations and division chairmen and presidents, and makes
specific recommendations to the Board for such salaries and plans. The
Compensation Committee also has the authority to administer the Company's
Amended and Restated 1993 Employees' Stock Option Plan (the "1993 Employees'
Stock Option Plan") and Amended and Restated 1996 Employees' Stock Option Plan
(the "1996 Employees' Stock Option Plan"), including the grant of options and
approval of loans to finance the purchase of shares, the Amended and Restated
Employee Stock Payment Plan (the "Employee Stock Plan"), including the
determination of the amount, allocation and vesting of shares and the Amended
and Restated Corporate Officers and Presidents of Operations Restricted Stock
Plan (the "Restricted Stock Plan") and, if approved by the Stockholders at the
Meeting, the 1997 Employees' Stock Option Plan (see Proposal 2).
The Conflict of Interest Committee makes determinations concerning
potential conflicts of interest involving the Company and its subsidiaries and
any directors, corporate officers and beneficial owners of more than 10% of the
Company's outstanding shares of Stock.
The Executive Committee is empowered to exercise all powers of the full
Board in the management of the business and affairs of the Company during the
intervals between regular and special meetings of the Board to the extent
permitted by, and subject to the limitations imposed by, the Delaware General
Corporation Law, the Certificate of Incorporation and the By-Laws.
The Finance Committee reviews and approves capital funding (debt or equity)
plans for the Company and major land policies in coordination with established
corporate strategic objectives, and reviews and recommends corporate strategic
objectives for the Company.
The Nominating Committee advises on compensation of directors and makes
recommendations to the Board for the election of directors, the succession in
the office of chief executive officer and the election of corporate officers.
The Nominating Committee also administers the Amended and Restated Non-Employee
Directors' Stock Option Plan and the Retirement Plan for Non-Employee Directors.
See "Director Compensation." The Nominating Committee will consider candidates
for director recommended by Stockholders, pursuant to the By-Laws, (i) if such
recommendations are submitted in writing to the Secretary of the Company not
less than 90 days prior to the first anniversary of the preceding year's annual
meeting, giving all information relating to such recommended candidates required
to be disclosed in solicitations of proxies for election of directors, the
background and qualifications of the candidates and certain information relating
to the Stockholders making such recommendations specified in Sections 1.14 and
1.15 of the By-Laws and (ii) such Stockholders deliver, or otherwise cause to be
delivered, to all Stockholders certain information relating to the recommended
candidates specified in Sections 1.14 and 1.15 of the By-Laws not less than 30
days prior to the date of the annual meeting.
Members of the committees of the Board are as follows: Audit
Committee -- Messrs. Hanau, Hopkins (Chair), McKee and Poole; Compensation and
Stock Option Committee -- Messrs. Gerard, Hanau, McKee (Chair) and Sight;
Conflict of Interest Committee -- Messrs. Adams, Heimbinder, McDonald (Chair)
and Sight; Executive Committee -- Messrs. Hanau (Chair), Heimbinder, Hopkins and
Strudler; Finance Com-
5
<PAGE> 9
mittee -- Messrs. Gerard (Chair), Heimbinder, McDonald and Ripault; Nominating
Committee -- Messrs. Adams (Chair), Poole, Ripault and Sight.
During 1996, there were a total of 6 meetings of the Board, 2 meetings of
the Audit Committee, 2 meetings of the Compensation Committee, 3 meetings of the
Finance Committee and 3 meetings of the Nominating Committee. No meetings of the
Executive Committee or the Conflict of Interest Committee were held during 1996.
The Company's normal practice is that committee meetings are held the day
preceding the regular meetings of the Board. All of the directors attended at
least 75 percent of the aggregate of the Board meetings and meetings of
committees of which they were members that were held during 1996, except for Mr.
McKee, who attended 70 percent of the meetings.
EXECUTIVE COMPENSATION
The following table sets forth a summary of annual and long-term
compensation (for 1996, 1995 and 1994) awarded to, earned by, or paid to the
Chairman and Co-Chief Executive Officer of the Company and each of the four most
highly compensated executive officers of the Company (other than the Chairman
and Co-Chief Executive Officer) whose total annual salary and bonus for the year
ended December 31, 1996, was in excess of $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------- PAYOUTS
(A) (B) (C) (D) (F) (G) --------
(E) RESTRICTED SECURITIES (H) (I)
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3)(4)(5) (#)(6) ($) ($)(7)(8)(9)
------------------ ---- -------- -------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Strudler; 1996 $440,000 $628,161 $ -- $ -- 30,000 $ -- $ 5,010
Chairman and Co-Chief 1995 425,000 526,223 -- 200,000 50,000 -- 5,010
Executive Officer 1994 400,000 440,000 -- -- 20,000 -- 5,010
Isaac Heimbinder; 1996 $430,000 $628,161 $ -- $ -- 30,000 $ -- $ 5,010
President, Co-Chief 1995 415,000 526,223 -- 200,000 50,000 -- 5,010
Executive Officer and 1994 390,000 430,000 -- -- 20,000 -- 5,010
Chief Operating
Officer
Craig M. Johnson; 1996 $182,500 $157,500 $ -- $ 22,500 5,000 $ -- $ 4,525
Senior Vice 1995 161,500 106,750 -- 215,250 2,000 -- 4,525
President -- 1994 145,000 91,875 -- 13,125 5,000 -- 4,417
Community
Development
Gary L. Frueh, 1996 $144,000 $144,500 $ -- $ 13,500 3,000 $ -- $ 5,057
Vice President -- 1995 140,000 90,125 -- 212,875 2,000 -- 4,980
Tax and Audit 1994 126,000 78,750 -- 11,250 5,000 -- 4,695
Chester P. Sadowski; 1996 $164,000 $107,625 $ -- $ 15,375 3,000 $ -- $ 4,728
Vice President -- 1995 159,000 101,500 -- 214,500 2,000 -- 4,728
Controller and Chief 1994 152,000 91,875 -- 13,125 5,000 -- 4,728
Accounting Officer
</TABLE>
- ---------------
(1) Amounts shown include the dollar value of base salary (cash and non-cash)
earned by the executive officers named above.
(2) Amounts shown include the dollar value of bonuses (cash and non-cash) earned
by the executive officers named above, but excludes the dollar value of
unvested stock awarded as described below. Pursuant to the 1996 Corporate
Officers' Incentive Compensation Program (the "1996 Program"), the 1995
Corporate Officers' Incentive Compensation Program (the "1995 Program") and
the 1994 Corporate Officers' Incentive Compensation Program (the "1994
Program," and together with the 1996 Program and the 1995 Program, the
"Incentive Programs"), the Board, on the recommendation of the Compensation
Committee, approved payment of incentive compensation to Messrs. Johnson,
Frueh and Sadowski
6
<PAGE> 10
for services rendered in 1996, 1995 and 1994. Pursuant to the Incentive Programs
and the Employee Stock Plan (see footnote (3) to the table for a description),
25% of such incentive compensation is payable in Common Stock, one-half of which
vests immediately and the remainder (reflected in column (f) above) of
which vests two years after the end of the incentive compensation year. The
payments under the Incentive Programs consisted of the following:
<TABLE>
<CAPTION>
VALUE # OF
OF VALUE OF SHARES AVERAGE
CASH VESTED UNVESTED OF UNVESTED CLOSING PRICE OF
YEAR OFFICER BONUS STOCK STOCK STOCK STOCK
---- ------- ------- ------ -------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
1996 Mr. Johnson $135,000 $22,500 $22,500 797 $ 28.225
Mr. Frueh $81,000 $13,500 $13,500 479 $ 28.225
Mr. Sadowski $92,250 $15,375 $15,375 545 $ 28.225
1995 Mr. Johnson $91,500 $15,250 $15,250 546 $ 27.925
Mr. Frueh $77,250 $12,875 $12,875 461 $ 27.925
Mr. Sadowski $87,000 $14,500 $14,500 519 $ 27.925
1994 Messrs. Johnson and Sadowski $78,750 $13,125 $13,125 729 $ 17.988
Mr. Frueh $67,500 $11,250 $11,250 625 $ 17.988
</TABLE>
Pursuant to the Employee Stock Plan, the number of shares of Common Stock
issued to each of the executives listed in the table was calculated by
dividing (x) the portion of their incentive compensation payable in Common
Stock by (y) the greater of (i) the average of the closing prices of the
Common Stock on the New York Stock Exchange ("NYSE") for the 10 trading
days immediately following release by the Company of its financial results
for the applicable fiscal year, and (ii) 95% of the average of the daily
last sale price of the Common Stock on the NYSE for the 20 consecutive
trading days immediately prior to the date such shares are issued. In
addition to the incentive compensation received under the 1996 Program, Mr.
Frueh was awarded a special bonus of $50,000 for his work in connection
with an on-going federal tax audit of the Company. Payment of contractual
incentive compensation to Messrs. Strudler and Heimbinder was made pursuant
to the terms and conditions of their respective Employment and Consulting
Agreements (described below). For the year ended December 31, 1994, Messrs.
Strudler and Heimbinder elected to receive 25% of such incentive
compensation in shares of Common Stock under the Employee Stock Plan, all
of which vested immediately. In addition, the Board, on the recommendation
of the Compensation Committee, approved on December 8, 1994, payment of
supplemental incentive compensation of $40,000 to each of Messrs. Strudler
and Heimbinder for their contribution to the Company's results during 1994
in several significant areas. See "Report of Compensation and Stock Option
Committee on Executive Compensation." The amounts of such contractual and
supplemental incentive bonuses, including the dollar value of the Common
Stock, are included in column (d) above. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."
(3) Amounts shown for 1996 for Messrs. Johnson, Frueh and Sadowski reflect the
dollar value of Common Stock not yet vested under the 1996 Program and the
Employee Stock Plan. Pursuant to the Employee Stock Plan, up to 25% of the
annual incentive compensation payable to each employee of the Company
pursuant to the Company's incentive compensation programs may be payable in
Common Stock, up to 50% of which may vest not later than two years from the
end of the applicable incentive compensation year. No dividends on the
shares of Common Stock subject to vesting will be paid prior to vesting.
The number of shares of Common Stock to be issued was determined pursuant
to the calculations described in footnote (2) to the table. Amounts shown
for 1994 for Messrs. Johnson, Frueh and Sadowski reflect the dollar value
of Common Stock that was awarded under the 1994 Program and vested on
December 31, 1996.
(4) Amounts shown for 1995 include the dollar value of Common Stock issued to
the executive officers named above on April 27, 1995 pursuant to the
Restricted Stock Plan. Subject to forfeiture and accelerated vesting
provisions, 20% of the shares of Common Stock awarded to each employee will
vest with each employee each year commencing in 2000. The 11,119 shares of
Common Stock awarded to each participant was determined by dividing
$200,000 by $17.988, the average of the closing prices of the Common Stock
on the NYSE for the 10 trading days immediately following release by the
Company on
7
<PAGE> 11
February 8, 1995 of its financial results for the fiscal year ended
December 31, 1994. With respect to shares of Common Stock issued pursuant
to the Restricted Stock Plan but unvested, the participants shall have the
right to vote such shares and to receive any cash dividends. The amounts
shown for 1995 for Messrs. Johnson, Frueh and Sadowski also include the
dollar value of Common Stock not yet vested under the 1995 Program
described in footnote (2) above.
(5) The number and value of the aggregate restricted stock holdings at the end
of the last completed fiscal year for the executive officers named above
are: each of Messrs. Strudler and Heimbinder -- 11,119 shares with a value
of $289,094; Mr. Johnson -- 11,665 shares with a value of $303,290; Mr.
