THE DELTONA CORPORATION
--------
NOTICE OF ANNUAL MEETING
May 20, 1997
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April 18, 1997
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
THE DELTONA CORPORATION will be held at The Biltmore Hotel, 1200 Anastasia
Avenue, Coral Gables, Florida, on the 20th day of May, 1997, at 9:30 o'clock in
the forenoon, local time, for the following purposes:
1. To elect directors to serve until the next Annual
Meeting of Stockholders and until their respective
successors shall have been elected and shall have
qualified.
2. To consider a proposal to appoint Deloitte & Touche
as auditors for the fiscal year ending December 31,
1997, subject to the discretion of the Board of
Directors.
3. To transact such other business as may properly
come before the meeting,or any adjournment thereof.
The transfer books will not be closed. The 1996 Annual Report of
the Company, including audited financial statements as of December 31, 1996,
accompanies this Notice of Meeting and the attached Proxy Statement. A list of
all stockholders of record as of April 16, 1997, the record date for the Annual
Meeting, will be available for examination by any stockholder at the main office
of the Company, 999 Brickell Avenue, Suite 700, Miami, Florida, 33131 during the
ten-day period preceding the date of the meeting.
By Order of the Board of Directors,
SHARON J. HUMMERHIELM
Vice President and Corporate Secretary
Please fill in, date and sign the
enclosed Proxy and return it promptly in the enclosed envelope.
<PAGE>
THE DELTONA CORPORATION
999 Brickell Avenue, Suite 700
Miami, Florida 33131
-------------
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board
of Directors of The Deltona Corporation, a Delaware corporation (the "Company"),
for use at the Annual Meeting of Stockholders to be held at The Biltmore Hotel,
1200 Anastasia Avenue, Coral Gables, Florida on the 20th day of May, 1997, at
9:30 o'clock in the forenoon, local time, and any adjournment or adjournments
thereof. The Proxy Statement and accompanying Proxy will be first sent to
stockholders of the Company on or about April 18, 1996.
The Company has one class of voting securities consisting of
15,000,000 shares of Common Stock of the par value of $1 per share. On March 21,
1997, the Company had outstanding 6,734,939 shares of Common Stock (excluding
12,228 shares held in treasury). Each share of Common Stock is entitled to one
vote and the holders of a majority of the issued and outstanding shares of
Common Stock present in person or by proxy constitutes a quorum. Only holders of
Common Stock of record at the close of business on April 16, 1997 shall be
entitled to notice of and to vote at the Meeting. The vote of a plurality of the
shares represented, in person or by proxy, at the Meeting is required to elect
the six nominees for director. The appointment of the independent public
accountants, as well as any other matter properly brought before the Meeting
must be approved by the affirmative vote of the holders of a majority of the
shares represented, in person or by proxy, at the Meeting.
The automated system administered by the Company's transfer agent
tabulates the votes. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting at the Meeting or any
adjournment thereof. Each are tabulated separately; however, neither abstentions
nor broker non-votes are counted for purposes of determining whether a proposal
has been approved.
Each Proxy executed and returned by a stockholder will be voted
as directed, and may be revoked at any time before it is voted by filing with
the Office of the Corporate Secretary, at 999 Brickell Avenue, Suite 700, Miami,
Florida 33131, a written revocation or by executing a later-dated Proxy or by
voting in person by ballot at the Meeting.
DIRECTORS AND EXECUTIVE OFFICERS
Directors of the Company
The entire Board of Directors is elected annually to hold office until the
next Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified. The present Board of Directors is: Antony Gram
(Chairman of the Board), Neil E. Bahr, Earle D. Cortright, Jr., George W.
Fischer, Rudy Gram and Thomas B. McNeill.
Each of the present six directors has been nominated for
re-election at the 1997 Annual Meeting. The accompanying form of Proxy will be
voted "FOR" the election of all nominees if no direction to the contrary is
given. The Board of Directors has no reason to believe that any nominee will
decline or be unable to serve as a director. If any nominee should, however,
become unavailable for election for any reason, the accompanying Proxy will be
voted for such other person as the Board of Directors may select or,
alternatively, the Board of Directors may reduce the number of directors to be
elected at the Meeting.
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The names of the nominees and certain information as of March 21,
1997 with respect to each of them is set forth below. Unless otherwise
indicated, each nominee has held the position shown, or has been associated with
the named employer in the executive capacity shown, for more than the past five
years.
<TABLE>
<CAPTION>
Year First
Name and Age Principal Occupation and Other Information Elected Director
- ------------ ------------------------------------------ ----------------
<S> <C> <C>
Neil E. Bahr, 71 Vice Chairman of the Board of Directors 1983(e)
(a), (b), (e) of the Company since June 19, 1992. Although
otherwise retired, Mr. Bahr has served
as President of Deltona Land & Investment
Corp.("DL&IC"), a subsidiary of the Company,
from September,1974 through December, 1985
Earle D. Cortright, President and Chief Operating Officer of The 1995
Jr., 56 (a), (d) Deltona Corporation since April 1990.
George W. Fischer, Mr. Fischer is retired. From March 1980
56 (b), (c) through December 1995 he was President of
CPS Industries, Inc., a privately held
company primarily engaged in owning and
operating a chain of beauty salons in
the Philadelphia, Pennsylvania area. From
1975 through 1995 he also served as
President of H.E.C Fischer,Inc., a closely
held real estate company.
