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)
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(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
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- --- Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:___________________________________________________
2) Form, Schedule or Registration Statement No.______________________________
3) Filing party:_____________________________________________________________
4) Date Filed:_______________________________________________________________
<PAGE>
CALTON, INC.
500 CRAIG ROAD
MANALAPAN, NEW JERSEY 07726-8790
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1998
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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, April 30, 1998 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 one director.
2. To transact such other business as may properly come before the
meeting or any adjournmentthereof.
Holders of Common Stock of record at the close of business on March 18,
1998, 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
March 25, 1998
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.
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PROXY STATEMENT
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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 April 30, 1998, 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." A form of proxy for use at the meeting is
also enclosed. The Company anticipates mailing this Proxy Statement to its
shareholders on or about March 25, 1998. 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
nominee for director named herein. Management is not aware at the date hereof of
any matters to be presented at the meeting other than the election of a
director. 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 March 18, 1998, the number of outstanding shares of Common Stock was
26,631,781. Only shareholders of record on the books of the Company at the close
of business on March 18, 1998 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
the nominee for the Board of Directors.
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 the nominee for director, abstentions and broker
non-votes. Authority withheld will be counted toward the tabulation of the votes
cast on the election of director 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.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to each person who,
as of March 18, 1998, is known by the Company to be the beneficial owner (as
defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934, as
amended) of more than five 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 Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ------
Anthony J. Caldarone ..................... 7,436,218(1) 27.4%
Joyce P. Caldarone ....................... 4,778,218(2) 17.6%
Apollo Homes Partners, L.P.(3) ........... 2,658,000(4) 10.0%
Frederick J. Jaindl(5) ................... 1,640,150 6.2%
Goldman Sachs & Co.(6) ................... 1,344,600 5.0%
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(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"), 11,437
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 which expires in November 1998. 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. Each of
the rights described above terminates in November 1998.
(2) Includes an aggregate of 3,383,009 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 12, 1998.
(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.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of March 18, 1998, 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.
Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ------
Anthony J. Caldarone ........................... 7,436,218(1) 27.4%
J. Ernest Brophy ............................... 45,770(2) (3)
Mark N. Fessel ................................. 38,457(2) (3)
Frank Cavell Smith, Jr. ........................ 20,000(2) (3)
Bradley A. Little .............................. 203,063(4) (3)
Robert A. Fourniadis ........................... 202,319(5) (3)
All Directors and Executive Officers as
a Group (6 persons)(1)(2)(4) and (5) ......... 7,928,594 28.8%
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(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, 11,437 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 20,000 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 181,667 shares subject to currently exercisable options granted
under the 1996 Option Plan and 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 21,396 shares held
through the Company's 401(k) Plan.
(5) Includes 178,667 shares subject to currently exercisable options granted
under the Option Plans and 23,652 shares held through the Company's 401(k)
Plan.
ELECTION OF DIRECTOR
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 is
divided into four classes, with each class to hold office for a term of four
years and the term of office of one class to expire each year. The Board of
Directors has fixed the number of directors at four, one of whom is to be
elected at the 1998 annual meeting, one whose term expires at the annual meeting
in 1999, one whose term expires at the annual meeting in 2000 and one whose term
expires at the annual meeting in 2001.
J. Ernest Brophy is the incumbent director whose term expires at the 1998
annual meeting. The Board has nominated Mr. Brophy for election to the class of
Directors whose term expires at the annual meeting in 2002. It is the intention
of the persons named in the accompanying proxy to vote, unless otherwise
instructed, in favor of the election as director of Mr. Brophy. If Mr. Brophy
should be unable to serve, the proxies will be voted for the election of a
substitute nominee, if any, designated by the Board of Directors. The Company is
not aware of any reason why Mr. Brophy, if elected, would be unable to serve as
a director.
Set forth below is certain biographical information with respect to the
nominee for election to the Board and the directors whose terms of office will
continue after the 1998 annual meeting.
3
<PAGE>
Nominee for Election for a Four-Year Term
Expiring at the 2002 Annual Meeting.
