<PAGE> 1
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 Section 240.14a-11(c) or Section 240.14a-2
U.S. HOME CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) 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:
----------------------------------------------------------------------
[ ] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
U.S. HOME CORPORATION
1800 WEST LOOP SOUTH
P. O. BOX 2863
HOUSTON, TEXAS 77252-2863
[U.S. HOME CORPORATION LOGO]
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
March 16, 1998
Dear Stockholders:
On behalf of the officers and directors of U.S. Home Corporation (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 22, 1998, at the Omni Hotel, Four Riverway, Houston, Texas.
At the meeting, stockholders of the Company (the "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 1998 Non-Employee Directors' Stock Option Plan, the Company's Non-
Employee Director Stock Plan and amendments to the Company's Amended and
Restated Employee Stock Payment 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
LOGO
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1998
---------------------
The Annual Meeting of the Stockholders of U.S. Home Corporation (the
"Company") will be held on Wednesday, April 22, 1998, 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 1998 Non-Employee Directors' Stock Option
Plan.
3. Approval of the Company's Non-Employee Director Stock Plan.
4. Approval of amendments to the Company's Amended and Restated Employee
Stock Payment Plan.
5. Ratification of the appointment of Arthur Andersen LLP as auditors of
the Company for the fiscal year ending December 31, 1998.
6. 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 2, 1998 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ RICHARD G. SLAUGHTER
RICHARD G. SLAUGHTER
Secretary
March 16, 1998
<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 2, 1998 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 common stock, $.01 par value per share,
of the Company (the "Common Stock") present in person or represented by Proxy
and entitled to vote shall constitute a quorum at the Meeting.
As of the Record Date, there were outstanding 11,931,177 shares of Common
Stock, the holders of which are entitled to one vote per share.
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 Common Stock.
Officers and other 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.
The Annual Report of the Company for the year ended December 31, 1997,
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 16, 1998.
IN ORDER THAT YOUR SHARES OF COMMON STOCK MAY BE REPRESENTED AT THIS
MEETING, YOU ARE REQUESTED TO:
PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY.
<PAGE> 5
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Restated Certificate of Incorporation, as amended (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 nor more than 15. On February 11, 1998, the Board
adopted a resolution setting the number of directors at 10.
The Nominating and Conflict of Interest Committee (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
"ByLaws"), (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 (the
"Directors"), have been nominated for reelection at the Meeting to serve until
the annual meeting of Stockholders in 1999, and until their successors are
elected and qualified:
Glen Adams
Steven L. Gerard
Kenneth J. Hanau, Jr.
Isaac Heimbinder
Malcolm T. Hopkins
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 Common 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 (59 yrs.); Private investor
and a director of several companies Finance; Nominating and Conflict of
(2)................................... 1993 Interest
Steven L. Gerard (52 yrs.); Private
investor and a director of several
companies (3)......................... 1993 Compensation and Stock Option; Finance
Kenneth J. Hanau, Jr. (71 yrs.);
Chairman of K&H Corrugated Case Audit; Compensation and Stock Option;
Corporation (4)....................... 1976 Executive
Isaac Heimbinder (54 yrs.); President,
Co-Chief Executive Officer and Chief
Operating Officer of the Company
(5)................................... 1984 Executive
Malcolm T. Hopkins (70 yrs.); Private
investor and a director of several
companies (6)......................... 1993 Audit; Executive
Charles A. McKee (79 yrs.); Former
Chairman and Chief Executive Officer
of Electrolux Corporation (7)......... 1978 Audit; Compensation and Stock Option
George A. Poole, Jr. (66 yrs.); Private
investor and a director of several Audit; Nominating and Conflict of
companies (8)......................... 1993 Interest
Herve Ripault (57 yrs.); Associate of
Optigestiom S.A., a French fund Finance; Nominating and Conflict of
management company (9)................ 1982 Interest
James W. Sight (42 yrs.); Private
investor and a director of several Compensation and Stock Option; Finance;
companies (10)........................ 1993 Nominating and Conflict of Interest
Robert J. Strudler (55 yrs.); Chairman
and Co-Chief Executive Officer of the
Company(11)........................... 1984 Executive
</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 15, 1996. Mr. Adams was previously Chairman, President and
Chief Executive Officer of Southmark Corporation from August 1990 until
August 15, 1996. Southmark Corporation, a real estate and financial
services company, was 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 and
Marvel Entertainment Group, Inc.
(3) Mr. Gerard has been a private investor and director of several companies
since July 31, 1997. Mr. Gerard was previously Chairman and Chief Executive
Officer of Triangle Wire & Cable Inc., a major manufacturer of electrical
wire and cable products, and its successor, Ocean View Capital, Inc., from
September 1992 to July 31, 1997. 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 Group, PLC 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. ("Citibank"), responsible
for credit, portfolio and risk management for Citibank's corporate and
investment banking activities in the United States, Japan, Europe and
Australia; from
3
<PAGE> 7
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.
(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 Columbia Energy Group, MAPCO, Inc., The
Metropolitan Series Fund, Inc., State Street Research & Management Company
and EMCOR Group, Inc.
(7) 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.
(8) Mr. Poole has been a private investor for more than the past five years.
Mr. Poole serves as a director of Anacomp, Inc. and The Bibb Company.
(9) 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.
(10) 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.
(11) Mr. Strudler has served as Chairman and Co-Chief Executive Officer of the
Company since April 26, 1995; and prior thereto he had been Chairman and
Chief Executive Officer of the Company since May 12, 1986. Mr. Strudler
also served as a director of the Company from January 27, 1983 until March
22, 1984.
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.
4
<PAGE> 8
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"), Amended and Restated 1996 Employees' Stock Option Plan (the
"1996 Employees' Stock Option Plan") and 1997 Employees' Stock Option Plan (the
"1997 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").
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 and Conflict of Interest 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, the election
of corporate officers and 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 Common Stock. The Nominating Committee also administers the Amended
and Restated Non-Employee Directors' Stock Option Plan and the Amended and
Restated 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;
Executive Committee -- Messrs. Hanau (Chair), Heimbinder, Hopkins and Strudler;
Finance Committee -- Messrs. Adams, Gerard (Chair), Ripault and Sight;
Nominating and Conflict of Interest Committee -- Messrs. Adams (Chair), Poole,
Ripault and Sight.
During 1997, there were a total of 6 meetings of the Board, 2 meetings of
the Audit Committee, 3 meetings of the Compensation Committee, 5 meetings of the
Finance Committee and 4 meetings of the Nominating and Conflict of Interest
Committee. No meetings of the Executive Committee were held during 1997. 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 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the year ended December
31, 1997 were Messrs. Gerard, Hanau, McKee and Sight. No such person was an
officer or employee of the Company during the year ended December 31, 1997 or
was formerly an officer of the Company.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth a summary of annual and long-term
compensation (for 1997, 1996 and 1995) 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, 1997, 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)
------------------ ---- ------ ------ ------------ ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Strudler; 1997 $475,000 $688,000 $-- $ -- 225,000 $-- $20,890
Chairman and Co-Chief 1996 440,000 628,161 -- -- 30,000 -- 5,010
Executive Officer 1995 425,000 526,223 -- 200,000 50,000 -- 5,010
Isaac Heimbinder; 1997 $465,000 $688,000 $-- $ -- 225,000 $-- $21,261
President, Co-Chief 1996 430,000 628,161 -- -- 30,000 -- 5,010
Executive Officer and 1995 415,000 526,223 -- 200,000 50,000 -- 5,010
Chief Operating Officer
Craig M. Johnson; 1997 $210,000 $210,000 $-- $ -- 5,000 $-- $ 4,725
Senior Vice President -- 1996 182,500 157,500 -- 22,500 5,000 -- 4,525
Community Development 1995 161,500 106,750 -- 215,250 2,000 -- 4,525
Chester P. Sadowski; 1997 $170,000 $125,000 $-- $ -- 3,000 $-- $ 4,928
Vice President -- 1996 164,000 107,625 -- 15,375 3,000 -- 4,728
Controller and Chief 1995 159,000 101,500 -- 214,500 2,000 -- 4,728
Accounting Officer
Richard G. Slaughter; 1997 $167,000 $118,000 $-- $ -- 3,000 $-- $ 5,056
Vice President -- 1996 164,000 91,875 -- 13,125 3,000 -- 4,856
Planning and Secretary 1995 159,000 101,500 -- 214,500 2,000 -- 4,856
</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 1997 Corporate
Officers' Incentive Compensation Program (the "1997 Program"), the 1996
Corporate Officers' Incentive Compensation Program (the "1996 Program") and
the 1995 Corporate Officers' Incentive Compensation Program (the "1995
Program," and together with the 1997 Program and the 1996 Program, the
"Incentive Programs"), the Board, on the recommendation of the Compensation
Committee, approved payment of incentive compensation to Messrs. Johnson,
Sadowski and Slaughter for services rendered in 1997, 1996 and 1995.