Frueh -- 11,580 shares with a value of $301,080 and Mr. Sadowski -- 11,638
shares with a value of $302,588.
(6) Pursuant to the 1993 Employees' Stock Option Plan and 1996 Employees' Stock
Option Plan, options were granted to acquire shares of Common Stock to
certain officers and other employees of the Company. See "Executive
Compensation -- Stock Options."
(7) The Company has a qualified profit sharing plan for the benefit of its
employees. The amounts shown for 1995 and 1994 are comprised of the
following: (i) contributions to the Company's profit sharing plan; (ii)
401(k) contributions by the Company and (iii) premium for a universal life
insurance policy with a cash surrender value. The amounts shown for 1996 are
comprised of the following:
<TABLE>
<CAPTION>
OFFICER PROFIT SHARING
------- --------------
<S> <C>
Robert J. Strudler............................ $3,000
Isaac Heimbinder.............................. $3,000
Craig M. Johnson.............................. $3,000
Gary L. Frueh................................. $2,877
Chester P. Sadowski........................... $3,000
<CAPTION>
OFFICER 401(K)
------- ----------------------
<S> <C>
Robert J. Strudler............................ $ 500
Isaac Heimbinder.............................. $ 500
Craig M. Johnson.............................. $ 500
Gary L. Frueh................................. $ 500
Chester P. Sadowski........................... $ 500
<CAPTION>
OFFICER LIFE INSURANCE PREMIUM
------- ----------------------
<S> <C>
Robert J. Strudler............................ $1,510
Isaac Heimbinder.............................. $1,510
Craig M. Johnson.............................. $1,025
Gary L. Frueh................................. $1,680
Chester P. Sadowski........................... $1,228
</TABLE>
(8) Mr. Strudler and Mr. Heimbinder are also entitled to retirement benefits
under their respective Employment and Consulting Agreements on the terms and
conditions specified therein. See "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements."
STOCK OPTIONS
The following table contains information concerning grants of options to
acquire shares of Common Stock made during the year ended December 31, 1996 to
the Chairman and Co-Chief Executive Officer of the Company and each of the four
most highly compensated executive officers of the Company (other than the
Chairman and Co-Chief Executive Officer) whose total annual salary and bonus for
the year ended December 31, 1996, was in excess of $100,000:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
--- ------------- ---------- -------- ---------- --------- -----------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE
SARS GRANTED IN FISCAL PRICE EXPIRATION
NAME (# SH) (1)(2) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------------- ---------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Strudler........ 30,000 29.4% $24.125 12/6/06 $455,162 $1,153,471
Isaac Heimbinder.......... 30,000 29.4% $24.125 12/6/06 $455,162 $1,153,471
Craig M. Johnson.......... 5,000 4.9% $24.125 12/6/06 $ 75,860 $ 192,245
Gary L. Frueh............. 3,000 2.9% $24.125 12/6/06 $ 45,516 $ 115,347
Chester P. Sadowski....... 3,000 2.9% $24.125 12/6/06 $ 45,516 $ 115,347
</TABLE>
8
<PAGE> 12
- ---------------
(1) The purpose of each of the 1993 Employees' Stock Option Plan and the 1996
Employees' Stock Option Plan (together, the "Employees' Stock Option Plans")
is to provide an incentive to key employees, including officers and
managerial or supervisory employees who are salaried employees of the
Company, to remain in the employ of the Company and to have a proprietary
interest in the Company. 500,000 shares of Common Stock have been reserved
for issuance in accordance with the provisions of each of the Employees'
Stock Option Plans.
Options granted under either of the Employees' Stock Option Plans are
intended to be designated as (i) "Incentive Stock Options" as defined in
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Tax
Code"), (ii) nonqualified stock options or (iii) any combination of
Incentive Stock Options and nonqualified stock options. In the event that a
portion of an option cannot be exercised as an Incentive Stock Option by
reason of the limitations contained in Section 422 of the Tax Code, such
portion will be treated as a nonqualified stock option.
Pursuant to each of the Employees' Stock Option Plans, the exercise price
for any Incentive Stock Option and/or a nonqualified stock option will be
the greater of (i) the closing price of the Common Stock on the NYSE on the
date that such option is granted and (ii) 95% of the average of the daily
last sale price of the Common Stock on the NYSE for the 20 consecutive
trading days immediately prior to the date such option is granted. No option
granted under either of the Employees' Stock Option Plans may be exercised
more than 10 years from the date such option is granted.
(2) As of December 6, 1996, pursuant to each of the Employees' Stock Option
Plans, options to acquire an aggregate of 102,000 shares of Common Stock
were granted to certain employees of the Company, including Messrs.
Strudler, Heimbinder, Johnson, Frueh and Sadowski and other officers.
Messrs. Strudler and Heimbinder were granted options that were immediately
exercisable. The options granted to Messrs. Johnson, Frueh and Sadowski
become exercisable for 1/3rd of the shares purchasable thereunder on
December 6, 1997, 2/3 rds of the shares purchasable thereunder on December
6, 1998 and all of the shares purchasable thereunder on December 6, 1999.
The following table contains information concerning the exercise of stock
options during the fiscal year ended December 31, 1996, and the fiscal year-end
value of unexercised options by the Chairman and Co-Chief Executive Officer of
the Company and each of the four most highly compensated executive officers of
the Company (other than the Chairman and Co-Chief Executive Officer) whose total
annual salary and bonus for the year ended December 31, 1996, was in excess of
$100,000:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(B) (C) (D) (E)
(A) ------------ -------- ------------------------- -------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON REALIZED AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert J. Strudler............... -- -- 138,334/6,666 $328,607/$72,493
Isaac Heimbinder................. -- -- 138,334/6,666 $328,607/$72,493
Craig M. Johnson................. -- -- 14,001/7,999 $ 55,770/$25,160
Gary L. Frueh.................... -- -- 12,001/5,999 $ 50,350/$21,410
Chester P. Sadowski.............. -- -- 14,001/5,999 $ 55,770/$25,160
</TABLE>
9
<PAGE> 13
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
AMENDED AND RESTATED EMPLOYMENT AND CONSULTING AGREEMENTS
Mr. Strudler entered into an Employment and Consulting Agreement with the
Company on May 12, 1986, which was amended and restated on October 17, 1995 and
further amended on February 11, 1997, and Mr. Heimbinder entered into a similar
Employment and Consulting Agreement with the Company on May 12, 1986, which was
amended and restated on October 17, 1995 and further amended on February 11,
1997 (collectively, the "Employment Agreements"). The Employment Agreements
provide for Messrs. Strudler's and Heimbinder's continued employment with the
Company as Chairman and Co-Chief Executive Officer and President, Co-Chief
Executive Officer and Chief Operating Officer, respectively, until June 20,
2000; provided, however, that, unless either the Company or Messrs. Strudler or
Heimbinder, as the case may be, otherwise elects by notice in writing delivered
to the other at least 90 days prior to June 20, 1998, or any subsequent
anniversary thereof, such term shall be automatically extended for one
additional year on June 20, 1998 (e.g., to June 20, 2001) and each subsequent
anniversary thereof, unless sooner terminated by Messrs. Strudler's or
Heimbinder's, as the case may be, voluntary resignation or otherwise terminated
pursuant to the terms of the Agreement (the "Employment Term"). Under the
Employment Agreements, during 1996, Messrs. Strudler and Heimbinder were paid
annual base salaries of $440,000 and $430,000, respectively, and will be paid
salaries thereafter which are subject to minimum increases equal to any increase
in the cost of living in the preceding year, as measured by the Consumer Price
Index -- U.S. City Averages, as published by the Bureau of Labor Statistics of
the United States Department of Labor (the "Consumer Price Index") and which are
subject to annual review by the Board. Messrs. Strudler and Heimbinder are also
to be paid incentive compensation for each fiscal year that the Company is
profitable based upon a formula set forth in the Employment Agreements. Pursuant
to the Employment Agreements, Messrs. Strudler and Heimbinder are entitled to
receive incentive compensation equal to the sum of the following: (i) one-half
( 1/2) of one percent (1%) of the first $10,000,000 of the Company's pre-tax
income for such year, plus (ii) three-fourths ( 3/4) of one percent (1%) of the
next $10,000,000 of the Company's pre-tax income for such year, plus (iii) one
percent (1%) of the Company's pre-tax income for such year in excess of
$20,000,000. Pursuant to the Employment Agreements, a portion of any
compensation otherwise payable will be deferred if it would otherwise not be
deductible by the Company because of the limitations set forth in Section 162(m)
of the Tax Code. See "Report of Compensation and Stock Option Committee on
Executive Compensation -- Chairman and President Compensation." In addition,
Messrs. Strudler and Heimbinder agreed to serve as consultants to the Company
for a period of five years after the Employment Term ceases, with consulting
fees payable at 1996 rates of $141,362 and $135,708 per year, respectively,
subject to cost of living adjustments, and, in the case of Mr. Strudler, will
receive reimbursement of expenses for maintenance of an office and secretarial
assistance in an amount not to exceed $50,000 per year. They will also be
entitled to retirement benefits upon the later of attainment of age 58 or the
end of the Employment Term equal to fifty percent (50%) of their highest monthly
base salaries during the Employment Term. They may also elect an early
retirement benefit in a reduced amount. The Company's obligation to pay these
retirement benefits has been substantially provided for by annuities owned by a
trust established by the Company for that purpose.
Messrs. Strudler and Heimbinder may be terminated for cause, as defined in
the Employment Agreements. If either Mr. Strudler or Mr. Heimbinder is
terminated without cause during the Employment Term, he will be entitled to
receive (i) the balance of the base salary which would have been paid during the
remainder of the Employment Term (but not less than three years), (ii) an amount
equal to bonuses earned, including any amounts deferred, in respect of the most
recently completed three calendar years, (iii) the actuarial present value of
retirement benefits payable under the Employment Agreement and (iv) an amount
equal to any consulting fee payable under the Employment Agreement.
If a "Control Change" (as defined below) is followed within two years by a
"Material Change" (as defined below), each of Mr. Strudler and Mr. Heimbinder
may terminate his employment and receive the payments referred to in clauses
(i), (ii) and (iv) of the preceding paragraph. A "Material Change" occurs if (w)
Mr. Strudler's or Mr. Heimbinder's employment is terminated without cause, (x)
Mr. Strudler's or
10
<PAGE> 14
Mr. Heimbinder's functions, duties or responsibilities are adversely changed,
(y) Mr. Strudler's or Mr. Heimbinder's base salary is reduced or (z) Mr.
Strudler or Mr. Heimbinder is assigned to a place of employment which is more
than 10 miles from his present place of employment and which is not the
corporate headquarters of the Company. In addition, if a Control Change occurs,
each of Mr. Strudler and Mr. Heimbinder may terminate his employment even if a
Material Change has not occurred, but will not be entitled to receive the
payments referred to in clause (i), (ii), (iii) or (iv) of the preceding
paragraph. However, in such event, each will serve as a consultant to the
Company and be compensated at the 1996 rate of $141,362 (for Mr. Strudler) or
$135,708 (for Mr. Heimbinder) per annum (subject to cost of living increases)
for five years thereafter, and will be entitled to payment of retirement
benefits and certain other benefits under the Employment Agreements.
