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|
Filed by a Party other than the Registrant |_|
Check the appropriate box
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Calton, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
Check the appropriate box
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14(a)(6)(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- ------------------------------------------------------------------------------
<PAGE>
4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
5) Total Fee Paid:
- ------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:_______________________________________________
2) Form, Schedule or Registration Statement No.__________________________
3) Filing party:_________________________________________________________
4) Date Filed:___________________________________________________________
<PAGE>
CALTON, INC.
500 Craig Road
Manalapan, New Jersey 07726-8790
------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 14, 1999
-----------------------------------
TO THE SHAREHOLDERS OF CALTON, INC.
The Annual Meeting of the Shareholders of CALTON, INC. (the "Company")
will be held on Wednesday, April 14, 1999 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 three directors.
2. 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 March 5,
1999, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
MARY H. MAGEE
Secretary
Manalapan, New Jersey
March 19, 1999
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 April 14, 1999, 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 March 19, 1999. 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. Management is not aware at the date
hereof of any matters to be presented at the meeting other than the election of
directors. 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 5, 1999, the number of outstanding shares of Common Stock was
27,252,565. Only shareholders of record on the books of the Company at the close
of business on March 5, 1999 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
<PAGE>
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 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 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 March 5, 1999, 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
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...................... 6,553,805(1) 23.6%
Joyce P. Caldarone........................ 6,553,805(2) 23.6%
Frederick J. Jaindl(3).................... 3,494,250 12.8%
- ----------
(1) Includes an aggregate of 2,281,209 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") and 15,024
shares held through the Company's 401(k) Plan.
(2) Includes an aggregate of 4,272,596 shares beneficially owned by Anthony J.
Caldarone, Mrs. Caldarone's husband, as to which shares she disclaims any
beneficial interest.
(3) 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, 1999. The
Company repurchased all of such shares from Mr. Jaindl on March 10, 1999.
See "Certain Relationships and Related Party Transactions."
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of March 5, 1999, with
respect to the beneficial ownership (as defined in Rule 13d-3) of the Company's
Common Stock by each
2
<PAGE>
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.......................... 6,553,805(1) 23.6%
J. Ernest Brophy.............................. 63,834(2) (3)
Mark N. Fessel................................ 55,765(2) (3)
Frank Cavell Smith, Jr........................ 30,000(2) (3)
Kenneth D. Hill............................... 80,000(4) (3)
Robert E. Naughton............................ -- --
All Directors and Executive Officers as
a Group (6 persons)(1)(2)(4) and (5)....... 6,767,578 24.3%
- ----------
(1) Includes an aggregate of 2,281,209 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 and 15,024 shares held through the Company's 401(k) Plan.
(2) Includes 30,000 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 40,000 shares held by Mr. Hill's spouse, as to which shares he
disclaims beneficial interest.
(5) Includes 51,600 shares subject to currently exercisable options held by an
officer of the Company and 12,574 shares held by such officer 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 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. In March 1999,
the Board increased the number of directors from four to six. As a result, three
directors will be elected at the 1999 annual meeting. The term of Mark N. Fessel
will expire at the 1999 annual meeting. Mr. Fessel has been nominated to stand
for reelection at the meeting to hold office until the 2003 annual meeting. The
Company's Certificate of Incorporation provides that additional directorships
resulting from an increase in the number of directors shall be apportioned among
the classes as equally as possible. Accordingly, Kenneth D. Hill has been
nominated for election to the class of directors whose term expires at the 2002
annual meeting and Robert E. Naughton has been nominated for election to the
class of directors whose term expires at the 2001 annual.
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
three nominees named hereinafter. If any of the nominees should be unable to
serve, the proxies will be voted for the
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<PAGE>
election of a substitute nominee, if any, designated by the Board of Directors.
The Company is not aware of any reason why any of the nominees, if elected,
would be unable to serve as a director.
Set forth below is certain biographical information with respect to the
nominees for election to the Board and the directors whose terms of office will
continue after the 1999 annual meeting.
Nominee for Election for a Four-Year Term Expiring at the 2003 Annual Meeting.
MARK N. FESSEL. Mr. Fessel, age 41, has served as a Director of Calton
since 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.
Nominee for Election for a Three-Year Term Expiring at the 2002 Annual Meeting.
KENNETH D. HILL. Mr. Hill, age 57, is currently Chairman and Chief
Executive Officer of iAW, Inc., a privately held Internet development company.
