SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |X| Definitive Proxy Statement
|_| Definitive Additional Materials |_| Soliciting Materials Pursuant to
|_| Confidential, for use of the Commission 240.14a-11(c) or 240.14a-12
Only (as permitted by Rule 14a-6(e)(2))
GRAND COURT LIFESTYLES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:_____
2) Aggregate number of securities to which transaction applies:________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
4) Proposed maximum aggregate value of transaction:____________________
5) Total fee paid:_____________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_____________________________________________
2) Form, Schedule or Registration Statement No:________________________
3) Filing Party:_______________________________________________________
4) Date Filed:_________________________________________________________
<PAGE>
GRAND COURT LIFESTYLES, INC.
John Luciani
Chairman of the Board and Chief Executive Officer
July 30, 1999
To All Grand Court Stockholders:
I cordially invite you to attend the Annual Meeting of Stockholders which
will be held at the Marriott at Glenpointe Hotel, 100 Frank W. Burr Boulevard,
Teaneck, New Jersey 07666, on Tuesday, August 31, 1999 at 10:00 a.m., local
time.
The annual election of directors will take place at the Meeting. Personal
information about the nominees for the Board of Directors as well as information
about the functions of the Board and its committees are contained in the Proxy
Statement.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the Meeting. You
are requested to complete, sign, date and mail the accompanying form of Proxy in
the enclosed envelope provided for that purpose to which no postage need be
affixed if mailed in the United States whether or not you expect to attend the
Meeting in person. The Proxy is revocable by you at any time prior to its
exercise and will not affect your right to vote in person in the event you
attend the Meeting. The prompt return of the Proxy will be of assistance in
preparing for the Meeting and your cooperation in this respect will be greatly
appreciated.
Please read the formal notice of the Meeting and the Proxy Statement
carefully. For those of you who cannot be present at the Meeting, I urge you to
participate by completing, signing and returning your Proxy in the enclosed
envelope. Your vote is important, and the management of Grand Court Lifestyles,
Inc. appreciates the cooperation of stockholders in directing proxies to vote at
the Meeting.
Sincerely,
JOHN LUCIANI,
Chairman of the Board and Chief
Executive Officer
<PAGE>
GRAND COURT LIFESTYLES, INC.
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
To the Stockholders of Grand Court Lifestyles, Inc.:
The Annual Meeting of Stockholders of Grand Court Lifestyles, Inc., a
Delaware corporation (the "Company"), will be held on August 31, 1999 at 10:00
a.m., local time, at the Marriott at Glenpointe Hotel, 100 Frank W. Burr
Boulevard, Teaneck, New Jersey 07666, to consider and act upon the following:
1. To elect all six directors to serve for a term of one year and
until their successors shall have been duly elected and qualified; and
2. To transact such other business as may properly come before the
Meeting and any adjournments thereof.
Stockholders of record at the close of business on July 23, 1999, which is
the record date for the Meeting, are entitled to receive notice of, and to vote
at, the Meeting and at any adjournment thereof. A Proxy and a Proxy Statement
for the Meeting are enclosed.
All stockholders are cordially invited to attend the Meeting in person.
Whether or not you plan to attend the Meeting, please complete, sign, date and
return the enclosed Proxy, which is solicited by the Board of Directors of the
Company, to ensure that your shares are represented at the Meeting. Stockholders
who attend the Meeting may revoke their Proxies and vote their shares in person.
By Order of the Board of Directors
KEITH MARLOWE
Secretary
Date: July 30, 1999
- --------------------------------------------------------------------------------
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
GRAND COURT LIFESTYLES, INC.
--------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
August 31, 1999
--------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Grand Court Lifestyles, Inc., a Delaware
corporation (the "Company"). These proxies will be voted at the Annual Meeting
of Stockholders of the Company (the "Meeting") which will be held at the
Marriott at Glenpointe Hotel, 100 Frank W. Burr Boulevard, Teaneck, New Jersey
07666, on August 31, 1999 at 10:00 a.m., local time, and at any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and in this Proxy Statement.
The principal executive offices of the Company are located at 2650 N.
Military Trail, Suite 350, Boca Raton, Florida 33431. The approximate date on
which this Proxy Statement and accompanying Proxy will first be sent or given to
stockholders is July 30, 1999.
VOTING SECURITIES AND VOTE REQUIRED
Stockholders of record as of the close of business on July 23, 1999 (the
"Record Date") will be entitled to notice of, and to vote at, the Meeting or any
adjournment or adjournments thereof. As of the Record Date, there was only one
class of voting securities of the Company outstanding, that being Common Stock.
