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
(Amendment No. )
Filed by the Registrant X
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Filed by a Party other than the Registrant |_|
Check the appropriate box
Preliminary Proxy Statement
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X Definitive Proxy Statement
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Calton, Inc.
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(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
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Fee computed on table below per Exchange Act Rules 14a(6)(i)(4) and 0-11.
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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:
________________________________________________________________________________
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:_______________________________________________________________
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CALTON, INC.
500 Craig Road
Manalapan, New Jersey 07726-8790
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 29, 1997
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TO THE SHAREHOLDERS OF CALTON, INC.
The Annual Meeting of the Shareholders of CALTON, INC. (the "Company")
will be held on Thursday, May 29, 1997 at the Company's offices at 500 Craig
Road, Manalapan, New Jersey at 10:00 a.m., local time, for the following
purposes:
1. To elect four directors.
2. To consider and act upon a proposed amendment to the Company's
Amended and Restated Certificate of Incorporation to provide for the
classification of the Company's Board of Directors into four classes
of directors with staggered terms of office.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of Common Stock of record at the close of business on May 6, 1997
are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
ROBERT A. FOURNIADIS
Secretary
Manalapan, New Jersey
May 7, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU ARE UNABLE TO DO
SO, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY AND MAIL IT AT ONCE IN THE
ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.
<PAGE>
CALTON, INC.
PROXY STATEMENT
General Information
This Proxy Statement is furnished to the holders of Calton, Inc. (the
"Company" or "Calton") Common Stock, $.01 par value ("Common Stock"), in
connection with the solicitation of proxies for use at the annual meeting of
shareholders to be held on May 29 1997, and at any adjournment thereof (the
"meeting" or "annual meeting"), pursuant to the accompanying Notice of Annual
Meeting of Shareholders. Holders of Common Stock are referred to herein
collectively as the "shareholders." Forms of proxies for use at the meeting are
also enclosed. The Company anticipates mailing this Proxy Statement to its
shareholders on or about May 7, 1997. The executive offices of the Company are
located at 500 Craig Road, Manalapan, New Jersey 07726-8790.
Shareholders may revoke the authority granted by their execution of
proxies at any time before the effective exercise of proxies by filing written
notice of such revocation with the secretary of the meeting. Presence at the
meeting does not of itself revoke the proxy; however, a vote cast at the meeting
by written ballot will revoke the proxy. All shares represented by executed and
unrevoked proxies will be voted in accordance with the specifications therein.
Proxies submitted without specification will be voted IN FAVOR OF the election
of the nominees for director named herein and FOR the proposal to amend the
Company's Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") to provide for the classification of the Board of Directors into
four classes of directors with staggered terms of office. Management is not
aware at the date hereof of any matters to be presented at the meeting other
than the election of directors and the proposal to amend the Certificate of
Incorporation. If any other matter is properly presented, the persons named in
the proxy will vote thereon according to their best judgment.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. The cost of preparing, assembling and mailing the
proxy material is to be borne by the Company. It is not anticipated that any
compensation will be paid for soliciting proxies, and the Company does not
intend to employ specially engaged personnel of the Company or other paid
solicitors in the solicitation of proxies. It is contemplated that proxies will
be solicited principally through the mail, but directors, officers and employees
of the Company may, without additional compensation, solicit proxies personally
or by telephone, facsimile transmission or letter.
Voting Securities
The voting securities entitled to vote at the meeting consist of shares of
Common Stock, with each share entitling its owner to one vote on an equal basis.
On May 6, 1997, the number of outstanding shares of Common Stock was 26,557,313.
Only shareholders of record on the books of the Company at the close of business
on May 6, 1997 will be entitled to vote at the meeting. The holders of a
majority of the outstanding shares of Common Stock, present in person or by
proxy, will constitute a quorum at the meeting. The affirmative vote of a
plurality of the shares of Common Stock present in person or represented by
proxy and entitled to vote, is required for the election of directors. The proxy
card provides space for a shareholder to withhold votes for any or all nominees
for the Board of Directors. The proposal to amend the Company's Certificate of
Incorporation must be approved by a majority of the votes cast at the meeting on
such proposal by the holders of the Common Stock.
All votes will be tabulated by the inspector of election appointed at the
meeting who will separately tabulate affirmative votes, negative votes,
authority withheld for any nominee for Director, abstentions and broker
non-votes. Authority withheld will be counted toward the tabulation of the votes
cast on the election of Directors and will have the same effect as a negative
vote. Under New Jersey law, any proxy submitted and containing an abstention or
broker non-vote will not be counted as a vote cast on any matter to which it
relates. Abstentions and broker non-votes will be counted for purposes of
determining whether a quorum is present at the annual meeting.
Principal Shareholders
The following table sets forth information with respect to each person
who, as of May 6, 1997, is known by the Company to be the beneficial owner (as
defined in Rule 13d-3 ("Rule 13d-3") of the Exchange Act) of more than five
<PAGE>
percent (5%) of the Company's Common Stock. Except as set forth in the footnotes
to the table, the shareholders have sole voting and investment power over such
shares:
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership Percent of Class
- ------------------------ ----------------------- ----------------
Anthony J. Caldarone................ 7,433,618(1) 27.5%
Joyce P. Caldarone.................. 4,775,618(2) 17.7%
Apollo Homes Partners, L.P.(3)...... 2,658,000(4) 10.0%
Frederick J. Jaindl(5) ............. 2,195,350 8.3%
Goldman Sachs & Co.(6) ............. 1,344,600 5.1%
- ----------
(1) Includes an aggregate of 1,395,209 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial interest,
500,000 shares subject to currently exercisable options granted under the
Company's 1996 Equity Incentive Plan (the "1996 Option Plan"), 8,837
shares held through the Company's 401(k) Plan and 2,658,000 shares held by
Apollo Homes Partners, L.P. ("Apollo Homes"), which Mr. Caldarone has the
right to vote in the election of directors pursuant to a proxy granted to
him by Apollo Homes. In addition, under the terms of a stock purchase
agreement between Mr. Caldarone and Apollo Homes, Mr. Caldarone was
granted certain rights of first offer with respect to the shares of Calton
Common Stock owned by Apollo. The agreement also grants Apollo certain
"tag-along rights" to sell shares of Calton Common Stock in the event of,
and along with, certain transfers of Common Stock made by Mr. and/or Mrs.