Since 1975, he has founded and managed computer related companies, including
NASTEC Corporation, a developer of computer-aided software engineering
development tools, from 1982 until its acquisition in 1987, and Multiple
Technologies Corporation, a consulting and application development company, from
1975 to 1982. From January 1994 through February 1996, he was employed as a
consultant by KDH Enterprises, Inc. From March 1997 through April 1998, Mr. Hill
served as President and Chief Executive Officer of DataTell Solutions, Inc., a
regional systems integration company that filed for federal bankruptcy
protection in May 1998. He served as President and Chief Executive Officer of
National AmeriServe, Inc., an internet business solutions provider, from May
1998 through October 1998.
Nominee for Election for a Two-Year Term Expiring at the 2001 Annual Meeting.
ROBERT E. NAUGHTON. Mr. Naughton, age 61, has served as President and CEO
of SIG, Inc. since its founding in 1990. SIG, Inc. is an information technology
consulting firm specializing in network design and management, technology
transition, business profit improvement, project management, E business and
staff augmentation. Prior to 1990, Mr. Naughton held management positions with
AGS Information Services, Compuware and SPR Corporation. He has 23 years of
experience in the information technology industry, including sales, marketing,
recruiting and P&L management.
Director Continuing in Office until 2000 Annual Meeting.
FRANK CAVELL SMITH, Jr. Mr. Smith, age 52, has served as a Director of
Calton since 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.
4
<PAGE>
Director Continuing in Office until 2001 Annual Meeting.
ANTHONY J. CALDARONE. Mr. Caldarone, age 61, 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. From June 1993 through October 1995, Mr. Caldarone served
as a Director of the Company.
Director Continuing in Office until 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. 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.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the fiscal year ended November 30, 1998, the Board of Directors
held seven meetings. During fiscal 1998, each member of the Company's current
Board of Directors attended at least 75% 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 1998, 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 1998, 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 1996 Option Plan and
the Amended and Restated 1993 Non-Qualified Stock Option Plan (the "1993 Option
Plan" and collectively with the 1996 Option Plan, the "Option Plans"). During
fiscal 1998, the Compensation Committee held one meeting and acted by unanimous
written consent on one occasion.
5
<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, 1998, 1997 and 1996, of the
Chief Executive Officer of the Company in fiscal 1998 and the other executive
officers of the Company who earned salary and bonuses in fiscal 1998 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 1998 $275,000 $350,000 $ --- 600,000(6) $17,855 (7)
Chairman, Chief 1997 250,000 52,000 --- --- $16,726
Executive Officer 1996 250,000 20,000 57,532 (8) --- 475
& President
Bradley A. Little (9) 1998 158,000 225,000 --- --- $9,816
Senior Vice President- 1997 148,333 45,000 --- 215,000(10) 9,636
Finance & Treasurer 1996 140,000 15,000 --- 25,000 7,586
Robert A. Fourniadis (9) 1998 129,500 150,000 --- --- $9,016
Senior Vice President- 1997 125,416 25,000 --- 185,000(11) 8,147
Legal & Secretary 1996 122,500 10,000 --- 10,000 7,014
</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 the three years ended November 30, 1998. All cash
compensation included in the above table was paid or accrued by Calton
Homes. The Company sold all of the outstanding capital stock of Calton
Homes on December 31, 1998.
(2) Represents amounts accrued in fiscal 1998, 1997 and 1996 and paid in the
subsequent fiscal year to the Named Officers (a) pursuant to the Company's
Incentive Compensation Plan (the "Incentive Plan") and (b) as bonus
compensation in connection with the sale of Calton Homes. 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 fiscal 1996, 1997 or 1998, and the incentive compensation pools for
such years were $120,000 in fiscal 1996, $270,000 in fiscal 1997 and
$750,000 in fiscal 1998. 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
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<PAGE>
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.
The amounts awarded under the Incentive Plan to the Named Officers for
fiscal 1998 were as follows: Mr. Caldarone - $190,000; Mr. Little -
$90,000 and Mr. Fourniadis - $80,000. A total of $500,000 of bonuses was
awarded by the Compensation Committee as bonuses as a result of the sale
of Calton Homes. Of this amount, $160,000 was awarded to Mr. Caldarone,
$135,000 was awarded to Mr. Little and $70,000 was awarded to Mr.
Fourniadis.
(3) Includes amounts contributed by the Company under its 401(k) Plan (the
"401(k) Plan"). All full-time employees who had completed more than one
year of service with the Company were eligible to participate in the
401(k) Plan which allowed 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 could make matching contributions to the 401(k)
Plan in the form of cash or Common Stock. The Company's matching
contribution for fiscal 1998 was made in Common Stock. Amounts contributed
by the Company to the accounts of the Named Officers for fiscal 1998
(including the dollar value of contributions made in the form of Common
Stock) were as follows: Mr. Caldarone - $2,000; Mr. Little - $2,000; and
Mr. Fourniadis - $2,000. The Company is in the process of terminating the
401(k) Plan as a result of the sale of Calton Homes.