Each holder of Common Stock on the Record Date is entitled to one vote for each
share held. The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock is necessary to constitute a quorum at
the Meeting. Assuming a quorum is present, the nominees for director receiving a
plurality of the votes cast at the Meeting shall be elected.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect except that votes withheld will be counted toward
determining the presence of a quorum for the transaction of business.
Abstentions and broker "non-votes" will be counted toward determining the
presence of a quorum for the transaction of business. Abstentions may be
specified on all proposals except the election of directors. With respect to
proposals other than the election of directors, abstentions will have the effect
of a negative vote. A broker "non-vote" will have no effect on the outcome of
any other proposals. The treatment of abstentions and broker "non-votes" is
consistent with applicable Delaware law and the Company's By-Laws.
As of the Record Date, 17,601,800 shares of the Company's Common Stock
were outstanding and entitled to vote at the meeting.
1
<PAGE>
VOTING OF PROXIES
Proxies are solicited by the Board of Directors of the Company in order to
provide every stockholder with an opportunity to vote on all matters that
properly come before the Meeting, whether or not the stockholder attends in
person. When the enclosed form of Proxy is properly signed, dated and returned,
the shares represented will be voted by the persons named as Proxies in
accordance with the stockholder's direction. If no direction is indicated, the
shares will be voted as recommended by the Board of Directors. The enclosed
Proxy confers discretionary authority to vote with respect to the transaction of
such other business of a procedural nature or incidental to the Meeting as may
properly come before the Meeting. As of the date of this Proxy Statement, the
Board of Directors of the Company does not know of any other matter to be
brought before the Meeting. However, if any other matters not mentioned in the
Proxy Statement are properly brought before the Meeting or any adjournment
thereof, the persons named in the enclosed Proxy or their substitutes will have
discretionary authority to vote Proxies given in said form, or otherwise act, in
respect of such matters in accordance with their best judgment. Any stockholder
executing a form of Proxy may revoke that Proxy or may submit a revised form of
Proxy at any time before it is voted. A stockholder may also vote by ballot at
the Meeting, thereby canceling any Proxy previously returned.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as of July 23, 1999
concerning (i) persons known to the Company to be the beneficial owners of more
than 5% of the Company's Common Stock, (ii) the ownership interest of each
director and executive officer of the Company listed in the compensation table
and (iii) the cumulative ownership interest of all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owners Status Beneficial Owner Class (1)
----------------- ------ ---------------- ---------
<S> <C> <C> <C>
John Luciani Chairman of the Board and 6,826,970 shares 38.79%
Chief Executive Officer
Bernard M. Rodin Chief Operating Officer, 6,826,970 shares 38.79%
Chief Financial Officer,
President and Director
John W. Luciani III Executive Vice President 10,000 shares(2) 0.06%
and Director
Dorian Luciani Senior Vice President - 10,000 shares(2) 0.06%
Acquisitions and
Construction
Paul Jawin General Counsel and 10,000 shares(2) 0.06%
Senior Vice President
All directors and
officers as a group 13,708,940 shares(3) 77.64%
George Batchelor
P.O. Box 523223
Miami, Florida 33152 1,200,000 shares(4) 6.82%
</TABLE>
(1) Based upon 17,601,800 shares of common stock outstanding on July 23, 1999.
Percentage ownership is calculated separately for each person or group on
the basis of the actual number of outstanding shares as of such date, and
assumes the exercise of certain stock options held by such person or group
(but not by anyone else) exercisable within sixty days of July 23, 1999.
2
<PAGE>
(2) Includes presently exercisable options to purchase 10,000 shares.
(3) Includes presently exercisable options to purchase 55,000 shares.
(4) In a statement dated June 16, 1999, filed with the Securities and Exchange
Commission on Schedule 13G under the Securities Exchange Act of 1934, Mr.
Batchelor indicated that he had sole power to vote or direct the vote of
and sole power to dispose or direct the disposition of 1,200,000 shares of
the Common Stock of the Company. On that Schedule 13G, Mr. Batchelor also
indicated that such 1,200,000 shares does not include shares of Common
Stock as to which he disclaims beneficial ownership.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
There are six members of the Board of Directors of the Company, with the
one-year term of office of each director expiring at the meeting of stockholders
each year, upon the election and qualification of a successor director. The term
of office of all six directors will expire at the Meeting. The Directors will be
elected to serve for a term of one year or until their successors shall have
been elected and qualified.
