<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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-12
</TABLE>
U. S. HOME CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
U.S. HOME CORPORATION
10707 CLAY ROAD
P. O. BOX 2863
HOUSTON, TEXAS 77252-2863
[U.S. HOME LOGO]
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
March 12, 1999
Dear Stockholders:
On behalf of the officers and directors of U.S. Home Corporation (the
"Company"), you are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 10:00 a.m., local time, on Wednesday, April 21, 1999,
at the Company's headquarters located at 10707 Clay Road, 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 Key Employees Restricted Stock Plan. These matters are described
in the formal Notice of Meeting and in the accompanying Proxy Statement.
The Board of Directors of the Company unanimously recommends that all
Stockholders vote in favor of each proposal. Your vote is important regardless
of the number of shares you own. We strongly encourage all Stockholders to
participate by voting their shares by proxy whether or not they plan to attend
the meeting. Please sign, date and mail the enclosed proxy as soon as possible.
If you do attend the meeting, you may still vote in person.
Sincerely,
/s/ ROBERT J. STRUDLER
Robert J. Strudler
Chairman and Co-Chief
Executive Officer
<PAGE> 3
[U.S. HOME LOGO]
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999
---------------------
The Annual Meeting of the Stockholders of U.S. Home Corporation (the
"Company") will be held on Wednesday, April 21, 1999, at 10:00 a.m., local time,
at the Company's headquarters located at 10707 Clay Road, 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 Key Employees Restricted Stock Plan.
3. Ratification of the appointment of Arthur Andersen LLP as auditors of
the Company for the fiscal year ending December 31, 1999.
4. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Only Stockholders of record at the close of business on March 1, 1999 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
RICHARD G. SLAUGHTER
Secretary
March 12, 1999
<PAGE> 4
U.S. HOME CORPORATION
10707 CLAY ROAD
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 1, 1999 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 13,305,129 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 Common 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 Common Stock represented by the Proxy will be voted
in favor of such proposal or matter. However, shares of Common 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 of Common Stock 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, 1998,
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 12, 1999.
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. The Board has 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, if such recommendations are submitted in writing to the Secretary
of the Company giving the background and qualifications of the candidates. In
addition, a Stockholder may nominate candidates for director only if such
Stockholder complies with the procedures set forth in Sections 1.14 and 1.15 of
the Company's Amended and Restated By-Laws (the "By-Laws"). The By-Laws require
(i) such recommendations to be 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 to 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 2000, 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 Nominating Committee may designate.
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
NAME, AGE, PRINCIPAL DIRECTOR BOARD COMMITTEE
OCCUPATION, OTHER DIRECTORSHIPS(1) SINCE MEMBERSHIP
---------------------------------- --------- ---------------
<S> <C> <C>
Glen Adams (60 yrs.)......................... 1993 Finance; Nominating and Conflict of
Private investor and a director of certain Interest
companies(2)
Steven L. Gerard (53 yrs.)................... 1993 Compensation and Stock Option; Finance
Chairman and Chief Executive Officer of
Great Point Capitol, Inc.(3)
Kenneth J. Hanau, Jr. (72 yrs.).............. 1976 Audit; Compensation and Stock Option;
Chairman of K&H Corrugated Case Executive
Corporation(4)
Isaac Heimbinder (55 yrs.)................... 1984 Executive
President, Co-Chief Executive Officer and
Chief Operating Officer of the Company(5)
Malcolm T. Hopkins (71 yrs.)................. 1993 Audit; Executive
Private investor and a director of several
companies(6)
Charles A. McKee (80 yrs.)................... 1978 Audit; Compensation and Stock Option
Former Chairman and Chief Executive Officer
of Electrolux Corporation(7)
George A. Poole, Jr. (67 yrs.)............... 1993 Audit; Nominating and Conflict of Interest
Private investor and a director of several
companies(8)
Herve Ripault (58 yrs.)...................... 1982 Finance; Nominating and Conflict of
Associate of Optigestiom S.A., a French Interest
fund management company(9)
James W. Sight (43 yrs.)..................... 1993 Compensation and Stock Option; Finance;
Private investor and a director of several Nominating and Conflict of Interest
companies(10)
Robert J. Strudler (56 yrs.)................. 1984 Executive
Chairman and Co-Chief Executive Officer of
the Company(11)
</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.
(3) Mr. Gerard is the Chairman and Chief Executive Officer of Great Point
Capitol, Inc. 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,
3
<PAGE> 7
PLC ("Mountleigh"), a London-based company engaged in property management
and retailing, from April 1992 to July 1992. Mr. Gerard was hired in
connection with the restructuring of Mountleigh. In connection with the
restructuring, Mountleigh was placed in U.K. receivership on May 23, 1992.
From July 1990 until April 1992, Mr. Gerard was a Senior Managing Director
of Citibank, N.A. ("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 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.
(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, The Metropolitan
Series Fund, Inc., Great Lakes Pulp & Fibre Company and Gemini Air Cargo,
Inc. Mr. Hopkins is also a trustee of State Street Research & Management
Company.
(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 Harvard Industries,
Inc.
(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.
4
<PAGE> 8
COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board include the following:
The Audit Committee reviews and approves the scope of the annual audit
undertaken by the Company's independent public accountants and meets with them
on a regular basis to review the progress and results of their work as well as
any recommendations they may make. The Audit Committee also reviews the fees of
the independent public accountants, and reviews and approves the annual
financial statements of the Company prior to issuance of such statements. In
addition, the Audit Committee reviews and approves any significant non-audit
services undertaken by the Company's independent public accountants. In
connection with the internal accounting controls of the Company, the Audit
Committee reviews internal audit procedures and reporting systems, as well as
reports of the Audit Department of the Company and the management action taken
in response to such reports.
The Compensation and Stock Option Committee (the "Compensation Committee")
reviews the salaries and all compensation plans for corporate officers,
presidents of operations and division chairmen and presidents, and makes
specific recommendations to the Board for such salaries and plans. The
Compensation Committee also has the authority to administer the Company's
Amended and Restated 1993 Employees' Stock Option Plan (the "1993 Employees'
Stock Option Plan"), 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 Second Amended and
Restated Employee Stock Payment Plan (the "Employee Stock Plan"), including the
determination of the amount, allocation and vesting of shares, and the Second
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 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, the 1998 Non-Employee Directors'
Stock Option Plan, the Non-Employee Director Stock 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, if such recommendations are submitted in writing to
the Secretary of the Company giving the background and qualifications of the
candidates. In addition, a Stockholder may nominate candidates for director only
if such Stockholder complies with the procedures set forth in Sections 1.14 and
1.15 of the By-Laws. The By-Laws require (i) such recommendations to be
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 to 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.