Antony Gram, 54 Chairman of the Board of Directors and 1992
(a), (c), (d), (f) Chief Executive Officer of the Company
since July 13, 1994. From June 19,1992
through April 6, 1994, Mr. Gram served
as a Vice Chairman of the Board of
Directors of the Company. For more than
the past five years, Mr. Gram has served
as Managing Director of Gramyco, a
scaffolding company, based in Belgium
Rudy Gram, 33 Vice President, Swan Development 1995
(c), (f) Corporation, based in St. Augustine, Florida
Thomas B. McNeill, Partner, Mayer, Brown & Platt; Chicago, 1975
62 , (b), (d) Illinois. The law firm of Mayer, Brown &
Platt was retained by the Company to
perform legal services on the Company's
behalf during 1992 through present
<FN>
- --------------------
(a) Member, Executive Committee.
(b) Member, Audit Committee.
(c) Member, Executive Compensation Committee.
(d) Member, Nominating Committee.
(e) Mr. Bahr also served as a director of the Company from
December, 1964 until September, 1974 when he resigned to
devote all of his time to his duties as President of DL&IC.
(f) Rudy Gram is the son of Antony Gram.
</FN>
</TABLE>
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<PAGE>
Additional Information Concerning the Board of Directors
Messrs. Bahr, Fischer, McNeill and Rudy Gram receive a fee of $1,000 per
month for services as a Director of the Company and are reimbursed for travel
and related costs incurred with respect to committee and board meetings. Messrs.
Antony Gram and Cortright do not receive a monthly Directors fee; however, they
are reimbursed for travel and related costs incurred with respect to committee
and board meetings and other Company business activities.
The Board of Directors has several standing committees: an Executive
Committee, an Audit Committee, an Executive Compensation Committee and a
Nominating Committee.
The Executive Committee, of which Antony Gram is Chairman, exercises
certain powers of the Board of Directors during the intervals between meetings
of the Board and met once during 1996.
The Audit Committee, of which Mr. McNeill is Chairman, confers with the
independent auditors of the Company and otherwise reviews the adequacy of
internal controls, reviews the scope and results of the audit, assesses the
accounting principles followed by the Company, and recommends the selection of
the independent auditors. There were four meetings of the Audit Committee during
1996.
The Executive Compensation Committee is chaired by Mr. Fischer, who serves
on no similar committee of any other company. While the other members of the
Committee, Messrs. Antony Gram and Rudy Gram, may serve together as directors of
other companies, none serves as a member of any other compensation committee.
The Committee reviews the methods and means by which management is compensated,
studies and recommends new methods of compensation, and reviews the standards of
compensation for management. In addition, the Executive Compensation Committee
administers the Annual Executive Bonus Plan and the 1987 Stock Incentive Plan.
No member of the Committee is eligible to participate in any of the Company's
compensation and benefit plans. See "Compensation Committee Report." The
Executive Compensation Committee held one meeting during 1996.
The Nominating Committee, of which Mr. McNeill is Chairman, recommends to
the Board of Directors nominees to fill additional directorships that may be
created and to fill vacancies that may exist on the Board of Directors. There
was one meeting of the Nominating Committee during 1996 held as part of a Board
of Directors meeting. The Nominating Committee will consider nominees
recommended by stockholders. Recommendations by stockholders should be submitted
to the Secretary of the Company and should identify the nominee by name and
provide detailed background information. Recommendations received by December
31, 1997 will be considered by the Nominating Committee for nomination at the
1998 Annual Meeting.
During 1996, the Board of Directors held three meetings. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings held by all committees on
which he served.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee (the "Committee") is comprised of Mr.
Fischer, Chairman, and Messrs. Antony Gram and Rudy Gram.
Mr. Antony Gram, a member of the Committee, has served as Chairman of the
Board and Chief Executive Officer of the Company, and thus, as an executive
officer of the Company, since July 13, 1994. Additionally, Mr. Antony Gram is
deemed to be the beneficial owner of 46.17% of the Company's Common Stock since
he is the beneficial owner of Yasawa Holdings, N.V. ("Yasawa") (which holds 4.3%
of the Common Stock of the Company as of March 21, 1997), as well as the holder
of a majority equity interest in Wilbury International N.V., a Netherlands
Antilles corporation ("Wilbury"), which owns all of the issued and outstanding
stock of Selex (which holds 41.9% of the Common Stock of the Company as of March
21, 1997). See "Ownership of Voting Securities of the Company."
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<PAGE>
Mr. Rudy Gram, a member of the Committee, was appointed November 30, 1995
and was elected to serve a one year term at the 1996 Annual Meeting. Mr. Rudy
Gram is the son of Mr. Antony Gram. See "Ownership of Voting Securities of the
Company."
On June 19, 1992, Selex loaned the Company the sum of $3,000,000 pursuant
to the First Selex Loan. The First Selex Loan is collateralized by a first
mortgage on certain of the Company's unsold, undeveloped property in its St.
Augustine Shores, Florida community. The Loan matures on June 15, 1996 and
provides for principal to be repaid at 50% of the net proceeds per lot for lots
requiring release from the mortgage, with the entire unpaid balance becoming due
and payable at the end of the four year term. It initially bears interest at the
rate of 10% per annum, with payment of interest deferred for the initial 18
months of the Loan and interest payments due quarterly thereafter. As part of
the Selex transaction, Selex was granted an option, approved by the holders of a
majority of the outstanding shares of the Company's Common Stock at the
Company's 1992 Annual Meeting, which, as modified, enabled Selex to convert the
First Selex Loan, or any portion thereof, into a maximum of 600,000 shares of
the Company's Common Stock at a per share conversion price equal to the greater
of (I) $1.25 or (ii) 95% of the market price of the Company's Common Stock at
the time of conversion, but in no event greater than $4.50 per share (the
"Option"). On February 17, 1994, Selex exercised the Option, in full, at a
conversion price of $1.90 per share, such that $1,140,000 in principal was
repaid under the First Selex Loan through such conversion. As of March 21, 1997,
the Company was in default of the First Selex Loan.