Pursuant to the 1996 and 1995 Programs and the Employee Stock Plan (see
footnote (3) to the table for a description), 25% of such incentive
compensation was paid in Common Stock, one-half of which vested 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
1996 and 1995 Programs consisted of the following:
<TABLE>
<CAPTION>
VALUE OF VALUE OF # OF SHARES AVERAGE
CASH VESTED UNVESTED OF UNVESTED CLOSING PRICE OF
YEAR OFFICER BONUS COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
---- ------- ----- ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
1996 Mr. Johnson............... $135,000 $22,500 $22,500 797 $28.225
Mr. Sadowski.............. $ 92,250 $15,375 $15,375 545 $28.225
Mr. Slaughter............. $ 78,750 $13,125 $13,125 465 $28.225
1995 Mr. Johnson............... $ 91,500 $15,250 $15,250 546 $27.925
Messrs. Sadowski and
Slaughter................. $ 87,000 $14,500 $14,500 519 $27.925
</TABLE>
6
<PAGE> 10
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. 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). See "Employment
Contracts and Termination of Employment and Change-in-Control
Arrangements."
(3) Amounts shown for 1996 for Messrs. Johnson, Sadowski and Slaughter 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.
(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
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, Sadowski and Slaughter also include the dollar
value of Common Stock that was awarded under the 1995 Program and vested on
December 31, 1997.
(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 $436,421; Mr. Johnson -- 11,916 shares with a value of $467,703; Mr.
Sadowski -- 11,664 shares with a value of $457,812 and Mr.
Slaughter -- 11,584 shares with a value of $454,672.
(6) Pursuant to the 1993 Employees' Stock Option Plan, the 1996 Employees' Stock
Option Plan and the 1997 Employees' Stock Option Plan, options were granted
to acquire shares of Common Stock to certain officers and other employees of
the Company. See "Stock Options."
(7) The Company has a qualified profit sharing plan for the benefit of its
employees. The amounts shown for 1996 and 1995 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. In addition to certain other
benefits for Messrs. Strudler ($15,680) and Heimbinder ($16,051), the
amounts shown for 1997 are comprised of the following:
<TABLE>
<CAPTION>
LIFE INSURANCE
OFFICER PROFIT SHARING 401(K) PREMIUM
------- -------------- ------ --------------
<S> <C> <C> <C>
Robert J. Strudler.......................................... $3,200 $500 $1,510
Isaac Heimbinder............................................ $3,200 $500 $1,510
Craig M. Johnson............................................ $3,200 $500 $1,025
Chester P. Sadowski......................................... $3,200 $500 $1,228
Richard G. Slaughter........................................ $3,200 $500 $1,356
</TABLE>
7
<PAGE> 11
(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, 1997 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, 1997, was in excess of $100,000:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------- ---------------------------
(A) (B) (C) (D) (E) (F) (G)
--- ------------ ---------- -------- ---------- ------------ ------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE
SARS GRANTED IN FISCAL PRICE EXPIRATION
NAME (# SH)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ ---------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Strudler............. 200,000(2) 40.2% $26.38 2/11/07 $3,317,419 $8,406,991
25,000(3) 5.0% $36.25 12/18/07 $ 569,935 $1,444,329
Isaac Heimbinder............... 200,000(2) 40.2% $26.38 2/11/07 $3,317,419 $8,406,991
25,000(3) 5.0% $36.25 12/18/07 $ 569,935 $1,444,329
Craig M. Johnson............... 5,000(3) 1.0% $36.25 12/18/07 $ 113,987 $ 288,865
Chester P. Sadowski............ 3,000(3) 0.6% $36.25 12/18/07 $ 68,392 $ 173,319
Richard G. Slaughter........... 3,000(3) 0.6% $36.25 12/18/07 $ 68,392 $ 173,319
</TABLE>
- ---------------
(1) The purpose of each of the 1993 Employees' Stock Option Plan, the 1996
Employees' Stock Option Plan and the 1997 Employees' Stock Option Plan (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 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) other than the 1993 Employees'
Stock Option Plan, 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) In connection with the amendment and restatement of their Employment and
Consulting Agreements, on February 11, 1997, Messrs. Strudler and Heimbinder
were each granted options to purchase shares of
8
<PAGE> 12
Common Stock. Fifty percent of the options become exercisable on June 21,
2000 and the remaining options become exercisable on June 21, 2001.
(3) As of December 18, 1997, pursuant to the Employees' Stock Option Plans,
options to acquire an aggregate of 97,000 shares of Common Stock were
granted to certain employees of the Company, including Messrs. Strudler,
Heimbinder, Johnson, Sadowski and Slaughter and other officers. Messrs.
Strudler and Heimbinder were granted options that were immediately
exercisable. The options granted to Messrs. Johnson, Sadowski and Slaughter
become exercisable for 1/3rd of the shares purchasable thereunder on
December 18, 1998, 2/3rds of the shares purchasable thereunder on December
18, 1999 and all of the shares purchasable thereunder on December 18, 2000.
The following table contains information concerning the exercise of stock
options during the fiscal year ended December 31, 1997, 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, 1997, was in excess of
$100,000:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
--- ----------- -------- ------------------------- -------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON REALIZED FY-END(#) FY-END($)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert J. Strudler............. -- -- 170,000/200,000 $2,397,350/$2,575,000
Isaac Heimbinder............... -- -- 170,000/200,000 $2,397,350/$2,575,000
Craig M. Johnson............... -- -- 18,001/8,999 $ 314,359/$73,071
Chester P. Sadowski............ -- -- 17,334/5,666 $ 304,271/$46,909
Richard G. Slaughter........... 5,000 $120,625 12,001/4,999 $ 178,609/$36,821
</TABLE>
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 voluntary resignation or otherwise terminated pursuant to the terms
of the applicable Employment Agreement (the "Employment Term"). Under the
Employment Agreements, during 1997, Messrs. Strudler and Heimbinder were paid
annual base salaries of $475,000 and $465,000, 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 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.
9
<PAGE> 13
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 1997 rates of $146,925 and $141,048 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 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 1997 rate of $146,925 (for Mr. Strudler) or
$141,048 (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),
10
<PAGE> 14
(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 and the restrictions will be of no further
force.
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 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
11
<PAGE> 15
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 of Control under the "provided" clause of clause (iii) above will not
constitute a Change of Control under this clause (iv); 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.