A Control Change occurs under the following circumstances: (i) a report on
Schedule 13D is filed pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), indicating that any person has become a beneficial
owner, directly or indirectly, of 15% or more of the combined voting power of
the then-outstanding securities of the Company, (ii) the purchase by any person
of securities pursuant to a tender offer or exchange offer to acquire any Common
Stock (or securities convertible into such Common Stock), if after the
consummation of the offer, such person would be the beneficial owner, directly
or indirectly, of 15% or more of the combined voting power of the
then-outstanding securities of the Company, (iii) a consolidation or merger of
the Company, approved by the Stockholders, in which the Company is not the
surviving corporation, pursuant to which shares of Common Stock would be
converted into cash, securities or other property (other than a merger of the
Company in which holders of Common Stock prior to the merger have the same
proportionate ownership of Common Stock of the surviving corporation immediately
after the merger as immediately before or with a corporation which prior to such
consolidation or merger owned 15% or more of the cumulative voting power of the
then-outstanding securities of the Company), (iv) any sale, lease, exchange or
other transfer of all or substantially all of the assets of the Company,
approved by the Stockholders, or (v) a change of a majority of the members of
the Board within a 12-month period, unless the election or nomination for
election by the Stockholders of each new director during such 12-month period
was approved by a vote of two-thirds of the directors then still in office who
were on the Board at the beginning of such 12-month period.
CERTAIN OTHER CHANGE IN CONTROL ARRANGEMENTS
On February 11, 1997, the Compensation Committee awarded options to
purchase 200,000 shares of Common Stock to each of Messrs. Strudler and
Heimbinder. Fifty percent of the options become exercisable on June 21, 2000 and
the remaining options become exercisable on June 21, 2001. If (i) the Company
elects not to extend the Employment Term (as defined above) for Messrs. Strudler
or Heimbinder to June 20, 2002, (ii) Messrs. Strudler or Heimbinder's employment
with the Company is terminated by the Company for any reason other than (A) for
cause (as defined in the Employment Agreements) or (B) death or disability,
(iii) there has been a Material Change (as defined above) or (iv) a Control
Change (as defined above) occurs, then, among other things, (1) the options and
any other options already held by Messrs. Strudler or Heimbinder vest and become
immediately exercisable, whether or not previously vested and exercisable and
(2) any Common Stock subject to restrictions already owned by Messrs. Strudler
and Heimbinder will immediately vest.
KEY EMPLOYEES' SEVERANCE PAY PLAN
The Board adopted the Company's Key Employees' Severance Pay Plan (the
"Severance Plan") on December 6, 1996. The purpose of the Severance Plan is to
encourage continuity of employment by key employees by providing them with an
incentive to remain in the employ of the Company despite the potential for a
change of control of the Company. The executive officers of the Company (other
than Messrs. Strudler and Heimbinder) and the presidents of operations of the
Company are participants in the Severance Plan. Under the terms of the Severance
Plan, a participant whose employment with the Company is terminated, other than
for Cause (as defined below), or whose employment is Constructively Terminated
(as defined below) within two years following a Change of Control (as defined
below) will be entitled to (i) receive an
11
<PAGE> 15
amount equal to the greater of (a) 12 months of such participant's base salary
or (b) one month of such participant's base salary for each full year during
which such participant was employed by the Company or its subsidiaries and (ii)
continue to participate in each of the Company's employee benefit plans,
policies or arrangements which provide insurance and medical benefits, on the
same basis as the Company's other executive officers, for one year after the
date of termination of employment. The benefits under the Severance Plan
described in clause (i) in the preceding sentence are to be paid to a
participant in a single lump sum in cash as soon as practicable (but in no event
later than 30 days) after the participant's termination of employment.
Under the Severance Plan, "Constructively Terminated" means a (i) reduction
in an amount equal to or greater than 15% of a participant's base salary, (ii)
material reduction in a participant's job function, duties or responsibilities
or (iii) required relocation of a participant of more than 50 miles from such
participant's current job location; provided, however, that the employment with
the Company or its subsidiaries of a president of operations who is a
participant will not be deemed to be Constructively Terminated in the event he
or she is required to be a division chairman or division president with the
Company or its subsidiaries and has job functions, duties or responsibilities of
a division chairman or division president and/or is required to relocate in
connection with such change in position; provided further, that the employment
of a participant will not be deemed Constructively Terminated unless such
participant actually terminates his or her employment with the Company within 60
days after the occurrence of an event specified in clauses (i), (ii) or (iii)
above.
Under the Severance Plan, "Cause" means (i) a participant's continuing
willful failure to perform his or her duties (other than as a result of total or
partial incapacity due to physical or mental illness), (ii) gross negligence or
malfeasance by a participant in the performance of his or her duties, (iii) an
act or acts on the part of a participant constituting a felony under the laws of
the United States, or any state thereof, which results or was intended to result
directly or indirectly in gain or personal enrichment by such participant at the
expense of the Company or its subsidiaries or (iv) breach of any of the
provisions of the Severance Plan pertaining to confidentiality and competitive
activities.
Under the Severance Plan, "Change of Control" means any of the following:
(i) a report on Schedule 13D is filed pursuant to Section 13(d) of the Exchange
Act, disclosing that any person, other than the Company (or one of its
subsidiaries) or any employee benefit plan sponsored by the Company (or one of
its subsidiaries), is the beneficial owner, directly or indirectly, of 50% or
more of the combined voting power of the then-outstanding equity of the Company;
(ii) any transaction or a series of related transactions (as a result of a
tender offer, merger, consolidation or otherwise whether or not the Company is
the continuing or surviving entity) that results in, or is in connection with,
any person, other than the Company (or one of its subsidiaries) or any employee
benefit plan sponsored by the Company (or one of its subsidiaries), acquiring
beneficial ownership, directly or indirectly, of 50% or more of the combined
voting power of the then-outstanding equity of the Company or of any person that
possesses beneficial ownership, directly or indirectly, of 50% or more of the
combined voting power of the then-outstanding equity of the Company; (iii) the
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Company to any person in one transaction or a series of related
transactions; provided, that a transaction where the holders of all classes of
the then-outstanding equity of the Company immediately prior to such transaction
own, directly or indirectly, 50% or more of the aggregate voting power of all
classes of equity of such person immediately after such transaction will not be
a Change of Control under this clause (iii); (iv) the liquidation or dissolution
of the Company; provided, that a liquidation or dissolution of the Company which
is part of a transaction or series of transactions that does not constitute a
Change in Control under the "provided" clause of clause (iii) above will not
constitute a Change in Control under this clause (iv); or (v) a change of a
majority of the members of the Board of Directors of the Company within a
12-month period, unless the election or nomination for election by the Company's
Stockholders of each new director during such 12-month period was approved by a
vote of two-thirds of the directors then still in office who were on the Board
at the beginning of such 12-month period.
12
<PAGE> 16
DIRECTOR COMPENSATION
Directors, other than those who are officers of the Company, receive the
following compensation: membership on the Board -- $24,000 per annum; each
committee membership -- $1,600 per annum; each committee chairmanship -- $1,600
per annum; attendance at each Board and committee meeting -- a per diem fee of
$1,000. Directors who are officers of the Company receive no compensation for
their services as directors.
AMENDED AND RESTATED NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The purpose of the Amended and Restated Non-Employee Directors' Stock
Option Plan (the "Directors' Plan") is to attract and retain qualified persons
for service as members of the Board. There are 100,000 shares of Common Stock
reserved for issuance in accordance with the provisions of the Directors' Plan.
The Directors' Plan is administered by the Nominating Committee.
Under the Directors' Plan, options are granted only to non-employee members
of the Board. No individual who is, at the time of grant, an employee of the
Company will be eligible to receive options. Options granted under the
Directors' Plan are nonqualified stock options and are not entitled to special
income tax treatment under the Tax Code.
No option may be exercised more than 10 years after the date such option is
granted. Furthermore, in the event of the resignation or removal of an optionee
as a director of the Company, the optionee shall have the right, not later than
the earlier of (i) three months after such resignation or removal or (ii) the
termination date of the option, to exercise the option. If an optionee shall
retire because of age, die or become disabled while a director of the Company,
the personal representative of the optionee or the person to whom such options
have been transferred by will or by laws of descent and distribution, or the
retiree or disabled optionee, shall have the right, not later than the earlier
of (i) three years after such optionee's retirement, death or disability, or the
number of months such director has served as a non-employee director, whichever
is less, or (ii) the termination date of the option, to exercise such option.
The grant of options to non-employee directors is nondiscretionary under
the Directors' Plan. Each person who becomes a non-employee director of the
Company shall be granted options to acquire 5,000 shares of Common Stock at the
time such person first becomes a non-employee director of the Company (a "New
Director Stock Option Grant"). On the date of each annual meeting or special
meeting in lieu of annual meeting of the Stockholders, each person who continues
to serve as a non-employee director of the Company immediately after such
meeting shall be granted options to acquire 1,000 shares of Common Stock (an
"Annual Stock Option Grant"); provided, that he or she has served as a
non-employee director for at least six months prior to such meeting.
The exercise price of any New Director Stock Option Grant and the Annual
Stock Option Grant shall be the average closing price of the Common Stock on the
NYSE for the 10 consecutive trading days immediately prior to the date of any
such stock option grant. Notwithstanding the foregoing, the exercise price of
any such option will in no event be less than 95% of the average closing price
of the Common Stock on the NYSE for the 20 consecutive trading days immediately
prior to the date of any such stock option grant.
Under the Directors' Plan, the non-employee directors of the Company were
each granted an Annual Stock Option Grant immediately following the 1996 Annual
Meeting of Stockholders at an exercise price of $23.288 per share.
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
The purpose of the Retirement Plan for Non-Employee Directors (the
"Directors' Retirement Plan") is to attract and retain qualified persons for
service as members of the Board. The Directors' Retirement Plan is administered
by the Nominating Committee.
13
<PAGE> 17
To be eligible for participation in the Directors' Retirement Plan, a
director must have served as a non-employee director of the Company for five
full calendar years (which need not be consecutive) since January 1, 1985
whether or not such director is a director upon retirement.
An eligible director's annual "Normal Retirement Benefit" under the
Directors' Retirement Plan equals 100% of such eligible director's "Base
Retainer" (defined as regular annual active service retainer for service as a
member of the Board in effect on the date of retirement, exclusive of any other
fees for serving on committees of the Board, attending meetings of the Board or
committees thereof or otherwise paid for services rendered to the Company)
payable in equal monthly installments and continuing for the number of full
months of service as a non-employee director from January 1, 1985 to the month
prior to retirement (whether or not after age 65), less a certain number of
months in the case of directors who received accrued retirement benefits in a
lump sum payment upon termination as of December 31, 1988 of the Non-Employee
Directors' Retirement Plan in effect as of January 1, 1985.
An eligible director who elects to retire from the Board prior to age 65
may elect to receive an early retirement benefit commencing at age 55 in an
amount equal to his Normal Retirement Benefit minus 5% for each year prior to
age 65 that the director elects early retirement.
An eligible director may elect to receive a lump sum payment, in lieu of
his Normal Retirement Benefit or early retirement benefits, payable at the time
when his benefit payments would otherwise commence, in an amount equal to the
present value of the benefit payments to be received.
Upon commencement of periodic benefit payments, such payments will be
adjusted on January 1 of each year for increases in the cost of living in the
preceding year, as measured by the Consumer Price Index.
Normal Retirement Benefit payments commence in the month following the
eligible director's retirement or 65th birthday, whichever is later. Early
retirement benefit payments commence in the month following the eligible
director's early retirement or 55th birthday, whichever is later.