One million dollars of the proceeds from the First Selex Loan was used by
the Company to acquire certain commercial and multi-family properties at the
Company's St. Augustine Shores community at their net appraised value, from Mr.
Muyres and certain entities affiliated with Messrs. Zwaans and Muyres. Namely,
(I) $416,000 was used to acquire 48 undeveloped condominium units (twelve 4 unit
building sites) and 4 completed (and rented) condominium units from
Conquistador, in which Messrs. Zwaans and Muyres serve as directors, as well as
President and Secretary/Treasurer, respectively; (ii) $485,000 was used to
acquire 4 commercial lots from Swan, in which Messrs. Zwaans and Muyres also
serve as directors, as well as President and Secretary, respectively; and (iii)
approximately $99,000 was used to reacquire, from Mr. Muyres, all of his rights,
title and interest in that certain contracts with the Company for the purchase
of a commercial tract in St. Augustine Shores, Florida. None of the commercial
and multi-family property acquired by the Company from Mr. Muyres and certain
entities affiliated with Messrs. Zwaans and Muyres collateralizes the First
Selex Loan. In March, 1994, Conquistador exercised its right to repurchase
certain multi-family property from the Company (which right had been granted in
connection with the June, 1992 Selex transaction) at a price of $312,000, of
which $260,000 was paid in cash to the Company and $52,000 was applied to reduce
interest due to Selex under the Second Selex Loan (the "First Conquistador
Acquisition").
On December 2, 1992, the Company entered into various agreements relating
to certain of its assets and the restructuring of its debt with Yasawa, which is
beneficially owned by Mr. Antony Gram. The consummation of these agreements,
which are further described below, was conditioned upon the acquisition by Mr.
Gram of the Company's outstanding bank loan.
On December 4, 1992, Mr. Gram entered into an agreement with the lenders,
pursuant to which he acquired the bank loan of approximately $25,150,000
(including interest and fees) for a price of $10,750,000. In conjunction with
such transaction, the lenders transferred to Mr. Gram the warrants which they
held that entitled the holder to purchase an aggregate of 277,387 shares of the
Company's Common Stock at an exercise price of $1.00 per share. Immediately
after the acquisition of the bank loan, Mr. Gram transferred all of his interest
in the bank loan, including the warrants, to Yasawa.
On December 11, 1992, the Company consummated the December 2, 1992
agreements with Yasawa. Under these agreements, Yasawa, its affiliates and the
Company agreed as follows: (I) the Company sold certain property at its Citrus
Springs community to an affiliate of Yasawa in exchange for approximately
$6,500,000 of debt reduction credit; (ii) an affiliate of Yasawa and the Company
entered into a joint venture agreement with respect to the Citrus Springs
property, providing for the Company to market such property and receive an
administration fee from the venture (in March, 1994, the Company and the
affiliate agreed to terminate the venture); (iii) the Company sold certain
contracts receivable at face value to an affiliate of Yasawa for debt reduction
credit of approximately $10,800,000; (iv) the Company sold the Marco Shores
Country Club and Golf Course to an affiliate of Yasawa for an aggregate sales
price of $5,500,000, with the affiliate
4
<PAGE>
assuming an existing first mortgage of approximately $1,100,000 and the Company
receiving debt reduction credit of $2,400,000, such that the Company obtained
cash proceeds from this transaction of $2,000,000, which amount was used for
working capital; (v) an affiliate of Yasawa agreed to lease the Marco Shores
Country Club and Golf Course to the Company for a period of approximately one
year; (vi) an affiliate of Yasawa and the Company agreed to amend the terms of
the warrants to increase the number of shares issuable upon their exercise from
277,387 shares to 289,637 shares and to adjust the exercise price to an
aggregate of approximately $314,000; (vii) Yasawa exercised the warrants in
exchange for debt reduction credit of approximately $314,000; (viii) Yasawa
released certain collateral held for the bank loan; (ix) an affiliate of Yasawa
agreed to make an additional loan of up to $1,500,000 to the Company, thus
providing the Company with a future line of credit (all of which was drawn and
outstanding as of March 21, 1997); and (x) Yasawa agreed to restructure the
payment terms of the remaining $5,106,000 of the bank loan as a loan from Yasawa
(the "Yasawa Loan").
The Yasawa Loan bears interest at the rate of 11% per annum, with payment
of interest deferred until December 31, 1993, when only accrued interest became
payable. Commencing January 31, 1994, principal and interest became payable
monthly, with all unpaid principal and accrued interest being due and payable on
December 31, 1997. As of March 21, 1997, $6,478,100 in principal and accrued
interest was in default under the Yasawa Loan.