5
<PAGE> 9
Members of the committees of the Board are as follows: Audit
Committee -- Messrs. Hanau, Hopkins (Chair), McKee and Poole; Compensation
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; and Nominating
Committee -- Messrs. Adams (Chair), Poole, Ripault and Sight.
During 1998, there were a total of 7 meetings of the Board, 2 meetings of
the Audit Committee, 5 meetings of the Compensation Committee, 1 meeting of the
Finance Committee and 2 meetings of the Nominating Committee. No meetings of the
Executive Committee were held during 1998. 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 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the year ended December
31, 1998 were Messrs. Gerard, Hanau, McKee and Sight. No such person was an
officer or employee of the Company during the year ended December 31, 1998 or
was formerly an officer of the Company.
EXECUTIVE COMPENSATION
The following table sets forth a summary of annual and long-term
compensation (for 1998, 1997 and 1996) 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, 1998, was in excess of $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3)(4) (#)(5) ($) ($)(6)(7)
------------------ ---- -------- -------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Strudler; 1998 $525,000 $834,928 $-- $ -- -- $-- $ 6,310
Chairman and Co-Chief 1997 475,000 688,000 -- -- 225,000 -- 20,890
Executive Officer 1996 440,000 628,161 -- -- 30,000 -- 5,010
Isaac Heimbinder; 1998 $515,000 $834,928 $-- $ -- -- $-- $ 6,310
President, Co-Chief 1997 465,000 688,000 -- -- 225,000 -- 21,261
Executive Officer and 1996 430,000 628,161 -- -- 30,000 -- 5,010
Chief Operating Officer
Craig M. Johnson; 1998 $235,000 $235,000 $-- $ -- 15,000 $-- $ 5,825
Senior Vice President -- 1997 210,000 210,000 -- -- 5,000 -- 4,725
Community Development 1996 182,500 157,500 -- 22,500 5,000 -- 4,525
Gary L. Frueh; 1998 $168,750 $225,000 $-- $ -- 8,000 $-- $ 6,480
Senior Vice President -- 1997 152,000 114,000 -- -- 3,000 -- 5,213
Tax and Audit 1996 144,000 144,500 -- 13,500 3,000 -- 5,057
Chester P. Sadowski; 1998 $181,250 $150,000 $-- $ -- 8,000 $-- $ 6,028
Senior Vice President -- 1997 170,000 125,000 -- -- 3,000 -- 4,928
Controller and Chief 1996 164,000 107,625 -- 15,375 3,000 -- 4,728
Accounting Officer
</TABLE>
- ---------------
(1) Amounts shown include the dollar value of base salary (cash and non-cash)
earned by the executive officers named above.
(2) Amounts shown include the dollar value of bonuses (cash and non-cash) earned
by the executive officers named above, but excludes the dollar value of
unvested stock awarded as described below. Pursuant to
6
<PAGE> 10
the 1998 Corporate Officers' Incentive Compensation Program (the "1998
Program"), the 1997 Corporate Officers' Incentive Compensation Program (the
"1997 Program") and the 1996 Corporate Officers' Incentive Compensation
Program (the "1996 Program," and together with the 1998 Program and the 1997
Program, the "Incentive Programs"), the Board, on the recommendation of the
Compensation Committee, approved payment of incentive compensation to
Messrs. Johnson, Frueh and Sadowski for services rendered in 1998, 1997 and
1996. Pursuant to the 1996 Program and the Employee Stock Plan, 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 Program consisted of the following:
<TABLE>
<CAPTION>
AVERAGE
VALUE OF VALUE OF # OF SHARES CLOSING PRICE
CASH VESTED UNVESTED OF UNVESTED OF COMMON
YEAR OFFICER BONUS COMMON STOCK COMMON STOCK COMMON STOCK STOCK
---- ------- -------- ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
1996 Mr. Johnson $135,000 $22,500 $22,500 797 $28.225
Mr. Frueh $131,000 $13,500 $13,500 478 $28.225
Mr. Sadowski $ 92,250 $15,375 $15,375 544 $28.225
</TABLE>
Pursuant to the Employee Stock Plan, the number of shares of Common Stock
issued to each of the executives listed in the table was calculated by
dividing (x) the portion of their incentive compensation payable in Common
Stock by (y) the greater of (i) the average of the closing prices of the
Common Stock on the New York Stock Exchange ("NYSE") for the 10 trading days
immediately following release by the Company of its financial results for
the applicable fiscal year, and (ii) 95% of the average of the daily last
sale price of the Common Stock on the NYSE for the 20 consecutive trading
days immediately prior to the date such shares are issued. In addition to
the incentive compensation received under the 1998 Program, Mr. Frueh was
awarded a special bonus of $75,000 for his work in connection with the
successful completion of certain federal tax matters. Payment of contractual
incentive compensation to Messrs. Strudler and Heimbinder was made pursuant
to the terms and conditions of their respective Second Amended and Restated
Employment and Consulting Agreements. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements."
(3) The amounts shown for 1996 for Messrs. Johnson, Frueh and Sadowski include
the dollar value of Common Stock that was awarded under the 1995 Program and
vested on December 31, 1998.
(4) Does not include the number and value of the aggregate unvested restricted
stock holdings at the end of the last completed fiscal year for the
executive officers named above: each of Messrs. Strudler, Heimbinder,
Johnson, Frueh and Sadowski - 11,119 shares, with a value of $369,707.
(5) Pursuant to 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."
(6) The Company has a qualified profit sharing plan for the benefit of its
employees. There were no contributions made to the profit sharing plan in
1998. The amounts shown for 1997 and 1996 are comprised of the following:
(i) contributions to the Company's profit sharing plan; (ii) 401(k)
contributions by the Company; (iii) premium for a universal life insurance
policy with a cash surrender value; and certain other benefits for Messrs.