DIRECTOR COMPENSATION
Directors, other than those who are officers of the Company, receive the
following compensation: membership on the Board -- $26,000 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
Under the Amended and Restated Non-Employee Directors' Stock Option Plan
(the "Directors' Option Plan"), nondiscretionary grants of options are made to
non-employee members of the Board. Each person who becomes a non-employee
director of the Company is granted an option to acquire 5,000 shares of Common
Stock at the time such person first becomes a non-employee director of the
Company. 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; provided, that he or
she has served as a non-employee director for at least six months prior to such
meeting.
Under the Directors' Option Plan, the non-employee directors of the Company
were each granted an option to acquire 1,000 shares of Common Stock immediately
following the 1997 Annual Meeting of Stockholders at an exercise price of $24.35
per share. Of the 100,000 shares of Common Stock reserved for issuance in
accordance with the Directors' Option Plan, there remain, as of the Record Date,
11,500 shares that have not been set aside for issuance of outstanding options.
On February 11, 1998, the Board adopted, subject to approval by the Stockholders
at the Meeting, the 1998 Non-Employee Directors' Stock Option Plan to supplement
and permit continuity of the Directors' Option Plan. See Proposal 2 -- "1998
Non-Employee Directors' Stock Option Plan."
12
<PAGE> 16
AMENDED AND RESTATED RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
Prior to April 23, 1997, non-employee directors were entitled to
participate in the Company's Retirement Plan for Non-Employee Directors under
which a non-employee director would receive a retirement benefit for the number
of full months of service as a director from January 1, 1985 to the month prior
to retirement. The retirement benefit is an amount equal to the annual cash
retainer payable to non-employee directors at the time of such directors'
retirement, payable in equal monthly installments.
On April 23, 1997, the Board approved the Amended and Restated Retirement
Plan for Non-Employee Directors (the "Directors' Retirement Plan"), which ceased
further accruals under the Directors' Retirement Plan and gave such directors
who were then participating in the Directors' Retirement Plan the right to (i)
terminate participation in and surrender any and all rights to benefits under
the Directors' Retirement Plan in exchange for the issuance on January 2, 1998
of a number of shares of Common Stock determined by dividing the affected
participants' accrued retirement benefits under the Directors' Retirement Plan
as of April 23, 1997 by $24.625 (the closing price of the Common Stock on April
23, 1997), or (ii) continue participation in the Directors' Retirement Plan with
accrued retirement benefits through April 23, 1997, but without any further
accruals thereafter.
All of the non-employee directors elected to terminate participation in the
Directors' Retirement Plan except for Mr. Hopkins. Mr. Hopkins will continue to
participate in the Directors' Retirement Plan and shall retain his retirement
benefits accrued through April 23, 1997 but will not be entitled to any further
accruals. On January 2, 1998, in accordance with such election, shares of Common
Stock were issued as follows: Messrs. Adams, Gerard, McDonald, Poole and
Sight -- 3,717; Mr. Hanau -- 1,118; Mr. McKee -- 2,499; and Mr.
Ripault -- 5,910.
On April 23, 1997, the Board adopted, subject to approval by the
Stockholders at the Meeting, the Non-Employee Director Stock Plan. See Proposal
3 -- "Non-Employee Director Stock Plan."
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,
1997, the Compensation Committee reviewed the salaries paid for similar
positions in similarly-sized companies which are in the same industry as the
Company. 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, level of
responsibility 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.
13
<PAGE> 17
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 other goals 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 1997 Program, an incentive compensation pool
in an amount equal to the lesser of $800,000 or 2% of the Company's pre-tax
income for the fiscal year ended December 31, 1997 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 1997 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 footnotes 2 and 3 to "Executive
Compensation -- Summary Compensation."
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 Table."
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, 1997, 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 $184,548
and $173,677 of Mr. Strudler's and Mr. Heimbinder's compensation, respectively,
was deferred.
14
<PAGE> 18
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 1997 was $475,000 and Mr.
Heimbinder's base salary for 1997 was $465,000. 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 1996. In 1997, the incentive bonus paid to
Mr. Strudler was $503,452, and the incentive bonus paid to Mr. Heimbinder was
$514,323, 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
15
<PAGE> 19
STOCK PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change during the five years ended December 31, 1997 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, 1992 for preparation of the
graph.
<TABLE>
<CAPTION>
Measurement Period U.S. Home
(Fiscal Year Covered) Corporation S & P 500 Peer Group
<S> <C> <C> <C>
1992 100 100 100
1993 273.08 110.08 128.10
1994 165.38 111.54 79.53
1995 298.72 153.45 107.77
1996 266.67 188.69 105.98
1997 402.56 251.64 178.90
</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.
16
<PAGE> 20
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the Company's
outstanding shares of Common Stock beneficially owned as of March 2, 1998, 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. All information with
respect to beneficial ownership has been furnished to the Company by the parties
below.
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------
NUMBER OF SHARES PERCENT
BENEFICIAL OWNERS (1)(2)(3)(4)(5) OF CLASS
----------------- ---------------- --------
<S> <C> <C>
Glen Adams................................................. 12,717 *
Steven L. Gerard........................................... 12,717 *
Kenneth J. Hanau, Jr....................................... 12,908 *
Isaac Heimbinder........................................... 217,273(6)(7) 1.82%
Malcolm T. Hopkins......................................... 11,000 *
Charles A. McKee........................................... 13,535(8) *
George A. Poole, Jr........................................ 14,717 *
Herve Ripault.............................................. 18,275 *
James W. Sight............................................. 12,717 *
Robert J. Strudler......................................... 211,983(6)(9) 1.78%
Craig M. Johnson........................................... 42,568 *
Chester P. Sadowski........................................ 34,238 *
Richard G. Slaughter....................................... 29,882(6) *
All directors and executive officers of the Company as a
group (17 persons)....................................... 739,632 6.20%
FMR Corp.
82 Devonshire Street
Boston, MA 02109(10)..................................... 1,520,845 12.75%
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404(11).................................. 917,560 7.69%
Wellington Management Company, LLP
75 State Street
Boston, MA 02109(12)..................................... 1,149,595 9.64%
</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 -- 170,000; Mr. Strudler -- 170,000; Mr.
Johnson -- 18,001; Mr. Sadowski -- 17,334; Mr. Slaughter -- 12,001; and all
executive officers of the Company as a group -- 510,297.
(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 1995 incentive compensation are as follows: Mr. Johnson -- 1,092; Mr.
Sadowski -- 1,038; Mr. Slaughter -- 1,038 and all executive officers of the
Company as a group -- 5,777. The number of shares of Common Stock issued
pursuant to the Employee Stock Plan for 1996 incentive compensation are Mr.
Johnson -- 797; Mr. Sadowski -- 545; Mr. Slaughter -- 465;
17
<PAGE> 21
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, Sadowski and Slaughter, and all executive
officers of the Company as a group, for 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, Sadowski and
Slaughter each received 11,119 shares; and all executive officers of the
Company as a group received 90,413 shares.
(4) Includes fully exercisable options granted pursuant to the Directors' Plan
to acquire the following number of shares of Common Stock: Mr.
Adams -- 9,000; Mr. Gerard -- 9,000; Mr. Hanau -- 11,500; Mr.
Hopkins -- 9,000; Mr. McKee -- 11,500; Mr. Poole -- 9,000; Mr.
Ripault -- 11,500; and Mr. Sight -- 9,000.
(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; and all directors and executive officers
of the Company as a group -- 2,186.