J. ERNEST BROPHY. Mr. Brophy, age, 73, 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 and a director
of Hurdy-Gurdy International, Inc., a company that marketed sorbet products.
Director Continuing in Office until 1999 Annual Meeting.
MARK N. FESSEL. Mr. Fessel, age 41, was initially 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.
Director Continuing in Office until 2000 Annual Meeting.
FRANK CAVELL SMITH, JR. Mr. Smith, age 52, was initially 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.
Director Continuing in Office until 2001 Annual Meeting.
ANTHONY J. CALDARONE. Mr. Caldarone, age 60, 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.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the fiscal year ended November 30, 1997, the Board of Directors held
five meetings and acted by unanimous written consent on three occasions. During
fiscal 1997, each member of the Company's current Board of Directors attended
all of the meetings of the Board of Directors and all of the 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.
During fiscal 1997, 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 1997, the Audit Committee held three 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 1997.
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<PAGE>
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, 1997, 1996 and 1995, of the
Chief Executive Officer of the Company in fiscal 1997 and the other executive
officers of the Company who earned salary and bonuses in fiscal 1997 in excess
of $100,000 (collectively, the "Named Officers"):
<TABLE>
<CAPTION>
Long Term
Annual Compensation Awards Compensation
------------------------------------- ------------
Awards
------------
Securities All Other
Name and Other Annual Underlying Compensation
Principal Position(1) Year Salary($) Bonus($)(2) Compensation Options (#) ($)(3)(4)(5)
- --------------------- ---- --------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Caldarone 1997 $250,000 $52,000 $ -- -- $16,726(6)
Chairman, Chief 1996 250,000 20,000 57,532(7) -- 475
Executive Officer 1995 7,692 -- -- 500,000(8) 240
& President (9)
Bradley A. Little 1997 148,333 45,000 -- 215,000(10) 9,636
Senior Vice President-- 1996 140,000 15,000 -- 25,000 7,586
Finance & Treasurer 1995 137,917 -- -- 185,000(11) 14,004
Robert A. Fourniadis 1997 125,416 25,000 -- 180,000(12) 8,147
Senior Vice President-- 1996 122,500 10,000 -- 10,000 7,014
Legal & Secretary 1995 120,417 -- -- 185,000(11) 13,812
</TABLE>
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(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, 1997. All
cash compensation included in the above table was paid or accrued by Calton
Homes.
(2) Represents amounts accrued in fiscal 1997 and fiscal 1996 and paid in the
subsequent fiscal year to the Named Officers pursuant to the Company's
Incentive Compensation Plan (the "Incentive Plan"). 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
1996 or 1997, and the incentive compensation pools for such years were
$120,000 in fiscal 1996 and $270,000 in fiscal 1997. No Incentive Plan
Awards were made with respect to fiscal 1995. 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, a portion 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 to obtain a specified
level of 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 1997
was made in Common Stock and the Company anticipates that its matching
5
<PAGE>
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 1997 (including the dollar value of contributions made
in the form of Common Stock) were as follows: Mr. Caldarone--$1,034; Mr.
Little--$1,316; and Mr. Fourniadis--$1,298.
(4) Includes automobile allowances in fiscal 1997 as follows: Mr.
Caldarone--$7,200; Mr. Little--$6,000; and Mr. Fourniadis--$6,000.
(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--$7,242; Mr. Little--$1,320; and
Mr. Fourniadis--$849.
(6) Includes $1,250 paid to Mr. Caldarone in connection with his election not
to participate in the Company's group health insurance plan.
(7) Includes (i) automobile allowance of $8,040, (ii) $45,000 paid for
relocation expenses, (iii) $3,450 of premiums paid by the Company under the
program which provides officers with additional life insurance and (iv)
$1,042 paid to Mr. Caldarone in connection with his election not to
participate in the Company's group health insurance plan.
(8) Represents options to purchase Common Stock which were granted to Mr.
Caldarone effective January 31, 1996 pursuant to his employment agreement
with the Company.