(4) Includes automobile allowances in fiscal 1998 as follows: Mr. Caldarone -
$6,600; 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 - $8,005; Mr. Little - $1,816;
and Mr. Fourniadis - $1,066.
(6) Represents shares underlying options granted in January 1999 for services
rendered in fiscal 1998.
(7) Includes $1,250 paid to Mr. Caldarone in connection with his election not
to participate in the Company's group health insurance plan.
(8) Includes (i) automobile allowance of $8,040, (ii) $45,000 paid for
relocation expenses and (iii) $1,042 paid to Mr. Caldarone in connection
with his election not to participate in the Company's group health
insurance plan.
(9) As a result of the sale of Calton Homes, this individual ceased to be an
officer of the Company on December 31, 1998.
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<PAGE>
(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 15,000 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 1998 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 1998 ($18,250 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 $0.625 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 1998.
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. In
January 1998, the Compensation Committee fixed Mr. Caldarone's annual salary at
$275,000. 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.
8
<PAGE>
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
year's 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 year's 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.
9
<PAGE>
OPTION GRANTS
Shown below is further information with respect to grants of stock
options in fiscal 1998 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
Value at Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options Appreciation for Option
Underlying Granted to Exercise or Term
Options Employees in Base Price Expiration --------------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10%
---- ----------- ----------- ------ ---- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Caldarone........ 600,000(1) 94.4% $1.22 1/27/2009 $460,355 $1,166,588
</TABLE>
- ----------
(1) Represents shares of Common Stock underlying options granted in January
1999 for services rendered in fiscal 1998. These options are exercisable
cumulatively in three equal annual installments commencing on the first
anniversary of the date of grant.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the value of unexercised
options to purchase the Company's Common Stock held by the Named Officers at
November 30, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options Held At FY-End (#) Options At FY-End ($)(1)
--------------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony J. Caldarone........................... 500,000 -- $359,375 --
Bradley A. Little ............................. 186,667 53,333(2) 123,425 $32,913
Robert A. Fourniadis........................... 180,667 29,333(2) 119,510 18,602
</TABLE>
- ----------
(1) Represents market value of shares covered by in-the-money options on
November 30, 1998. The closing price of the Common Stock on such date was
$1-1/16. Options are in-the-money if the market value of shares covered
thereby is greater than the option exercise price.
(2) All of such options became exercisable on January 1, 1999 as a result of
the sale of Calton Homes.
CORPORATE PERFORMANCE
Set forth below is a performance graph which compares the percentage
change in the cumulative total shareholder return on the Common Stock of the
Company for the period from
10
<PAGE>
December 1, 1993 to November 30, 1998, with the cumulative total return on the
American Stock Exchange Market Value 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 Market Value Index and the peer group indices on
December 1, 1993 and that all dividends were reinvested).
[GRAPHICAL REPRENSENTATION OF DATA BELOW]
<TABLE>
<CAPTION>
------------------------------FISCAL YEAR ENDING-----------------------------
COMPANY/INDEX/MARKET 11/30/1993 11/30/1994 11/30/1995 11/29/1996 11/28/1997 11/30/1998
<S> <C> <C> <C> <C> <C> <C>
Calton Inc 100.00 41.67 19.44 13.89 19.44 47.22
Peer Group 100.00 50.84 84.50 89.56 104.68 107.96
AMEX Market Index 100.00 95.18 119.60 129.01 147.37 145.59
</TABLE>
- --------
(1) The peer group (the "Peer Group") selected by the Company is comprised, for
the most part, of companies in the homebuilding industry that were of the same
or similar size as the Company in fiscal 1998 and competed 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., Oriole Homes
Corp., Washington Homes, Inc. FPA Corp. and Sundance Homes, Inc.
11
<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 1998 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. In recent years, 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
in the business historically conducted by 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 the Company. 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.
12
<PAGE>
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 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 1999, the Committee reviewed Mr.
Caldarone's compensation, considering the significant improvements in
performance that had been achieved in fiscal 1998, the performance of the
Company in fiscal 1998 as compared to its competitors and the fact that Mr.
Caldarone had not received any stock option grants and only one increase in
salary (which increased his annual base salary to $275,000) since his return to
the Company in 1995. Based upon this information, the Committee granted Mr.
Caldarone options to purchase 600,000 shares of Common Stock at an exercise
price of $1.22 per share (the fair market value on the date of the grant) and
awarded Mr. Caldarone 25.3% of the incentive compensation awarded to
participants in the Incentive Plan, which amounted to $190,000. The total amount
of incentive compensation available for participants in the Incentive Plan for
fiscal 1998 was $750,000. In addition, in view of the key role played by Mr.