The Company's By-Laws provide for six members of the Board of Directors.
There were no vacancies as of the Record Date.
Proxies may not be voted for a greater number of persons than the six
nominees named. Unless otherwise indicated, all proxies received will be voted
in favor of the election to the Board of Directors of the nominees named below.
Should any of the nominees not remain a candidate for election at the date of
the Meeting (which contingency is not now contemplated or foreseen by the Board
of Directors), proxies solicited hereby will be voted in favor of those nominees
who do remain candidates and may be voted for substitute nominees selected by
the Board of Directors. The nominees for director receiving a plurality of the
votes cast at the Meeting shall be elected. Shares represented by Proxy as to
which authority to vote for the named nominee is properly "withheld" will not be
counted either "for" or "against" in determining a plurality for such nominee.
The following table lists the names of the directors and the nominees for
Director, their ages, their current positions with the Company and the
expiration date of their term as director of the Company.
Name Age Current Position
---- --- ----------------
John Luciani.............. 67 Chairman of the Board of
Directors and Chief
Executive Officer
Bernard M. Rodin.......... 69 Director, Chief Operating Officer,
Chief Financial Officer and
President
John W. Luciani III....... 46 Director and Executive Vice
President
Sidney Dworkin............ 78 Director
Walter Feldesman.......... 81 Director
Leslie E. Goodman......... 56 Director
3
<PAGE>
JOHN LUCIANI, Chief Executive Officer and Chairman of the Board of
Directors since January 1996, founded the earliest predecessor of the Company in
1969 with Bernard M. Rodin and has been engaged in a number of business
activities and investments since 1952. Commencing in 1960, he entered into the
real estate development and construction business, concentrating initially on
the development, construction and sale of residential high-rise apartment
buildings and single-family homes and subsequently on the acquisition and
development of multi-family rental housing complexes. Since 1986, he has
concentrated on the acquisition, development and financing of senior living
communities for the elderly. Mr. Luciani was a general partner of three
partnerships that owned multi-family properties, but withdrew as a general
partner prior to the filing in 1996 by these partnerships of petitions under
Chapter 11 of the U.S. Bankruptcy Code.
BERNARD M. RODIN, Chief Operating Officer, Chief Financial Officer,
President and Director since October, 1998, has been engaged, since the
formation of the earliest predecessor of the Company in 1969 with John Luciani,
in the financing of property acquisitions by arranging for the sale of
partnership interests and in property management. This activity initially
focused on the Company's multi-family housing portfolio and, since 1986, on the
Company's senior living communities. Mr. Rodin has a bachelor of science degree
from the City University of New York. Mr. Rodin is a certified public accountant
and was actively engaged in the practice of public accounting prior to 1969. Mr.
Rodin was a general partner of three partnerships that owned multi-family
properties, but withdrew as a general partner prior to the filing in 1996 by
these partnerships of petitions under Chapter 11 of the U.S. Bankruptcy Code.
JOHN W. LUCIANI III, Executive Vice President and Director since June,
1996, a son of John Luciani, joined the Company in 1975 and initially was
involved in the management and operations of the Company's multi-family housing
portfolio. Mr. Luciani is presently involved in the acquisition of existing
senior living communities and the daily operation of the Company's senior living
portfolio. Mr. Luciani graduated from Fairleigh Dickinson University with a
bachelor of science degree in Accounting and a master of business administration
degree in Finance. He is an active member of the American Seniors Housing
Association (ASHA).
SIDNEY DWORKIN, Director since June, 1998. Mr. Dworkin was one of the
founders and served as President for 25 years and Chairman of the Board of Revco
D.S., Inc. until October 1987. Mr. Dworkin currently serves as a member of the
Board of Directors of Crager Industries, Inc., Comtrex Systems, Inc., CCA
Industries, Northern Technologies International Inc., Viragen Inc. and Novapet
Inc. He is also the owner and Chairman of the Board of Advanced Modular Systems,
Inc., a privately-held manufacturer of modular buildings. His experience ranges
across a multitude of industries including, among others, pharmaceuticals,
computer hardware and software, modular housing and consumer products.