(6) Excludes 35,000 shares of Common Stock held in the Company's Profit Sharing
Plan, of which Messrs. Strudler, Heimbinder and Slaughter are each a
trustee and in which Mr. Heimbinder may be deemed to have an unallocated
pecuniary interest to the extent of 122 shares; Mr. Slaughter may be deemed
to have an unallocated pecuniary interest to the extent of 122 shares; and
Mr. Strudler may be deemed to have an unallocated pecuniary interest to the
extent of 129 shares, including 7 shares in which his son, an employee of
the Company, may be deemed to have an unallocated pecuniary interest; each
of Messrs. Strudler, Heimbinder and Slaughter 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, Heimbinder and
Slaughter has shared voting and dispositive power over the 35,000 shares of
Common Stock.
(7) Excludes 8,196 shares of Common Stock held in trust for Mr. Heimbinder's
children and 2,500 shares of Common Stock held in a family foundation. Mr.
Heimbinder disclaims beneficial ownership of such shares.
(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) FMR Corp. beneficially owns, through its wholly-owned subsidiary, Fidelity
Management & Research Company ("Fidelity"), as an investment advisor to
certain funds ("Fidelity Funds"), 1,396,945 shares of Common Stock, which
amount includes through its wholly-owned subsidiary, Fidelity Management
Trust Company ("FMTC"), as trustee or managing agent to certain accounts
("Accounts"), 113,900 shares of Common Stock. Of the amounts held by FMR
Corp., 600,645 shares of Common Stock (5.04% of the total outstanding
amount of the Common Stock) are also beneficially owned by Fidelity Low
Priced Stock Fund, a fund for which Fidelity serves as investment advisor.
Fidelity International Limited, and various foreign-based subsidiaries,
provide investment advisory and management services to a number of non-U.S.
investment companies. Fidelity International Limited is the beneficial
owner of 10,000 shares of Common Stock. Each of FMR Corp., through its
control of Fidelity, and the Fidelity Funds has sole dispositive power over
1,396,945 shares of Common Stock. Neither FMR Corp. nor Edward C. Johnson
3d, as chairman and 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 113,900 shares of
Common Stock and power to vote or to direct the voting of 104,100 of such
shares, and no power to vote or to direct the voting of 9,800 shares of
Common Stock owned by the Accounts.
18
<PAGE> 22
(11) Franklin Resources, Inc. beneficially owns 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 707,800
shares of Common Stock (5.94% of the total outstanding amount of the Common
Stock) beneficially owned by Franklin Advisory Services, Inc. as an
investment advisor. The Advisor Subsidiaries have sole voting power and
sole dispositive power over such shares.
(12) Wellington Management Company, LLP beneficially owns, in its capacity as an
investment advisor, shares which are owned of record by third parties.
Included in the number of such shares are 1,149,295 shares of Common Stock
(9.64% 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.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(PROPOSAL 2)
On February 11, 1998, the Board adopted the Company's 1998 Non-Employee
Directors' Stock Option Plan (the "1998 Directors' Option Plan") for the purpose
of attracting and retaining qualified persons for service as members of the
Board. There are 100,000 shares of Common Stock reserved for issuance under the
1998 Directors' Option Plan, which is intended to supplement and permit
continuity of the Directors' Option Plan, under which only 11,500 shares remain
available for grant. The 1998 Directors' Option Plan is administered by the
Nominating Committee.
The full text of the 1998 Directors' Option Plan is set forth as Exhibit A
to this Proxy Statement. The principal features of the 1998 Directors' Option
Plan are summarized below.
Under the 1998 Directors' Option 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 1998 Directors' Option Plan are nonqualified stock options and are not
entitled to special income tax treatment under the Tax Code.
No option may be granted more than 10 years after the adoption of the 1998
Directors' Option Plan by the Board, nor 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 1998 Directors' Option 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
19
<PAGE> 23
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, so long as the Company's
Class B Warrants are outstanding, 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.
Tax Considerations
A director who receives an option grant under the 1998 Directors' Option
Plan will not recognize any income at the time the option is granted. At the
time the option is exercised, the director will recognize taxable income 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 director recognizes income.
The following table sets forth the benefits and amounts to be received or
allocated to all non-employee directors as a group under the 1998 Directors'
Option Plan if such plan had been in effect for the year ended December 31,
1997.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
DIRECTOR STOCK PLAN
-------------------
NUMBER
DOLLAR OF
VALUE(1) UNITS
--------- ------
<S> <C> <C>
Robert J. Strudler
Chairman and Co-Chief Executive Officer................... (2) (2)
Isaac Heimbinder
President, Co-Chief Executive Officer and Chief Operating
Officer................................................ (2) (2)
Chester P. Sadowski
Vice President -- Controller and Chief Accounting
Officer................................................ (2) (2)
Richard G. Slaughter
Vice President -- Planning and Secretary.................. (2) (2)
Craig M. Johnson
Senior Vice President -- Community Development............ (2) (2)
All Executive Officers as a Group........................... (2) (2)
Non-Employee Directors...................................... $119,200 8,000
Non-Executive Employees..................................... (2) (2)
</TABLE>
- ---------------
(1) Dollar values for options set forth above are based upon the difference
between the closing price of the Common Stock on the NYSE on the last day
of trading in 1997 ($39.25 per share of Common Stock) and the exercise
price ($24.35 per share of Common Stock) of the shares purchasable under
the options granted on April 23, 1997.
(2) Executive officers and other employees do not participate in the 1998
Directors' Option Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 1998
NON-EMPLOYEE DIRECTORS' 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 Common
Stock present in person or represented by Proxy and entitled to vote at the
Meeting is required for approval of Proposal 2.
20
<PAGE> 24
NON-EMPLOYEE DIRECTOR STOCK PLAN
(PROPOSAL 3)
On April 23, 1997, the Board adopted the Company's Non-Employee Director
Stock Plan (the "Director Stock Plan") for the purpose of attracting and
retaining qualified persons for service as a member of the Board and to provide
compensation to directors in shares of the Company's Common Stock, thereby
aligning their interests more closely with those of the Stockholders. The
Director Stock Plan was adopted by the Board in connection with its termination
of further accruals under the Directors' Retirement Plan on April 23, 1997. See
"Director Compensation -- Amended and Restated Non-Employee Directors'
Retirement Plan." There are 100,000 shares of Common Stock reserved for issuance
under the Director Stock Plan.
The full text of the Director Stock Plan is set forth as Exhibit B to this
Proxy Statement. The principal features of the Director Stock Plan are
summarized below.
The Director Stock Plan is effective as of April 23, 1997 and shall remain
in effect until the earlier of (i) termination by action of the Board, or (ii)
issuance of all shares of Common Stock available under the Director Stock Plan.
Under the Director Stock Plan, participants (i) who were elected as
Directors at the 1997 Annual Meeting will be issued a number of shares of Common
Stock equal to $26,000, divided by the closing price of the Common Stock on the
NYSE on the date of the 1997 Annual Meeting, and (ii) who are elected as
Directors at the 1998 Annual Meeting will be issued a number of shares of Common
Stock equal to $26,000, divided by the closing price of the Common Stock on the
NYSE on the date of the Meeting. Thereafter, on the date of election as a
director at each subsequent annual meeting, each participant shall receive as
compensation for service as a director for the succeeding year the number of
shares of Common Stock equal to the annual cash retainer payable to each
director for such year, divided by the closing price of the Common Stock on the
NYSE on the date of such election.
Participants elected or appointed other than at an Annual Meeting will be
issued a pro rata number of shares of Common Stock based upon the number of
months to be served in the year between Annual Meetings. After approval of the
Plan by the Stockholders, participants who voluntarily resign or become employed
by the Company prior to the April 15th which immediately follows the issuance of
such shares will forfeit all such shares of Stock. Participants who otherwise
cease to be Directors, including the death or disability of such participants,
will forfeit a pro rata number of shares of Common Stock based upon the number
of months served in the year between Annual Meetings. Other than shares issued
pursuant to clause (i) of the preceding paragraph, participants may not
transfer, sell, pledge, assign, encumber or otherwise dispose of shares pursuant
to the Director Stock Plan until the April 15th which immediately follows the
issuance of such shares, or the date on which participants cease to be
directors.