Caldarone, and contains provisions requiring (a) Apollo, under certain
circumstances, to sell the Common Stock owned by it in the event that Mr.
and Mrs. Caldarone sell all of the securities of the Company that they own
and (b) Mr. and Mrs. Caldarone to offer to Apollo, under certain
circumstances, the opportunity to purchase a pro rata portion of
additional securities acquired by Mr. and/or Mrs. Caldarone from the
Company.
(2) Includes an aggregate of 3,380,404 shares beneficially owned by Anthony J.
Caldarone, Mrs. Caldarone's husband, as to which shares she disclaims any
beneficial interest.
(3) The sole general partner of Apollo Homes is AIF II, L.P., a Delaware
limited partnership. The managing general partner of AIF II, L.P. is
Apollo Advisors, whose principal offices are located at Two Manhattanville
Road, Purchase, New York 10577. Apollo Capital Management, Inc. ("ACM") is
the general partner of Apollo Advisors. Shareholdings information is based
upon Apollo Homes' Schedule 13D, as amended to November 21, 1995.
(4) See note 1 above for a description of certain rights granted by Apollo
Homes to Anthony J. Caldarone with respect to these shares.
(5) Such holder maintains an address at c/o Jaindl Farms, 3150 Coffeetown
Road, Orefield, Pennsylvania 12609. Shareholdings information is based
upon the Schedule 13D of such holder, as amended to January 14, 1997.
(6) The principal offices of such shareholder are located at 85 Broad Street,
New York, New York 10004. Shareholdings information is based upon the
Schedule 13D, as amended to May 5, 1995, of Goldman Sachs & Co., the
direct owner, and The Goldman Sachs Group, L.P., which indicates that each
of such entities is a beneficial owner of such shares.
Security Ownership of Management
The following table sets forth information, as of May 6, 1997, with
respect to the beneficial ownership (as defined in Rule 13d-3) of the Company's
Common Stock by each director and nominee for director, each of the Named
Officers (as defined in the section captioned "Executive Compensation") who is
currently an officer of the Company and by all directors and executive officers
as a group. Except as set forth in the footnotes to the table, the shareholders
have sole voting and investment power over such shares.
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<PAGE>
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership Percent of Class
- ------------------------ ----------------------- ----------------
Anthony J. Caldarone................ 7,433,618(1) 27.5%
J. Ernest Brophy.................... 23,770(2) (3)
Mark N. Fessel...................... 14,390(2) (3)
Frank Cavell Smith, Jr.............. 10,000(2) (3)
Robert A. Fourniadis................ 168,919(4) (3)
Bradley A. Little................... 166,276(5) (3)
All Directors and Executive
Officers as a Group (6 persons)
(1)(2)(4) and (5).................. 7,816,973 28.7%
(1) Includes an aggregate of 1,395,209 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial interest,
500,000 shares subject to currently exercisable options granted under the
1996 Option Plan, 8,837 shares held through the Company's 401(k) Plan and
2,658,000 shares held by Apollo Homes which Mr. Caldarone has the right to
vote in the election of directors pursuant to a proxy granted to him by
Apollo Homes. See note 1 to the table presented under the caption
"Principal Shareholders."
(2) Includes 10,000 shares subject to currently exercisable options granted
under the 1996 Option Plan.
(3) Shares beneficially owned do not exceed 1% of the Company's outstanding
Common Stock.
(4) Includes 148,333 shares subject to currently exercisable options granted
under the Company's Amended and Restated 1993 Non-Qualified Stock Option
Plan (the "1993 Option Plan" and, collectively with the 1996 Option Plan,
the "Option Plans") and 20,586 shares held through the Company's 401(k)
Plan.
(5) Includes 148,333 shares subject to currently exercisable options granted
under the 1993 Option Plan and 17,943 shares held through the Company's
401(k) Plan.
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist of
not fewer than three nor more than fifteen members. The Board of Directors has
fixed the number of directors at four. Each of the individuals named below, who
has been nominated for election as a director by the Board of Directors, is
currently a member of the Board of Directors of the Company.
It is the intention of the persons named in the accompanying proxy to
vote, unless otherwise instructed, in favor of the election as directors of the
four nominees named hereinafter. If the proposal to amend the Company's
Certificate of Incorporation is approved at the annual meeting, one nominee (J.
Ernest Brophy) will be elected as a Class I director to serve for an initial
term expiring at the annual meeting in 1998, one nominee (Mark N. Fessel) will
be elected as a Class II director to serve for an initial term expiring at the
annual meeting in 1999, one nominee (Frank Cavell Smith, Jr.) will be elected as
a Class III director to serve for an initial term expiring at the annual meeting
in 2000, and one nominee (Anthony J. Caldarone) will be elected as a Class IV
director to serve for an initial term expiring at the annual meeting in 2001
(or, in all cases, until their successors have been elected and qualified).
After the election of directors at the 1997 annual meeting, election of
directors will be for four year terms. If the proposal to amend the Certificate
of Incorporation is not adopted at the meeting, each director will serve until
the next annual meeting of shareholders or until his successor is duly elected
and qualified. See "Proposal to Amend Certificate of Incorporation to Classify
the Board of Directors."
If any of the nominees should be unable to serve, the proxies will be
voted for the election of such other person or persons as shall be determined by
the persons named in the proxy in accordance with their judgment. The Company is
not aware of any reason why any of the nominees, if elected, would be unable to
serve as a director.
Nominees
Set forth below is certain biographical information, as of March 30, 1997,
with respect to the nominees and the class to which each nominee will be elected
if the proposal to amend the Company's Certificate of Incorporation is adopted.
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<PAGE>
Nominee Age Class
------- --- -----
Anthony J. Caldarone 59 IV
J. Ernest Brophy 72 I
Mark N. Fessel 40 II
Frank Cavell Smith, Jr. 52 III
Mr. Caldarone was reappointed as Chairman, President, Chief Executive
Officer and a Director of Calton in November 1995, having previously served in
such capacities from the inception of the Company in 1981 through May 1993 when
the Company consummated the Plan of Reorganization. From June 1993 through
October 1995, Mr. Caldarone served as a Director of the Company.