(9) 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 through May 1993.
(10) Represents 30,000 shares underlying options granted in January 1998 for
services rendered in fiscal 1997 and 185,000 shares underlying options
granted in respect of prior fiscal years which were repriced in 1997.
(11) 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.
(12) Represents 10,000 shares underlying options granted in January 1998 for
services rendered in fiscal 1997 and 170,000 shares underlying options
granted in respect of prior fiscal years which were repriced in 1997.
DIRECTORS' COMPENSATION
Members of the Board of Directors who are not full time employees of Calton
were each entitled in fiscal 1997 to annual compensation of $20,000 for service
as a director. Calton paid or accrued a total of $66,000 in director fees to
members of the Board of Directors during fiscal year 1997 ($6,300 of which was
paid in the form of Common Stock pursuant to elections permitted under the 1996
Option Plan). 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 is awarded options to purchase 10,000 shares of
the Company's Common Stock each time such director is elected or re-elected to
the Board of Directors and each time that an annual meeting of shareholders is
held during the term of such director. In order to receive the award, an
incumbent non-employee director must have attended 75% of all Board meetings and
75% of all meetings of Board committees of which the director is a member during
the prior 12 months. Options to purchase an aggregate of 30,000 shares of Common
Stock at an exercise price of $.37 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 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, 1999. 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
6
<PAGE>
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 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's 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's 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.
7
<PAGE>
OPTION GRANTS
Shown below is further information with respect to grants of stock options
in fiscal 1997 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
Number of Percent Value at Assumed
Securities of Total Annual Rates of Stock
Under- Options Price Appreciation
lying Granted to Exercise or for Option Term
Options Employees in Base Price Expiration -------------------
Name Granted (#) Fiscal Year ($/Sh) Date(1) 5% ($) 10% ($)
---- ----------- ----------- ------ ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Bradley A. Little ....... 30,000(1) 2.1% $.50 1/29/2008 $ 9,447 $23,906
25,000(2) 1.7% .41 4/24/2006 5,083 12,271
60,000(2) 4.1% .41 1/25/2005 10,015 23,338
100,000(2) 6.8% .41 7/23/2005 18,134 42,892
Robert A. Fourniadis .... 10,000(1) 0.7% .50 1/29/2008 3,149 7,969
10,000(2) 0.7% .41 4/24/2006 2,033 4,908
60,000(2) 4.1% .41 1/25/2005 10,015 23,338
100,000(2) 6.8% .41 7/23/2005 18,134 42,892
</TABLE>
- ----------
(1) Represents shares of Common Stock underlying options granted in January
1998 for services rendered in fiscal 1997. These options are exercisable
cumulatively in five equal annual installments commencing on the first
anniversary of the date of grant.
(2) Represents shares of Common Stock underlying options which were repriced in
January 1997. The options expiring in April 2006 are exercisable in five
equal annual installments during the five year period which commenced in
April 1996. The options which expire in January 2005 and July 2005 are
exercisable in three equal annual installments during the three year
periods which commenced January 1995 and July 1995, respectively.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the value of unexercised options
to purchase the Company's Common Stock held by the Named Officers at November
30, 1997. No options were exercised by the Named Officers in fiscal 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options Held At FY-End (#) Options At FY-End ($)(1)
--------------------------- ---------------------------
Name Exercisable / Unexercisable Exercisable / Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony J. Caldarone ....... 500,000 -- $48,125 --
Bradley A. Little .......... 173,334 36,666 6,013 $2,725
Robert A. Fourniadis ....... 170,334 24,666 5,923 2,365
</TABLE>
- ----------
(1) Represents market value of shares covered by in-the-money options on
November 28, 1997 (the last day of fiscal 1997 on which the Common Stock
was traded on the American Stock Exchange). The closing price of the Common
Stock on such date was $.44. Options are in-the-money if the market value
of shares covered thereby is greater than the option exercise price.