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee administers the Company's executive compensation
program and makes specific recommendations to the Board for salaries, incentive
bonuses and stock option plans. The Compensation Committee is composed of four
independent, non-employee directors. See "Committees of the Board of Directors."
The Company's executive compensation program (which excludes the Chairman
and President of the Company, whose respective Employment Agreements provide for
the terms of their base and incentive compensation) is intended to attract,
retain and motivate highly qualified executives for the Company and to create an
incentive to increase Stockholder value. This objective is implemented through
payment of salaries and bonuses, the granting of stock options and the payment
of universal life insurance premiums, as well as medical benefits, 401(k)
contributions and profit sharing plan contributions which are available to
employees of the Company.
Salaries. The Compensation Committee is responsible for recommending for
each fiscal year the base salary levels for the executive officers of the
Company. In developing salary recommendations for the year ended December 31,
1996, the Compensation Committee reviewed the salaries paid for similar
positions in similarly-sized companies which engage in the Company's business.
The Compensation Committee confirmed that the base salaries for the executive
officers were consistent with its objective of setting base salaries within
reasonable ranges for similar positions in comparatively-sized companies by
reviewing a composite compensation survey for residential builders, as well as
public filings of various residential builders. Such survey and filings included
various companies which were in the Company's peer group. See "Stock Performance
Graph." In recommending base salary levels, the Compensation Committee also
considers each executive officer's experience level and potential for
significant contributions to the Company's profitability and the Company's goal
of retaining and motivating highly qualified executive officers in a highly
competitive and mobile industry.
14
<PAGE> 18
Bonuses. An annual incentive bonus plan for the executive officers (other
than Messrs. Strudler and Heimbinder) has been structured to provide financial
incentives which are related to the Company's profitability and are utilized to
recognize the executive's individual contributions to the Company. The annual
bonus plan is also intended to reward executive officers for exceptional
performance. Under the 1996 Program, an incentive compensation pool in an amount
equal to the lesser of $700,000 or 2% of the Company's pre-tax income for the
fiscal year ended December 31, 1996 has been established to be distributed to
the executive officers based upon evaluation of the following factors:
1) A review of the profit and loss of the Company as compared to the
projected profit and loss for the fiscal year as set forth in the Company's
business plan.
2) A review of the cash flow of the Company as compared to the
projected cash flow for the fiscal year as set forth in the Company's
business plan.
3) The overall performance of the Company in comparison to competitive
industry performance, taking into consideration an analysis of rates of
growth, return on equity and return on sales.
4) The incentive bonus payments by competitors in relation to the
proposed bonus payments to the Company's executive officers.
5) All other actions and activities by the executive officers in the
fulfillment of their tasks as an officer to maximize Stockholder value.
The amount of the payments allocated to each executive officer from the
incentive pool is determined by the Board (upon the recommendation of the
Compensation Committee) in its sole discretion; provided that the maximum
incentive compensation payable from the incentive pool to any officer for fiscal
year 1996 will not exceed 75% of the base salary of such officer, except for Mr.
Johnson whose maximum incentive compensation will not exceed 100% of his base
salary. An executive officer will only be entitled to receive incentive
compensation from the incentive pool if the officer is employed by the Company
during the entire fiscal year. See footnote 3 to "Executive
Compensation -- Summary Compensation." In addition to the incentive compensation
received from the pool, Mr. Frueh was awarded a special bonus of $50,000 for his
work in connection with an on-going federal tax audit of the Company.
Stock Options. Long-term incentives to remain in the employ of the Company
are provided through grants of stock options to key employees, including
officers and managerial or supervisory employees who are salaried employees of
the Company and its subsidiaries. The amount of the awards reflect the officer's
position and ability to influence the Company's overall performance. Options are
intended to provide officers with an increased incentive to make contributions
to the long-term performance and growth of the Company, to join the interests of
officers with the interests of Stockholders and to attract and retain qualified
employees.
Restricted Stock Plan. In 1995, long-term incentives through grants of
restricted stock were provided to key employees, including officers and
presidents of operations. These restricted stock grants vest over time,
including on an accelerated schedule if the Company's financial performance
achieves certain specified targets. See footnote 4 to "Executive
Compensation -- Summary Compensation."
Compliance with Internal Revenue Code Section 162(m). It is the policy of
the Compensation Committee to structure compensation to minimize the amount that
could be subject to the $1,000,000 limitation on corporate tax deductions under
Section 162(m) of the Tax Code, while maintaining flexibility to take actions
which it deems to be in the best interest of the Company and its Stockholders
but which may result in the payment of certain amounts that are not deductible.
For the year ended December 31, 1996, Messrs. Strudler's and Heimbinder's
"applicable employee remuneration" (as such term is defined in the Tax Code)
each exceeded $1,000,000. Pursuant to the Employment Agreements, a portion of
any compensation otherwise payable may be deferred in certain circumstances if
it would otherwise not be deductible by the Company because of the limitations
set forth in Section 162(m) of the Tax Code. Accordingly, payment of $40,183 and
$29,753 of Mr. Strudler's and Mr. Heimbinder's compensation, respectively, was
deferred.
15
<PAGE> 19
Chairman and President Compensation. The compensation for Mr. Strudler, the
Chairman and Co-Chief Executive Officer of the Company, and Mr. Heimbinder, the
President, Co-Chief Executive Officer and Chief Operating Officer of the
Company, is based on their respective Employment Agreements, which were amended
and restated as of October 17, 1995 and further amended on February 11, 1997,
upon approval by the Board (based on a recommendation of the Compensation
Committee), and have been in effect since 1986, as amended from time to time.
See "Employment Contracts and Termination of Employment and Change-in-Control
Arrangements." Mr. Strudler's base salary for 1996 was $440,000 and Mr.
Heimbinder's base salary for 1996 was $430,000. Such base salaries were
determined by the Board (based on a recommendation of the Compensation
Committee), after reviewing the base salary increases for Messrs. Strudler and
Heimbinder over the past several years, the comparable salaries of chief
executive officers and chief operating officers of other homebuilding companies
as set forth in the composite compensation survey for residential builders
employed by the Compensation Committee in determining the other executive
officer compensation and public filings of various residential builders (some of
which were included in the Company's peer group (see "Stock Performance Graph"),
and the Company's performance during 1995. In 1996, the incentive bonus paid to
Mr. Strudler was $587,978, and the incentive bonus paid to Mr. Heimbinder was
$598,408, based upon a formula set forth in the Employment Agreements. Such
bonuses paid exclude amounts deferred as described in the preceding paragraph.
The compensation framework of the Employment Agreements is consistent with the
Compensation Committee's policy to provide incentives to executive officers with
rewards related to the Company's profitability and to recognize executive
officer's individual contributions to the Company.
Compensation and Stock Option
Committee
Charles A. McKee, Chairman
Steven L. Gerard
Kenneth J. Hanau, Jr.
James W. Sight
16
<PAGE> 20
STOCK PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change during the five years ended December 31, 1996 in (i) the total
Stockholder return on the Common Stock with (ii) the total return on the
Standard & Poor's 500 Stock Index and (iii) the total stockholder return on the
common stock of a peer group consisting of 10 companies engaged in homebuilding
activities. Such yearly percentage change has been measured by dividing (i) the
sum of (a) the amount of dividends for the measurement periods, assuming
dividend reinvestment, and (b) the price per share at the end of the measurement
period less the price per share at the beginning of the measurement period, by
(ii) the price per share at the beginning of the measurement period. The price
of each unit has been set at $100 on December 31, 1991 for preparation of the
graph.
<TABLE>
<CAPTION>
Measurement Period U.S. Home Corporation S&P 500 Peer Group
(Fiscal Year Covered)
<S> <C> <C> <C>
1991 100 100 100
1992 240.15 107.64 118.82
1993 655.79 118.50 151.62
1994 397.17 120.06 93.28
1995 717.36 165.18 130.66
1996 640.39 203.11 131.04
</TABLE>
On June 21, 1993, the Company's shares of outstanding common stock were
cancelled and .077480 shares of Common Stock and Class B Warrants to purchase
.042036 shares of Common Stock were issued for each old share of common stock
pursuant to the provisions of the Company's Chapter 11 plan of reorganization.
The periods shown on the graph prior to June 22, 1993 reflect a restatement of
the value of the old common stock to reflect the exchange of the shares of old
common stock for the shares of Common Stock.
The peer group index is composed of the following homebuilding companies:
Centex Corporation, Continental Homes Holding Corp., Del Webb Corp., Hovnanian
Enterprises, Inc., Kaufman & Broad Home Corporation, Lennar Corporation, MDC
Holdings, Inc., Pulte Corporation, The Ryland Group, Inc. and Standard Pacific
Corp.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the year ended December
31, 1996 were Messrs. Gerard, Hanau, McKee and Sight. No such person was an
officer or employee of the Company during the year ended December 31, 1996 or
was formerly an officer of the Company.
17
<PAGE> 21
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the Company's
outstanding shares of Common Stock and Convertible Preferred Stock beneficially
owned as of March 3, 1997, by (i) each director of the Company, (ii) the
Chairman and Co-Chief Executive Officer and each of the four most highly
compensated executive officers of the Company (other than the Chairman and
Co-Chief Executive Officer), (iii) all directors and executive officers of the
Company as a group and (iv) each person who owns more than five percent of the
Common Stock or the Convertible Preferred Stock. All information with respect to
beneficial ownership has been furnished to the Company by the parties below.
<TABLE>
<CAPTION>
COMMON STOCK CONVERTIBLE PREFERRED STOCK
------------------------------ ---------------------------
NUMBER OF SHARES PERCENT NUMBER OF PERCENT
BENEFICIAL OWNERS (1)(2)(3)(4)(5) OF CLASS SHARES OF CLASS
----------------- ---------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Glen Adams.............................. 8,000 * -- --
Steven L. Gerard........................ 8,000 * -- --
Kenneth J. Hanau, Jr.................... 10,790 * -- --
Isaac Heimbinder........................ 204,107(6)(7) 1.78% -- --
Malcolm T. Hopkins...................... 10,000 * -- --
Jack L. McDonald........................ 8,000 * -- --
Charles A. McKee........................ 12,535(8) * -- --
George A. Poole, Jr..................... 10,000 * -- --
Herve Ripault........................... 11,365 * -- --
James W. Sight.......................... 8,000 * -- --
Robert J. Strudler...................... 202,210(6)(9) 1.76% -- --
Craig M. Johnson........................ 38,022 * -- --
Gary L. Frueh........................... 33,109 * -- --
Chester P. Sadowski..................... 30,586 * -- --
All directors and executive officers of
the Company as a group (14 persons)... 682,748 5.95% 261 *
Barclays Global Investors, N.A.
45 Fremont Street
San Francisco, CA 94105(10)........... 673,994 5.87% -- --
FMR Corp.
82 Devonshire Street
Boston, MA 02109(11).................. 1,462,745 12.75% 45,000 40.05%
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404(12)............... 924,800 8.06% -- --
Wellington Management Company, LLP
75 State Street
Boston, MA 02109(13).................. 1,149,296 10.02% -- --
</TABLE>
- ---------------
* Less than 1%.
(1) Includes options which are fully exercisable pursuant to the Company's
Employees' Stock Option Plans for the following number of shares of Common
Stock: Mr. Heimbinder -- 138,334; Mr. Strudler -- 138,334; Mr.