Mr. Brophy, a self-employed attorney and certified public accountant
specializing in tax consultation to clients engaged in the construction
business, was reappointed as a Director of Calton in November 1995, having
served in such capacity from March 1983 through November 1985 and from April
1986 until through May 1993 when the Company and certain of its subsidiaries
consummated a joint plan of reorganization under Chapter 11 of the United States
Bankruptcy Code (the "Plan of Reorganization"). From 1992 through March 1996,
Mr. Brophy served as Chief Financial Officer of Hurdy-Gurdy International, Inc.,
a company that marketed sorbet products.
Mr. Fessel was designated as a Director of Calton by the holders of a
majority in outstanding principal amount of the Company's 12-5/8% Subordinated
Notes (the "Subordinated Notes") pursuant to the Plan of Reorganization in May
1993. Since 1985, Mr. Fessel has owned and operated a real estate company and
has acted as principal in numerous commercial and residential real estate
developments throughout the northeast. In 1984, Mr. Fessel served as the Vice
President of Acquisitions of the Meredith Organization, a nationally recognized
real estate developer.
Mr. Smith was designated as a Director of Calton by the holders of a
majority in outstanding principal amount of Subordinated Notes pursuant to the
Plan of Reorganization in May 1993. Since 1990, Mr. Smith has been associated
with the MEG Companies as a Senior Consultant responsible for corporate real
estate consulting activities. From 1977 to 1990, Mr. Smith served as a Real
Estate Consultant and Real Estate Development Manager for The Spaulding Co.,
Inc. Mr. Smith also is an adjunct faculty member at Boston University and a
member of the Board of Trustees of Shelter, Inc.
Meetings of the Board of Directors; Committees
During the fiscal year ended November 30, 1996, the Board of Directors
held four meetings. During fiscal 1996, each member of the Company's current
Board of Directors attended all of the meetings of the Board of Directors and
meetings of the committees on which he served. See the section captioned
"Directors' Compensation" for a discussion of fees paid by the Company to its
directors for their services as such.
During fiscal 1996, the Board of Directors had two standing committees:
the Audit Committee and the Compensation Committee.
The Audit Committee currently consists of Mr. Brophy and Mr. Smith. The
functions performed by the Audit Committee are, among other things, to recommend
to the Board of Directors the auditors to be engaged as the Company's
independent public accountants, to review the proposed plan and scope for the
annual audit and the results of such audit when completed, to review the
services rendered by the auditors and the fees charged for such services, to
determine the effect, if any, on the independent public accountants'
independence of the performance of any non-audit services and to review the
plan, scope and results of the Company's internal audit operations. During
fiscal 1996, the Audit Committee held two meetings.
Messrs. Fessel and Smith are members of the Compensation Committee. The
Compensation Committee reviews and approves compensation for executive employees
of the Company on a periodic basis, subject to approval of the Board, and
administers the Company's Incentive Compensation Plan, the Option Plans and
severance policy for the Company's senior executives. One meeting of the
Compensation Committee was held during fiscal 1996.
Executive Compensation
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years ended November 30, 1996, 1995 and 1994, of the
Chief Executive Officer of the Company in fiscal 1996 and the other executive
officers of the Company who earned salary and bonuses in fiscal 1996 in excess
of $100,000 (collectively, the "Named Officers"):
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<TABLE>
<CAPTION>
Long Term
Annual Compensation Awards Compensation
---------------------------------------------- ------------
Awards
------
Other Securities All Other
Name and Principal Annual Underlying Compensation
Position(1) Year Salary($) Bonus($)(2) Compensation Options(#) ($)(3)(4)(5)
----------- ---- --------- ----------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Caldarone 1996 $250,000 $ 20,000 $57,532(4)(5)(6) -- $ 475
Chairman, Chief 1995 7,692 -- -- 500,000(7) 240
Executive Officer & 1994 -- -- -- -- --
President(8)
Bradley A. Little 1996 140,000 15,000 -- 25,000 7,586
Senior Vice 1995 137,917 -- -- 185,000(9) 14,004
President-Finance & 1994 126,250 100,000 -- 60,000 11,922
Treasurer
Robert A. Fourniadis 1996 122,500 10,000 -- 10,000 7,014
Senior Vice 1995 120,417 -- -- 185,000(9) 13,812
President-Legal & 1994 108,333 90,000 -- 60,000 11,470
Secretary
</TABLE>
- ----------
(1) Each of the individuals named in the above table served as an officer of
the Company's wholly owned subsidiary, Calton Homes, Inc. ("Calton
Homes"), during all or a portion of the three years ended November 30,
1996. All cash compensation included in the above table was paid or
accrued by Calton Homes.
(2) Represents amounts accrued in fiscal 1994 and fiscal 1996 and payable in
the subsequent fiscal year to the Named Officers pursuant to the Company's
Incentive Compensation Plan (the "Incentive Plan"). No Incentive Plan
Awards were made with respect to fiscal 1995. The Incentive Plan provides
for an incentive compensation pool equal to ten percent (10%) of the
Company's annual pre-tax income, subject to certain adjustments to pre-tax
income that may be made by the Compensation Committee to remove the effect
of events or transactions not in the ordinary course of the Company's
operations. No such adjustments were made for the fiscal years 1994 or
1996, and the incentive compensation pools for such years were $656,000 in
fiscal 1994 (of which $620,000 was awarded) and $120,000 in fiscal 1996
(of which $119,000 was awarded). Officers and key operations and senior
corporate management employees (the "Eligible Employees") of the Company
and its subsidiaries are eligible for participation in the Incentive Plan.
In addition, up to 10% of the incentive compensation pool established
under the Incentive Plan may be used for bonuses to full time employees
who do not otherwise have an opportunity for commissions or bonuses. The
Eligible Employees are determined each fiscal year by the Compensation
Committee based on the recommendations of the President and Chief
Executive Officer of the Company. An Eligible Employee may not receive a
distribution from the incentive compensation pool for any fiscal year that
exceeds the lesser of twenty percent (20%) of the available incentive
compensation pool or one hundred percent (100%) of the Eligible Employee's
base salary for such fiscal year, unless otherwise provided in the
Eligible Employee's employment agreement with the Company. The
Compensation Committee ultimately determines the percentage, if any, of
the incentive compensation pool for a fiscal year to be awarded to an
Eligible Employee.