Strudler ($15,680) and Heimbinder ($16,051) in 1997. The amounts shown for
1998 are comprised of the following:
<TABLE>
<CAPTION>
LIFE
OFFICER 401(K) INSURANCE PREMIUM
------- ------ -----------------
<S> <C> <C>
Robert J. Strudler..................................... $4,800 $1,510
Isaac Heimbinder....................................... $4,800 $1,510
Craig M. Johnson....................................... $4,800 $1,025
Gary L. Frueh.......................................... $4,800 $1,680
Chester P. Sadowski.................................... $4,800 $1,228
</TABLE>
(7) Mr. Strudler and Mr. Heimbinder are also entitled to retirement benefits
under their respective Second Amended and Restated Employment and Consulting
Agreements on the terms and conditions specified
7
<PAGE> 11
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, 1998 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, 1998, was in excess of $100,000:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
------------------------------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g)
- ---------------------------- ------------ ---------- -------- ---------- ---------- ----------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE
SARS GRANTED IN FISCAL PRICE EXPIRATION
NAME (#SH)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Strudler.......... -- -- -- -- -- --
Isaac Heimbinder............ -- -- -- -- -- --
Craig M. Johnson............ 10,000(2) 4.6% $47.56 4/21/08 $299,118 $758,023
5,000(3) 2.3% $26.13 10/14/08 82,149 208,182
Gary L. Frueh............... 5,000(2) 2.3% $47.56 4/21/08 $149,559 $379,011
3,000(3) 1.4% $26.13 10/14/08 49,289 124,909
Chester P. Sadowski......... 5,000(2) 2.3% $47.56 4/21/08 $149,559 $379,011
3,000(3) 1.4% $26.13 10/14/08 49,289 124,909
</TABLE>
- ---------------
(1) The purpose of the 1997 Employees' Stock Option Plan (the "Employees' Stock
Option Plan") 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 the
Employees' Stock Option Plan.
Options granted under the Employees' Stock Option Plan 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 the Employees' Stock Option Plan, the exercise price for any
Incentive Stock Option and/or a nonqualified stock option will be the
closing price of the Common Stock on the NYSE on the date that such option
is granted. No option granted under the Employees' Stock Option Plan may be
exercised more than 10 years from the date such option is granted.
(2) As of April 21, 1998, pursuant to the Employees' Stock Option Plan, options
to acquire an aggregate of 173,000 shares of Common Stock were granted to
certain employees of the Company, including Messrs. Johnson, Frueh and
Sadowski. The options granted to Messrs. Johnson, Frueh and Sadowski become
exercisable in equal annual installments over a five year period commencing
on April 21, 1999.
8
<PAGE> 12
(3) As of October 14, 1998, pursuant to the Employees' Stock Option Plan,
options to acquire an aggregate of 45,000 shares of Common Stock were
granted to certain employees of the Company, including Messrs. Johnson,
Frueh and Sadowski. The options granted to Messrs. Johnson, Frueh and
Sadowski become exercisable in equal annual installments over a three year
period commencing on October 14, 1999.
The following table contains information concerning the exercise of stock
options during the fiscal year ended December 31, 1998, 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, 1998, 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 $1,452,350/$1,375,000
Isaac Heimbinder.......... -- -- 170,000/200,000 $1,452,350/$1,375,000
Craig M. Johnson.......... -- -- 22,001/19,999 $225,228/$50,827
Gary L. Frueh............. 5,000 $90,625 13,000/11,000 $102,510/$30,500
Chester P. Sadowski....... -- -- 20,000/11,000 $213,055/$30,500
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
SECOND 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 February 9, 1999, and
Mr. Heimbinder entered into a similar Employment and Consulting Agreement with
the Company on May 12, 1986, which was amended and restated on February 9, 1999
(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, 2001;
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, 1999, or any subsequent
anniversary thereof, such term shall be automatically extended for one
additional year on June 20, 1999 (to June 20, 2002) 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 1998, Messrs. Strudler and Heimbinder were paid
annual base salaries of $525,000 and $515,000, 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. 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
9
<PAGE> 13
(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 1998 rates of $149,237 and $143,267 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
and transportation 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 sixty percent (60%) 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 a lump sum cash payment equal to the sum of (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 (or, at
the option of the employee, in monthly installments) 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), as well as the normal monthly retirement payments referred
to in clause (iii), 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 lump
sum cash payment referred to in the preceding paragraph. However, each will
serve as a consultant to the Company and be compensated at the 1998 rate of
$149,237 (for Mr. Strudler) or $143,267 (for Mr. Heimbinder) per annum (subject
to cost of living increases) for five years thereafter, and will be entitled to
payment of the normal monthly retirement benefits and certain other benefits as
provided 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, (A) in which the Company is not the
continuing or surviving corporation, (B) 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 continuing or surviving
corporation immediately after the merger as immediately before) or (C) with a
corporation which prior to such consolidation or merger owned 15% or more of the
cumulative voting power of the then-outstanding securities of the Company, (iv)
any sale, lease, exchange or other transfer of all or substantially all of the
assets of the Company, approved by the Stockholders, or (v) a change of a
majority of the members of the Board within a 12-month period, unless the
election or nomination for election by the
10
<PAGE> 14
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.
AMENDED AND RESTATED KEY EMPLOYEES' SEVERANCE PAY PLAN
The Board adopted the Company's Key Employees' Severance Pay Plan (the
"Severance Plan") on December 6, 1996, which was amended and restated on April
22, 1998. 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, whether voluntarily or involuntarily
other than for Cause (as defined below), within one (1) year after the
occurrence of a Change of Control (as defined below) will be entitled to (i)
receive an amount equal to the greater of (x) 12 months of such participant's
base salary plus any bonuses received by the participant for the immediately
preceding incentive year or (y) 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. A participant whose employment
with the Company is terminated by the Company other than for Cause or whose
employment is Constructively Terminated (as defined below) within two years, but
more than one (1) year, following a Change of Control 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 cash benefits under the
Severance Plan described above 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.
11
<PAGE> 15
Under the Severance Plan, "Cause" means (i) a participant's continuing
willful failure to perform his or her duties (other than as a result of total or
partial incapacity due to physical or mental illness), (ii) gross negligence or
malfeasance by a participant in the performance of his or her duties, (iii) an
act or acts on the part of a participant constituting a felony under the laws of
the United States, or any state thereof, which results or was intended to result
directly or indirectly in gain or personal enrichment by such participant at the
expense of the Company or its subsidiaries or (iv) breach of any of the
provisions of the Severance Plan pertaining to confidentiality and competitive
activities.