On April 30, 1993 Selex loaned the Company an additional $1,000,000
collateralized by a first mortgage on certain of the Company's property in its
Marion Oaks, Florida community (the "Second Selex Loan"). Interest under the
Second Selex Loan was 11% per annum, deferred until December 31, 1993, and
principal was to be repaid at $3,000 per lot for lots requiring release from the
mortgage, with the entire unpaid principal balance and interest accruing from
January 1, 1994 to April 30, 1994 due and payable on April 30, 1994. Although
Selex had certain conversion rights under the Second Selex Loan in the event the
Company sold any Common Stock or Preferred Stock prior to payment in full of all
amounts due to Selex under the Second Selex Loan, such rights were voided. The
Second Selex Loan was satisfied on May 22, 1995 through the closing of the
Second Conquistador Acquisition, discussed below.
From July 9, 1993 through December 31, 1993, Selex loaned the Company an
additional $4,400,000 collateralized by a second mortgage on certain of the
Company's property on which Selex and/or Yasawa hold a first mortgage pursuant
to a Loan Agreement dated July 14, 1993 and amendments thereto (the "Third Selex
Loan"). The Third Selex Loan bears interest at 11% per annum, with interest
deferred until December 31, 1993. Principal is to be repaid at $3,000 per lot
for lots requiring release from the mortgage, with the entire unpaid principal
balance and interest accruing from January 1, 1994 to April 30, 1994 due and
payable on April 30, 1994. The Second Conquistador Acquisition, discussed below,
closed on May 22, 1995, provided a reduction of the debt due and payable under
the Third Selex Loan. As of March 21, 1997, the remaining balance of $4,229,200
in principal and accrued interest remained unpaid and in default.
In February, 1994, Yasawa loaned the Company an additional amount of
approximately $514,900 at an interest rate of 8% per annum (the "Second Yasawa
Loan"). Since May, 1994, additional amounts were advanced to the Company under
the Second Yasawa Loan to enable the Company to pay certain essential expenses,
including payment of certain real estate taxes, and effectuate settlements with
the Company's principal creditors. As of March 21, 1997, an aggregate amount of
$6,012,000 had been advanced to the Company under the Second Yasawa Loan and the
balance of $6,859,300 in principal and accrued interest remains unpaid.
On May 22, 1995, the Company closed a transaction with Conquistador (the
"Second Conquistador Acquisition") for the sale of an administration building
and a multi-family site in the Company's St. Augustine Shores community as well
as the remaining lot inventory in the Company's FeatherNest community at Marion
Oaks in consideration for the satisfaction of $2,599,300 of principal and
accrued interest on the Second and Third Selex Loans. In a separate transaction
which also closed on the same date, the Company sold to Conquistador (the "Third
Conquistador Acquisition") four single family residential lots in the St.
Augustine Shores community for $100,000 in cash. These transactions were
accounted for in accordance with generally accepted accounting principals for
these types of related party transactions. Accordingly, the resulting gain of
$1,900,000 was treated as a contribution of capital and recorded directly to
capital surplus.
On April 16, 1996, Yasawa loaned the Company $1,000,000 which was used to
pay approximately $979,000 of delinquent real estate taxes. On September 6,
1996, Yasawa loaned the Company $918,000, $818,000 of which was used
5
<PAGE>
to satisfy the remaining obligation on the Marco class action settlement
agreement and $100,000 was used to satisfy a previous advance. Additionally, as
part of the settlement agreement, Swan Development Corporation, an affiliate of
Yasawa, acquired four condominium units from the class action trustee for
$182,000, the same value that the trustee attributed to the units on September
14, 1992.
At December 31, 1995, $4,200,000 of accrued interest due to Selex, Yasawa
and their affiliates was reclassified as non-interest bearing principal. Through
March 21, 1997, $1,140,000 in principal was repaid under the First Selex Loan
through the exercise of the above described Option, the Second Selex Loan was
repaid in full, $1,380,900 in principal was repaid under the Third Selex Loan,
and $135,900 in principal and $346,000 in accrued interest was repaid under the
Yasawa loan. As of March 21, 1997, the Company had loans outstanding from Selex,
Yasawa and their affiliates in the aggregate amount of approximately
$24,522,200, including interest, all of which are in default, including
approximately $8,986,900, which is owed to Selex, including accrued and unpaid
interest of approximately $792,700 (10% per annum on the First Selex Loan, 11%
per annum on the Third Selex Loan and 12% per annum on the $1,000,000 Empire
Note assigned to Selex); approximately $13,337,400, which is owed to Yasawa,
including accrued and unpaid interest of approximately $1,168,100 (11% per annum
on the Yasawa Loan and 8% per annum on the Second Yasawa Loan); and
approximately $2,228,000, which is owed to an affiliate of Yasawa, including
accrued and unpaid interest of approximately $223,000 (12% per annum). The loans
from Selex, Yasawa and their affiliates are secured by substantially all of the
assets of the Company.
On March 10, 1994, the Company was advised that Selex filed an Amendment to
its Schedule 13D filed with the Commission. In the Amendment, Selex reported
that it, together with Yasawa and their affiliates, were uncertain as to whether
they would provide any further funds to the Company. The Amendment further
stated that Selex, Yasawa and their affiliates were seeking third parties to
provide financing for the Company and that as part of any such transaction, they
would be willing to sell or restructure all or a portion of their loans and
Common Stock in the Company.
The Company has stated in previous filings with the Commission and
elsewhere herein that the obtainment of additional funds to implement its
marketing program and achieve the objectives of its business plan is essential
to enable the Company to maintain operations and continue as a going concern.