(3) Includes amounts contributed by the Company under its 401(k) Plan (the
"401(k) Plan"). All full-time employees who have completed more than one
year of service with the Company are eligible to participate in the 401(k)
Plan which allows eligible employees to save up to 18% of their pre-tax
compensation (subject to a maximum amount per year established annually
pursuant to the Internal Revenue Code of 1986, as amended) through a
payroll deduction. Subject to the discretion of its Board of Directors,
the Company may make matching contributions to the 401(k) Plan in the form
of cash or Common Stock. The Company's matching contribution for fiscal
1996 was made primarily in Common Stock and the Company anticipates that
its matching contribution for the next fiscal year will be made in the
form of Common Stock. Amounts contributed by the Company to the accounts
of the Named Officers for fiscal 1996 (including the dollar value of
contributions made in the form of Common Stock) were as follows: Mr.
Caldarone - $475; Mr. Little - $475; and Mr. Fourniadis - $273.
(4) Includes the reimbursement by the Company of automobile expenses in fiscal
1996 as follows: Mr. Caldarone - $8,040; Mr. Little - $6,000; and Mr.
Fourniadis - $6,000.
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<PAGE>
(5) Includes cost of premiums paid by the Company under a program which
provides officers of the Company with additional life insurance
(supplementing the coverage available under the Company's group life
insurance plan) as follows: Mr. Caldarone - $3,450; Mr. Little - $1,111;
and Mr. Fourniadis - $741.
(6) Includes (i) $45,000 paid to Mr. Caldarone for relocation expenses and
(ii) $1,042 paid to Mr. Caldarone in connection with his election not to
participate in the Company's group health insurance plan.
(7) Represents options to purchase Common Stock which were granted to Mr.
Caldarone effective January 31, 1996 pursuant to his employment agreement
with the Company.
(8) Mr. Caldarone was reappointed Chairman, President and Chief Executive
Officer of the Company on November 21, 1995 having previously served in
such capacities from the Company's inception until June 1993.
(9) Represents 25,000 shares underlying options granted in January 1996 for
services rendered in fiscal 1995 and 160,000 shares underlying options
granted in respect of prior fiscal years which were repriced in 1995.
Directors' Compensation
Members of the Board of Directors who are not full time employees of
Calton were each entitled in fiscal 1996 to annual compensation of $20,000 for
service as a director. Calton paid or accrued a total of $69,000 in director
fees to members of the Board of Directors during fiscal year 1996. Directors are
reimbursed for travel expenses incurred in connection with attendance at Board
and committee meetings. Directors who are not full time employees are paid a
participation fee of $1,000 for each committee meeting attended. In addition,
under the terms of the 1996 Option Plan each non-employee director who has
attended 75% or more of the Board meetings and meetings of the committees on
which he serves is awarded options to purchase 10,000 shares of the Company's
Common Stock each time such director is re-elected to the Board of Directors.
Options to purchase an aggregate of 30,000 shares of Common Stock at an exercise
price of $.53125 per share (the fair market value of the Common Stock on the
date of grant) were granted to non-employee directors pursuant to the 1996
Option Plan in fiscal 1996. The exercise price of these options was adjusted to
$.41 per share (the fair market value of the Common Stock on the date of the
adjustment) in January 1997.
Employment Agreement with Chief Executive Officer
Effective November 21, 1995, the Company entered into an Employment
Agreement (the "Employment Agreement") with Anthony J. Caldarone, Chairman,
President and Chief Executive Officer of the Company. The term of the Employment
Agreement will end on November 30, 1998; provided, that such term will be
automatically extended annually for periods of one (1) year unless a notice of
non-extension is issued by the Company or Mr. Caldarone. Pursuant to the
Employment Agreement, Mr. Caldarone will receive a minimum annual salary of
$250,000 ("Base Compensation") which may be increased by the Board or a
committee thereof. Mr. Caldarone is entitled to participate in any bonus
compensation or benefit plan or arrangement provided by the Company to its
employees or senior level executives, including the Company's Incentive Plan.
Under the Employment Agreement, Mr. Caldarone may be awarded up to thirty
percent (30%) of the Incentive Plan's designated incentive compensation for any
fiscal year and, subject to such limitation, is entitled to not less than
one-half of the average percentage that all awards to other Eligible
Participants are of the respective Eligible Participants' base salary for the
relevant fiscal year. Mr. Caldarone is entitled to be reimbursed by the Company
for certain automobile expenses and was granted options to purchase 500,000
shares of Common Stock under the 1996 Option Plan pursuant to the Employment
Agreement.
If the Employment Agreement is terminated by reason of Mr. Caldarone's
death, the Company is obliged to reimburse Mr. Caldarone's designated
beneficiaries the cost of COBRA benefits, other than long-term disability
coverage, for a period of 18 months following the date of death. If the
Employment Agreement is terminated by reason of Mr. Caldarone's disability, Mr.
Caldarone will be entitled to receive a lump sum cash payment equal to one
years' Base Compensation (the "Severance Compensation") from the Company as well
as the cost of COBRA benefits, other than long-term disability, for him and his
family for a period of 18 months following the date of termination, and continue
to participate in any group life insurance or supplemental life insurance
program of the Company then in effect for a period of 18 months following the
date of termination (collectively, the "Severance Benefits"). The Company may
terminate the Employment Agreement for just cause in the event Mr. Caldarone is
convicted of a felony in connection with his duties as an officer of the
Company, if the commission of such felony resulted in a personal financial
benefit to Mr. Caldarone. Upon termination for just cause by the Company, Mr.
Caldarone is not entitled to receive any Severance Compensation or Severance
Benefits. If the Company terminates the Employment Agreement without just cause,
Mr. Caldarone is entitled to the Severance Compensation and Severance Benefits.
If the Company terminates
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<PAGE>
the Employment Agreement by issuing a notice of non-extension, Mr. Caldarone is
entitled to receive a lump sum cash payment equal to one years' Base
Compensation as well as the Severance Benefits. Mr. Caldarone may terminate the
Employment Agreement for just cause and receive Severance Compensation and
Severance Benefits, if (i) the Board fails to re-elect him as each of Chairman,
President and Chief Executive Officer of the Company, (ii) the Board
significantly reduces the nature and scope of his authorities, powers, duties
and functions, (iii) the Company breaches any material covenant of the
Employment Agreement, or (iv) the Company consents to Mr. Caldarone's
retirement. If Mr. Caldarone terminates the Employment Agreement without just
cause or by issuing a notice of non-extension, he is not entitled to the
Severance Compensation or Severance Benefits. After the date of termination of
Mr. Caldarone' employment for any of the reasons specified herein and in the
Employment Agreement, Mr. Caldarone will not receive any further salary payments
under the Employment Agreement.