Under the Severance Plan, "Change of Control" means any of the following:
(i) a report on Schedule 13D is filed pursuant to Section 13(d) of the Exchange
Act, disclosing that any person, other than the Company (or one of its
subsidiaries) or any employee benefit plan sponsored by the Company (or one of
its subsidiaries), is the beneficial owner, directly or indirectly, of 50% or
more of the combined voting power of the then-outstanding equity of the Company;
(ii) any transaction or a series of related transactions (as a result of a
tender offer, merger, consolidation or otherwise whether or not the Company is
the continuing or surviving entity) that results in, or is in connection with,
any person, other than the Company (or one of its subsidiaries) or any employee
benefit plan sponsored by the Company (or one of its subsidiaries), acquiring
beneficial ownership, directly or indirectly, of 50% or more of the combined
voting power of the then-outstanding equity of the Company or of any person that
possesses beneficial ownership, directly or indirectly, of 50% or more of the
combined voting power of the then-outstanding equity of the Company; (iii) the
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Company to any person in one transaction or a series of related
transactions; provided, that a transaction where the holders of all classes of
the then-outstanding equity of the Company immediately prior to such transaction
own, directly or indirectly, 50% or more of the aggregate voting power of all
classes of equity of such person immediately after such transaction will not be
a Change of Control under this clause (iii); (iv) the liquidation or dissolution
of the Company; provided, that a liquidation or dissolution of the Company which
is part of a transaction or series of transactions that does not constitute a
Change 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.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLANS
Under the Amended and Restated Non-Employee Directors' Stock Option Plan
and the 1998 Non-Employee Directors' Stock Option Plan (collectively, the
"Directors' Option Plans"), 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 Plans, the non-employee directors of the
Company were each granted an option to acquire 1,000 shares of Common Stock
immediately following the 1998 Annual Meeting of Stockholders at an exercise
price of $45.22 per share.
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.
NON-EMPLOYEE DIRECTOR STOCK PLAN
Under the Non-Employee Director Stock Plan ("Director Stock Plan"), on the
date of election as a director at each annual meeting, each participant shall
receive as additional 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. 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 Common 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. 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.
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.
On April 22, 1998, in accordance with the Director Stock Plan, 1,606 shares
of Common Stock were issued to each director.
13
<PAGE> 17
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,
1998, 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.
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 1998 Program, an incentive compensation pool
in an amount equal to the lesser of $850,000 or 2% of the Company's pre-tax
income for the fiscal year ended December 31, 1998 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 1998 will not exceed 75% of the base salary of such officer, except for
Messrs. Johnson, Frueh and Sadowski whose maximum incentive compensation will
not exceed 100% of their base salaries. An executive officer will only be
14
<PAGE> 18
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 achieves certain specified
financial targets.
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, 1998, 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 will 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 $353,486
and $343,292 of Mr. Strudler's and Mr. Heimbinder's compensation, respectively,
was deferred.
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 Second Amended and Restated Employment and
Consulting Agreements dated as of February 9, 1999, upon approval by the Board
(based on a recommendation of the Compensation Committee), which 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 1998 was $525,000 and Mr. Heimbinder's base salary for 1998 was
$515,000. 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 1998. In
1998, the incentive bonus paid to Mr. Strudler was $834,928, and the incentive
bonus paid to Mr. Heimbinder was $834,928, based upon a formula set forth in the
Employment Agreements. Such bonuses paid include 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, 1998 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 9 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, 1993 for preparation of the
graph.
[GRAPH]
<TABLE>
<CAPTION>
Measurement Period U.S. Home
(Fiscal Year Covered) Corporation S&P 500 Peer Group
<S> <C> <C> <C>
1993 100 100 100
1994 60.56 101.32 62.02
1995 109.39 139.40 83.53
1996 97.65 171.41 82.72
1997 147.42 228.59 139.15
1998 124.88 293.92 179.92
</TABLE>
The peer group index is composed of the following homebuilding companies:
Centex Corporation, 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 1, 1999, 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) OF CLASS
----------------- ---------------- --------
<S> <C> <C>
Glen Adams.................................................. 15,323 *
Steven L. Gerard............................................ 15,323 *
Kenneth J. Hanau, Jr........................................ 15,514 *
Isaac Heimbinder............................................ 217,273(5) 1.63%
Malcolm T. Hopkins.......................................... 13,606 *
Charles A. McKee............................................ 27,930(6) *
George A. Poole, Jr......................................... 22,323 *
Herve Ripault............................................... 20,881 *
James W. Sight.............................................. 12,823 *
Robert J. Strudler.......................................... 211,983(7) 1.59%
Gary L. Frueh............................................... 31,162 *
Craig M. Johnson............................................ 46,568 *
Chester P. Sadowski......................................... 37,248 *
All directors and executive officers of the Company as a
group (17 persons)........................................ 787,923 5.92%
First Union Corporation
One First Union Center
Charlotte, NC 28288(8).................................... 751,615 5.65%
FMR Corp.
82 Devonshire Street
Boston, MA 02109(9)....................................... 826,745 6.21%
Wellington Management Company, LLP
75 State Street
Boston, MA 02109(10)...................................... 1,197,695 9.0%
</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 -- 22,001; Mr. Frueh -- 13,000; Mr. Sadowski -- 20,000; and all
executive officers of the Company as a group -- 442,795.
(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 1996 incentive compensation was Mr. Johnson -- 1,594; Mr. Frueh -- 957;
Mr. Sadowski -- 1,089; and all executive officers of the Company as a
group -- 5,992. The number of shares of Common Stock issued pursuant to the
Employee Stock Plan for 1998 incentive compensation for all executive
officers of the Company as a group was 505 with an approximately equal
number of shares of Common Stock credited to all executive officers of the
Company as a group, for 1998 that have not yet vested under the Employee
Stock Plan.
(3) Includes shares of Common Stock issued but not yet vested 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,
17
<PAGE> 21
Strudler, Johnson, Frueh and Sadowski each received 11,119 shares; and all
executive officers of the Company as a group received 90,413 shares. Does
not include shares to be issued under the 1998 Key Employees Restricted
Stock Plan if approved by Stockholders. See "1998 Key Employees Restricted
Stock Plan -- New Plan Benefits."
(4) Includes fully exercisable options granted pursuant to the Directors' Plan
to acquire the following number of shares of Common Stock: Mr.
Adams -- 10,000; Mr. Gerard -- 10,000; Mr. Hanau -- 12,500; Mr.
Hopkins -- 10,000; Mr. McKee -- 12,500; Mr. Poole -- 10,000; Mr.
Ripault -- 12,500; and Mr. Sight -- 10,000.
(5) 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.
(6) Excludes 775 shares of Common Stock owned by Mr. McKee's wife. Mr. McKee
disclaims beneficial ownership of such shares.