Common Stock issuable under the Director Stock Plan will be registered
pursuant to a Registration Statement on Form S-8 under the Securities Act of
1933, as amended. The Common Stock will be issued in the name of the participant
and the participant will be entitled to all rights of a Stockholder, including
the right to vote the shares and to receive any declared dividends subject to
the transfer and forfeiture provisions described in the preceding paragraph.
Tax Considerations
There should be no Federal tax liability to a participant until the
forfeiture restrictions lapse. Upon the lapse of restrictions, the then current
market value of such shares is taxed to the participant as ordinary income (a
participant could elect to be taxed at the time of award based upon the then
current award value) and the Company records such amount as an expense.
Dividends received during the restricted period are taxed to the participant as
ordinary income. Stock appreciation after the restrictions lapse is taxed as
capital gain upon the participant's sale of the shares of Common Stock.
21
<PAGE> 25
The following table sets forth the benefits and amounts to be received or
allocated to all non-employee directors as a group under the Director Stock Plan
if such plan had been in effect for the year ended December 31, 1997.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
DIRECTOR STOCK PLAN
-------------------------
DOLLAR NUMBER
VALUE OF UNITS(1)
-------- -----------
<S> <C> <C>
Robert J. Strudler
Chairman and Co-Chief Executive Officer............... (2) (2)
Isaac Heimbinder
President, Co-Chief Executive Officer and Chief
Operating Officer..................................... (2) (2)
Chester P. Sadowski
Vice President -- Controller and Chief Accounting
Officer............................................... (2) (2)
Richard G. Slaughter
Vice President -- Planning and Secretary.............. (2) (2)
Craig M. Johnson
Senior Vice President -- Community Development........ (2) (2)
All Executive Officers as a Group....................... (2) (2)
Non-Employee Directors.................................. $218,044 8,856
Non-Executive Employees................................. (2) (2)
</TABLE>
- ---------------
(1) The number of shares of Common Stock of the Company to be awarded under
the Director Stock Plan was determined by dividing the annual cash
retainer for 1997 of $26,000 by $24.625, the closing price of the Common
Stock on the NYSE for April 23, 1997.
(2) Executive officers and other employees do not participate in the Director
Stock Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
NON-EMPLOYEE DIRECTOR STOCK 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 Common
Stock present in person or represented by Proxy and entitled to vote at the
Meeting is required for approval of Proposal 3.
AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
EMPLOYEE STOCK PAYMENT PLAN
(PROPOSAL 4)
The Company's Amended and Restated Employee Stock Payment Plan, approved by
the Stockholders in 1994, provides that up to 25% of an employee's annual
incentive compensation earned may be payable in shares of Common Stock. Of such
shares, up to 50% may vest not later than two years after the end of the
incentive year applicable to the award of Common Stock, and issuance of any such
Common Stock is conditioned on the employee remaining in the employ of the
Company, except in the case of retirement after age 65 or death. An employee
eligible to receive Common Stock under the Amended and Restated Employee Stock
Payment Plan will have no rights as a Stockholder with respect to such Common
Stock until such employee has become the holder of record of such Common Stock
upon vesting. The number of shares of Common Stock issued to employees is
calculated by dividing (x) the portion of their incentive compensation to be
paid in Common Stock by (y) the greater of (i) unless otherwise determined by
the Plan administrator, the closing price of the Common Stock on the NYSE on the
last trading day of the most recent 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 of the grant (the "20-day Average").
22
<PAGE> 26
On February 11, 1998, the Board amended the Amended and Restated Employee
Stock Payment Plan, subject to Stockholder approval, to (i) extend the
termination date of the Amended and Restated Employee Stock Payment Plan from
December 31, 1998 to December 31, 2008; and (ii) remove the 20-day Average
provision in determining the shares to be issued. The 20-day Average provision
was originally included exclusively in view of a provision in the Class B
Warrants, which will expire on June 21, 1998, prior to any further grants. Of
the 250,000 shares of Common Stock reserved for issuance under the Amended and
Restated Employee Stock Payment Plan, there remain, as of the Record Date,
186,095 shares that have not been issued in accordance with the Amended and
Restated Employee Stock Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF AMENDMENTS TO
THE AMENDED AND RESTATED EMPLOYEE STOCK PAYMENT PLAN, AS SET FORTH ABOVE, 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 Common
Stock present in person or represented by Proxy and entitled to vote at the
Meeting is required for approval of Proposal 4.
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS
(PROPOSAL 5)
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 1998. 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 Common
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 1998
Non-Employee Directors' Stock Option Plan, the adoption of the Non-Employee
Director Stock Plan, the amendment of the Amended and Restated Employee Stock
Payment 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 Common Stock represented by Proxies shall be voted
in accordance with the judgment of the person or persons exercising the
authority conferred by the Proxies.
23
<PAGE> 27
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company on or before November
16, 1998 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 16, 1998
24
<PAGE> 28
EXHIBIT A
U.S. HOME CORPORATION
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSES.
The purposes of the U.S. Home Corporation 1998 Non-Employee Directors'
Stock Option Plan (the "Plan") are to attract and retain qualified and competent
persons for service as members of the board of directors (the "Board") of U.S.
Home Corporation (the "Company") by providing a means whereby such persons
acquire an equity interest in the Company and to secure for the Company and its
stockholders the benefit of the incentives inherent in such equity ownership by
persons whose advice and counsel are important to the Company's future growth
and continued success. The Plan is intended to supplement and provide continuity
to the Amended and Restated Non-Employee Stock Option Plan (the "1993 Plan").
2. ADMINISTRATION.
(a) The Board shall (i) administer the Plan, (ii) establish, subject to the
provisions of the Plan, such rules and regulations as it may deem appropriate
for the proper administration of the Plan and (iii) make such determinations
under, and such interpretations of, and take such steps in connection with, the
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 shall initially be the Nominating and Conflict of Interest Committee of
the Board, which shall be comprised of at least three members of the Board, all
of whom are to be non-employee directors (within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) 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 Plan,
whether or not the power and the authority of the Committee is hereinafter fully
set forth. The Board or the Committee, as applicable, shall hereinafter be
referred to as the "Administrator."
3. STOCK.
The stock (the "Stock") to be made the subject of an option under the Plan
shall be the shares of common stock of the Company, $.01 par value per share,
whether authorized and unissued or treasury stock. The total amount of Stock for
which options may be granted under the Plan shall not exceed, in the aggregate,
100,000 shares, subject to adjustment in accordance with the provisions of
Section 12 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 Plan during the remaining term of the Plan.
4. AWARD OF OPTIONS.
(a) Options shall be granted only to non-employee directors of the Board.
No individual who is, at the time of grant, an employee of the Company shall be
eligible to receive options under the Plan.
(b) All options granted under the Plan shall be non-qualified options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "IRC").
(c) Any and all options granted under this Plan shall be granted not later
than 10 years from February 11, 1998, the date the Plan was adopted by the
Board.
(d) All options granted under the Plan shall be evidenced by a written
agreement substantially in the form of Exhibit A annexed hereto (each an "Option
Agreement").
(e) Options shall be granted under the Plan only when awards are no longer
available under the 1993 Plan.