Caldarone in the negotiation and consummation of the sale of Calton Homes (the
"Sale Transaction"), the Committee awarded Mr. Caldarone $160,000 (32%) of the
$500,000 bonus pool awarded to officers and key operations and senior corporate
management employees as a result of the consummation of the Sale Transaction
which the Company estimates will result in a pretax gain of approximately $8.8
million in the first quarter of fiscal 1999.
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
13
<PAGE>
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
In December 1998, the Company repurchased 886,000 shares of Common Stock
from Apollo Homes Partners, L.P. ("Apollo") for an aggregate purchase price of
$996,750 ($1.125 per share). Contemporaneous with this transaction, Apollo sold
886,000 shares of Common Stock to Anthony J. Caldarone, the Chairman, President
and Chief Executive Officer of the Company, and 886,000 shares of Common Stock
to Joyce P. Caldarone, Mr. Caldarone's wife, at a price of $1,125 per share.
Prior to these transactions, Apollo owned approximately 10% of the Company's
outstanding Common Stock.
On March 10, 1999, the Company repurchased an aggregate of 3,950,000
shares of Common Stock from Frederick Jaindl, his son, Mark Jaindl, and certain
of their affiliates. The shares repurchased represented approximately 14.5% of
the Company's outstanding Common Stock prior to the transaction. After taking
into account $332,645 of profits disgorged by Messrs. Jaindl to the Company
under the short-swing profit rules of the Securities and Exchange Commission,
the aggregate amount paid by the Company for the stock was $5,333,377 ($1.35 per
share).
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its executive officers, directors and
greater than ten percent shareholders complied with all filing requirements
applicable to them with respect to events or transactions during fiscal 1998,
except that the Forms 5 required to be filed by each of Bradley A. Little (to
report acquisitions of Common Stock under the 401(k) Plan and one grant of
options under the 1996 Option Plan), Robert A. Fourniadis (to report
acquisitions of Common Stock under the 401(k) Plan and one grant of options
under the 1996 Option Plan), Anthony J. Caldarone (to report acquisitions of
Common Stock under the 401(k) Plan), Mark N. Fessel (to report four acquisitions
of Common Stock and one grant of options under the 1996 Option Plan), J. Ernest
Brophy (to report two acquisitions of Common Stock and one grant of options
under
14
<PAGE>
the 1996 Option Plan) and Frank C. Smith (to report one grant of options under
the 1996 Option Plan) in January 1999 were filed late.
ANNUAL REPORT
The annual report to shareholders for the fiscal year ended November 30,
1998 accompanies this Proxy Statement. PricewaterhouseCoopers L.L.P.
("PricewaterhouseCoopers") has audited the financial statements of the Company
for the three fiscal years ended November 30, 1998, 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 November 17, 1998, the Company's Board of Directors
approved the engagement of PricewaterhouseCoopers to serve as the Company's
independent public accountants for fiscal 1998. PricewaterhouseCoopers 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 PricewaterhouseCoopers 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 19, 1999. 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 FOR
THE NOMINEES 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.
15
<PAGE>
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.
MARY H. MAGEE
Secretary
March 19, 1999
16
<PAGE>
CALTON, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 14, 1999
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF CALTON, INC.
PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Anthony J. Caldarone and David J. Coppola 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 March
5, 1999, 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. Said proxies are
authorized to vote in their discretion upon any other matters which may properly
come before the meeting.
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 ALL NOMINEES LISTED ON THE REVERSE SIDE OF THIS CARD.
COMMON STOCK -----------
SEE REVERSE
SIDE
-----------
<PAGE>
(This proxy is continued from the reverse side)
|X| PLEASE MARK YOUR |
VOTES AS IN THIS | 9334
EXAMPLE. |
FOR all nominees
(except as provided WITHHOLD
to the contrary AUTHORITY to
below) vote for all nominees
Election of Mark N. Fessel, |_| |_|
Kenneth D. Hill, and
Robert E. Naughton, as
Directors.
Instruction: to withhold authority
to vote for any individual nominee,
write nominee(s) name here:
----------------------------------
| PLEASE MARK, SIGN, DATE AND RETURN
| THE PROXY CARD PROMPTLY USING THE
| ENCLOSED ENVELOPE.
Signature(s) of Shareholder(s)___________________________________________Dated
, 1999
(Joint Owners must each sign. Please sign exactly as your name(s)
appear(s) on the card. When signing as attorney, trustee, executor, and
administrator, guardian or corporate officer, please give your full
title.)