(7) Excludes 100 shares of Common Stock held in trust for Mr. Strudler's son.
Mr. Strudler disclaims beneficial ownership of such shares.
(8) First Union Corporation ("First Union") beneficially owns shares through
its subsidiaries Evergreen Asset Management Corporation, Lieber & Company
and Wheat First Securities, Inc. in their capacity as investment advisors
for mutual funds and other clients who beneficially own such shares; and
First Union National Bank which holds shares in a fiduciary capacity for
its customers. First Union has sole power to vote or to direct the vote of
664,400 shares; shared power to vote or to direct the vote of 86,525
shares; the sole power to dispose or to direct the disposition of 661,060
shares; and the shared power to dispose or direct the disposition of 87,055
shares.
(9) FMR Corp. beneficially owns, through its wholly-owned subsidiary, Fidelity
Management & Research Company ("Fidelity"), as an investment advisor to
various investment companies (the "Funds"), 815,845 shares (6.13% of the
Common Stock). Edward C. Johnson 3d ("Johnson"), as chairman and FMR
through its control of Fidelity, and the funds each has sole power to
dispose of the 815,845 shares owned by the Funds. Neither Johnson nor FMR
has the sole power to vote or direct the voting of the shares owned
directly by the Funds, which power resides with the Funds' Boards of
Trustees. Fidelity carries out the voting of the shares under written
guidelines established by the Funds' Boards of Trustees. Fidelity
Management Trust Company ("FMTC"), a wholly-owned subsidiary of FMR, is the
beneficial owner of 10,900 shares as a result of its serving as investment
manager of institutional accounts. Johnson and FMR, through its control of
FMTC, each has sole voting and dispositive power over 10,900 shares owned
by the institutional accounts.
(10) Wellington Management Company, LLP ("WMC") beneficially owns, in its
capacity as an investment advisor, shares which are owned of record by
clients of WMC. Those clients have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the sale of,
such securities. No such client is known to have such right or power with
respect to more than five percent of the Common Stock except for Vanguard
Windsor Fund. WMC has shared power to vote or to direct the vote of 900
shares of Common Stock and shared power to dispose or direct the
disposition of 1,197,695 shares of Common Stock.
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 except as follows: Mr. Hanau was one day late
in reporting the conversion of 102 Class B Warrants into Common Stock. Mr. Sight
was five days late in reporting the open market sale of 2,500 shares of Common
Stock. Mr. Frueh was 30 days late in reporting the open market sale of 3,847
shares of Common Stock and the exercise of stock options for 5,000 shares of
Common Stock.
18
<PAGE> 22
1998 KEY EMPLOYEES RESTRICTED STOCK PLAN
(PROPOSAL 2)
On June 10, 1998, the Board adopted the Company's 1998 Key Employees
Restricted Stock Plan (the "1998 Restricted Stock Plan") for the purpose of
providing corporate officers, presidents of operations and division presidents
an incentive to provide services to the Company over a long period of time and
to enhance the level of performance of the Company by awarding such employees
shares of Common Stock subject to certain vesting requirements. There are
120,000 shares of Common Stock reserved for issuance under the 1998 Restricted
Stock Plan.
The full text of the 1998 Restricted Stock Plan is set forth as Exhibit A
to this Proxy Statement. The principal features of the 1998 Restricted Stock
Plan are summarized below.
There are 47 eligible employees, including 33 division presidents, five
presidents of operations and nine corporate officers, who will receive shares of
Common Stock under the 1998 Restricted Stock Plan.
The 1998 Restricted Stock Plan will be effective upon approval by the
Stockholders; and at such time each corporate officer and president of
operations will be awarded and issued 5,000 shares of Common Stock and each
division president will be awarded and issued 1,000 shares of Common Stock.
Commencing on the date in 2003 on which the Company releases its financial
results for the previous fiscal year (a "Vesting Date"), subject to the
forfeiture provisions and accelerated vesting provisions contained in the 1998
Restricted Stock Plan, 30% of the shares of Common Stock awarded shall vest. For
each year thereafter on the Vesting Date, an additional 10% of the shares of
Common Stock awarded shall vest. The shares of Common Stock awarded to each
employee will vest on an accelerated basis if the Company's earnings per share
reaches predetermined levels specified in the 1998 Restricted Stock Plan.
Pursuant to these acceleration provisions, all of the shares of Common Stock may
vest as early as the Vesting Date in 2000.
In the event an employee is not employed by the Company on or prior to
December 31 of any year which is immediately prior to any Vesting Date, due to
voluntary termination or termination for Cause (as defined in the 1998
Restricted Stock Plan), all of the then unvested shares of Common Stock and all
rights arising from such shares of Common Stock shall be forfeited by such
employee and returned to the Company. If the employee's employment is terminated
without Cause prior to January 1, 2003, 20% of the shares of Common Stock shall
be vested upon termination. If there is a Change of Control (as defined in the
1998 Restricted Stock Plan), all shares shall become fully vested. If the
employee's employment termination is due to death, disability or retirement with
20 years of service, the Administrator (as defined below) has the authority, at
its sole discretion, to vest as many shares of Common Stock as it deems
appropriate based upon the employee's performance.
Shares of Common Stock will not be provided to the employee on vesting
unless and until the amount of Federal, state or local taxes required to be
withheld has been paid or otherwise satisfied. Tax withholding liabilities may
be satisfied by relinquishing shares vesting pursuant to the Restricted Stock
Plan, valued at the market price on the date such shares would be released to
the employee.
The Common Stock will be issued in the name of the employee but will be
held in escrow for the benefit of the employee pending vesting or forfeiture.
The employee will have voting rights prior to vesting and be entitled to receive
any declared dividends.
The 1998 Restricted Stock Plan will be administered by the Compensation
Committee, comprised of at least three members, all of whom are to be
"disinterested persons" for purposes of Rule 16b-3 of the Exchange Act (the
"Administrator").
The Board may at any time terminate, amend or modify the Restricted Stock
Plan in any respect it deems suitable; provided, however, that no amendment,
modification or termination of the Restricted Stock Plan (A) may in any manner
adversely affect any unvested Common Stock theretofore awarded under the 1998
Restricted Stock Plan without the consent of the employee to whom Common Stock
has been awarded or (B) modify the allocation of shares issued to the employees
designated by the Administrator.
