SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
OAKWOOD HOMES CORPORATION
(Name of Registrant as Specified in Its Charter)
OAKWOOD HOMES CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
- --------------------------------------------------------------------------------
[ ] 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>
OAKWOOD HOMES CORPORATION
P. O. BOX 7386, GREENSBORO, NORTH CAROLINA
27417-0386
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 31, 1996
NOTICE is hereby given that the Annual Meeting of Shareholders of Oakwood
Homes Corporation (the Company) will be held in the Auditorium of the Four
Seasons Holiday Inn Convention Center, 3121 High Point Road, Greensboro, North
Carolina on Wednesday, January 31, 1996 at 2:00 P.M., Local Time, for the
purpose of considering and acting upon the following:
1. Election of three members to the Board of Directors for a term of
three years and until their successors are elected and qualified.
2. Approval of Key Employee Stock Plan.
3. Approval of Executive Incentive Compensation Plan.
4. Ratification of the selection of Price Waterhouse LLP as independent
public accountants for the fiscal year ending September 30, 1996.
5. Any and all other matters that may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on December 1, 1995
as the record date for determining the shareholders entitled to notice of and to
vote at the meeting or any adjournment thereof and only holders of Common Stock
of the Company of record at such date will be entitled to notice thereof and to
vote thereat.
You are urged to attend the annual meeting in person but, if you are unable
to do so, the Board of Directors will appreciate the prompt return of the
enclosed proxy, dated and signed. The proxy may be revoked at any time before it
is exercised and will not be exercised if you attend the meeting and vote in
person.
By order of the Board of Directors.
NICHOLAS J. ST. GEORGE
President
Greensboro, North Carolina
December 27, 1995
<PAGE>
OAKWOOD HOMES CORPORATION
P. O. BOX 7386
GREENSBORO, NORTH CAROLINA 27417-0386
-------------------
PROXY STATEMENT
-------------------
General
This Proxy Statement and the accompanying proxy card are furnished to the
shareholders of Oakwood Homes Corporation (the "Company") commencing on or about
December 27, 1995 in connection with the solicitation by the Board of Directors
of proxies to be used at the Annual Meeting of Shareholders to be held at the
Auditorium of the Four Seasons Holiday Inn Convention Center, 3121 High Point
Road, Greensboro, North Carolina on Wednesday, January 31, 1996 at 2:00 P.M.,
Local Time, and at any adjournment thereof.
Solicitation other than by mail may be made personally and by telephone by
regularly employed officers and employees of the Company who will not be
additionally compensated therefor. The Company will request brokers, dealers,
banks or voting trustees, or their nominees, who hold stock in their names for
others or hold stock for others who have the right to give voting instructions,
to forward proxy material to their principals and request authority for the
execution of the proxy and will reimburse such persons for their reasonable
expenses in so doing. The total cost of soliciting proxies will be borne by the
Company.
Any proxy delivered in the accompanying form may be revoked by the person
executing the proxy at any time before the authority thereby granted is
exercised by filing an instrument revoking it or a duly executed proxy bearing a
later date with the Secretary of the Company or if the person executing the
proxy attends the meeting and elects to vote in person. If a choice is specified
in the proxy, shares represented thereby will be voted in accordance with such
choice. If no choice is made, the proxy will be voted FOR the action proposed.
The only matters to be considered at the meeting, so far as known to the
Board of Directors, are the matters set forth in the Notice of Annual Meeting of
Shareholders and routine matters incidental to the conduct of the meeting.
However, if any other matter should come before the meeting or any adjournment
thereof, it is the intention of the persons named in the accompanying proxy or
their substitutes to vote the proxy in accordance with their best judgment on
such matters.
Each shareholder present or represented and entitled to vote on a matter at
the meeting or any adjournment thereof will be entitled to one vote on such
matter for each share held by him of record at the close of business on December
1, 1995, which is the record date for determining the shareholders entitled to
notice of and to vote at such meeting or any adjournment thereof. The number of
outstanding shares of the $.50 par value Common Stock of the Company (the Common
Stock) at the close of business on December 1, 1995 was 22,264,493 shares.
1
<PAGE>
Principal Holders of the Common Stock and Holdings of Management
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the only person known by the Company
to own beneficially more than 5% of the Common Stock:
Number of Shares
and Nature of Percentage of
Beneficial Shares
Name and Address Ownership Outstanding
- ---------------- --------- -----------
FMR Corp.