Johnson -- 14,001; Mr. Frueh -- 12,001; Mr. Sadowski -- 14,001; and all
executive officers of the Company as a group -- 354,674.
(2) Includes shares of Common Stock issued in connection with the Employee
Stock Plan. See "Executive Compensation -- Summary Compensation Table." The
number of shares of Common Stock issued pursuant to the Employee Stock Plan
for 1994 incentive compensation are as follows: Mr. Heimbinder -- 5,420;
Mr. Strudler -- 5,559; Mr. Johnson -- 1,459; Mr. Frueh -- 1,251; Mr.
Sadowski -- 1,459; and all executive officers of the Company as a
group -- 18,622. Messrs. Heimbinder and Strudler elected to be included in
the Employee Stock Plan for purposes of their 1994
18
<PAGE> 22
incentive compensation. The number of shares of Common Stock issued
pursuant to the Employee Stock Plan for 1995 incentive compensation are Mr.
Johnson -- 546; Mr. Frueh -- 348; Mr. Sadowski -- 519; and all executive
officers of the Company as a group -- 2,889. The number of shares of Common
Stock issued pursuant to the Employee Stock Plan for 1996 incentive
compensation are Mr. Johnson -- 797; Mr. Frueh -- 479; Mr. Sadowski -- 545;
and all executive officers of the Company as a group -- 2,998. The table
does not include an approximately equal number of shares of Common Stock
credited to Messrs. Johnson, Frueh and Sadowski, and all executive officers
of the Company as a group, for 1995 and 1996 that have not yet vested under
the Employee Stock Plan.
(3) Includes shares of Common Stock issued in connection with the Restricted
Stock Plan. See "Executive Compensation -- Summary Compensation Table." The
number of shares of Common Stock issued pursuant to the Restricted Stock
Plan are as follows: Messrs. Heimbinder, Strudler, Johnson, Frueh and
Sadowski each received 11,119 shares; and all executive officers of the
Company as a group received 88,952 shares.
(4) Includes fully exercisable options granted pursuant to the Directors' Plan
to acquire the following number of shares of Common Stock: Mr.
Adams -- 8,000; Mr. Gerard -- 8,000; Mr. Hanau -- 10,500; Mr.
Hopkins -- 8,000; Mr. McDonald -- 8,000; Mr. McKee -- 10,500; Mr.
Poole -- 8,000; Mr. Ripault -- 10,500; and Mr. Sight -- 8,000.
(5) Includes Class B Warrants, exercisable at $20 per share, to acquire the
following number of shares of Common Stock: Mr. Hanau -- 102; Mr.
McKee -- 710; Mr. Ripault -- 21; Mr. Strudler -- 1,893; Mr. Frueh -- 1,353;
and all directors and executive officers of the Company as a
group -- 4,079.
(6) Excludes 55,000 shares of Common Stock held in the Company's Profit Sharing
Plan, of which Messrs. Strudler and Heimbinder are each a trustee and in
which Mr. Heimbinder may be deemed to have an unallocated pecuniary
interest to the extent of 192 shares and Mr. Strudler may be deemed to have
an unallocated pecuniary interest to the extent of 202 shares, including 10
shares in which his son, an employee of the Company, may be deemed to have
an unallocated pecuniary interest; each of Messrs. Strudler and Heimbinder
disclaim beneficial ownership of all such shares held by the Profit Sharing
Plan except those in which each has a pecuniary interest. Each of Messrs.
Strudler and Heimbinder has shared voting and dispositive power over the
55,000 shares of Common Stock.
(7) Excludes 12,196 shares of Common Stock and Class B Warrants, exercisable at
$20 per share, to purchase 6,116 shares of Common Stock held in trust for
Mr. Heimbinder's children. Mr. Heimbinder disclaims beneficial ownership of
such shares and Warrants.
(8) Excludes 775 shares of Common Stock and Class B Warrants, exercisable at
$20 per share, to purchase 420 shares of Common Stock owned by Mr. McKee's
wife. Mr. McKee disclaims beneficial ownership of such shares and warrants.
(9) Excludes 100 shares of Common Stock held in trust for Mr. Strudler's son.
Mr. Strudler disclaims beneficial ownership of such shares.
(10) Barclays Global Investors, N.A. may be deemed to be the beneficial owner of
such shares held in trust accounts for the economic benefit of the
beneficiaries of those accounts. Barclays Global Investors, N.A. has sole
voting power and sole dispositive power over such shares.
(11) FMR Corp. beneficially owns, through its wholly-owned subsidiary, Fidelity
Management & Research Company ("Fidelity"), as an investment advisor to
certain funds ("Fidelity Funds"), 1,372,845 shares of Common Stock, which
amount includes 45,000 shares of Convertible Preferred Stock convertible
into 45,000 shares of Common Stock, and through its wholly-owned subsidiary
Fidelity Management Trust Company ("FMTC"), as trustee or managing agent to
certain accounts ("Accounts"), 89,900 shares of Common Stock. Of the
amounts held by FMR Corp., 555,645 shares of Common Stock (4.84% of the
total outstanding amount of the Common Stock) and 45,000 shares of
Convertible Preferred Stock (40.05% of the total outstanding amount of the
Convertible Preferred Stock) are also beneficially owned by Fidelity Low
Priced Stock Fund, a fund for which Fidelity serves as investment advisor.
Each of FMR Corp., through its control of Fidelity, and the Fidelity Funds
has sole dispositive power over 1,372,845 shares of Common Stock. Neither
FMR Corp. nor Edward C. Johnson 3d, as chairman and
19
<PAGE> 23
holder of 12.0% of voting common stock of FMR Corp., has the sole power to
vote or direct the voting of the shares owned directly by the Fidelity
Funds, which power rests with the boards of trustees of the Fidelity Funds.
Each of FMR Corp., through its control of FMTC, and the Accounts has sole
dispositive power over 89,900 shares of Common Stock and power to vote or
to direct the voting of 80,600 of such shares, and no power to vote or to
direct the voting of 9,300 shares of Common Stock owned by the Accounts.
(12) Franklin Resources, Inc. beneficially owns such shares through one or more
open or closed-end investment companies or other managed accounts which are
advised by direct and indirect investment advisory subsidiaries (the
"Advisor Subsidiaries"). Included in the number of such shares are 780,300
shares of Common Stock (6.80% of the total outstanding amount of the Common
Stock) beneficially owned by Franklin Advisory Services, Inc. as an
investment advisor. In addition to the Common Stock shown in the foregoing
table, Franklin Resources, Inc. holds 56,338 shares of Common Stock which
may be acquired upon conversion by Franklin Resources, Inc. of its interest
in the Company's convertible subordinated debentures. The Advisor
Subsidiaries have sole voting power and sole dispositive power over such
shares.
(13) Wellington Management Company, LLP beneficially owns, in its capacity as an
investment advisor, such shares which are owned of record by third parties.
Included in the number of such shares are 1,100,000 shares of Common Stock
(9.59% of the total outstanding amount of the Common Stock) beneficially
owned by Vanguard/Windsor Fund, Inc. Vanguard/Windsor Fund, Inc. has sole
voting power and shared dispositive power over such shares. Wellington
Management Company, LLP has shared dispositive power over such shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is not aware of any reporting person, as defined in Item 405 of
Regulation S-K, that failed to file on a timely basis, reports required by
Section 16(a) of the Exchange Act.
1997 EMPLOYEES' STOCK OPTION PLAN
(PROPOSAL 2)
On February 12, 1997, the Board adopted the Company's 1997 Employees' Stock
Option Plan (the "1997 Stock Option Plan") for the purpose of providing an
incentive to key employees, including officers and managerial or supervisory
employees who are salaried employees of the Company, to remain in the employ of
the Company and to have a proprietary interest in the Company. There are 500,000
shares of Common Stock reserved for issuance under the 1997 Stock Option Plan.
The maximum number of shares of Common Stock which may be the subject of options
granted to any individual in any calendar year is 250,000.
The full text of the 1997 Stock Option Plan is set forth as Exhibit A to
this Proxy Statement. The principal features of the 1997 Stock Option Plan are
summarized below.
All officers and managerial or supervisory employees who are salaried
employees of the Company, approximately 580 employees, including, but not
limited to, corporate officers, presidents of operations and division
presidents, are eligible to receive options under the 1997 Stock Option Plan.
The Common Stock issuable under the 1997 Stock Option Plan will be
registered pursuant to a Registration Statement on Form S-8 under the Securities
Act of 1933, as amended. The 1997 Stock Option Plan will be administered by the
Board who may from time to time appoint a committee (the "Committee") and may
delegate to the Committee full power and authority to take any action required
or permitted to be taken by the Board under the 1997 Stock Option Plan. The
Committee will be comprised of at least three members of the Board, all of whom
are to be "non-employee directors" for purposes of Rule 16b-3 of the Exchange
Act and "outside directors" for the purposes of Section 162(m) of the Tax Code.
The Board has authorized the Compensation Committee to administer the Plan.
20
<PAGE> 24
Options to be granted under the 1997 Stock Option Plan are intended to be
designated as (i) "Incentive Stock Options" as defined in Section 422(b) of the
Tax Code, (ii) nonqualified stock options or (iii) any combination of Incentive
Stock Options and nonqualified stock options. In the event that a portion of an
option cannot be treated as an Incentive Stock Option by reason of the
limitations contained in Section 422 of the Tax Code, such portion will be
treated as a nonqualified stock option.
The grant of options under the 1997 Stock Option Plan is discretionary with
the Compensation Committee who shall also specify the terms under which the
options become exercisable. The exercise price of any Incentive Stock Option
and/or a nonqualified stock option granted under the 1997 Stock Option Plan
shall be the closing price of the Common Stock on the NYSE on the day that such
option is granted. Notwithstanding the foregoing, the exercise price of such
option will in no event be less than 95% of the average of the daily last sale
price of the Common Stock on the NYSE for the 20 consecutive trading days
immediately prior to the date such option is granted, unless otherwise
determined by the Compensation Committee. The 1997 Stock Option Plan became
effective upon the date of adoption by the Board and options may be granted on
or subsequent to such date, but no option may be exercised under the 1997 Stock
Option Plan unless and until the 1997 Stock Option Plan shall have been approved
by the Stockholders within 12 months after its adoption by the Board.
No option may be exercised more than 10 years after the date such option is
granted. Furthermore, in the event the optionee's employment with the Company is
terminated for any reason other than for Cause (as defined in the applicable
option agreement) or death or disability, the optionee retires or such
optionee's employment with the Company is Constructively Terminated (as defined
in the applicable option agreement), the optionee shall have the right, not
later than the earlier of (i) three months after such termination or retirement
or (ii) the termination date of the option, to exercise the option. If an
optionee shall die or become disabled while an employee of the Company, the
personal representative of the optionee or the person to whom such options have
been transferred by will or by laws of descent and distribution, or the disabled
optionee, shall have the right, not later than the earlier of (i) one year after
such optionee's death or disability, or (ii) the termination date of the option,
to exercise such option.
The Board may at any time terminate, amend or modify the 1997 Stock Option
Plan in any respect it deems suitable without the approval of the stockholders
of the Company, except to the extent that such stockholder approval is required
under applicable law or the Board determines that such approval is necessary or
desirable in order to ensure that an option granted hereunder qualifies under
any applicable section of the Tax Code or the Exchange Act. The Compensation
Committee may at any time alter or amend any or all option agreements under the
1997 Stock Option Plan in any manner that would be authorized for a new award of
options under the 1997 Stock Option Plan; provided, however, that no amendment,
modification or termination of the 1997 Stock Option Plan may (A) in any manner
affect any option theretofore granted under the 1997 Stock Option Plan without
the consent of the then holder or (B) modify the allocation of options to the
persons designated by the Compensation Committee.