Since December, 1992, the Company has been dependent on loans and advances from
Selex, Yasawa and their affiliates in order to implement its marketing program
and assist in meeting its working capital requirements. As previously stated,
during the last nine months of 1993, Selex, Yasawa and their affiliates loaned
the Company an aggregate of $4,400,000 pursuant to Third Selex Loan. Funds
advanced under the Third Selex Loan enabled the Company to commence
implementation of the majority of its marketing program in the third quarter of
1993. The full benefits of the program were not realized in 1993 and the Company
was unable to secure financing in 1994 to meet its working capital requirements
and continue its marketing program. Commencing in 1994, Yasawa advanced
additional funds (the "Second Yasawa Loan") totaling $6,012,000 as of December
31, 1996, to meet the Company's minimum working capital requirements, to pay a
portion of delinquent real estate taxes, to pay settlements with certain trade
creditors and to settle certain litigation.
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Executive Officers of the Company
The table below sets forth the executive officers of the Company as of
March 21, 1997, their ages and their principal occupations during the past five
years. Each has been appointed to serve in the capacities indicated until their
successors are appointed and qualified, subject to their earlier resignation or
removal by the Board of Directors.
<TABLE>
<CAPTION>
Name and Age Principal Occupation During the Past Five Years
- ------------- -------------------------------------------------
<S> <C>
Antony Gram, 54 Chairman of the Board of Directors and Chief Executive
Officer of the Company since July 13, 1994. From June 19,
1992 through April 6, 1994, Mr. Gram served as Vice Chairman
of the Board of Directors of the Company. For more than the
past five years, Mr. Gram has served as Managing Director of
Gramyco, a scaffolding company based in Belgium.
Earle D. Cortright,
Jr., 56 Mr. Cortright, who joined the Company in 1966, has been
President and Chief Operating Officer since April, 1990.
Prior thereto, he served as Executive Vice President and
Chief Operating Officer (January, 1988-April, 1990),
as Executive Vice President and Chief Financial Officer
(March, 1986-December, 1987) and as Senior Vice President
and Chief Financial Officer (November, 1979-February, 1986).
David M. Harden, Mr. Harden, who joined the Company in 1978, has been Senior
45 Vice President - Marketing Administration since November,
1992. Prior thereto, he served as Vice President-Real
Estate Services (January, 1990 - November, 1992), as
Assistant Vice President-Real Estate Services (January,
1989-December, 1989) and as Director of Real Estate
Services.
Sharon J.
Hummerhielm, 47 Mrs. Hummerhielm, who joined the Company in March, 1975,
has been Vice President-Administration and Corporate
Secretary since May 1995. Prior thereto, she served as Vice
President- Administration from (January 1993 through May 22,
1995);Vice President - Regulatory and Customer Affairs
(January, 1987 - December,1992) and as Director of
Administrative Services and Director of Regulatory Affairs.
Donald O. McNelley,
52 Mr. McNelley, has been Treasurer of the Company since
May 23, 1995. He originally joined the Company in 1971 and
was Senior Vice President and Chief Financial Officer from
January 1988 - August 1990. He temporarily left the
Company's employ in August 1990 to become Senior Vice
President of James Cable Partners LP ("James"). He left
James in August 1991 and was self employed until he rejoined
the Company in May 1994.
</TABLE>
EXECUTIVE COMPENSATION
Due to the Company's liquidity situation, Antony Gram has served
as Chairman of the Board and Chief Executive Officer of the Company since July
13, 1994 without compensation. The Commission's rules on executive compensation
disclosure require, however, that the Summary Compensation Table which appears
below, depict the compensation for the past three years of the Company's chief
executive officer and its four most highly compensated executive officers whose
annual salary and bonuses exceed $100,000. During the fiscal year ended December
31, 1996, one executive officer of the Company was paid an annual salary and
bonus in excess of $100,000. Accordingly, the table set forth below, discloses
the annual compensation paid to Mr. Antony Gram, Chairman of the Board and Chief
Executive Officer, and Mr. Earle Cortright, President and Chief Operating
Officer for the three years ended December 31, 1996.
7
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<TABLE>
<CAPTION>
Summary Compensation Table
Annual Long Term
Compensation Compensation
---------------------------------------------------------------------------------------------
Awards Payouts
--------------------------------- ------------
Name and Fiscal Salary Bonus Other Annual SARs/Restricted Stock LTIP All Other
Principal Position Year ($) ($)(a) Compensation Stock Awards Options Payouts Compensation
(b) (#)(c) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Antony Gram, Chairman of the 1996 -- -- -- -- -- -- --
Board & Chief Executive 1995 -- -- -- -- -- -- --
Officer (7/13/94 to present) 1994 -- -- -- -- -- -- --
E.D.Cortright,Jr. 1996 $200,000 -- -- -- -- -- --
President & Chief 1995 $200,000 $100,000(d) -- -- -- -- --
Operating Officer 1994 $209,615 (d) -- -- -- -- $100,000 (d)
<FN>
- -------
(a) The amounts disclosed in this column represent, in the case of Mr.
Cortright, $100,000 which was paid to him in 1995 pursuant to the special
bonus provided for in his employment contract. See "Employment Contracts."
Although the Company maintains an Annual Executive Bonus Plan (the "Bonus
Plan"), in which all executive officers of the Company are eligible to
participate, due to the Company's financial position and its liquidity
situation, no bonus awards have been made under the Bonus Plan to any
executive officer of the Company since 1990.
(b) In accordance with the rules of the Commission, amounts relating to 1994 or
1995, if any, and amounts totaling less than the lower of $50,000 or 10% of
the total annual salary and bonus have been omitted.