82 Devonshire Street
Boston, MA 02109 3,216,950(1) 14.4%
- ----------
(1) The information concerning beneficial ownership is derived from a Schedule
13G dated February 13, 1995, filed by FMR Corp. jointly on behalf of FMR
Corp., Edward C. Johnson, Fidelity Management & Research Company and the
Fidelity Magellan Fund. FMR Corp. has sole voting power over 25,600 shares
and sole dispositive power over all of the shares. FMR Corp. does not have
shared voting or dispositive power over any of the shares.
The following table sets forth as of December 1, 1995 certain information
with respect to the beneficial ownership of the Common Stock by Mr. J. Michael
Stidham, Executive Vice President--Retail of Oakwood Mobile Homes, Inc., a
wholly-owned subsidiary of the Company, Larry T. Gilmore, Executive Vice
President--Consumer Finance of Oakwood Acceptance Corporation, a wholly-owned
subsidiary of the Company, and Robert D. Harvey, Sr., Vice
President--Administration and a Director of the Company not standing for
reelection, and by all directors and officers as a group. Information as to the
beneficial ownership of each of the other directors individually (including
executive officers who are also directors) is included in the information on
each director or nominee under the heading "Election of Directors."
Number of Shares Percentage of
Name of Beneficial Owner Beneficially Owned Shares Outstanding(1)
- ------------------------ ------------------ ---------------------
J. Michael Stidham 59,633(2) (3)
Larry T. Gilmore 48,658(4) (3)
Robert D. Harvey, Sr. 92,279(5) (3)
All directors and executive
officers as a group (17 persons) 1,432,475(6) 6.3%
- ----------
(1) Based on the number of shares outstanding plus options which are presently
exercisable or exercisable within 60 days.
(2) Includes 40,837 shares subject to options which are presently exercisable
or exercisable within 60 days.
(3) Less than 1%.
(4) Includes 37,300 shares subject to options which are presently exercisable
or exercisable within 60 days and 200 shares held by Mr. Gilmore's wife.
(5) Includes 82,366 shares subject to options which are presently exercisable
or exercisable within 60 days.
(6) Includes 650,050 shares subject to options which are presently exercisable
or exercisable within 60 days.
2
<PAGE>
Election of Directors
The Board of Directors has 11 members. Four of the directors' terms expire
in 1996. The Board proposes to fill three of these positions at the meeting with
the three nominees to serve, subject to the provisions of the Bylaws, until the
Annual Meeting of Shareholders in 1999 and until their successors are duly
elected and qualified. There will be one vacancy on the Board of Directors. The
Board of Directors intends to leave this position open until the Board of
Directors has identified an appropriate individual who is willing to serve as a
director. Directors are elected by a plurality of the votes cast by the holders
of shares entitled to vote in the election of directors at a meeting at which a
majority of the votes entitled to be cast is present. Provided a majority is
present, abstentions and shares not voted are not taken into account in
determining a plurality. It is the intention of the persons named in the
accompanying proxy to vote all proxies solicited by the Board of Directors for
the three nominees listed hereafter for the terms expiring in 1999, unless
authority to vote for the nominees or an individual nominee is withheld by a
shareholder. If for any reason any nominee shall not become a candidate for
election as a director at the meeting, an event not now anticipated, the proxies
will be voted for the three nominees including such substitutes as shall be
designated by the Board of Directors.
The nominees for election as directors to serve until 1999 were elected to
their present terms, which expire in 1996, at the Annual Meeting of Shareholders
held February 3, 1993, except for Mr. Streeter, who was elected to his present
term at the Annual Meeting of Shareholders held February 2, 1994:
<TABLE>
<CAPTION>
Number of
Shares Percentage
Name and Beneficially of Shares
Director Since Information About Director Owned(1) Outstanding(2)
- -------------- -------------------------- -------- --------------
<S> <C> <C> <C>
Nicholas J. St. George President and Chief Executive Officer of the 258,403(3) 1.2%
1972 Company since 1979. Director of American
Bankers Insurance Group, Inc. and of Legg
Mason, Incorporated. He is 56 years old.
A. Steven Michael Executive Vice President and Chief Operating 130,324(4) (5)
1992 Officer of the Company since 1989.
He is 45 years old.
Sabin C. Streeter Managing Director, Donaldson Lufkin & Jenrette 12,500(6) (5)
1993 Securities Corporation (investment banking firm)
since 1976. Director of Middleby Corporation,
Park-Hunter Incorporated and FOTOBALL, Inc.
He is 54 years old.