Tax Considerations
A recipient who receives an option grant under the 1997 Stock Option Plan
will not have to recognize any income at the time the option is granted. The
recipient of an Incentive Stock Option will generally recognize income at the
time the shares received on exercise are disposed of in an amount equal to the
difference between the amount realized and the exercise price. The Company will
not receive a Federal income tax deduction in connection with either the grant
or exercise of an Incentive Stock Option. The recipient of a nonqualified stock
option will recognize income at the time the option is exercised in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price. The Company will be entitled to a deduction at
the time and in the same amount as the recipient of a nonqualified stock option
recognizes income upon exercise. Special rules regarding the timing of income
may apply to a recipient who is subject to the insider trading rules of Section
16(b) of the Exchange Act. Income attributable to options granted under the 1997
Stock Option Plan should not be subject to the limitations on deductibility
contained in Section 162(m) of the Tax Code. In the event a recipient receives
an Incentive Stock Option and disposes
21
<PAGE> 25
of it in a disqualifying disposition, the option will be treated as a
nonqualified stock option with the tax consequences described above.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 1997 STOCK
OPTION PLAN, AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE
SO VOTED.
The affirmative vote of the holders of a majority of the shares of Stock
present in person or represented by Proxy and entitled to vote at the Meeting is
required for approval of Proposal 2.
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS
(PROPOSAL 3)
The Board, upon recommendation of the Audit Committee, has appointed,
subject to ratification by Stockholders, the firm of Arthur Andersen LLP,
independent public accountants, to examine the financial statements of the
Company for 1997. Arthur Andersen LLP has been employed by the Company as its
independent auditors for more than 25 years. Stockholders are asked to ratify
the action of the Board in making such appointment.
Representatives of Arthur Andersen LLP will attend the Meeting and may make
a statement if they so desire. They also will be available to respond to
appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION, AND IT IS
INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
The affirmative vote of the holders of a majority of the shares of Stock
cast thereon is required for the ratification of the appointment of auditors.
OTHER BUSINESS
Management of the Company knows of no business to be brought before the
Meeting other than the election of Directors, the adoption of the 1997 Stock
Option Plan and ratification of the appointment of auditors as set forth in the
Notice of Annual Meeting. If any other proposals come before the Meeting, it is
intended that the shares of Stock represented by Proxies shall be voted in
accordance with the judgment of the person or persons exercising the authority
conferred by the Proxies.
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company on or before November
14, 1997 and otherwise be in accordance with the By-Laws in order to be included
in the Proxy Statement and Proxy for that meeting. The mailing address of the
Company for submission of any such proposal is given on the first page of this
Proxy Statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE REQUESTED TO SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON.
On Behalf of the Board of Directors
RICHARD G. SLAUGHTER
Secretary
Houston, Texas
March 14, 1997
22
<PAGE> 26
EXHIBIT A
U.S. HOME CORPORATION
1997 EMPLOYEES' STOCK OPTION PLAN
1. PURPOSE
The 1997 Employees' Stock Option Plan (the "Stock Option Plan") is intended
to provide an incentive for key employees of U.S. Home Corporation (the
"Company") and its subsidiaries in order to encourage them to remain in the
employ of the Company and contribute to the Company's success by granting them
stock options.
(a) The Board of Directors of the Company (the "Board") will (i) administer
the Stock Option Plan, (ii) establish, subject to the provisions of the Stock
Option Plan, such rules and regulations as it may deem appropriate for the
proper administration of the Stock Option Plan and (iii) make such
determinations under, and such interpretations of, and take such steps in
connection with, the Stock Option Plan or the options issued thereunder as it
may deem necessary or advisable.
(b) The Board may from time to time appoint a Committee (the "Committee")
which will be comprised of at least three members of the Board, all of whom are
to be non-employee directors (as defined herein) and outside directors (as
defined herein), and may delegate to the Committee full power and authority to
take any and all action required or permitted to be taken by the Board under the
Stock Option Plan, whether or not the power and the authority of the Committee
is hereinafter fully set forth. The members of the Committee may be appointed
from time to time by the Board and serve at the pleasure of the Board. The
Board, if each member is an outside director, or the Committee, as applicable,
will hereinafter be referred to as the "Administrator."
(c) For the purposes hereof, (i) a "non-employee director" is a director
who, on a given date, is a non-employee director within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (ii) an "outside director" is a director who, on a given
date, is an outside director within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "IRC").
3. STOCK.
The stock (the "Stock") to be made the subject of an option under the Stock
Option Plan will be the shares of common stock, $.01 par value per share, of the
Company, whether authorized and unissued or treasury stock. The total amount of
Stock for which options may be granted under the Stock Option Plan will not
exceed, in the aggregate, 500,000 shares, subject to adjustment in accordance
with the provisions of Section 11 hereof. Any shares of Stock which were the
subject of unexercised portions of any terminated or expired options may again
be subject to the grant of options under the Stock Option Plan.
4. AWARD OF OPTIONS.
(a) The Administrator may award options to those Officers (as defined
herein) selected by the Administrator in the amounts determined by the
Administrator, provided that the maximum number of shares of Stock which may be
the subject of options granted to any individual in any calendar year is
250,000. Such options will be exercisable in accordance with the terms hereof.
(b) The Administrator may, at any time prior to the expiration of 10 years
from the date on which the Stock Option Plan is adopted, authorize the granting
of options to such members of that class of the Company's key employees
consisting of the officers and managerial or supervisory personnel, who are
salaried employees of the Company (the "Officers"), as it may select, and in
such amounts and in such installments as it will designate, subject to the
provisions of this Section. The Administrator, in its sole discretion, will
designate such options as (i) "Incentive Stock Options" within the meaning of
Section 422 of the IRC, (ii) other stock options subject to the terms and
conditions set forth herein ("Nonqualified Stock Options") or (iii) any
combination of Incentive Stock Options and Nonqualified Stock Options. In the
event that any
A-1
<PAGE> 27
portion of an option cannot be exercised as an Incentive Stock Option by reason
of the limitation contained in Section 422(d) of the IRC, such portion will be
treated as a Nonqualified Stock Option.
(c) No person will be eligible to receive or hold an Incentive Stock Option
under the Stock Option Plan if, immediately after such option is granted, such
person owns (within the meaning of Section 422 of the IRC) stock possessing more
than 10 percent of the total combined voting power or value of all classes of
capital stock of the Company.
(d) All Incentive Stock Options will be evidenced by a written agreement in
substantially the form of Exhibit A annexed hereto, and all Nonqualified Stock
Options will be evidenced by a written agreement in substantially the form of
Exhibit B annexed hereto (each an "Option Agreement").
5. PRICE.
(a) The exercise price of an option will be the closing price of the Stock
on the New York Stock Exchange ("NYSE") on the day that such option is granted
if a sale is executed on such Exchange on that day, and if there was no such
sale, the price will be the closing price of the Stock on the last preceding day
on which a sale was executed. Notwithstanding the foregoing, the exercise price
of such option will in no event be less than 95% of the average of the daily
last sale prices of the Stock on the NYSE (or if no sale takes place on any such
day on the NYSE, the average of the last reported closing bid and asked prices
on such day as officially quoted on the NYSE) for the 20 consecutive trading
days immediately prior to the date such option is granted, unless otherwise
determined by the Administrator.
(b) The closing price of the Stock, as of any particular day, will be as
reported in The Wall Street Journal; provided, however, that if the Stock is not
listed on the New York Stock Exchange on the date the particular option is
granted, the exercise price will be not less than the fair market value of the
shares of Stock covered by the option at the time that the option is granted, as
determined by the Administrator based on such empirical evidence as it deems to
be necessary under the circumstances.
6. TERM.
Subject to Sections 8 and 9 hereof, an option may be exercised by the
holder thereof (a "Holder") at such times and in such installments, if any, as
may be specified in such Holder's Option Agreement, which will provide that no
option will be exercised in any amount later than 10 years from the date such
option was granted.
7. TRANSFERABILITY.
No option will be transferable by a Holder other than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined by the IRC or Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). During the lifetime of a Holder, the option will
be exercisable only by such Holder. An Officer who acquires Stock hereunder will
only transfer such Stock in compliance with applicable federal and state
securities laws.
8. TERMINATION OF EMPLOYMENT.
Except to the extent otherwise specified by the Administrator, if, on or
after the date an option is granted under the Stock Option Plan, (i) (A) a
Holder's employment with the Company is terminated by the Company for any reason
other than (x) for Cause (as defined in the applicable Option Agreement), or (y)
death or disability (within the meaning of Section 22(e)(3) of the IRC), (B) the
Holder retires in accordance with the Company's normal retirement policy or with
the consent of the Board, or (C) such Holder's employment with the Company is
Constructively Terminated (as defined in the applicable Option Agreement), the
Holder will have the right, not later than the earlier of (a) three months after
such termination or retirement or (b) the termination date of the option, to
exercise the option, to the extent the right to exercise such option will have
accrued at the date of such termination of employment or retirement, except to
the extent that such option theretofore will have been exercised, or (ii) a
Holder's employment with the Company is terminated (A) by the Company for Cause,
or (B) by the Holder for any reason other than due to (x) such Holder being
Constructively Terminated, (y) such Holder's retirement in accordance with the
A-2
<PAGE> 28
Company's normal retirement policy or with the consent of the Board or (z) such
Holder's death or disability, the right to exercise the option will thereupon
terminate.
9. DEATH OR DISABILITY.
(a) Except to the extent otherwise specified by the Administrator and as
provided in paragraph (b) of this Section 9, if a Holder's employment with the
Company is terminated because of disability (within the meaning of Section
22(e)(3) of the IRC), the disabled Holder will have the right, not later than
the earlier of (i) one year after such termination or (ii) the termination date
of the option, to exercise the option, to the extent the right to exercise such
option will have accrued at the date of such termination of employment, except
to the extent that such option theretofore has been exercised.
(b) Except to the extent otherwise specified by the Administrator, if a
Holder dies while in the employ of the Company or within three months after
termination of employment with the Company because of disability, such Holder's
personal representative or the person or persons to whom the option will have
been transferred by will or by the laws of descent and distribution will have
the right, not later than the earlier of (i) one year after the date of such
Holder's death or (ii) the termination date of the option, to exercise such
option, to the extent the right to exercise such option shall have accrued at
the date of death or disability, except to the extent such option theretofore
will have been exercised.
10. PAYMENT FOR STOCK.
(a) The purchase price of Stock issued upon exercise of options granted
hereunder will be paid in full on the date of purchase. Payment will be made
either in cash or such other consideration as the Administrator deems
appropriate, including, without limitation, Stock already owned by the Holder or
Stock to be acquired by the Holder upon exercise of the option having a total
fair market value, as determined by the Administrator, equal to the purchase
price, or a combination of cash and Stock having a total fair market value, as
so determined, equal to the purchase price.