(c) The Company has a 1987 Stock Incentive Plan (the "Stock Plan") which
combines the features of a stock option plan and a performance unit plan.
Due to the Company's financial condition, no awards have been paid under
the Stock Plan except for those initial awards which were earned at the end
of 1989. There are no options outstanding under the Stock Plan as of
December 31, 1996.
(d) This amount reflects the last two installments of Mr. Cortright's special
bonus remaining to be paid at the end of 1994, which were paid in 1995. See
"Employment Contracts."
</FN>
</TABLE>
Employment Contracts
In June, 1992, the Company obtained $8,000,000 additional financing through
a $13,500,000 sale of certain of the Company's contracts receivable. The
agreement with respect to such sale requires that the Company maintain, in
effect, certain employment agreements with Mr. Cortright and certain other
executive officers of the Company.
Pursuant to the requirements of such agreement, Mr. Cortright entered into
a five-year employment agreement which continues through June 19, 1997. Such
agreement is subject to automatic renewal for successive one-year periods unless
notice of intent not to renew is given by the Company 60 days prior to the end
of the applicable contract term. The agreement provides for Mr. Cortright to be
paid his current annual salary of $200,000 (subject to such increases as may be
mutually agreed upon) and for the furnishing of certain benefits, such as
payment of an automobile allowance. The agreement contains "non compete"
provisions which preclude Mr. Cortright from engaging, in any manner, or from
being employed, in any capacity, in any business which could be deemed to be
competitive with the Company in Florida, New York, New Jersey and Ohio during
the five year term of his agreement, if his employment is terminated or
constructively terminated by the Company or if he resigns his employment from
the Company. Because of such non-compete provisions and to compensate Mr.
Cortright for his exceptional services in conjunction with the completion of the
restructuring of the Company's bank debt and the securing of financing for the
Company through the above-mentioned contracts receivable sale and the Selex
Loan, Mr. Cortright's agreement also provides for the payment of a $200,000
bonus, $50,000 of which was paid upon the signing of his agreement and the
completion of the foregoing transactions, $50,000 of which was paid in
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<PAGE>
June, 1993, $50,000 of which was due in June, 1994 and paid in 1995 and $50,000
due and paid in 1995 (the "Special Bonus"). Additionally and as a consequence of
such non-compete provisions, Mr Cortright's employment agreement provides that
if his employment is terminated or constructively terminated by the Company,
without cause (defined as gross misconduct), during its initial term or any
renewal term, he is entitled to receive a lump sum payment at termination equal
to any salary remaining to be paid him for the contract term (but, in no event,
less than for an additional two years); in addition, he is entitled to payment
of an automobile allowance and certain insurance benefits for such period. For
purposes of Mr. Cortright's agreement, "constructive termination" includes,
among other things: (I) the assignment of duties inconsistent with Mr.
Cortright's status as President and Chief Operating Officer or a substantial
alteration in his responsibilities if such assignment and/or alteration is not
acceptable to him, (ii) relocation of the Company's principal place of business
to a location other than Orlando, Florida (unless such other location is
mutually agreed upon), (iii) failure of the Company to maintain compensation
plans in which Mr. Cortright participates or to continue providing certain other
existing employee benefits, or (iv) any disability commencing after a "change in
control" which is continuous for six months. Mr. Cortright's agreement with the
Company further provides that if his employment is terminated due to death or
medical disability (as distinguished from a disability following a change in
control), payment of salary to him or his beneficiary shall continue for two
years following termination. Under this agreement and the benefit plans
described in the Compensation Committee Report, a "change in control" is (a) an
acquisition of 35% of the voting securities of the Company if the Board of
Directors determines that a change in control has occurred or is likely to
occur; or (b) a change in the majority of the Board of Directors of the Company
which is not recommended or approved by the incumbent Board. On June 11, 1992,
the Board determined that the acquisition by Selex of more than 35% of the
Company's Common Stock from Empire, accompanied by its control of the Board,
would constitute a change in control of the Company.
Two other executive officers, Mr. Harden and Mrs. Hummerhielm, are employed
pursuant to employment agreements which provide that if their employment is
terminated due to death, payment of salary to their beneficiary continues for
six months and, if employment is otherwise terminated by the Company without
cause (defined as gross misconduct), they are entitled to receive one year's
salary, payable in twenty-four equal semi-monthly installments.
COMPENSATION COMMITTEE REPORT
Compensation Philosophy
It is the goal of the Company and this Committee to align all compensation,
including executive compensation, with business objectives and both individual
and corporate performance, while simultaneously attracting and retaining
employees who contribute to the long-term success of the Company. The Company
attempts, within its resources, to pay competitively and for performance and
management initiative, while striving for fairness in the administration of its
compensation program.
Executive Compensation Program
Since it has long been the policy of the Company to encourage and enable
employees upon whom it principally depends to acquire a personal proprietary
interest in the Company, the total executive compensation program of the Company
consists of both cash and equity based compensation and has been comprised of
three key elements: salary, an annual bonus and a long term incentive plan that
provides for both incentive awards and stock options.
While each of these elements is discussed below, it is important to note
that due to the financial performance of the Company during the past five years,
and the fact that the Company has undergone two changes in control since January
1, 1990, no awards have been made under the Annual Executive Bonus Plan (the
"Bonus Plan") since 1990 and with the exception of the one stock option granted
in 1993, no awards have been made under the long term incentive program other
than the initial awards which were fully earned at the end of 1989. In
particular, the Committee has been reticent to grant additional equity based
awards, lest it jeopardize the utilization of the Company's net operating loss
carryforward for federal income tax purposes. This situation is re-examined
annually.