19
<PAGE> 23
Under the present provisions of the Tax Code, the Federal income tax
consequences of the 1998 Restricted Stock Plan should be as follows:
There is no Federal tax liability to an employee until the shares of Common
Stock vest with the employee, at which time the current market value of the
shares will constitute ordinary income (an employee could elect to be taxed at
the time of award based upon the value of the shares, however, such an election
is not anticipated). Dividends received during the restricted period are taxed
to the employee as ordinary income. Stock appreciation after the restrictions
lapse is taxed as capital gain upon the employee's sale of the shares of Common
Stock.
The following table sets forth the benefits and amounts to be received or
allocated to executive officers, all executive officers as a group, all
non-employee directors as a group and all non-executive employees as a group
under the 1998 Restricted Stock Plan if such plan is approved by the
Stockholders at the Annual Meeting.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1998 RESTRICTED STOCK PLAN
--------------------------
DOLLAR NUMBER
VALUE(1) OF UNITS
----------- ---------
<S> <C> <C>
Robert J. Strudler Chairman and Co-Chief Executive
Officer................................................... $ 166,250 5,000
Isaac Heimbinder President, Chief Operating Officer and
Co-Chief Executive Officer................................ $ 166,250 5,000
Craig M. Johnson Senior Vice President -- Community
Development............................................... $ 166,250 5,000
Gary L. Frueh Senior Vice President -- Tax and Audit........ $ 166,250 5,000
Chester P. Sadowski Senior Vice President -- Controller and
Chief Accounting Officer.................................. $ 166,250 5,000
All Executive Officers as a Group........................... $1,496,250 45,000
Non-Employee Directors...................................... (2) (2)
Non-Executive Employees..................................... $1,895,250 57,000
</TABLE>
- ---------------
(1) Dollar values set forth above are based upon the closing price of the Common
Stock on the NYSE on the last day of trading in 1998 ($33.25 per share of
Common Stock).
(2) Non-Employee Directors do not participate in the 1998 Restricted Stock Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 1998
RESTRICTED 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 2.
20
<PAGE> 24
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS
(PROPOSAL 3)
The Board, upon recommendation of the Audit Committee, has appointed,
subject to ratification by Stockholders, the firm of Arthur Andersen LLP,
independent public accountants, to examine the financial statements of the
Company for 1999. 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 Key
Employees Restricted Stock 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.
21
<PAGE> 25
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the Annual Meeting of
Stockholders to be held in 2000 ("2000 Annual Meeting") must be received by the
Company on or before November 13, 1999 and otherwise be made in accordance with
the By-Laws in order to be included in the Proxy Statement and Proxy for that
meeting. Proxies solicited on behalf of the Board of Directors for the 2000
Annual Meeting will confer discretionary authority to vote with respect to any
other matter properly submitted by a stockholder for action at the 2000 Annual
Meeting, unless the Secretary of the Company receives written notice on or
before January 22, 2000, that such stockholder intends to submit a proposal at
such 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 12, 1999
22
<PAGE> 26
EXHIBIT A
U.S. HOME CORPORATION
1998 KEY EMPLOYEES RESTRICTED STOCK PLAN
1. PURPOSE.
The purpose of the U.S. Home Corporation Key Employees Restricted Stock
Plan (the "Plan") is to create incentives for the corporate officers, presidents
of operations and division presidents of U.S. Home Corporation (the "Company")
to provide services to the Company over a long period of time and to enhance the
level of performance of the Company by awarding such employees shares of Stock
(as defined herein) subject to certain vesting requirements.
2. ADMINISTRATION.
(a) A committee (the "Committee"), which shall initially be the
Compensation and Stock Option Committee of the board of directors of the Company
(the "Board"), and which will be comprised of at least three members of the
Board, all of whom are "disinterested persons" (as defined below), will (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 Stock issued
thereunder as it may deem necessary or advisable. The members of the Committee
may be appointed from time to time by the Board and serve at the pleasure of the
Board. The Committee will hereinafter be referred to as the "Administrator."
(b) For the purposes of this Section 2, a "disinterested person" is a
person who, on a given date, is disinterested within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
3. STOCK.
The stock which is the subject of the Plan will be the shares of common
stock of the Company, $.01 par value per share (the "Stock"), whether authorized
and unissued or treasury stock. The total number of shares of Stock which may be
issued under the Plan will not exceed, in the aggregate, 120,000.
4. AWARD OF STOCK.
(a) All of the corporate officers, presidents of operations and division
presidents of the Company listed on Schedule A attached hereto (each an
"Employee" and collectively, "Employees"), shall be eligible to receive Stock in
accordance with the terms hereof.
(b) In consideration of future services to be provided by each Employee to
the Company, each corporate officer and president of operations shall be awarded
5,000 shares of Stock and each division president will be awarded 1,000 shares
of stock.
(c) The Administrator shall have the right pursuant to the terms hereof to
award Stock to any individual who becomes a corporate officer, president of
operations or division president of the Company after the effective date of the
Plan. The Administrator shall make such award substantially in accordance with
the terms of the Plan, including the vesting requirements contained in Section 5
hereof, but shall be permitted to award a smaller number of shares of Stock
based on the date on which the individual commences employment as a corporate
officer, president of operations or division president of the Company.
5. VESTING
(a) On each Vesting Date, unless all shares of Stock awarded to each
Employee shall have previously vested with each Employee and subject to the
forfeiture provisions contained herein, a percentage of the shares of Stock
awarded hereunder to each Employee shall vest with each Employee such that the
cumulative
A-1
<PAGE> 27
percentage of total shares of Stock vested with each Employee shall be the
greatest of the applicable percentages set forth below:
(i) (A) 30% as of the Vesting Date in the year 2003;
(B) 40% as of the Vesting Date in the year 2004;
(C) 50% as of the Vesting Date in the year 2005;
(D) 60% as of the Vesting Date in the year 2006;
(E) 70% as of the Vesting Date in the year 2007;
(F) 80% as of the Vesting Date in the year 2008;
(G) 90% as of the Vesting Date in the year 2009;
(H) 100% as of the Vesting Date in the year 2010;
(ii) If, the Earnings per Share (as defined herein) for a fiscal year
ending on or before December 31, 2001 is:
(A) greater than $6.74 and less than or equal to $6.99, then 25%;
(B) greater than $6.99 and less than or equal to $7.49, then 50%;
(C) greater than $7.49, then 100%
provided, however, that no Employee shall be required to forfeit any
shares of Stock previously vested hereunder.