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<PAGE> 29
5. NUMBER OF SHARES TO BE GRANTED.
Each person who becomes a non-employee director of the Company after the
adoption of the Plan by the Board shall be granted an option for 5,000 shares of
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 of the
Company, each person who continues to serve as a non-employee director of the
Company immediately after such meeting shall be granted an option for 1,000
additional shares of 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 options shall be deemed automatically granted at the times, in
the amounts and at the option prices set forth herein without any further action
on the part of the Administrator, and the proper officers of the Company are
authorized, empowered and directed to execute and deliver an Option Agreement to
reflect each such grant at the times, in the amounts and at the option prices
determined in accordance with the Plan.
6. PRICE.
(a) In the case of a New Director Stock Option Grant, the exercise price of
such option shall be the average closing price of the Stock on the New York
Stock Exchange ("NYSE") for the 10 consecutive trading days prior to the date of
the New Director Stock Option Grant. Notwithstanding the foregoing, so long as
the Company's Class B Warrants are outstanding, the exercise price of such
option will in no event be less than 95% of the average closing price of the
Stock on the NYSE for the 20 consecutive trading days immediately prior to the
date of the New Director Stock Option Grant.
(b) In the case of an Annual Stock Option Grant, the exercise price of such
option shall be the average closing price of the Stock on the NYSE for the 10
consecutive trading days prior to the date of the Annual Stock Option Grant.
Notwithstanding the foregoing, so long as the Company's Class B Warrants are
outstanding, the exercise price of such option will in no event be less than 95%
of the average closing price of the Stock on the NYSE for the 20 consecutive
trading days immediately prior to the date of the Annual Stock Option Grant.
(c) The closing price of the Stock, as of any particular day, shall be as
reported in The Wall Street Journal; provided, however, that if the Stock is not
listed on the NYSE on the dates the option exercise price is to be determined,
the option exercise price shall 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.
7. TERM.
Subject to Sections 9, 10 and 21 hereof, an option may be exercised by the
holder thereof (a "Holder") in whole at any time or in part from time to time
commencing with the date of grant, but no option may be exercised in any amount
later than 10 years from the date such option was granted.
8. TRANSFERABILITY.
No option may be transferable by a Holder other than by will or the laws of
descent and distribution. During the lifetime of a Holder, the option may be
exercisable only by such Holder. A Holder who acquires Stock hereunder may only
transfer such Stock in compliance with applicable federal and state securities
laws.
9. TERMINATION OF DIRECTORSHIP.
If, on or after the date an option is granted under the Plan, a Holder (i)
resigns as a director of the Company or (ii) is removed as a director of the
Company by the stockholders of the Company, with or without cause, the Holder
shall have the right, not later than the earlier of (A) three months after such
resignation or removal or (B) the termination date of the option as set forth in
the Option Agreement, to exercise such option, to the extent the right to
exercise such option shall have accrued at the date of such resignation or
removal, except to the extent that such option theretofore shall have been
exercised.
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<PAGE> 30
10. RETIREMENT, DEATH OR DISABILITY.
If a Holder retires at the age of 65 or above, dies, or becomes disabled
(within the meaning of Section 22(e)(3) of the IRC) while a director of the
Company, the Holder, the personal representative of the Holder or the person or
persons to whom the option shall have been transferred by will or by the laws of
descent and distribution, or the disabled Holder, shall have the right, not
later than the earlier of (i) three years from the date of the Holder's
retirement, death or disability or (ii) the termination date of the option as
set forth in the Option Agreement, to exercise such option to the extent the
right to exercise such option shall have accrued at the date of such retirement,
death or disability, except to the extent such option theretofore shall have
been exercised.
11. PAYMENT FOR STOCK.
(a) The purchase price of Stock issued upon exercise of options granted
hereunder shall be paid in full on the date of purchase. Payment shall 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) Stock shall 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, if any, 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.
12. STOCK ADJUSTMENTS.
(a) The total amount of Stock for which options shall be granted under the
Plan and option terms (both as to the number of shares of Stock and the price of
the option) shall 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 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 shall be the surviving corporation, or after any consolidation of
the Company and one or more other corporations, each Holder shall, 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 shall then be so
exercised, the number and class of shares of stock or other securities 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 shall 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 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
Plan and not previously exercised shall terminate unless exercised at least one
business day before the scheduled closing of such event; provided, that any such
exercise or termination shall be conditioned on the closing of such transaction;
and provided further, that the Board may, in its discretion, require instead
that all options granted under the Plan and not previously exercised shall be
assumed by such other corporation on the basis provided in the preceding
paragraph to the extent possible or practical.
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<PAGE> 31
(d) The adjustments described in this Section 12 and the manner of
application of the foregoing provisions shall be determined by the Board in its
sole discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.
13. RIGHTS AS A STOCKHOLDER.
A Holder or a transferee of an option shall 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 12 hereof, no adjustment shall 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 or she shall become the holder
of record thereof.
14. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the Plan in any
respect it deems suitable without the approval of the stockholders of the
Company; provided however, that no such action of the Board, without the
approval of the stockholders of the Company, may (i) increase the total amount
of Stock on which options may be granted under the Plan, (ii) change the manner
of determining the option price, (iii) change the class of individuals eligible
to receive options, (iv) change the number of options which may be granted to
each director or (v) change the times when such options are granted; provided,
further, that no amendment, modification or termination of the Plan may in any
manner affect any option theretofore granted under the Plan without the consent
of the then Holder. Notwithstanding the foregoing, the Plan may not be amended
more than once in any six-month period except to comply with changes in the IRC,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
any rules or regulations promulgated under either the IRC or ERISA.
15. INVESTMENT PURPOSE.
At the time of exercise of any option, the Company may, if it shall deem it
necessary or desirable for any reason, require the Holder to (i) in the absence
of an effective registration statement under the Securities Act of 1933, as
amended, 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.
16. RIGHT TO REMOVE DIRECTOR.
Nothing contained herein or in any Option Agreement shall restrict the
right of the stockholders of the Company to remove any Holder as director at any
time, with or without cause, or shall constitute or be evidence of any agreement
or understanding, express or implied, that the Company shall retain a director
for any period of time, or at any particular rate of compensation.
17. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or taken pursuant
to the provisions of the Plan by the Administrator shall be final and be binding
and conclusive for all purposes.
18. INDEMNIFICATION OF DIRECTORS.
Each director of the Company, solely in his or her capacity as a director,
shall 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 Plan, or any
option granted thereunder, and against all amounts paid in settlement thereof
(provided such settlement shall be approved by independent legal counsel) or
paid in satisfaction of a judgment in any such action, suit or proceeding, to
the extent permitted by
A-4
<PAGE> 32
Delaware law. Upon the institution of any such action, suit or proceeding, a
director of the Company shall 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.
19. FEDERAL INCOME TAX CONSEQUENCES.
Under the present provisions of the IRC, the federal income tax
consequences of participating in the Plan may be summarized as follows: This
summary is of general application only and its application to any individual
will depend on that individual's circumstances. The summary does not address the
effect of state and local income tax laws. The Plan is not subject to the
provisions of Section 401 (a) of the IRC or ERISA.
The recipient of an option shall not recognize income upon the grant of the
option, but, upon exercise, generally shall recognize ordinary income in an
amount equal to the difference between the fair market value of the Stock
acquired on the exercise date and the option price. The Company generally shall
be entitled to a tax deduction at the same time and in the same amount as the
income recognized.
If an option is exercised within six months of the date of grant and the
Holder is restricted from selling the Stock acquired upon exercise because of
the restrictions of Section 16(b) of the Exchange Act, unless the Holder elects
under Section 83(b) of the IRC to be taxed immediately, he or she shall
recognize ordinary income (and the Company shall be entitled to a deduction) at
the end of the restricted period imposed by Section 16(b) in an amount equal to
the difference between the fair market value of the Stock at that time and the
option price.