8
<PAGE>
REPORT ON OPTION REPRICING
Shown below is information with respect to all repricings of options held
by any executive officer of the Company during the ten fiscal years ended
November 30, 1997. Except as indicated in the notes to the table set forth
below, information with respect to the market price of the Common Stock reflects
the market price of the Company's Common Stock on the date of the repricing.
<TABLE>
TEN-YEAR OPTION REPRICINGS
<CAPTION>
Length of
Number of Original
Securities Market Price Option Term
Underlying of Stock at Exercise Price Remaining at
Options Time of at Time of Date of
Repriced or Repricing or Repricing or New Exercise Repricing
Name Date Amended(#) Amendment($) Amendment($) Price($) Amendment
---- ---- ---------- ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bradley A. Little .............. 1/28/97 25,000 $.41 $.53 $.41 9 yr 3 mo
Senior Vice 1/28/97 60,000 .41 .50 .41 8 yr
President-Finance 1/28/97 100,000 .41 .50 .41 8 yr 6 mo
and Treasurer 4/18/95 60,000 .50 .72 .50 9 yr 9 mo
4/18/95 100,000 .50 1.94 .50 8 yr 3 mo
Robert A. Fourniadis ........... 1/28/97 10,000 .41 .53 .41 9 yr 3 mo
Senior Vice 1/28/97 60,000 .41 .50 .41 8 yr
President-Legal 1/28/97 100,000 .41 .50 .41 8 yr 6 mo
and Secretary 4/18/95 60,000 .50 .72 .50 9 yr 9 mo
4/18/95 100,000 .50 1.94 .50 8 yr 3 mo
1/31/90 20,000(1) .75(1)(2) 1.79(1) (3) 4 yr 3 mo
Douglas T. Noakes .............. 4/18/95 564,564 .50 1.53 .50 8 yr 1 mo
Former Chief 4/18/95 120,000 .50 .72 .50 9 yr 9 mo
Executive Officer 5/28/93(4) 564,564 1.75(1)(5) .50(1)(4) 1.53 12 yr 1 mo
and President
Peter M. Pizza ................. 1/31/90 30,000(1) .75(1)(2) 2.62(1) .75(1)(6) (6)
Former Senior
Vice President
and Treasurer
</TABLE>
- ----------
(1) Does not reflect a 20 for 1 reverse split effected in May 1993.
(2) Represents the last sales price of the Company's Common Stock on the New
York Stock Exchange on the date the adjustment to the exercise price of the
options was made.
(3) The per share exercise price was adjusted to $.75 if exercised prior to
June 30, 1990, $.77 if exercised prior to September 30, 1990, $.79 if
exercised prior to December 31, 1990, and $.81 if exercised prior to March
31, 1991. These options are no longer outstanding.
(4) For purposes of this Option Repricing Table, the date of repricing of
options granted to Mr. Noakes in 1992 is deemed to be May 28, 1993, the
date the Plan of Reorganization was consummated and the options were
approved by the Board of Directors.
(5) Represents the arithmetic average of the highest and lowest sales prices of
the Company's Common Stock on the American Stock Exchange on June 2, 1993,
the date the Common Stock issued in connection with the Plan of
Reorganization began trading on the American Stock Exchange.
(6) Options were exercised and the purchase price was paid with a promissory
note issued by the optionee. Thereafter, the per share purchase price was
reduced to $.75 and a corresponding reduction was made to the amount of the
note.
9
<PAGE>
CORPORATE PERFORMANCE
Set forth below is a performance graph which 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, 1997, with the cumulative total
return on the American Stock Exchange Market Value Index and peer group
indices(1) over the same period (assuming the investment of $100 in the
Company's Common Stock, the American Stock Exchange Market Value Index and the
peer group indices on June 2, 1993 and that all dividends were reinvested).