For purposes hereof, "Earnings per Share" means the "Diluted Earnings Per
Common Share" based upon the audited financial statements of the Company for
such year as reported in the Company's annual report or other SEC filings
excluding extraordinary gains or losses and prior to giving effect to
accelerated vesting of restricted stock issued under the terms of this Plan;
provided, however, that gains or losses from the sale or disposition of any
asset, other than land, with a book cost in excess of ten million dollars
($10,000,000) may be excluded at the discretion of the Administrator.
The Earnings per Share amounts set forth in Sections 5(a)(ii) will be
appropriately adjusted for any increase or decrease in the number of outstanding
shares of Stock resulting from payment of a stock dividend on the Stock, a
subdivision or combination of the Stock, or a reclassification of the Stock, and
in the event of a consolidation or merger.
(b) In the event an Employee is not employed by the Company on or prior to
December 31 of any year which is immediately prior to any Vesting Date, due to
voluntary termination of employment by the Employee or termination for Cause (as
defined herein), all of the shares of Stock remaining to be vested with such
Employee hereunder and all rights arising from such shares of Stock shall be
forfeited by such Employee and returned to the Company.
(c) For purposes of the Plan, a voluntary termination by an Employee will
not be deemed to occur in the event such Employee is Constructively Terminated
(as defined herein).
(d) In the event an Employee is terminated without Cause prior to January
1, 2003, 20% of the shares of Stock awarded hereunder shall immediately vest
with such Employee and the remaining shares of Stock to be vested hereunder and
all rights arising from such shares of Stock shall be forfeited by such Employee
and returned to the Company.
(e) In the event there is a Change of Control (as defined herein), all
shares of Stock remaining to be vested with such Employee hereunder shall
immediately vest with such Employee. The Company shall immediately cause the
issuance to such Employee of appropriate stock certificates representing such
shares of Stock in such Employee's name in accordance with Section 6 hereof.
(f) In the event an Employee dies, is Permanently Disabled (as defined
herein), or retires after age 60 with not less than 20 years of employment by
the Company, the Administrator shall have the authority, in its sole discretion,
to vest such Employee (or such Employee's estate, if applicable) in as many
shares of Stock as the Administrator shall deem appropriate, based upon such
Employee's prior job performance.
A-2
<PAGE> 28
(g) For purposes of the Plan:
(i) "Base Salary" shall mean an amount equal to an Employee's maximum
annual base salary in effect at any time after the effective date of the
Plan, excluding any incentive compensation or bonus payable or paid to an
Employee.
(ii) "Cause" means (1) an Employee's continuing willful failure to
perform his duties with respect to the Company (other than as a result of
total or partial incapacity due to physical or mental illness), (2) gross
negligence or malfeasance by an Employee in the performance of his duties
with respect to the Company, (3) an act or acts on an Employee's part
constituting a felony under the laws of the United States or any state
thereof which results or was intended to result directly or indirectly in
gain or personal enrichment by such Employee at the expense of the Company
or (4) any other circumstances set forth in an employment agreement between
the Company and such Employee which would constitute grounds for the
Company to terminate the employment of such Employee for cause (as defined
in the applicable employment agreement).
(iii) "Change of Control" shall mean any of the following: (i) a
report on Schedule 13D is filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), disclosing that any person or group of
persons (within the meaning of Section 13(d) of the Exchange Act), 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 (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the combined
voting power of the then outstanding equity of the Company (as determined
under paragraph (d) of Rule 13d-3 under the Exchange Act, in the case of
rights to acquire the common stock, $.01 par value per share (the "Common
Stock"), 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 that is in connection with, any person or group of
persons (within the meaning of Section 13(d) of the Exchange Act), 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 (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the combined
voting power of the then outstanding equity of the Company (as determined
under paragraph (d) of Rule 13d-3 under the Exchange Act, in the case of
rights to acquire the Common Stock) or of any person or group of persons
(within the meaning of Section 13(d) of the Exchange Act) that possesses
beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of fifty percent (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 or group of persons (within
the meaning of Section 13(d) of the Exchange Act) 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, fifty
percent (50%) or more of the aggregate voting power of all classes of
equity of such person or group 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 related
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 in a majority of the
members of the Board of Directors of the Company within a 12-month period,
unless the election or nomination for election by the Company's
stockholders of each new director during such 12-month period was approved
by the vote of two-thirds of the directors then still in office who were
directors at the beginning of such 12-month period.
(iv) If the Employee is a Corporate Officer or President of
Operations, "Constructively Terminated" means (1) a reduction in an amount
equal to or greater than 15 percent of an Employee's Base Salary, (2) a
material reduction in an Employee's job function, duties or
responsibilities or (3) a required relocation of an Employee of more than
50 miles from such Employee's current job location; provided, however, that
the employment with the Company or its divisions or subsidiaries of a
President of
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Operations 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 divisions or 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 an Employee will not be deemed
Constructively Terminated unless such Employee actually terminates his or
her employment with the Company within 60 days after the occurrence of an
event specified in clause (1), (2) or (3) above.
(v) If the Employee is a Division President, "Constructively
Terminated" means a reduction in an amount equal to or greater than 15
percent of an Employee's Base Salary; provided that the employment of an
Employee will not be deemed Constructively Terminated unless such Employee
actually terminates his or her employment with the Company within 60 days
after the reduction in Base Salary.
(vi) "Permanently Disabled" means physical or mental incapacity of
such nature that an Employee is unable to engage in or perform the
principal duties of his customary employment or occupation on a continuing
or sustained basis. All determinations as to the date and extent of
disability of any Employee shall be made by the Administrator upon the
basis of such evidence as it deems necessary or desirable.
(vii) "Vesting Date" means the date each year, commencing in 2000 and
through 2010, on which the Company releases its financial results for the
previous fiscal year.
6. STOCK CERTIFICATES.
(a) Each Employee shall receive a stock certificate reflecting the number
of shares of Stock awarded hereunder. Such certificate shall be registered in
the name of such Employee and shall bear the following legend:
"The securities (the "Shares") represented by this stock
certificate are restricted by the terms of the U.S. Home
Corporation 1998 Key Employees Restricted Stock Plan
("Restricted Stock Plan"), effective as of , 1998,
which contains provisions affecting the rights and obligations
of the holder of the Shares and restrictions on the transfer of
the Shares. Any transfer of the Shares represented by this stock
certificate in violation of the Restricted Stock Plan is null
and void."