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Salary
Salaries paid to executive officers (other than the Chief Executive Officer
and the President) are based upon the recommendations of the President, derived
from his subjective assessment of the nature of the position, competitive
salaries and the contribution, experience and Company tenure of the executive
officer. The President reviews all salary recommendations with the Committee,
which is responsible for approving or disapproving such recommendations.
Salaries paid to the Chief Executive Officer (if any) and the President are
determined by the Committee, subject to ratification by the Board of Directors
and are based upon the Committee's subjective evaluation of their contribution
to the Company, their performance and salaries paid to competitors to their
chief executive officer and chief operating officer. Prior to January 1, 1990,
the President's assessment and the Committee's subsequent approval or
disapproval also took into consideration data from comparable industry salary
surveys, such as that prepared by Stephens and Associates. From 1990 through the
present, the only salary increases which were granted occurred in June 1992 (at
which time Mr. Cortright, and three other executive officers of the Company were
granted salary increases ,granted in connection with the efforts of these
officers in securing over $10,000,000 in new financing for the Company and
resolving various regulatory matters with the State of Florida) and in May 1995,
at which time Mr. Harden, Mrs. Hummerhielm and Mr. McNelley were granted salary
increases.
Annual Incentive Program
Although business exigencies and the Company's liquidity situation have
required the Company to temporarily suspend the granting of awards under the
Stock Plan and the Bonus Plan, and to award bonuses only in certain limited
instances where the bonus directly relates to the accomplishment of certain
specified corporate and financial objectives, it is the intention of the
Committee that an executive's annual compensation consist of a base salary and
an annual bonus under the Bonus Plan. All executive officers of the Company
(except those who are otherwise entitled to receive additional compensation) and
all managerial employees who meet certain eligibility criteria determined by
their level of responsibility, are eligible to participate in the Bonus Plan.
The Bonus Plan provides for executives to earn bonuses of up to 150% of the base
bonus for which they are eligible (which generally ranges from 10% to 75% of
annual salary, depending upon their position and anticipated contribution to the
Company), with the maximum bonus payable to the president being limited to 100%
of his annual salary. Such bonuses are earned based upon the success of the
Company, or of the subsidiary or division for which the individual is
responsible, in achieving its debt-to-equity and/or net income goals. Typically,
under the Bonus Plan, awards are determined in advance of a fiscal year, at
which time the net income and/or debt-to-equity goals for the year are also
established. Thereafter, at the conclusion of the year, the awards are adjusted
up or down and paid, based upon the achievements of the specified objectives and
individual job performance. The Bonus Plan provides for the determination and
payment of bonuses thereunder in the event of the termination of employment of a
participant following a change of control of the Company. No bonuses were
awarded, earned by, or paid to, any executive officer of the Company under the
Bonus Plan during or in respect to 1995. Further, since no bonus awards have
been outstanding to any executive officer of the Company for the past three
years, the change in control resulting from the Selex transaction did not result
in the acceleration of the determination and payment of bonuses under the Bonus
Plan.
The only bonus paid in 1995 and 1993 was to Mr. Cortright, pursuant to his
employment agreement described above. No bonus was paid in 1994. In 1992, Mr.
Cortright was instrumental in securing over $10,000,000 in new financing for the
Company through the sale of contracts receivable and the Selex transaction, as
well as for resolving certain regulatory matters with the State of Florida. His
contribution was recognized by the award of a $200,000 bonus (an amount equal to
one year's salary). To avoid straining the Company's liquidity situation, it was
determined that his employment agreement would provide for that bonus to be paid
in four annual installments. The installment due in June 1994 was not paid until
1995. The final scheduled 1995 installment, was paid in 1995. See "Employment
Contracts".
Long Term Incentive Program
Additional long-term cash and equity incentives are provided through the
Stock Plan. Under the Stock Plan, incentive shares are awarded to those
executive officers and other key employees who, in the opinion of the Committee,
are in positions which enable them to make significant contributions to the
long-term performance and growth of the Company.
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The extent to which incentive share awards are earned is determined at the end
of the three-year award cycle, based upon the achievement of a net income goal
set forth in the three-year business plan adopted by the Board of Directors of
the Company prior to or during the first year of the cycle. Awards are paid, in
the discretion of the Committee, in cash or in shares of Common Stock of the
Company, on or before the May 1st following the end of the three year cycle.
Chief Executive Officer Compensation
Since July 13, 1994, Antony Gram has served as Chairman of the Board and
Chief Executive Officer of the Company. As Chairman and Chief Executive Officer,
Mr. Gram has been given the responsibility of resolving the financial and legal
difficulties facing the Company and developing an alternative business plan to
enable the Company to continue as a going concern. During the process of
resolving such difficulties and developing such plan, Mr. Gram has agreed to
serve without compensation, with the understanding that all ordinary, necessary
and reasonable expenses incurred by him in the performance of his duties,
including travel and temporary living expenses, will be reimbursed by the
Company and with the further understanding that the Committee and the Board will
thereafter consider establishing an appropriate salary to be paid him for his
services.
Compliance With Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to the corporation's Chief Executive Officer and four other mostly highly
compensated executives officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. The
compensation currently paid to the Company's Chief Executive Officer and highly
compensated executive officers does not approach the $1,000,000 threshold, and
the Company does not anticipate approaching such threshold in the foreseeable
future. Nevertheless, the Company intends to take the necessary action to comply
with the Code limitations.