[GRAPHICAL REPRESENTATION OF CHART BELOW]
6/3/93 11/30/93 11/30/94 11/30/95 11/30/96 11/30/97
------- -------- -------- -------- -------- --------
CALTON, INC. ......... $100.00 $112.50 $ 46.88 $ 21.88 $ 15.63 $ 21.88
AMEX MARKET INDEX .... $100.00 $107.30 $102.13 $128.32 $138.43 $158.13
FORMER PEER GROUP .... $100.00 $116.40 $ 66.33 $105.44 $111.08 $155.51
CURRENT PEER GROUP ... $100.00 $113.31 $ 57.73 $ 95.93 $101.74 $118.82
- ----------
(1) The current peer group (the "Current 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 Current Peer Group are: Hovnanian Enterprises, Inc., Toll
Brothers, Inc., Oriole Homes Corp., Washington Homes, Inc., FPA Corp. and
Sundance Homes, Inc. The peer group selected for the Company's 1997 Proxy
Statement (the "Former Peer Group") included Lennar Corp., Pulte Home Corp.
and Continental Homes Corp. In selecting the Current Peer Group, the
Company replaced these corporations with Washington Homes, Inc., FPA Corp.
and Sundance Homes, Inc. The Company believes that the corporations added
to the Current Peer Group are more similar to the Company in terms of size
and scope of operations than the corporations replaced.
10
<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 1997 or was formerly an
officer or employee 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
graph 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
through May 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
11
<PAGE>
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 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 1998, the Committee reviewed Mr. Caldarone's compensation,
considering the performance of the Company in fiscal 1997 as compared to its
competitors, the fact that Mr. Caldarone had not received any salary increase or
stock option grants since his return to the Company in 1995 and the completion
of two significant transactions during fiscal 1997: the refinancing of the
Company's revolving credit facility and the sale of the Company's Florida
homebuilding operations. Based upon this information and a review of other
actions implemented by Mr. Caldarone to position the Company for future growth,
the Committee increased Mr. Caldarone's annual salary to $275,000 and awarded
Mr. Caldarone 19.3% of the incentive compensation awarded to participants in the
Incentive Plan, which amounted to $52,000. The total amount of incentive
compensation available for participants in the Incentive Plan for fiscal 1997
was $270,000.
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., which is the beneficial owner of approximately 5% of
the Company's Common Stock, is affiliated with one of the lenders under the
Company's prior revolving credit facility (the "Facility") which was retired in
fiscal 1997 by the repayment of $39.4 million, representing a 7% discount to the
aggregate amount outstanding under the Facility at the time it was retired. The
Goldman, Sachs & Co. affiliate held a 22.5% interest in amounts outstanding
under the Facility at the time of the retirement.
ANNUAL REPORT
The annual report to shareholders for the fiscal year ended November 30,
1997 accompanies this Proxy Statement. Coopers & Lybrand L.L.P. ("Coopers &
Lybrand") has audited the financial statements of the Company for the three
fiscal years ended November 30, 1997, 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.
12
<PAGE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Company is made by
the Board of Directors. On October 21, 1997, the Company's Board of Directors
approved the engagement of Coopers & Lybrand to serve as the Company's
independent public accountants for fiscal 1997. 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 25, 1998. 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 NOMINEE TO 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, P.O. BOX
170, ISELIN, NEW JERSEY 08830. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
ROBERT A. FOURNIADIS
Secretary
March 25, 1998
13
<PAGE>
- --------------------------------------------------------------------------------
CALTON, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 30, 1998
P THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF CALTON, INC.
R
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
O appoints Anthony J. Caldarone and Robert A. Fourniadis and each of them,
the true and lawful attorneys, agents and proxies of the undersigned, with
X 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
Y the close of business on March 18, 1998, 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 THE
ELECTION OF J. ERNEST BROPHY AS DIRECTOR.
COMMON STOCK
------------
SEE REVERSE
SIDE
------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
(This proxy is continued from the reverse side)
Please mark your |
[x] votes as in this | 0000
example. |______
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTOR: J. Ernest Brophy
FOR WITHHELD
[ ] [ ]
- --------------------------------------------------------------------------------
2. In their discretion upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
Dated:___________________________, 1998
_______________________________________
_______________________________________
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.