For the term of the Employment Agreement and for a period of twelve (12)
months following termination of Mr. Caldarone' employment, other than for just
cause by the Company or without just cause by Mr. Caldarone, Mr. Caldarone is
restricted from competing with the Company in certain regions in which the
Company is actively engaged in business.
Severance Policy For Senior Executives
The Company has established a severance compensation policy for senior
level executives who have been employed by the Company for more than one year
(the "Severance Policy"). To become eligible to participate in the Severance
Policy, a senior level executive must be selected by the Company's Compensation
Committee and approved by the Board of Directors ("Eligible Participants").
Under the Severance Policy, an Eligible Participant whose employment is
terminated is entitled to receive one month's base salary for each year employed
by the Company, pro rated for any partial year, but in no event less than six
month's base salary; provided, however, that the Eligible Participants who were
designated to participate in the Severance Policy in August 1993 (Mr. Little and
Mr. Fourniadis) are entitled to receive twelve month's base salary. In addition,
the Company will pay all amounts required to be paid by the Eligible
Participants to continue insurance coverage under COBRA for a period of time
equal to the number of months on which the severance compensation is based. The
severance compensation for Eligible Participants who are parties to employment
agreements will be governed by the terms of such agreements. Eligible
Participants who resign voluntarily or who are terminated for cause (as defined
in the Severance Policy) will not be eligible for severance compensation.
Option Grants
Shown below is further information with respect to grants of stock options
in fiscal 1996 to the Named Officers by the Company which are reflected in the
Summary Compensation Table set forth under the caption "Executive Compensation."
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------- Potential Realizable
Percent of Value at Assumed
Number of Total Options Annual Rates of
Securities Granted to Stock Price Appre-
Underlying Employees Exercise or ciation for Option Term
Options in Fiscal Base Price Expiration -----------------------
Name Granted (#) Year ($/Sh) Date(1) 5% ($) 10% ($)
---- ----------- ------------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Bradley A. Little...... 25,000(1) 3.2% $.53125(2) 4/24/2006 $8,353 $21,166
Robert A. Fourniadis... 10,000(2) 1.3% .53125(2) 4/24/2006 3,341 8,467
</TABLE>
(1) Represents shares of Common Stock underlying options granted in April
1996. The options are exercisable cumulatively in five equal annual
installments commencing on the first anniversary of the date of grant.
(2) The exercise price of these options was adjusted to $.41 per share in
January 1997. The potential realizable value of the adjusted options held
by the individuals identified in the above table is as follows: Mr. Little
- $5,849 (assuming a 5% annual appreciation rate) and $14,523 (assuming a
10% annual appreciation rate); and Mr. Fourniadis - $2,340 (assuming a 5%
annual appreciation rate) and $5,809 (assuming a 10% appreciation rate).
<PAGE>
Option Exercises and Fiscal Year-End Values
Shown below is information with respect to unexercised options to purchase the
Company's Common Stock held by the Named Officers at November 30, 1996. On such
date, the exercise price of each of such options equaled or exceeded the closing
price of the Company's Common Stock on the American Stock Exchange ($.3125 per
share) on November 29, 1996 (the last day of fiscal 1996 on which the Common
Stock was traded on the American Stock Exchange). No options were exercised in
fiscal 1996.
Number of Securities
Underlying Unexercised
Options Held At FY-End(#)
-------------------------
Name Exercisable / Unexercisable
---- ----------- -------------
Anthony J. Caldarone.... 500,000 ---
Bradley A. Little....... 120,000 90,000
Robert A. Fourniadis.... 120,000 75,000
CORPORATE PERFORMANCE
Set forth on the following page are two performance graphs. The initial
graph compares the percentage change in the cumulative total shareholder return
on the Common Stock of the Company for the period from June 2, 1993, the date
the Common Stock issued in connection with the consummation of the Plan of
Reorganization began trading on the American Stock Exchange, to November 30,
1996, with the cumulative total return on the American Stock Exchange Composite
Index and a peer group index(1) over the same period (assuming the investment of
$100 in the Company's Common Stock, the American Stock Exchange Composite Index
and the peer group index on June 2, 1993 and that all dividends were
reinvested). The second graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock of the Company for the
period from November 30, 1991 to March 10, 1993, the last day of trading of the
Common Stock on the New York Stock Exchange, with the cumulative total return on
the New York Stock Exchange Market Value Index and the peer group index(1) over
the same period (assuming the investment of $100 in the Company's Common Stock,
the New York Stock Exchange Market Value Index and the peer group index on
November 30, 1991 and that all dividends were reinvested).
- ----------
(1) The peer group selected by the Company is comprised, for the most part, of
companies in the homebuilding industry that are of the same or similar size as
the Company and compete in some or all of the same markets as the Company in
recent years. The homebuilding companies in the peer group are: Hovnanian
Enterprises, Inc., Toll Brothers, Inc., Lennar Corp., Oriole Homes Corp., Pulte
Home Corp. and Continental Homes Holding Corp. The peer group selected for the
Company's 1996 Proxy Statement was identical to the group identified above.
-8-
<PAGE>
[The following tabular information is a description, pursuant to Rule 304 of
Regulation S-T, of a graph contained in paper format of this Proxy Statement
being sent to shareholders.]
NOVEMBER 30,
JUNE 2, -------------------------------
COMPANY 1993 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ----
CALTON, INC 100.00 112.50 46.88 21.88 15.63
PEER GROUP 100.00 113.74 68.16 104.21 112.40
AMEX COMPOSITE INDEX 100.00 107.30 102.13 128.32 138.43
[The following tabular information is a description, pursuant to Rule 304 of
Regulation S-T, of a graph contained in paper format of this Proxy Statement
being sent to shareholders.]
NOVEMBER 30,
----------------- March 10,
COMPANY 1991 1992 1993
------- ------ ------ ------
CALTON, INC 100.00 100.00 93.78
PEER GROUP 100.00 166.33 197.70
NYSE MARKET INDEX 100.00 114.78 118.61
-9-
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee (the "Compensation Committee" or "Committee")
currently consists of Mark N. Fessel and Frank Cavell Smith, Jr. No such person
was an officer or employee of the Company during fiscal 1996 or was formerly an
officer of the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation.