If the Holder pays the option price entirely in cash for tax purposes, his
or her basis in the shares of Stock received shall be equal to their fair market
value on the exercise date (or the date on which the Section 16(b) period
expires, if applicable), and the holding period for tax purposes shall begin on
the day following the exercise date.
20. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
21. EFFECTIVE DATE.
The Plan shall become effective upon the date of its adoption by the Board.
However, if the Plan is not approved by the stockholders, the Plan shall be null
and void.
22. OVERRIDE.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the 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> 33
EXHIBIT A
(TO 1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN)
U.S. HOME CORPORATION
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of , 199 between U.S. HOME
CORPORATION, a Delaware corporation (the "Company"), and (the
"Holder").
1. PURPOSE.
The purpose of this Stock Option Agreement (this "Agreement") is to set
forth the terms and conditions of the stock option granted to the Holder under
the 1998 Non-Employee Directors' Stock Option Plan (the "Plan"). The terms and
conditions (including defined terms) of the 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 shall constitute acceptance of and agreement with all of
the terms and conditions contained in this Agreement and the 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 [5,000] [1,000] 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.
Subject to Sections 4, 5 and 13 hereof, the Option shall be exercisable in
whole or in part at any time on or after the date hereof; provided, however,
that the Option shall expire on the date 10 years from the date hereof. Any
exercise shall be accompanied by a written notice to the Company in
substantially the form attached hereto as Schedule 1.
4. TERMINATION OF DIRECTORSHIP.
If, on or after the date the Option is granted, the Holder (i) resigns as a
director of the Company or (ii) is removed as a director of the Company by the
stockholders of the Company, with or without cause, the Holder shall have the
right, not later than the earlier of (A) three months after such resignation or
removal or (B) the termination date of the Option set forth herein, to exercise
the Option, to the extent the right to exercise the Option shall have accrued at
the date of such resignation or removal, except to the extent that the Option
theretofore shall have been exercised.
5. RETIREMENT, DEATH OR DISABILITY.
If the Holder retires at the age of 65 or above, dies, or becomes disabled
(within the meaning of Section 22(e)(3) of the IRC) while a director of the
Company, the Holder, the personal representative of the Holder or the person or
persons to whom the Option shall have been transferred by will or by the laws of
descent and distribution, or the disabled Holder, will have the right, not later
than the earlier of (i) three years from the date of the Holder's retirement,
death or disability or (ii) the termination date of the Option set forth
- ---------------
* To be determined pursuant to Section 6 of the Plan.
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<PAGE> 34
herein, to exercise the Option to the extent the right to exercise the Option
shall have accrued at the date of such retirement, death or disability, except
to the extent the Option theretofore shall have been exercised.
6. TRANSFERABILITY.
The Option shall not be transferable by the Holder other than by will or
the laws of descent and distribution. During the lifetime of the Holder, the
Option shall be exercisable only by such Holder. If the Holder acquires Stock
hereunder, the Holder shall only transfer such Stock in compliance with
applicable federal and state securities laws.
7. PAYMENT OF EXERCISE PRICE.
Payment for shares of Stock issued upon exercise of the Option shall be
paid in full on the date of purchase. Payment shall be made either in cash or in
such other consideration as the Administrator (as defined in the Plan) seems
appropriate. Notwithstanding the foregoing, shares of Stock shall 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, if any, 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
shall be adjusted, as necessary, in accordance with the provisions of Section 12
of the Plan.
9. NO RIGHTS AS STOCKHOLDER.
The Holder shall 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 12 of the Plan, no
adjustment shall be made for dividends (ordinary or extraordinary, 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
shall become the holder of record thereof.
10. RIGHT TO REMOVE DIRECTOR.
Nothing contained herein or in any Option Agreement shall restrict the
right of the stockholders of the Company to remove any Holder as director at any
time, with or without cause, or shall constitute or be evidence of any agreement
or understanding, express or implied, that the Company shall retain a director
for any period of time, or at any particular rate of compensation.
11. REPRESENTATIONS.
At the time of any exercise of the Option, the Company may, if it shall
deem it necessary or desirable for any reason, require the Holder to (i) in the
absence of an effective registration statement under the Securities Act of 1933,
as amended, 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) 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.
12. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware.
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<PAGE> 35
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-8
<PAGE> 36
SCHEDULE 1
U.S. Home Corporation
1800 West Loop South
Houston, Texas 77252
Attention: Secretary
Re: Notice of Exercise of Stock Option
Dear Sir:
I am the holder of the below-described option to acquire shares of common
stock, $.01 par value per share (the "Common Stock"), of U.S. Home Corporation
(the "Company") granted under the U.S. Home Corporation 1998 Non-Employee
Directors' 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 Common Stock
and tender the purchase price therefor, reserving my right to purchase any
remaining shares of Common Stock subject to the option in accordance with its
terms.
Dated:
Very truly yours,
------------------------------------
Signature
Name:
------------------------------------
Address:
------------------------------------
--------------------------------
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<PAGE> 37
EXHIBIT B
U.S. HOME CORPORATION
NON-EMPLOYEE DIRECTOR STOCK PLAN
1. NAME OF PLAN. This plan shall be known as the "U.S. Home Corporation
Non-Employee Director Stock Plan" and is hereinafter referred to as the "Plan."
2. PURPOSES OF PLAN. The purposes of the Plan are to enable U.S. Home
Corporation, a Delaware corporation (the "Company"), to attract and retain
qualified persons to serve as Directors of the Company ("Directors"), to enhance
the equity interest of Directors in the Company, to solidify the common
interests of its Directors and stockholders, and to encourage the highest level
of Director performance by providing such Directors with a proprietary interest
in the Company's performance and progress, by awarding them annually shares of
the Company's common stock, par value $0.01 per share (the "Stock").
3. EFFECTIVE DATE AND TERM. The Plan shall be effective as of April 23,
1997, provided that it is approved by the Company's stockholders at the annual
meeting thereof (each such meeting, an "Annual Meeting") in 1998. The Plan shall
remain in effect until terminated by action of the Board of Directors of the
Company (the "Board"), or until no shares of Stock remain available under the
Plan, if earlier.
4. ELIGIBLE PARTICIPANTS. Each Director shall be a participant
("Participant") in the Plan during such period as such individual remains a
Director and is not an employee of the Company or any of its subsidiaries.
5. RECEIPT OF STOCK. (a) Upon stockholder approval of the Plan at the
Annual Meeting held in 1998, Participants (i) who were elected as Directors at
the 1997 Annual Meeting will be issued a number of shares (rounded to the nearer
whole share) of Stock equal to $26,000, divided by the closing price of the
Stock on the New York Stock Exchange on the date of the 1997 Annual Meeting, and
(ii) who are elected as Directors at the 1998 Annual Meeting will be issued a
number of shares (rounded to the nearer whole share) of Stock equal to $26,000,
divided by the closing price of the Stock on the New York Stock Exchange on the
date of the 1998 Annual Meeting.
(b) On the date of election as a Director at each subsequent Annual Meeting
(or special meeting in lieu of an Annual Meeting), each Participant shall
receive as compensation for services as a Director for the succeeding year the
number of shares (rounded to the nearer whole share) of Stock equal to the
annual cash retainer payable to each Director for such year, divided by the
closing price of the Stock on the New York Stock Exchange on the date of such
election; provided, that so long as the Company's Class B Warrants are
outstanding, the closing price for the foregoing calculation shall not be less
than 95% of the Current Market Price (as defined in the Warrant Agreement
relating to such Class B Warrants). If the Stock is not traded on such Exchange
at the time of issuance, the Committee (as defined in Section 11) shall
determine the value of the Stock in good faith.