WALTER FELDESMAN, Director since June, 1996, has been Of Counsel to the
law firm of Baer Marks & Upham LLP since March 1993 and for more than five years
prior thereto was a partner of Summit, Rovins and Feldesman. Mr. Feldesman is
currently a Director and Chairman of the Audit Committee of Sterling Bancorp and
a Director of its subsidiary, Sterling National Bank & Trust Co. Mr. Feldesman
is a member of the National Institute on Financial Services for Elders, the
National Academy of Elder Law Attorneys, the American Association of Homes for
the Aging, the National Council on the Aging and American Society on Aging. Mr.
Feldesman is also special counsel on elderlaw to United Senior Health
Cooperative. He has authored an article entitled "Long-Term Care Insurance Helps
Preserve an Estate," and a published work entitled the "Dictionary of Eldercare
Terminology." He has written two other books, "New Medicare Choices" which was
published in February, 1998 and Home Care which is expected to be published in
July, 1999. Mr. Feldesman has a bachelor's degree in economics from New York
University. Mr. Feldesman earned an LLB from Harvard Law School.
4
<PAGE>
LESLIE E. GOODMAN, Director since June, 1996, has been Executive Vice
President of The Eagle Group since January 1998. Until December 1996 Mr. Goodman
was the Area President for the North Jersey Region for First Union National Bank
and a Senior Executive Vice President of First Union Corporation. From September
1990 through January 1994, he served as President and Chief Executive Officer of
First Fidelity Bank, N.A., New Jersey. From January 1994 to December 1995, Mr.
Goodman served as a Senior Executive Vice President and a Director of First
Fidelity Bank, National Association until it was merged into First Union. From
January 1990 until December 1995, he also served as Senior Executive Vice
President, member of the Office of the Chairman and a Director of First Fidelity
Bancorporation. He is a member of the Board of Directors and Chairman of the
Audit Committee of Wawa Inc., a member of the Board of Directors of Tear Drop
Golf Company, Inc. and a director of Admiralty Bank Corporation. In addition,
Mr. Goodman is a member of the Board of Trustees of Rutgers University and
Hackensack University Medical Center.
BOARD OF DIRECTORS AND COMMITTEES
There were eleven (11) meetings of the Board of Directors of the Company
held during the last fiscal year. All current directors attended at least 75% of
the total number of meetings of the Board which occurred during the period in
which the director was a member of the Board and all committee meetings of the
Board on which the director served which occurred during the period in which the
director was a member of the committee.
The Board of Directors has standing Compensation and Audit Committees. The
Company does not have a standing nominating committee.
The members of the Compensation Committee are Messrs. John Luciani, Walter
Feldesman, Leslie E. Goodman and Sidney Dworkin. The principal function of the
Compensation Committee is to review current and proposed employment arrangements
with existing and prospective senior employees and the administration of the
1996 Stock Option and Performance Award Plan (the "Plan"). In administering the
Plan, the Compensation Committee's principal function is to select the
employees, consultants and directors to whom options will be granted, determine
the number, terms and conditions of options to be granted to any such employee,
consultant or director when options are to be granted, and establish rules and
regulations for the administration of the plan. During the fiscal year ended
January 31, 1999, the Compensation Committee met on one occasion.
The members of the Audit Committee are Messrs. Rodin, Feldesman, Goodman
and Dworkin. The Audit Committee's principal functions are (i) to consider
matters relating to the administration and audit of the Company's accounts and
its financial affairs; (ii) to supervise the Company's relationship with its
independent auditors; (iii) to recommend the appointment of independent
auditors; and (iv) to meet with Company personnel as it deems appropriate to
carry out its functions. During the fiscal year ended January 31, 1999, the
Audit Committee met on two occasions.
5
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information supplied herein is as of April 30, 1999 or from February 1,
1998 through April 30, 1999. Such amounts would not materially change to the
date hereof.
Messrs. Luciani and Rodin, the Chairman of the Board and President of the
Company, respectively, and entities controlled by them serve as general partners
(with interests ranging between 1% and 2%) of partnerships directly and
indirectly owning multi-family properties and on account of such general partner
status have personal liability for recourse partnership obligations and own
small equity ownership interests in the partnerships. The Company holds (i)
notes, aggregating $100.9 million, net of deferred income, as of April 30, 1999,
that are secured by the limited partnership interests in such partnerships and
(ii) other partnership receivables aggregating $60.7 million from such
partnerships at April 30, 1999. Messrs. Luciani and Rodin have provided personal
guarantees for certain of the Company's debt, and the obligations thereunder may
continue. The aggregate amount of such debt personally guaranteed by each of
Messrs. Luciani and Rodin is approximately $14.6 million as of April 30, 1999.