The Compensation Committee is currently comprised of independent,
non-employee directors. It is charged with the responsibility of reviewing and
approving the compensation of the Company's officers and administration of the
Company's Incentive Plan, the Option Plans and severance policy for the
Company's senior executives.
The Committee has determined that the Company's policies for compensation,
including base compensation, incentive compensation and benefits, should be
guided by the marketplace. Noting the cyclical nature of the homebuilding
industry and the importance of controlling fixed costs, the Committee has
determined that the blend of base salary and incentive compensation offered to
the Company's executive officers should emphasize performance based incentive
compensation over base salary compensation. To accomplish the Committee's
compensation objectives for the Company and to attract, motivate and retain key
executives for the management and long term success of the Company, the Company
has developed compensation programs which provide executive officers a base
salary and the opportunity to earn additional compensation based on the profits
and overall success of the Company. Compensation programs include salary and
incentive plans.
The Company's executive compensation programs have three principal
components: base salary, incentive compensation awards and stock option grants.
Factors considered when determining the base salary for an officer of the
Company include the position of the officer, the amount of responsibility
associated with such position, past performance of such responsibilities,
dedication to the pursuit of achieving individual and Company goals and the
overall results of the Company. The Committee believes that the base salaries of
the Company's executive officers are generally below or similar to the amounts
paid to comparable officers at other companies of the same or similar size
and business as the Company, including, for the most part, the companies
contained in the peer group selected by the Company in preparation of the
performance graphs presented herein, and, therefore, incentive compensation in
the form of awards under the Incentive Plan and stock option grants are key
components of the total compensation paid or awarded to officers of Calton. The
type and amount of incentive compensation is a function of the performance of
both Company and individual participants in the particular plan. For example,
the Company's Incentive Plan is a cash based plan directly linked to the
Company's financial performance while the Option Plans provide a method whereby
the officers can share in the long-term growth and success of the Company. The
Committee believes these components collectively provide an appropriate
relationship between an executive's compensation and the Company's financial
performance.
The Compensation Committee reviews the performance of the Chief Executive
Officer and other officers of the Company annually. The Compensation Committee
makes recommendations to the Board with respect to salaries and determines
awards to be made under the Incentive Plan. The Compensation Committee also
determines recipients of, and the number of shares to be covered by, options
granted under the Option Plans to all employees, including officers. Incentive
compensation and stock option grants for executive officers are determined by
evaluating the performance of the individuals reviewed, their contributions to
the performance of the Company, their responsibilities, experience and
potential, their period of service at current salary and compensation practices
for comparable positions at other companies. Financial results, nonfinancial
measures and the Chief Executive Officer's evaluation of other executive
officers are considered.
In November 1995, the Board of Directors appointed Anthony J. Caldarone as
Chairman, President and Chief Executive Officer of the Company. Mr. Caldarone
had previously served in such capacity from the inception of the Company in 1981
to June 1993. In connection with the appointment of Mr. Caldarone as Chairman,
President and Chief Executive Officer, the Board approved an employment
agreement between the Company and Mr. Caldarone which provides for a minimum
base salary of $250,000 per year and pursuant to which, options to purchase
500,000 shares of Calton Common Stock at a price of $.34375 per share (110% of
the trading price of the Common Stock on the date of grant) were granted to Mr.
Caldarone under the 1996 Option Plan. In approving the employment agreement
-10-
<PAGE>
and the compensation payable thereunder, the Board considered the compensation
paid to chief executive officers of similarly situated companies, as well as Mr.
Caldarone's qualifications and prior experience in serving in such capacity. See
"Employment Agreement with Chief Executive Officer" for a more detailed
description of the terms of the employment agreement between the Company and Mr.
Caldarone. In January 1997, the Committee reviewed Mr. Caldarone's compensation,
considering the performance of the Company in fiscal 1996 as compared to its
competitors and Mr. Caldarone's effectiveness in leading the Company to
profitability in 1996 following a net loss in fiscal 1995. Based upon this
information and a review of actions implemented by Mr. Caldarone to position the
Company for future growth, Mr. Caldarone was awarded 16.6% of the incentive
compensation awarded to participants in the Incentive Plan, which amounted to
$20,000. The total amount of incentive compensation available for participants
in the Incentive Plan for fiscal 1996 was $120,000 (of which $119,000 was
awarded).
In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was
amended to add Section 162(m). Section 162(m) places a limit of $1,000,000 on
the amount of compensation that may be deducted by the Company in any year with
respect to certain of the Company's highest paid executives. Certain performance
based compensation that has been approved by shareholders is not subject to the
deduction limit. The Company believes that compensation paid to its officers
under all of its compensation plans, except the Incentive Plan, will qualify as
performance based compensation, and will therefore be exempt from the $1,000,000
deduction limit.
COMPENSATION COMMITTEE
Mark N. Fessel
Frank Cavell Smith, Jr.
Certain Relationships and Related Party Transactions.
Goldman, Sachs & Co. is the beneficial owner of more than 5% of the
Company's Common Stock and is affiliated with one of the lenders under the
Company's Amended Credit Agreement (the "Amended Credit Agreement"). This
affiliate held a 22.5% interest in amounts outstanding under the Amended Credit
Agreement, which totalled approximately $39.5 million at November 30, 1996.
PROPOSAL TO AMEND CERTIFICATE
OF INCORPORATION TO CLASSIFY
THE BOARD OF DIRECTORS
At present, all of the Company's directors are elected at each annual
meeting of shareholders for a term which expires at the next annual meeting of
shareholders or until a successor is elected and qualified. The second paragraph
of Article V of the Company's Certificate of Incorporation currently provides as
follows:
Subject to the foregoing, the number of directors of the Corporation
shall be fixed from time to time as provided in the By-laws and may be
altered from time to time as provided in the By-laws, provided, however,
there shall be no less than three (3) and more more than fifteen (15)
directors of the Corporation. In the case of any increase in the number of
directors, the additional directors shall be elected as provided in the
Bylaws. The directors need not be residents of the State of New Jersey and
the directors need not be shareholders of the Corporation.
The Company's by-laws currently provide that vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced.