(c) Participants elected or appointed other than at an Annual Meeting (or
special meeting in lieu of an Annual Meeting) will be issued a pro rata number
of shares of Stock based upon the number of months to be served in the year
between Annual Meetings. After approval of the Plan by the Company's
stockholders, Participants who voluntarily resign or become employed by the
Company prior to the April 15th in the year immediately following the issuance
of such shares will forfeit such shares. Participants ceasing to be a Director
for any other reason, including the death or disability of such Participant,
will forfeit a pro rata number of shares of Stock based upon the number of
months served in the year between Annual Meetings. If the Annual Meeting (or
special meeting in lieu of an Annual Meeting) at which the shares are issued is
held earlier than April 15th, then the Director must serve until April 15th of
the following year.
(d) Other than shares issued pursuant to Section 5(a)(i), Participants may
not transfer, sell, pledge, assign, encumber or otherwise dispose of shares
issued pursuant to this Plan until the April 15th which immediately follows the
issuance of such shares, or the date on which Participants cease to be
Directors, if earlier; provided, that, if the Annual Meeting (or special meeting
in lieu of an Annual Meeting) is held earlier
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<PAGE> 38
than April 15th, then shares issued at such meeting pursuant to this Plan will
be so restricted until April 15th of the following year; and provided further,
that a Participant may transfer shares to his or her spouse or issue or any
trust for the benefit of such Participant, his or her spouse or issue, so long
as such transferee shall take and hold such shares subject to all obligations
and restrictions of this Plan, including, but not limited to, the forfeiture
provisions of paragraph (c) above and the absolute transfer restriction set
forth in the preceding provisions of this paragraph.
6. DELIVERY OF STOCK. The shares of Stock shall be delivered as soon as
practicable after the date of such Participant's election or appointment.
7. STOCK CERTIFICATES; VOTING AND OTHER RIGHTS. The certificates for shares
delivered to a Director pursuant to Section 6 shall be issued in the name of the
Director, and the Director shall be entitled to all rights of a stockholder with
respect to Stock for all such shares issued in his or her name, including the
right to vote the shares, and the Director shall receive all dividends and other
distributions paid or made with respect thereto. The certificates representing
the shares issued hereunder shall bear a legend indicating that such shares are
subject to forfeiture and restrictions on transfer pursuant to Section 5, and
the Company's transfer agent shall be given stop transfer instructions to the
same effect.
8. GENERAL RESTRICTIONS. Notwithstanding any other provision of the Plan or
agreements made pursuant thereto, the Company shall not be required to issue or
deliver any certificate or certificates for shares of Stock under the Plan prior
to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of issuance
of such shares on the New York Stock Exchange, or such other securities
exchange as may at the time be the primary market for the Stock;
(ii) Any registration or other qualification of such shares under any
state or federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Committee shall, in its
absolute discretion upon the advice of counsel, deem necessary or
advisable; and
(iii) Obtaining any other consent, approval or permit from any state
or federal governmental agency which the Committee shall, in its absolute
discretion upon the advice of counsel, determine to be necessary or
advisable.
9. STOCK AVAILABLE. Subject to Section 10, the maximum number of shares of
Stock which may be issued pursuant to the Plan is 100,000. Shares of Stock
issuable under the Plan may be taken from authorized but unissued or treasury
shares of the Company or purchased in the open market.
10. CHANGE IN CAPITAL STRUCTURE; CHANGE OF CONTROL. In the event that there
is any change in the Stock by reason of any stock dividend, stock split,
combination of shares, exchange of shares, reclassification, recapitalization,
merger, consolidation, change of control, spin-off or other change in
capitalization of the Company, appropriate adjustment shall be made in the
restrictions on transfer, legend requirements, number and kind of shares or
other property subject to the Plan, and any other relevant provisions of the
Plan by the Committee, whose determination shall be binding and conclusive on
all persons.
11. ADMINISTRATION; AMENDMENT. (a) The Plan shall be administered by the
Nominating and Conflict of Interest Committee of the Board (the "Committee"),
which shall have full authority to construe and interpret the Plan, to
establish, amend and rescind rules and regulations relating to the Plan, and to
take all such actions and make all such determinations in connection with the
Plan as it may deem necessary or desirable. Any such action or determination
shall be final and binding.
(b) The Board may at any time terminate, amend or modify the 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; provided, that the Board shall not amend or modify the Plan without
stockholder approval to (i) increase the maximum number of shares that may be
issued pursuant to the Plan or (ii) change the provisions of Section 5 hereof
with respect to the pricing of the Stock in order to make it more favorable to
Participants.
B-2
<PAGE> 39
12. MISCELLANEOUS. (a) Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for election by the
Company's stockholders or to limit any right to remove any Director.
(b) The Company shall have the right to require, prior to the issuance or
delivery of any shares of Stock pursuant to the Plan, that a Director make
arrangements satisfactory to the Committee for the withholding of any taxes
required by law to be withheld with respect to the issuance or delivery of such
shares, including, without limitation, by the withholding of shares that would
otherwise be so issued or delivered, by withholding from any other payment due
to the Director, or by a cash payment to the Company by the Director.
13. GOVERNING LAW. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.
14. OVERRIDE. With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934, as amended, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 thereunder or
any successor provision. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
B-3
<PAGE> 40
U.S. HOME CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT J. STRUDLER and ISAAC
P HEIMBINDER, and each of them, with full power of substitution, as
proxies of the undersigned to vote all of the shares of common stock of
R U.S. Home Corporation the undersigned is entitled to vote, with all
powers the undersigned would possess if personally present, at the
O Annual Meeting of Stockholders of U.S. Home Corporation, a Delaware
corporation, to be held at the Omni Hotel, Four Riverway, Houston,
X Texas, at 10:00 a.m., local time, on Wednesday, April 22, 1998, and at
any adjournment thereof, on the matters described on the reverse hereof
Y and, in their discretion, on such other matters as may properly come
before the meeting.
UNLESS AUTHORITY TO DO SO IN WITHHELD BY APPROPRIATE DESIGNATION,
THIS PROXY SHALL BE DEEMED TO HAVE GRANTED AUTHORITY TO VOTE FOR THE
ELECTION OF ALL DIRECTORS AS SET FORTH IN THE PROXY STATEMENT, AND WILL
BE SO VOTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 2, 3, 4 AND 5.
Please sign, date and return this Proxy promptly. No postage is
required if returned in the enclosed envelope and mailed in the United
States.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
<PAGE> 41
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. ELECTION OF DIRECTORS
Nominees: Glen Adams; Steven L. Gerard; Kenneth J. Hanau, Jr.; Isaac Heimbinder;
Malcolm T. Hopkins; Charles A. McKee; George A. Poole, Jr.; Herve
Ripault; James W. Sight; Robert J. Strudler
FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
_______________________________________________________
FOR AGAINST ABSTAIN
2. Approval of the 1998 Non-Employee Directors'
Stock Option Plan. [ ] [ ] [ ]
3. Approval of the Non-Employee Director
Stock Plan. [ ] [ ] [ ]
4. Approval of an Amendment to the Amended
and Restated Employee Stock Payment Plan [ ] [ ] [ ]
5. Ratification of Arthur Andersen LLP
as auditors. [ ] [ ] [ ]
Please sign exactly as name appears on this Proxy. If shares are registered in
more than one name, all such persons should sign this Proxy. A corporation
should sign in its full corporate name by a duly authorized officer, stating
such officer's title. Trustees, guardians, executors and administrators should
sign in their official capacity giving their full title as such. if a
partnership, please sign in partnership name by authorized person.
Signature: _________________________________________ Date _____________________
Signature: _________________________________________ Date _____________________
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