(b) The Administrator may, in its sole discretion, require that the stock
certificates evidencing the shares of Stock be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a condition of
receiving the shares of Stock, the Employee shall have delivered a stock power,
endorsed in blank, relating to the shares of Stock. If and to the extent any
shares of Stock vest with an Employee in accordance with terms hereof, stock
certificates for the appropriate number of unrestricted shares of Stock shall be
delivered promptly to the Employee. Shares of Common Stock will not be released
to an Employee unless and until the amount of federal, state or local taxes
required to be withheld has been paid or satisfied. Tax withholding liabilities
may be satisfied by the Employee relinquishing shares of Common Stock vested
pursuant to the Plan, valued at the market price of the Common Stock on the date
such shares of Common Stock are released to the Employee.
7. TERM AND EFFECTIVE DATE.
The Plan will become effective upon (i) approval by the Board and (ii)
approval by the affirmative vote of a majority of the shares of voting capital
stock of the Company present or represented and entitled to vote at the 1999
annual meeting of the Company's stockholders. Subject to Section 15 hereof, the
Plan shall terminate upon issuance and vesting all of the Stock issuable
pursuant to the Plan.
8. TRANSFERABILITY.
Employees shall not be permitted to sell, transfer, pledge, assign or
otherwise encumber shares of Stock awarded hereunder prior to the vesting of
such shares of Stock. Upon vesting of such shares of Stock, an
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<PAGE> 30
Employee will only transfer such shares of Stock in compliance with applicable
federal and state securities laws. Employees who are affiliates of the Company
may generally dispose of their shares in accordance with Rule 144 promulgated
under the Securities Act of 1933, as amended.
9. RIGHTS AS A STOCKHOLDER.
Except as provided in Section 8 hereof or this Section 9, Employees shall
have, with respect to any shares of Stock remaining to be vested hereunder, all
of the rights of stockholders of the Company, including the right to vote such
shares of Stock and to receive any cash dividends. Stock dividends, if any,
issued with respect to such shares of Stock shall be subject to the same
restrictions and other terms and conditions hereunder that apply to such shares
of Stock.
10. INVESTMENT PURPOSE.
At the time of issuance of any shares of Stock, the Administrator may, if
it will deem it necessary or desirable for any reason, require an Employee to
represent in writing to the Company that it is such Employee's then intention to
acquire the Stock for investment purposes and not with a view to the
distribution thereof.
11. RIGHT TO TERMINATE EMPLOYMENT.
Nothing contained herein will restrict the right of the Company to
terminate the employment of any Employee at any time.
12. FINALITY OF DETERMINATIONS.
Each determination, interpretation, or other action made or taken pursuant
to the provisions of the Plan by the Administrator will be final and be binding
and conclusive for all purposes.
13. SUBSIDIARY AND PARENT CORPORATIONS.
Unless the context requires otherwise, references under the Plan to the
Company will be deemed to include any subsidiary corporations and parent
corporations of the Company, as those terms are defined in Section 424 of the
Internal Revenue Code of 1986, as amended.
14. GOVERNING LAW.
The Plan will be governed by the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION.
The Board may at any time terminate, amend or modify the Plan in any
respect it deems suitable, including the amendment or modification of the
vesting provisions in Section 2 hereof, without the approval of the stockholders
of the Company, except to the extent that such stockholder approval is required
under applicable law or the Board determines that such approval is necessary or
desirable in order to ensure that the stock granted hereunder qualifies under
any applicable section of the Internal Revenue Code or the Exchange Act;
provided, however, that no amendment, modification or termination of the Plan
may (A) adversely affect any unvested shares theretofore issued under the Plan
without the consent of the Employee to whom such shares were issued or (B)
modify the allocation of shares issued to the employees designated by the
Administrator.
16. OVERRIDE.
(a) 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.
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<PAGE> 31
(b) All transactions pursuant to terms of the Plan, including, without
limitation, awards and vesting of Stock, shall only be effective at such time as
counsel to the Company shall have determined that such transaction will not
violate federal or state securities or other laws. The Administrator may, in its
sole discretion, defer the effectiveness of such transaction to pursue whatever
actions may be required to ensure compliance with such federal or state
securities or other laws.
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SCHEDULE A
<TABLE>
<CAPTION>
CORPORATE OFFICERS PRESIDENTS OF OPERATIONS
------------------ ------------------------
<S> <C> <C>
Robert J. Strudler Sam B. Crimaldi
Isaac Heimbinder James R. Petty
Gary L. Frueh Christopher B. Rediger
Craig M. Johnson Michael T. Richardson
Thomas A. Napoli Philip J. Walsh III
Frank E Matthews
Chester P. Sadowski
Richard G. Slaughter
Kelly F. Somoza
</TABLE>
<TABLE>
<CAPTION>
DIVISION PRESIDENTS:
--------------------
<S> <C> <C> <C>
Gary W. Aalen Mountain Ops Land Gene E. Lanton Central Florida
Robert T. Allegra Sarasota/Manatee Charles D. Lindsay Houston
Philip F. Barber Shenandoah Valley Land Michael J. Lutz Central California
Brian W. Bombeck Sacramento Land Darin L. McMurray Lee/Collier
W. George Breen New Jersey Land James G. Migliore Ohio
Steven L. Craddock Tucson Francine A. Miller Central Florida
James E. Curry South Florida Land James R. Neilson Thompson
George A. d'Hemecourt Dallas/Ft. Worth Richard L. Noble Colorado Springs
Rory Dickens D.C John A. Sellinger Central Florida
Francis J. Dolan Orlando Frederick J. Sikorski Central Florida
Robert F. Fertig North Florida Paul D. Sims Houston
Barry G. Grant Phoenix Robert L. Sithens Ohio
Steve T. Hackney Las Vegas Gregory A. Snyder New Jersey
Sherman S. Haggerty Sacramento Dale W. Stotts Dallas/Ft. Worth
Andrew G. Irick II Central Florida Land Gust J. Valantasis Orlando
Jan Knibbe Denver Joe L. Weathersby South Texas
Jeffrey H. Whiton Colorado
</TABLE>
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<PAGE> 33
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the Annual
Meeting of Stockholders to be held in 2000 ("2000 Annual Meeting') must be
received by the Company on or before November 13, 1999 and otherwise be made in
accordance with the By-Laws in order to be included in the Proxy Statement and
Proxy for that meeting. Proxies solicited on behalf of the Board of Directors
for the 2000 Annual Meeting will confer discretionary authority to vote with
respect to any other matter properly submitted by a stockholder for action at
the 2000 Annual Meeting, unless the Secretary of the Company receives written
notice on or before January 22, 2000, that such stockholder intends to submit a
proposal at such 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 12, 1999