In addition, Messrs. Luciani and Rodin and certain employees will devote a
limited portion of their time to overseeing the third-party managers of
multi-family properties in which the Company has financial interests in that it
holds the related purchase notes, but in which Messrs. Luciani and Rodin have
equity interests and the Company does not.
Since February 1, 1998 and through April 30, 1999, the Company paid to
Francine Rodin, the wife of Bernard M. Rodin, the Company's Chief Operating
Officer, Chief Financial Officer, President and a Director, $174,558 as fees for
introducing to the Company broker/dealers that have assisted the Company in its
syndications of partnership interests and in placing other securities offered by
the Company. Mrs. Rodin will receive a fee with respect to any future sales
through such broker/dealers of such syndicated partnership interests and other
securities offered by the Company.
Walter Feldesman, a Director of the Company, is Of Counsel to the law firm
of Baer Marks & Upham LLP, which acts as counsel to the Company from time to
time. In addition, Mr. Feldesman is a director of Sterling National Bank & Trust
Co. which has entered into a revolving credit agreement with the Company which
permits the Company to borrow up to $8,000,000, of which $2,644,835 was
outstanding at April 30, 1999.
Michele R. Jawin, the daughter of Mr. Rodin and wife of Paul Jawin, the
Company's General Counsel and a Senior Vice President, is Of Counsel to Thelen
Reid & Priest LLP, which acts as securities counsel to the Company. Dorian
Luciani, a son of John Luciani, is the Company's Senior Vice President -
Acquisitions & Construction; and Deborah Luciani, a daughter of John Luciani, is
a Senior Vice President - New Business Development & Finance of the Company.
6
<PAGE>
George Batchelor is a beneficial owner of more than 5% of the Company's
Common Stock. Since February 1, 1998 and through April 30, 1999 the following
transactions occurred between Mr. Batchelor and the Company: (i) the Company
borrowed $39.3 million (at stated interest rates ranging from 12% to 15%) from
Mr. Batchelor, and repaid $30.2 million of principal amounts of loans and paid
$9.1 million of interest and other loan fees to Mr. Batchelor, (ii) the Company
sold to Mr. Batchelor controlling interests in eight multi-family owning
partnerships for an aggregate consideration of $12.0 million of which $5.0
million was in cash and the remaining $7.0 million was in the form of a note on
which the Company has received principal and interest in the amount of $281,314,
(iii) the Company entered into four joint venture arrangements in which it sold
a 50% interest in each of four development communities to Mr. Batchelor for an
aggregate consideration of $20.0 million, and (iv) the Company sold to Mr.
Batchelor investments in multi-family syndications for an aggregate
consideration of $239,425.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
The following table lists the directors, officers and beneficial owners of
more than 10% of the outstanding Common Stock (each a "Reporting Person") that
failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year, the number of late reports, the
number of transactions that were not reported on a timely basis and any known
failure to file a required Form by each Reporting Person:
<TABLE>
<CAPTION>
No. of Transactions Failure to File
No. of Late Reports Not Timely Reported Required Form
------------------- ------------------- -------------
<S> <C> <C> <C>
John Luciani 1 1 0
Bernard Rodin 1 1 0
John W. Luciani III 0 1 1
Sidney Dworkin 2 1 0
Leslie Goodman 1 0 0
Dorian Luciani 0 1 1
Paul Jawin 0 1 1
Edward J. Glatz 0 1 1
Deborah Luciani 0 1 1
Catherine V. Merlino 0 1 1
Keith Marlowe 0 1 1
</TABLE>
Except as set forth above, the Company believes that during the fiscal
year ended January 31, 1999, its executive officers, directors and holders of
more than 10% of the Common Stock complied with all Section 16(a) filing
requirements. In making these statements, the Company has relied upon a review
of reports on Forms 3, 4 and 5 furnished to the Company during, or with respect
to, its last fiscal year.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table shows, as to the Chief Executive Officer and each of
the four other most highly compensated executive officers information concerning
compensation accrued for services to the Company in all capacities during fiscal
1996, 1997 and 1998, respectively.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities
Salary Underlying Options All Other
Name and Principal Position Year ($) (#) Compensation
- --------------------------- ---- --- --- ------------
<S> <C> <C> <C> <C>
John Luciani, Chairman of the Board Fiscal