(b) The Company may make loans to such Holders as the Administrator, in its
discretion, may determine in connection with the exercise of options granted
under the Stock Option Plan; provided, however, that the Administrator will have
no discretion to authorize the making of any loan where the possession of such
discretion or the making of such loan would result in a "modification" (as
defined in Section 424(h) of the IRC) of any Incentive Stock Option. Such loans
will be subject to the following terms and conditions and such other terms and
conditions as the Administrator will determine not inconsistent with the Stock
Option Plan. Such loans will bear interest at such rates as the Administrator
will determine from time to time, which rates may be below then current market
rates (except in the case of Incentive Stock Options). In no event may any such
loan exceed the fair market value, at the date of exercise, of the shares
covered by the option, or portion thereof, exercised by the Holder. No loan will
have an initial term exceeding five years, but any such loan may be renewable at
the discretion of the Administrator. When a loan is made, the Holder will pledge
to the Company shares of Stock having a fair market value at least equal to the
principal amount of the loan. Every loan will comply with all applicable laws,
regulations and rules of the Federal Reserve Board and any other governmental
agency having jurisdiction over the Company.
(c) Stock will not be issued upon the exercise of options unless and until
the aggregate amount of federal, state or local taxes of any kind required by
law to be withheld with respect to the exercise of such options have been paid
or satisfied or provision for their payment and satisfaction has been made upon
such terms as the Administrator may prescribe, including, without limitation,
payment of any such taxes by exchanging shares of Stock previously owned by the
Holder or acquired upon the exercise of an option.
11. STOCK ADJUSTMENTS.
(a) The total amount of Stock for which options may be granted under the
Stock Option Plan and option terms (both as to the number of shares of Stock and
the price of the option) will be appropriately adjusted for any increase or
decrease in the number of outstanding shares of Stock resulting from payment of
a stock dividend on the Stock, a subdivision or combination of the Stock, or a
reclassification of the Stock, and (in
A-3
<PAGE> 29
accordance with the provisions contained in the following paragraph) in the
event of a consolidation or a merger in which the Company will be the surviving
corporation.
(b) After any merger of one or more corporations into the Company in which
the Company will be the surviving corporation, or after any consolidation of the
Company and one or more other corporations, each Holder will, at no additional
cost, be entitled, upon any exercise of his option, to receive, in lieu of the
number of shares of Stock as to which such option will then be so exercised, the
number and class of shares of stock, other securities or other consideration to
which such Holder would have been entitled pursuant to the terms of the
applicable agreement of merger or consolidation if at the time of such merger or
consolidation such Holder had been a Holder of record of a number of shares of
Stock equal to the number of shares for which such option may then be so
exercised. Comparable rights will accrue to each Holder in the event of
successive mergers or consolidations of the character described above.
(c) In the event of any sale of all or substantially all of the assets of
the Company, or any merger of the Company into another corporation, or any
dissolution or liquidation of the Company or, in the discretion of the Board,
any consolidation or other reorganization in which it is impossible or
impracticable to continue in effect any options, all options granted under the
Stock Option Plan and not previously exercised will become exercisable by
Holders who are at such time in the employ of the Company or any of its
subsidiaries or divisions, commencing 10 days before the scheduled closing of
such event, and will terminate unless exercised at least one business day before
the scheduled closing of such event; provided, that any such exercise will be
conditioned on the closing of such transaction; and provided further, that the
Administrator may, in its discretion, require instead that all options granted
under the Stock Option Plan and not previously exercised will be assumed by such
other corporation on the basis provided in the preceding paragraph.
(d) The adjustments described in this Section 11 and the manner of
application of the foregoing provisions will be determined by the Administrator
in its sole discretion. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an option.
12. RIGHTS AS A STOCKHOLDER.
A Holder or a transferee of an option will have no rights as a stockholder
with respect to any share of Stock covered by such Holder's option until such
Holder has become the Holder of record of such share of Stock, and, except for
stock dividends as provided in Section 11 hereof, no adjustment will be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights in respect of such share for which
the record date is prior to the date on which he will become the holder of
record thereof.
13. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the Stock Option Plan
in any respect it deems suitable without the approval of the stockholders of the
Company, except to the extent that such stockholder approval is required under
applicable law or the Board determines that such approval is necessary or
desirable in order to ensure that an option granted hereunder qualifies under
any applicable section of the IRC or the Exchange Act. The Administrator may at
any time alter or amend any or all Option Agreements under the Stock Option Plan
in any manner that would be authorized for a new award of options under the
Stock Option Plan; provided, however, that no amendment, modification or
termination of the Stock Option Plan may (A) in any manner affect any option
theretofore granted under the Stock Option Plan without the consent of the then
Holder or (B) modify the allocation of options to the persons designated by the
Administrator.
14. INVESTMENT PURPOSE.
At the time of exercise of any option, the Company may, if it will deem it
necessary or desirable for any reason, require the Holder to (i) represent in
writing to the Company that it is such Holder's then intention to acquire the
Stock for investment and not with a view to the distribution thereof or (ii)
postpone the date of exercise until such time as the Company has available for
delivery to the Holder a prospectus meeting the requirements of all applicable
securities laws.
A-4
<PAGE> 30
15. RIGHT TO TERMINATE EMPLOYMENT.
Nothing contained herein or in any Option Agreement will restrict the right
of the Company to terminate the employment of any Holder at any time, with or
without Cause.
16. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or taken pursuant
to the provisions of the Stock Option Plan by the Administrator will be final
and be binding and conclusive for all purposes.
17. INDEMNIFICATION OF DIRECTORS.
Each director of the Company will be indemnified by the Company against all
costs and expenses reasonably incurred by such director in connection with any
action, suit or proceeding to which he or she or any of the other directors may
be a party by reason of any action taken or failure to act under or in
connection with the Stock Option Plan, or any option granted thereunder, and
against all amounts paid by the other directors in settlement thereof (provided
such settlement will be approved by independent legal counsel) or paid by the
other directors in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment based upon a finding of bad faith. Upon the
institution of any such action, suit or proceeding, a director of the Company
will notify the Company in writing, giving the Company an opportunity, at its
own expense, to handle and defend the same before such director undertakes to
handle it on his or her own behalf.
18. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the Stock Option
Plan to the Company will be deemed to include any divisions of the Company and
any subsidiary corporations and parent corporations of the Company, as those
terms are defined in Section 424 of the IRC.
19. GOVERNING LAW.
The Stock Option Plan will be governed by the laws of the State of
Delaware.
20. EFFECTIVE DATE.
The Stock Option Plan will become effective upon the date of its adoption
by the Board and options may be granted on or subsequent to such date but no
option may be exercised under the Stock Option Plan unless and until the Stock
Option Plan shall have been approved by the stockholders of the Company within
12 months after its adoption by the Board. If the Stock Option Plan is not so
approved by the stockholders, all options granted hereunder shall be null and
void.
21. OVERRIDE.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Stock Option Plan are intended to comply with all
applicable conditions of Rule 16b-3 or any successor provision under the
Exchange Act. To the extent any provision of the Stock Option Plan or action by
the Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Administrator.
A-5
<PAGE> 31
EXHIBIT A
(TO 1997 STOCK OPTION PLAN)
U.S. HOME CORPORATION
1997 EMPLOYEES' STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of , between U.S. HOME
CORPORATION, a Delaware corporation (the "Company"), and (the
"Holder").
1. PURPOSE.
The purpose of this Incentive Option Agreement (this "Agreement") is to set
forth the terms and conditions of the incentive stock option granted to the
Holder under the U.S. Home Corporation 1997 Employees' Stock Option Plan (the
"Stock Option Plan"). The terms and conditions (including defined terms) of the
Stock Option Plan are expressly incorporated herein and made a part hereof with
the same force and effect as if fully set forth herein. The acceptance by the
Holder of the Option (as hereinafter defined) granted hereby will constitute
acceptance of and agreement with all of the terms and conditions contained in
this Agreement and the Stock Option Plan.
2. GRANT OF OPTION.
The Company hereby grants to the Holder an option (the "Option") to
purchase all or any part of an aggregate of shares of the Company's
common stock, $.01 par value per share (the "Stock"), at a price of $ *
per share (the "Exercise Price"), subject to adjustment as herein provided. Such
Option is intended to qualify as an "Incentive Stock Option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "IRC");
provided, however, that to the extent that any portion of this Option cannot be
exercised as an Incentive Stock Option by reason of the $100,000 limitation
contained in Section 422(d) of the IRC, such portion will be treated as a
nonqualified stock option.
3. TERM OF OPTION.
(a) Subject to Sections 4 and 5 hereof, the Option shall be exercisable as
follows:
(b) The Option will expire on the date 10 years from the date hereof. Any
exercise will be accompanied by a written notice to the Company in substantially
the form attached hereto as Schedule 1.
4. TERMINATION OF EMPLOYMENT.
(a) If, on or after the date an Option is granted under the Stock Option
Plan, (i)(A) the Holder's employment with the Company is terminated by the
Company for any reason other than (x) for Cause (as herein defined), or (y)
death or disability (within the meaning of Section 22(e)(3) of the IRC), (B) the
Holder retires in accordance with the Company's normal retirement policy or with
the consent of the board of directors of the Company (the "Board"), or (C) the
Holder's employment with the Company is Constructively Terminated (as defined
herein), the Holder will have the right, not later than the earlier of (a) three
months after such termination or retirement or (b) the termination date of the
Option to exercise the Option, to the extent the right to exercise such Option
will have accrued at the date of such termination of
- ---------------
* To be determined pursuant to Section 5 of the Stock Option Plan.
A-6
<PAGE> 32
employment or retirement, except to the extent that such Option theretofore will
have been exercised, or (ii) the Holder's employment with the Company is
terminated (A) by the Company for Cause or (B) by the Holder for any reason
other than due to (x) the Holder being Constructively Terminated, (y) the
Holder's retirement in accordance with the Company's normal retirement policy or
with the consent of the Board, or (z) the Holder's death or disability, the
right to exercise the Option will thereupon terminate.
(b) For purposes of this Agreement, the term "Cause" means (i) the Holder's
continuing willful failure to perform his or her duties with respect to the
Company (other than as a result of total or partial incapacity due to physical
or mental illness), (ii) gross negligence or malfeasance by the Holder in the
performance of his duties with respect to the Company, (iii) an act or acts on
the Holder's part constituting a felony under the laws of the United States or
any state thereof which results or was intended to result directly or indirectly
in gain or personal enrichment by the Holder at the expense of the Company or
(iv) any other circumstances set forth in an employment agreement between the
Company and the Holder which would constitute grounds for the Company to
terminate the employment of the Holder for Cause.
(c) For purposes of this Agreement, the term "Constructively Terminated"
means (i) a reduction in an amount equal to or greater than 15 percent of the
Holder's base salary, (ii) a material reduction in the Holder's job function,
duties or responsibilities or (iii) a required relocation of the Holder of more
than 50 miles from the Holder's current job location; provided, however, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President with the Company and has job functions, duties or
responsibilities of a Division Chairman or Division President and/or is required
to relocate in connection with such change in position; provided, further, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President of a division other than the division he or she is currently
employed by and has job functions, duties or responsibilities of a Division
Chairman or Division President and/or is required to relocate in connection with
such change in position; provided, further, that the employment of any person
will not be deemed Constructively Terminated unless the Holder actually
terminates his or her employment with the Company within 60 days after the
occurrence of an event specified in clauses (i), (ii) or (iii) above.
5. DEATH OR DISABILITY.
(a) Except as provided in paragraph (b) of this Section 5, if the Holder's
employment with the Company is terminated because of his or her disability
(within the meaning of Section 22(e)(3) of the IRC), the disabled Holder will
have the right, not later than the earlier of (i) one year after such
termination or (ii) the date 10 years from the date hereof, to exercise the
Option, to the extent the right to exercise the Option will have accrued
hereunder at the date of such termination of employment, except to the extent
the Option theretofore will have been exercised.