Subject to shareholder approval, the Board of Directors proposes to amend
Article V of the Certificate of Incorporation to provide for the classification
of the Board of Directors into four classes of directors with staggered terms of
office. Specifically, the Board of Directors proposes to amend the second
paragraph of Article V to read in its entirety as follows:
The number of directors of the Corporation shall be the number, not
less than three (3) nor more than fifteen (15), fixed from time to time by
the Board of Directors. The Board of Directors shall be divided into four
classes, designated Class I, Class II, Class II and Class IV, as nearly
equal in number as possible, and the term of office of directors of one
class shall expire at each annual meeting of shareholders, and in all cases
as to each director until
-11-
<PAGE>
his successor shall be elected and shall qualify (except in cases where no
successor is elected due to a reduction in the size of the board) or until
his earlier resignation, removal from office, death or incapacity. The
initial term of office of directors of Class I shall expire at the annual
meeting of shareholders in 1998; that of Class II shall expire at the
annual meeting of shareholders in 1999; that of Class III shall expire at
the annual meeting of shareholders in 2000; and that of Class IV shall
expire at the annual meeting of shareholders in 2001; and in all cases as
to each director until his successor shall be elected and shall qualify
(except in cases where no successor is elected due to a reduction in the
size of the board) or until his earlier resignation, removal from office,
death or incapacity. At each annual meeting of shareholders after 1997, the
number of directors equal to the number of directors of the class whose
term expires at the time of such meeting (or, if less, the number of
directors properly nominated and qualified for election) shall be elected
to hold office until the fourth succeeding annual meeting of shareholders
after their election or until their successors are elected and qualify.
Additional directorships resulting from an increase in the number of
directors shall be apportioned among the classes as equally as possible.
Vacancies, including vacancies created by an increase in the size of the
Board of Directors, shall be filled by the affirmative vote of a majority
of the remaining Board of Directors, though less than a quorum, but any
such director so elected shall hold office until the next succeeding annual
meeting of shareholders. At such annual meeting, such director or a
successor to such director shall be elected and qualified in the class to
which such director is assigned to hold office for the term or remainder of
the term of such class. Directors shall be assigned to each class in
accordance with a resolution or resolutions adopted by the Board of
Directors. The directors need not be residents of the State of New Jersey
and the directors need not be shareholders of the Corporation. This second
paragraph of this Article V shall not be amended, altered or repealed
except by the affirmative vote of the holders of not less than sixty-six
and two-thirds percent (66 2/3%) of the combined voting power of the then
outstanding shares of stock of the Corporation entitled to vote generally
in the election of directors, voting together as a single class.
The proposed amendment to classify the Board of Directors provides that the
directors will be classified into four classes, as nearly equal in number as
possible. If the proposed amendment is approved by the shareholders and,
thereafter, is filed with the Secretary of State of the State of New Jersey, the
Company's Board of Directors will be classified into four classes. In that
event, each of the directors elected at the Annual Meeting will continue to
serve as a director, but the term of office for all such directors will no
longer be one year. Instead, Class I directors will hold office until the 1998
annual meeting; Class II directors will hold office until the 1999 annual
meeting; Class III directors will hold office until the 2000 annual meeting; and
Class IV directors will hold office until the 2001 annual meeting; and, in each
case, until their successors are duly elected and qualify (except in cases where
no successor is elected due to a reduction in the size of the Board), or until
earlier resignation, removal from office, death or incapacity. At each annual
meeting commencing with the 1998 annual meeting, a director elected to succeed a
director in the class whose term expires will be elected for a four-year term so
that the term of one class of directors will expire each year. Thus, after 1997,
shareholders will elect only one-fourth (or, if one of the classes has one more
director, approximately one-fourth) of the directors at each annual meeting.
Each director will serve until a successor is elected and qualified (except in
cases where no successor is elected due to a reduction in the size of the
Board), or until earlier resignation, removal from office, death or incapacity.
Vacancies, including vacancies created by an increase in the size of the Board
of Directors, shall be filled by the affirmative vote of a majority of the
entire board. Directors appointed to fill a vacancy will hold office only until
the next annual meeting of shareholders. At such next meeting, such director or
a successor to such director shall be elected to the class to which such
director is assigned to hold office for the term or the remainder of the term of
such class. The Board of Directors presently has no plans, arrangements,
commitments or understandings with respect to increasing or decreasing the size
of the board or any class of directors. Under the terms of the proposed
amendment, the affirmative vote of the holders of not less than sixty six and
two-thirds percent (66 2/3%) of the combined voting power of the then
outstanding shares of stock of the Company entitled to vote generally in the
election of directors, voting together as a single class, would be required to
amend, alter or repeal the provisions providing for a classified Board of
Directors that are described above.
If the nominees for election to the Board of Directors at the annual
meeting are elected and the amendment to classify the Board of Directors is
thereafter approved, then, upon the filing of the amendment with the Secretary
of State of the State of New Jersey, J. Ernest Brophy will be a member of Class
I and will hold office until the 1998 annual meeting; Mark N. Fessel will be a
member of Class II and will hold office until the 1999 annual meeting; Frank
Cavell Smith, Jr. will be a member of Class III and hold office until the 2000
annual meeting; and Anthony J. Caldarone will be a member of Class IV and hold
office until the 2001 annual meeting. If any nominee is not elected at an annual
-12-
<PAGE>
meeting, then the person elected will become a member of the class of which the
nominee would have been a member had he been elected. If the proposal to
classify the Board of Directors is not approved, all of the directors elected at
the 1997 annual meeting will serve for a one-year term to expire at the 1998
annual meeting.
For information regarding the nominees for election to the Board of
Directors at the 1997 annual meeting, see "Election of Directors."
The Board of Directors believes that dividing the directors into four
classes is advantageous to the Company and its shareholders. By providing that
directors will serve four-year terms rather than one-year terms, the likelihood
of continuity and stability in leadership and the policies formulated by the
Board of Directors will be enhanced. Management believes that the staggered
election of directors will promote continuity because only one-fourth of the
directors will be subject to election each year.
The proposed amendment to classify the Board of Directors may extend the
time required to effect a change in control of the Board of Directors and may
discourage hostile take-over bids for the Company. Without a classified Board of
Directors, a change in control of the Board can be made by shareholders holding
a majority of the Company's shares at a single annual meeting. If the Company
implements a classified Board of Directors, it may take at least three annual
meetings for a majority of shareholders to effect a change in control of the
Board of Directors, because only a minority of the directors will be elected at
each annual meeting. Under the New Jersey Business Corporation Act, shareholders
of a corporation whose board of directors is classified are not entitled to
remove directors without cause.