and Chief Executive Officer(1) 1996 $500,000 - $ 497,000
Fiscal
1997 $600,000 - $1,566,000
Fiscal
1998 $600,000 - -
Bernard M. Rodin, Chief Operating Fiscal
Officer, Chief Financial Officer, 1996 $500,000 - $ 497,000
President and Director(1)
Fiscal
1997 $600,000 - $1,566,000
Fiscal
1998 $600,000 - -
John W. Luciani, III, Executive Fiscal
Vice President and Director 1996 $350,000 - -
Fiscal
1997 $353,846 - -
Fiscal
1998 $375,000 50,000 -
Dorian Luciani, Senior Vice Fiscal
President - Acquisitions and 1996 $350,000 - -
Construction
Fiscal
1997 $353,846 - -
Fiscal
1998 $375,000 50,000 -
Paul Jawin, General Counsel and Fiscal
Senior Vice President 1996 $325,000 - -
Fiscal
1997 $344,327 - -
Fiscal
1998 $365,000 50,000 -
</TABLE>
8
<PAGE>
(1) Messrs. Luciani and Rodin received dividends and distributions from the
Company's predecessors but did not receive salaries. As of April 1, 1996 a
salary for each of Messrs. Luciani and Rodin was established at the rate
of $600,000 per year. In fiscal 1996 such officers also received $397,000
each as a dividend and $100,000 each for the period from February 1, 1996
until April 1, 1996, which was in the form of a dividend but which is
classified as officers' compensation for financial statement purposes. In
January 1998, such officers received a non-cash distribution for the
release of previously assigned collateral of $1,566,000 each.
Grants and Exercises of Stock Options
The following table sets forth certain information with respect to stock
options granted during fiscal 1998 to the executive officers of the Company
listed in the Summary Compensation Table. The table also discloses the gain or
"spread" that would be realized if the options granted were exercised on the
expiration date assuming the Company's stock price had appreciated by the
percentage levels indicated annually from the market price on the date of grant.
Individual Grants
<TABLE>
<CAPTION>
Number of Potential Realized
Securities % of Total Value at Assumed Annual
Underlying Options Granted Exercise Rates of Stock Price
Options Granted to Employees in Price Expiration Appreciation for Option
Name (#) (1) Fiscal Year $/share Date Term ($)
---- ------- ----------- ------- ---- --------
<S> <C> <C> <C> <C> <C> <C>
5% 10%
-- ---
John W. Luciani III 50,000 10.53% 8. 50 11/18/08 267,280 677,341
Dorian Lucian 50,000 10.53% 8.50 11/18/08 267,280 677,341
Paul Jawin 50,000 10.53% 8.50 11/18/08 267,280 677,341
</TABLE>
(1) As of January 31, 1999, options to acquire 475,000 shares had been granted
under the plan with an exercise price of $8.50 per share. 20% of such options
vested immediately and 20% will vest each year thereafter for the next four
years. Such options expire November 18, 2008.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth outstanding stock options held by the
executive officers of the Company listed in the Summary Compensation Table at
January 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Exercised In-The-Money Options
Options at Fiscal Year End at Fiscal Year End
Shares Acquired Value Received
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Luciani III 0 0 10,000 40,000 0 0
Dorian Luciani 0 0 10,000 40,000 0 0
Paul Jawin 0 0 10,000 40,000 0 0
</TABLE>
9
<PAGE>
Employment Agreements of Executive Officers
The Company has no employment agreements with its executive officers.
Compensation Committee Interlocks and Insider Participation
The Board of Directors established a Compensation Committee in June 1996.
The Compensation Committee currently consists of Messrs. Luciani, Feldesman,
Goodman and Dworkin. None of the executive officers of the Company currently
serves on the compensation committee of another entity or on any other committee
of the board of directors of another entity performing similar functions. For a
description of transactions between the Company and members of the Compensation
Committee or their affiliates, see "Certain Relationships and Related
Transactions."
Director Compensation
The Company pays each Director who is not an employee of the Company
$500.00 per telephonic Board meeting attended and $1,000.00 per Board meeting
personally attended. All Directors are reimbursed by the Company for their
out-of-pocket expenses incurred in connection with attendance at meetings of,
and other activities related to service on, the Board of Directors or any Board
Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee has prepared the following report on the
Company's policies with respect to the compensation of executive officers for
fiscal 1998. The compensation committee makes all decisions on compensation of
the Company's executive officers. The compensation committee consists of John
Luciani, Chief Executive Officer of the Company and Sidney Dworkin, Leslie E.