(b) If the Holder dies while in the employ of the Company or within three
months after termination of his or her employment with the Company or any
Subsidiary or division thereof because of his or her disability, his personal
representative or the person or persons to whom the Option will have been
transferred by will or by the laws of descent and distribution will have the
right, not later than the earlier of (i) one year after the date of the Holder's
death or (ii) the date 10 years from the date hereof, to exercise the Option, to
the extent the right to exercise the Option will have accrued at the date of
death or disability, except to the extent the Option theretofore will have been
exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the IRC or Title I of the Employee Retirement Income
Security Act of 1974, as amended. During the lifetime of the Holder, the Option
will be exercisable only by such Holder. If the Holder acquires Stock hereunder,
he or she will only transfer such Stock in compliance with applicable federal
and state securities laws.
A-7
<PAGE> 33
7. PAYMENT OF EXERCISE PRICE.
Payment for shares of Stock issued upon exercise of the Option will be paid
in full on the date of purchase. Payment will be made either in cash or in such
other consideration as the Administrator (as defined in the Stock Option Plan)
deems appropriate. Notwithstanding the foregoing, shares of Stock will not be
issued upon exercise of the Option unless and until the aggregate amount of
federal, state and local taxes of any kind required to be withheld with respect
to such exercise have been paid or satisfied or provision for their payment and
satisfaction has been made upon such terms as the Administrator may prescribe.
8. ADJUSTMENT TO OPTION.
The number of shares of Stock subject to the Option and the Exercise Price
will be adjusted, as necessary, in accordance with the provisions of Section 11
of the Stock Option Plan.
9. NO RIGHTS AS STOCKHOLDER.
The Holder will have no rights as a stockholder with respect to any Stock
covered by the Option until he or she has become the holder of record of such
Stock, and, except for stock dividends as provided in Section 11 of the Stock
Option Plan, no adjustment will be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property) or distributions
or other rights in respect of such Stock for which the record date is prior to
the date on which he or she will become the holder of record thereof.
10. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained herein will restrict any right of the Company to
terminate the employment of the Holder at any time, with or without Cause.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if it will deem
it necessary or desirable for any reason, require the Holder (i) to represent in
writing to the Company that it is his then intention to acquire the Stock for
investment and not with a view to the distribution thereof or (ii) to postpone
the date of exercise until such time as the Company has available for delivery
to the Holder a prospectus meeting the requirements of all applicable federal or
state securities laws.
A-8
<PAGE> 34
12. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
U.S. HOME CORPORATION
By:
----------------------------------
Name:
Title:
HOLDER
------------------------------------
Signature
Name:
-------------------------------
Address:
-------------------------------
-------------------------------
A-9
<PAGE> 35
SCHEDULE 1
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
Re: Notice of Exercise of Incentive Stock Option
Dear Sir:
I am the holder of the below-described incentive stock option granted under
the U.S. Home Corporation (the "Company") 1997 Employees' Stock Option Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE
DATE OF OPTION SUBJECT TO OPTION PER SHARE
- ----------------- ----------------- --------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase shares of the common stock, $.01
par value per share, of the Company, reserving my right to purchase any
remaining shares subject to the option in accordance with its terms.
Dated: ,
Very truly yours,
-----------------------------------
Signature
Name:
-----------------------------
Address:
--------------------------
--------------------------
A-10
<PAGE> 36
EXHIBIT B
(TO 1997 STOCK OPTION PLAN)
U.S. HOME CORPORATION
1997 EMPLOYEES' STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of , between U.S. HOME
CORPORATION, a Delaware corporation (the "Company"), and
(the "Holder").
1. PURPOSE.
The purpose of this Nonqualified Stock Option Agreement (this "Agreement")
is to set forth the terms and conditions of the stock option granted to the
Holder under the 1997 Employees' Stock Option Plan (the "Stock Option Plan").
The terms and conditions (including defined terms) of the Stock Option Plan are
expressly incorporated herein and made a part of hereof with the same force and
effect as if fully set forth herein. The acceptance by the Holder of the Option
(as hereinafter defined) granted hereby will constitute acceptance of and
agreement with all of the terms and conditions contained in this Agreement and
the Stock Option Plan.
2. GRANT OF OPTION.
The Company hereby grants to the Holder an option (the "Option") to
purchase all or any part of an aggregate of shares of the Company's
common stock, $.01 par value per share (the "Stock"), at a price of $ *
per share (the "Exercise Price"), subject to adjustment as herein provided. Such
Option is not intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"IRC").
3. TERM OF OPTION.
(a) Subject to Sections 4 and 5 hereof, the Option shall be exercisable as
follows:
(b) The Option will expire on the date 10 years from the date hereof. Any
exercise will be accompanied by a written notice to the Company in substantially
the form attached hereto as Schedule 1.
4. TERMINATION OF EMPLOYMENT.
(a) If, on or after the date an Option is granted under the Stock Option
Plan, (i) (A) the Holder's employment with the Company is terminated by the
Company for any reason other than (x) for Cause (as herein defined), or (y)
death or disability (within the meaning of Section 22(e)(3) of the IRC), (B) the
Holder retires in accordance with the Company's normal retirement policy or with
the consent of the board of directors of the Company (the "Board"), or (C) the
Holder's employment with the Company is Constructively Terminated (as defined
herein), the Holder will have the right, not later than the earlier of (a) three
months after such termination or retirement or (b) the termination date of the
Option, to exercise the Option, to the extent the right to exercise the Option
will have accrued hereunder at the date of such termination of employment or
retirement, except to the extent that the Option theretofore will have been
exercised or (ii) the Holder's employment with the Company is terminated (A) by
the Company for Cause or (B) by the Holder
- ---------------
* To be determined pursuant to Section 5 of the Stock Option Plan.
A-11
<PAGE> 37
for any reason other than due to (x) the Holder being Constructively Terminated,
(y) the Holder's retirement in accordance with the Company's normal retirement
policy or with the consent of the Board, or (z) the Holder's death or
disability, the right to exercise the Option will thereupon terminate.
(b) For purposes of this Agreement, the term "Cause" will mean (i) the
Holder's continuing willful failure to perform his duties with respect to the
Company (other than as a result of total or partial incapacity due to physical
or mental illness), (ii) gross negligence or malfeasance by the Holder in the
performance of his or her duties with respect to the Company, (iii) an act or
acts on the Holder's part constituting a felony under the laws of the United
States or any state thereof which results or was intended to result directly or
indirectly in gain or personal enrichment by the Holder at the expense of the
Company or (iv) any other circumstances set forth in an employment agreement
between the Company and the Holder which would constitute grounds for the
Company to terminate the employment of the Holder for Cause.
(c) For purposes of this Agreement, the term "Constructively Terminated"
means (i) a reduction in an amount equal to or greater than 15 percent of the
Holder's base salary, (ii) a material reduction in the Holder's job function,
duties or responsibilities or (iii) a required relocation of the Holder of more
than 50 miles from such Holder's current job location; provided, however, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President with the Company and has job functions, duties or
responsibilities of a Division Chairman or Division President and/or is required
to relocate in connection with such change in position; provided, further, that
the employment with the Company will not be deemed to be Constructively
Terminated in the event he or she is required to be a Division Chairman or
Division President of a division other than the division he or she is currently
employed by and has job functions, duties or responsibilities of a Division
Chairman or Division President and/or is required to relocate in connection with
such change in position; provided, further, that the employment of any person
will not be deemed Constructively Terminated unless the Holder actually
terminates his or her employment with the Company within 60 days after the
occurrence of an event specified in clauses (i), (ii) or (iii) above.
5. DEATH OR DISABILITY.
(a) Except as provided in paragraph (b) of this Section 5, if the Holder's
employment with the Company is terminated because of his or her disability
(within the meaning of Section 22(e)(3) of the IRC), the disabled Holder will
have the right, not later than the earlier of (i) one year after such
termination or (ii) the date 10 years from the date hereof, to exercise the
Option, to the extent the right to exercise the Option will have accrued
hereunder at the date of such termination of employment, except to the extent
the Option theretofore will have been exercised.
(b) If the Holder dies while in the employ of the Company or any subsidiary
or division thereof or within three months after termination of his or her
employment with the Company because of his or her disability, his or her
personal representative or the person or persons to whom the Option will have
been transferred by will or by the laws of descent and distribution will have
the right, not later than the earlier of (i) one year after the date of the
Holder's death or (ii) the date 10 years from the date hereof, to exercise the
Option, to the extent the right to exercise the Option will have accrued at the
date of death or disability, except to the extent the Option theretofore will
have been exercised.
6. TRANSFERABILITY.
The Option will not be transferable by the Holder other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the IRC or Title I of the Employee Retirement Income
Security Act of 1974, as amended. During the lifetime of the Holder, the Option
will be exercisable only by such Holder. If the Holder acquires Stock hereunder,
he or she will only transfer such Stock in compliance with applicable federal
and state securities laws.
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<PAGE> 38
7. PAYMENT OF EXERCISE PRICE.
Payment for shares of Stock issued upon exercise of the Option will be paid
in full on the date of purchase. Payment will be made either in cash or in such
other consideration as the Administrator (as defined in the Stock Option Plan)
deems appropriate. Notwithstanding the foregoing, shares of Stock will not be
issued upon exercise of the Option unless and until the aggregate amount of
federal, state and local taxes of any kind required to be withheld with respect
to such exercise have been paid or satisfied or provision for their payment and
satisfaction has been made upon such terms as the Administrator may prescribe.
8. ADJUSTMENT TO OPTION.
The number of shares of Stock subject to the Option and the Exercise Price
will be adjusted, as necessary, in accordance with the provisions of Section 11
of the Stock Option Plan.
9. NO RIGHTS AS STOCKHOLDER.
The Holder will have no rights as a stockholder with respect to any Stock
covered by the Option until such person has become the holder of record of such
Stock, and, except for stock dividends as provided in Section 11 of the Stock
Option Plan, no adjustment will be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property) or distributions
or other rights in respect of such Stock for which the record date is prior to
the date on which he or she will become the holder of record thereof.
10. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained herein will restrict any right of the Company to
terminate the employment of the Holder at any time, with or without Cause.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if it will deem
it necessary or desirable for any reason, require the Holder (i) to represent in
writing to the Company that it is his then intention to acquire the Stock for
investment and not with a view to the distribution thereof or (ii) to postpone
the date of exercise until such time as the Company has available for delivery
to the Holder a prospectus meeting the requirements of all applicable federal or
state securities laws.
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<PAGE> 39
12. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
U.S. HOME CORPORATION
By:
--------------------------------
Name:
Title:
HOLDER
------------------------------------
Signature
Name:
------------------------------
Address:
---------------------------
---------------------------
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<PAGE> 40
SCHEDULE 1
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
Re: Notice of Exercise of Nonqualified Stock Option
Dear Sir:
I am the holder of the below-described nonqualified stock option granted
under the U.S. Home Corporation (the "Company") 1997 Employees' Stock Option
Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE
DATE OF OPTION SUBJECT TO OPTION PER SHARE
- ----------------- ----------------- --------------
<S> <C> <C>
</TABLE>
I hereby exercise my option to purchase shares of the common stock, $.01
par value per share, of the Company, reserving my right to purchase any
remaining shares subject to the option in accordance with its terms.
Dated: ,
Very truly yours,
------------------------------------
Signature
Name:
------------------------------
Address:
---------------------------
---------------------------
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