Future Compensation Trends
The Committee anticipates undertaking a review of all compensation programs
and policies of the Company, and making appropriate modifications and revisions,
in conjunction with the development of an alternative business plan for the
Company.
Executive Compensation Committee
George W. Fischer, Chairman
Antony Gram
Rudy Gram
OWNERSHIP OF VOTING SECURITIES OF THE COMPANY
Based upon information furnished to the Company or contained in filings
made with the Commission, the Company believes that the only persons who
beneficially own more than five percent (5%) of the shares of the Common Stock
of the Company are Selex ( 41.9%) and, Antony Gram, through his holdings in
Selex and Yasawa (46.17%).
All of the issued and outstanding stock of Selex, Gerrit van den Veenstraat
70, Amsterdam, The Netherlands, is owned by Wilbury a majority of which is, in
turn, owned by Antony Gram. Antony Gram, Chairman of the Board of Directors and
Chief Executive Officer of the Company, as the largest shareholder of Wilbury,
holding a majority equity interest in that corporation, is treated as the
beneficial owner of all of the Company's Common Stock held by Selex. In
addition, Mr. Gram beneficially owns Yasawa. Since Yasawa is the direct owner of
289,637 shares of the Common Stock of the Company, Mr. Gram is deemed to be the
beneficial owner of an aggregate of 3,109,703 shares of Common Stock of the
Company (46.17%).
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The following table sets forth information, as of March 21, 1997,
concerning the beneficial ownership by all directors and nominees, by each of
the executive officers named in the Summary Compensation Table beginning on Page
9 (the "Summary Compensation Table") and by all directors and executive officers
as a group. The number of shares beneficially owned by each director or
executive officer is determined under the rules of the Commission, and the
information is not necessarily indicative of beneficial ownership for any other
purpose.
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial Ownership(a) of Class
--------------------------- --------
<S> <C> <C>
Directors:
Neil E. Bahr................. 4,121 - Direct *
Earle D. Cortright, Jr....... 18,706 - Direct *
George W. Fischer ........... 35,000 - Direct *
Antony Gram.................. 3,109,703 - Indirect 46.17%
Rudy Gram.................... 0
Thomas B. McNeill ........... 200 - Direct *
Executive Officers named in
Summary Compensation Table:
Earle D. Cortright, Jr....... 18,706 - Direct *
Antony Gram........ 3,109,703 - Indirect 46.17%
All executive officers and
directors as a group,
consisting of 9 persons
(including those listed above).... 3,167,930 47.03%
<FN>
- ---------------
* Represents holdings of less than 1%.
(a) Except for Antony Gram, who beneficially owns 46.17% of the Common
Stock of the Company, no current director, nominee or executive officer
beneficially owns more than 1% of the Company's outstanding shares.
</FN>
</TABLE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
The Securities Exchange Act of 1934 requires the Company's directors, its
executive officers and any persons holding more than ten percent of the
Company's Common Stock to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Commission and the New
York Stock Exchange. Under the Section 16(a) rules, the Company is required to
disclose in this Proxy Statement any failure to file such required reports by
their prescribed due dates.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements were satisfied.
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock, based on the market price of the Common
Stock, with the cumulative total return of companies on the Media General
Financial Services Composite Index and the Media General Peer Group (real estate
subdividers and developers) Index.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN AMONG
THE DELTONA CORPORATION, MG COMPOSITE INDEX AND MG GROUP INDEX
[GRAPHIC OMITTED]
ASSUMES $100 INVESTED ON JANUARY 1,
1992; DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER
31, 1996; THE COMPANY'S
STOCK CEASED TRADING 4/6/94
ON NEW YORK AND PACIFIC
STOCK EXCHANGES.
APPOINTMENT OF AUDITORS
The Board of Directors recommends that the stockholders appoint Deloitte &
Touche as auditors of the financial statements of the Company for the fiscal
year ending December 31, 1997, subject to the discretion of the Board. If the
stockholders do not vote for such appointment, the Board of Directors will
reconsider the appointment of such auditors. If Deloitte & Touche are unable to
serve, or the Board, in its discretion, determines that it is in the best
interest of the Company that such accountants do not serve as auditors of the
financial statements of the Company, the Board shall appoint other auditors to
replace Deloitte & Touche. One of the predecessor firms of Deloitte & Touche,
Deloitte Haskins & Sells, had been the auditors for the Company since 1966.
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Representatives of Deloitte & Touche will attend the meeting and will be
given the opportunity to make a statement at the meeting if they desire to do
so. Such representatives will be available during appropriate portions of the
meeting to respond orally to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the only business which the
management expects to be presented at the meeting is that set forth above. If
any other matters are properly brought before the meeting, or any adjournments
thereof, it is the intention of the persons named in the accompanying form of
Proxy to vote the Proxy on such matters in accordance with their judgment.
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, directors and certain employees of the Company who will
not be specially compensated for such solicitation.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next
Annual Meeting should be received by the Office of the Corporate Secretary, The
Deltona Corporation, 999 Brickell Avenue, Suite 700, Miami, Florida 33131, no
later than December 31, 1997, in order to be considered for inclusion in the
Company's 1998 Annual Meeting proxy statement.
By Order of the Board of Directors
SHARON J. HUMMERHIELM
April 18, 1997 Vice President and Corporate Secretary
Please mark,
sign and return the enclosed Proxy promptly.
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