Goodman and Walter Feldesman, who are non-employee directors. Mr. Goodman is the
chairman of the committee.
Compensation Of Executive Officers
The Company's compensation policies are designed to enable the Company to
(i) attract, motivate and retain experienced and qualified executives, and (ii)
relate the compensation of employees to the success of the Company and the
creation of shareholder value. The compensation committee reviews the Company's
executive officer compensation program annually to ensure that the compensation
paid to the Company's executive officers is consistent with the Company's
business strategy, corporate culture, and operating performance. Although a
number of factors may be considered in determining each executive's compensation
package, including various corporate and individual performance measures, no
specific quantitative formula is used in making compensation decisions. The
compensation committee also relies on the recommendations of the Chief Executive
Officer in matters relating to the individual performance of the other executive
officers because they believe that the Chief Executive Officer is most qualified
to make this assessment. Executive compensation generally consists of two
components: base salary and long-term incentive awards.
Base salaries of executives are initially determined by evaluating the
responsibilities of the position, the experience and knowledge of the
individual, and the competitive marketplace for executive talent. Base salaries
are reviewed annually by the compensation committee.
Stock options are considered an effective long-term incentive because
gains are linked to increases in the stock value, which in turn provides
stockholder gains. The full benefit of the stock options is realized upon
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appreciation of the stock price in future periods, thus providing an incentive
to create value for the Company's stockholders through appreciation of the stock
price. On November 17, 1998, the compensation committee granted to certain of
the Company's employees stock options to purchase an aggregate of 475,000
shares, with options to purchase 275,000 of these shares being granted to the
Company's executive officers. These options were granted at an exercise price
equal to the market price of the common stock at the date of the grant. The
options vested 20% on the date of the grant and the remainder vest in equal
portions over a four- year period, and are exercisable within ten years from the
date of the grant. The committee believes that the four-year vesting period and
fair market value pricing encourage the Company's officers to focus on the
long-term success of the Company.
Other Benefits
The Company has established the Grand Court Lifestyles, Inc. Retirement
Savings Plan (the "401(k) Plan") for all employees of the Company that meet
minimum employment criteria. The 401(k) Plan provides that participants may
defer up to 15% of the eligible compensation on a pre-tax basis subject to
certain maximum amounts. The Company does not make matching contributions to the
401(k) Plan. Employees' contributions vest immediately.
CEO's Compensation
In establishing the compensation of John Luciani, the Company's Chief
Executive Officer, the Compensation Committee (with Mr. Luciani abstaining)
utilized the same compensation policies applicable to executive officers in
general. In fiscal 1998, Mr. Luciani received a salary of $600,000. Mr. Luciani
and Mr. Bernard M. Rodin own substantial percentages of the Company's Common
Stock. In view of their substantial holdings, they have not been awarded stock
options.
Limitations On the Deductibility Of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a
corporate deduction for compensation over $1.0 million paid to the company's
chief executive officer and any of the four other most highly compensated
officers. Certain performance-based compensation that has been approved by
shareholders is not subject to the deduction limit. The Company's stock option
plan is structured to qualify options granted thereunder as performance-based
compensation under Section 162(m). For fiscal 1999, the Compensation Committee
does not contemplate that there will be any such nondeductible compensation.
Compensation Committee
Sidney Dworkin
Walter Feldesman
Leslie E. Goodman
John Luciani
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Performance Graph
Displayed below is a graph which compares the cumulative total stockholder
returns (including reinvestment of dividends) from the period from March 18,
1998 (the date of the initial public offering of the Company's Common Stock)
through January 31, 1999 on an investment of $100 in (i) the Company's Common
Stock, (ii) the Russell 2000 Index (an index of small capitalization companies),
and (iii) the MG Industry Group Index 523 (long-term care facilities).
Stockholders are advised that historical results are not necessarily indicative
of future performance.
COMPARE CUMULATIVE TOTAL RETURN
AMONG GRAND COURT LIFESTYLES, INC.,
RUSSELL 2000 INDEX AND MG GROUP INDEX 523
[The following table was depicted as a line chart in the printed material.]