The adoption of the proposal to amend the Certificate of Incorporation may
deter certain mergers, tender offers, proxy contests or other future takeover
attempts which holders of some or even a majority of the outstanding Common
Stock believe to be in their best interests, and may make removal of management
a more difficult event if such removal would be beneficial to shareholders
generally. Not all takeovers or changes in control of the Board that are
proposed and effected without prior consultation and negotiation with the
incumbent Board are nessarily detrimental to the Company and its shareholders.
However, the Board believes that the benefits of seeking to protect its ability
to negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure the Company outweigh the disadvantages of discouraging
such proposals.
The provisions for electing only one out of four classes of the Board
annually, rather than the entire Board, will be applicable to every annual
election of directors, and not just to any election occurring after a change in
shareholder control of the Company. A classified Board could delay shareholders
who do not support the policies of the Board of Directors from removing a
majority of the Board for up to three years. This would be so even if the only
reason for the attempted action by a shareholder was dissatisfaction with the
policies of the current Board.
The proposed amendment to the Certificate of Incorporation contemplates
that the affirmative vote of the holders of at least sixty six and two-thirds
percent (66 2/3%) of the combined voting power of the outstanding shares of
stock of the Company entitled to vote generally in the election of directors,
voting together as a single class will be required to amend, alter or repeal the
second paragraph of Article V (which provides for the classification of the
Board of Directors). The 66 2/3% vote requirement will give the holders of a
minority of the Company's voting power a veto power over changes to the second
paragraph of Article V, even if the holders of a majority of the voting power of
the Company favored such changes. As a result, this requirement would hinder
attempts by a shareholder with a majority of the voting power to alter or repeal
the provisions which provide for a classified Board.
The proposal to amend the Certificate of Incorporation is not the result
of any attempt to accumulate the Company's securities or to obtain control of
the Company by means of a merger, tender offer, solicitation in opposition to
management or otherwise, and the Company is not aware of any such effort.
If the proposed amendment to classify the board is approved, the
appropriate sections of the Company's Bylaws will be amended by the Board of
Directors to conform to the Certificate of Incorporation.
Adoption of this proposed amendment requires the affirmative vote of a
majority of the votes cast at the annual meeting by holders of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
CERTIFICATE OF INCORPORATION TO CLASSIFY THE BOARD OF DIRECTORS.
ANNUAL REPORT
The annual report to shareholders for the fiscal year ended November 30,
1996 accompanies this Proxy Statement. Coopers & Lybrand has audited the
financial statements of the Company for the three fiscal years ended
-13-
<PAGE>
November 30, 1996, which financial statements are contained in the annual report
to shareholders. Such annual report, including the audited financial statements
contained therein, is not incorporated in this Proxy Statement and is not deemed
to be a part of the proxy soliciting material.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Company is made by
the Board of Directors. On October 29, 1996, the Company's Board of Directors
approved the engagement of Coopers & Lybrand to serve as the Company's
independent public accountants for fiscal 1996. Coopers & Lybrand has served as
the Company's auditors since 1988. The Board of Directors has not yet met to
select the Company's independent public accountants for the current fiscal year.
As previously stated under the caption "Election of Directors," the
Company's Board of Directors has an Audit Committee consisting of outside
directors, and the present members of the committee are Mr. Brophy and Mr.
Smith.
A representative of Coopers & Lybrand will be present at the meeting and
will have an opportunity to make a statement if the representative desires to do
so. Said representative will also be available to respond to appropriate
questions from shareholders of the Company.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the Company's next annual
meeting must be received by the Company at its principal executive offices for
inclusion in its proxy statement and form of proxy relating to that meeting no
later than November 28, 1997. The Company's by-laws contain certain procedures
which must be followed in connection with shareholder proposals.
THE MANAGEMENT OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE IN
FAVOR FOR THE NOMINEES TO THE BOARD OF DIRECTORS AND FOR THE PROPOSAL TO
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CLASSIFY THE BOARD OF
DIRECTORS.
THE COMPANY SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE UPON
WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF SHARES
OF COMMON STOCK OF THE COMPANY. REQUESTS SHOULD BE DIRECTED TO SHAREHOLDER
RELATIONS, CALTON, INC., 500 CRAIG ROAD, MANALAPAN, NEW JERSEY 07726-8790.
ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND SEND IN THEIR PROXIES
IN THE ENCLOSED ENVELOPE WITHOUT DELAY TO FIRST CITY TRANSFER COMPANY, 111 WOOD
AVENUE SOUTH, SUITE 206, ISELIN, NEW JERSEY 08830. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
ROBERT A. FOURNIADIS
Secretary
May 7, 1997
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<PAGE>
CALTON, INC.
Proxy for Annual Meeting of Shareholders to be held on
May 29, 1997
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF CALTON, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Anthony J. Caldarone and Robert A. Fourniadis and each of them, the
true and lawful attorneys, agents and proxies of the undersigned, with full
power of substitution, to vote with respect to all the shares of Common Stock of
CALTON, INC., standing in the name of the undersigned at the close of business
on May 6, 1997, at the annual meeting of shareholders to be held at the
Company's offices at 500 Craig Road, Manalapan, New Jersey and at any and all
adjournments thereof, with all powers that the undersigned would possess if
personally present and especially (but without limiting the general
authorization and power hereby given) to vote as indicated on the reverse side
hereof.
The shares represented by this Proxy will be voted in the manner directed, and
if no instructions to the contrary are indicated, will be voted FOR each item.
COMMON STOCK
See Reverse Side
<PAGE>
(This proxy is continued from the reverse side.)
- ---
X Please mark your votes as in this example.
- ---
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS: Anthony J. Caldarone, J. Ernest Brophy, Mark N.
Fessel and Frank Cavell Smith, Jr.
FOR WITHHELD
---- ----
---- ----
For, except vote withheld from the following nominee(s):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2. To approve a proposal to amend the Company's Amended and Restated
Certificate of Incorporation to provide for the classification of the
Company's Board of Directors.
FOR AGAINST WITHHELD
---- ---- ----
---- ---- ----
- --------------------------------------------------------------------------------
3. In their discretion upon such other matters as may properly come before
the meeting or any adjournment or adjournments thereof.
- --------------------------------------------------------------------------------
Dated: __________________, 1997
-------------------------------
-------------------------------
IMPORTANT: Please sign exactly as
name appears at the left. Each
joint owner should sign. Executors,
administrators, trustees, etc.,
should give full title.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