3/16/98 4/30/98 7/31/98 10/31/98 1/31/99
GRAND COURT LIFESTYLES, INC. 100.00 99.40 95.24 79.46 83.63
MG GROUP INDEX 100.00 100.00 78.68 64.10 57.34
RUSSELL 2000 INDEX 100.00 100.55 87.62 79.24 89.43
ASSUMES $100 INVESTED ON MAR. 16, 1998
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING JAN. 31, 1999
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AUDITORS
The Company's independent public auditors are BDO Seidman, LLP, New York,
New York. A representative of BDO Seidman, LLP will be present at the Meeting
and available to respond to appropriate questions and, in addition, such
representative will be given an opportunity to make a statement at the Meeting
if the representative desires. At a meeting held on October 6, 1998, the Board
of Directors of the Company approved the engagement of BDO Seidman, LLP as its
independent auditors to replace Deloitte & Touche LLP, who were dismissed as
auditors of the Company effective October 6, 1998. The members of the Company's
Audit Committee approved the change. The reports of Deloitte & Touche LLP on the
Company's financial statements for the past fiscal year did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended January 31, 1997 and 1998, and in the
subsequent interim period, there were no disagreements with Deloitte & Touche
LLP on any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedure which, if not resolved to the
satisfaction of Deloitte & Touche LLP, would have caused Deloitte & Touche LLP
to make reference to the matter in their report.
ANNUAL REPORT
All stockholders of record as of July 23, 1999 have or are currently being
sent a copy of the Company's Annual Report for the fiscal year ended January 31,
1999 (the "Annual Report") which contains audited financial statements of the
Company. If a stockholder has not received a copy of the Annual Report, a copy
of the Annual Report may be requested by writing to Investor Relations, Grand
Court Lifestyles, Inc., 2650 N. Military Trail, Suite 350, Boca Raton, Florida
33431.
STOCKHOLDER PROPOSALS
If a stockholder intends to present a proposal at the Company's 2000
Annual Meeting of Stockholders and seeks to have the proposal included in the
Company's Proxy Statement relating to that meeting, pursuant to Rule 14a-8 of
the Securities Exchange Act of 1934, as amended, the proposal must be received
by the Company no later than the close of business on April 1, 2000. If a
stockholder wishes to present a matter at the 2000 Annual Meeting of
Stockholders that is outside of the processes of Rule 14a-8, the Company must
receive notice of such matter on or before June 15, 2000. After that date, the
proposal will be considered untimely and the Company's Proxies will have
discretionary voting authority with respect to such matter. Any proposals, as
well as any related questions, should be directed to the Secretary of the
Company.
MISCELLANEOUS
The Company will bear all of the costs of solicitation of proxies. In
addition to solicitation of proxies by use of the mails, directors, officers and
employees (who will receive no compensation therefor in addition to their
regular remuneration) of the Company may solicit the return of proxies by
telephone, telegram or personal interview.
It is important that proxies be returned promptly. Stockholders are,
therefore, urged to fill in, date, sign and return the proxy immediately. No
postage need be affixed if mailed in the enclosed envelope in the United States.
By Order of the Board of Directors
KEITH MARLOWE
Secretary
Date: July 30, 1999
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GRAND COURT LIFESTYLES, INC.
Annual Meeting of Stockholders--August 31, 1999
The undersigned hereby appoints Paul Jawin and Keith Marlowe, and each of them,
proxies with powers of substitution to each, for and in the name of the
undersigned to vote all shares of Common Stock of Grand Court Lifestyles, Inc.
(the "Company") that the undersigned would be entitled to vote at the Company's
Annual Meeting of Stockholders (the "Meeting") to be held on August 31, 1999,
and at any adjournment or postponement thereof, upon the matters set forth in
the Notice of the Meeting as stated below. In their discretion, the proxies are
further authorized to vote upon such other business as may properly come before
the Meeting.
The undersigned acknowledges receipt of Notice of the Meeting and the
accompanying Proxy Statement and Annual Report.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 1:
1. Election of Directors for all nominees (except as marked to the
contrary)
|_| FOR |_| WITHHOLD AUTHORITY
The nominees of the Board of Directors are:
Sidney Dworkin, Leslie E. Goodman, Walter Feldesman, John Luciani,
John Luciani, III and Bernard M. Rodin.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
(Continued and to be signed and dated on reverse side.)
<PAGE>
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy, when
properly executed and returned, will be voted "FOR" Proposal 1.
Please mark, date, sign and promptly return this proxy in the accompanying
envelope. No postage is required if mailed within the United States.
Dated:_________________________________, 1999
_____________________________________________
Signature
_____________________________________________
Signature
Please sign here exactly as your name
appears on this card. If the stock is
registered in more than one name, each joint
owner or each fiduciary should sign
personally. Only authorized officers should
sign for a corpora