</TABLE>
3
<PAGE>
The following members of the Board of Directors were elected to their
present terms, which expire in 1997, at the Annual Meeting of Shareholders held
February 2, 1994:
<TABLE>
<CAPTION>
Number of
Shares Percentage
Name and Beneficially of Shares
Director Since Information About Director Owned(1) Outstanding(2)
- -------------- -------------------------- -------- --------------
<S> <C> <C> <C>
Ralph L. Darling Chairman of the Board of the Company since 441,326(7) 2.0%
1971 1971. He is 84 years old.
Kermit G. Phillips, II Chairman of the Board, Phillips Management 116,894(8) (5)
1979 Group, Inc., Greensboro, NC (real estate
development and management company) since
1974. He is 61 years old.
H. Michael Weaver Chairman of the Board of W.H. Weaver 49,562(9) (5)
1991 Construction Company (general construction,
real estate development and management) since
1975. He is 58 years old.
Francis T. Vincent, Jr Private Investor. Commissioner of Major League 8,500(6) (4)
1993 Baseball, 1989-1992. Director of Time-Warner
Inc., Horizon Group, Inc. and Culbro Corporation.
He is 57 years old.
</TABLE>
The following members of the Board of Directors were elected to their
present terms, which expire in 1998, at the Annual Meeting of Shareholders held
February 1, 1995:
<TABLE>
<CAPTION>
Number of
Shares Percentage
Name and Beneficially of Shares
Director Since Information About Director Owned(1) Outstanding(2)
- -------------- -------------------------- -------- --------------
<S> <C> <C> <C>
Clarence W. Walker Partner, Kennedy Covington Lobdell & 56,359(10) (5)
1971 Hickman, L.L.P., Attorneys at Law, Charlotte, NC
since 1961. He is 64 years old.
Dennis I. Meyer Partner, Baker & McKenzie, Attorneys at Law, 38,684(11) (5)
1983 Washington, DC since 1965. Director of United
Financial Banking Companies, Inc. (bank holding
company). He is 60 years old.
C. Michael Kilbourne Executive Vice President of the Company since 64,430(12) (5)
1995 1994 and Chief Financial Officer of the Company
since 1988; Vice President of the Company,
1988-1994; Treasurer of the Company, 1988-1992.
He is 45 years old.
</TABLE>
4
<PAGE>
- ----------
(1) Common Stock ownership information is as of December 1, 1995.
(2) Based on the number of shares outstanding plus shares subject to options
held by the director or nominee which are presently exercisable or
exercisable within 60 days.
(3) Includes 158,215 shares subject to options which are presently exercisable
or exercisable within 60 days.
(4) Includes 101,875 shares subject to options which are presently exercisable
or exercisable within 60 days.
(5) Less than 1%.
(6) Includes 7,500 shares subject to an option which is presently exercisable
or exercisable within 60 days.
(7) Includes 48,190 shares held by Mr. Darling's wife. A Stock Purchase and
Option Agreement between Mr. Darling and the Estate of Mr. James E.
LaVasque grants to Mr. Darling the right of first refusal to purchase any
of the Common Stock that the Estate proposes to sell. The trusts
established under the will of Mr. LaVasque owned 149,999 shares of Common
Stock at December 1, 1995. None of the LaVasque trust shares are included
above.
(8) Includes 36,090 shares subject to options which are presently exercisable
or exercisable within 60 days.
(9) Includes 15,000 shares subject to options which are presently exercisable
or exercisable within 60 days and 1,000 shares held by Mr. Weaver's wife.
(10) Includes 36,090 shares subject to options which are presently exercisable
or exercisable within 60 days and 1,171 shares held by Mr. Walker's wife.
(11) Includes 36,090 shares subject to options which are presently exercisable
or exercisable within 60 days and 2,594 shares held by Mr. Meyer's wife.
(12) Includes 48,021 shares subject to options which are presently exercisable
or exercisable within 60 days.
Committees of the Board of Directors
The Audit Committee is composed of Kermit G. Phillips, II, Clarence W.
Walker and H. Michael Weaver. This Committee is responsible for recommending
independent public accountants for the Company and reviewing the Company's
financial statements, audit reports, internal financial controls and internal
audit procedures. The Audit Committee met three times during the year ended
September 30, 1995.
The Compensation Committee is composed of Dennis I. Meyer, Sabin C.
Streeter, Francis T. Vincent, Jr. and H. Michael Weaver. This Committee reviews
and makes recommendations and determinations with respect to the compensation of
officers. The Compensation Committee met four times during the fiscal year ended
September 30, 1995.
The Board of Directors of the Company does not have a Nominating Committee.
The Board of Directors met six times during the fiscal year ended September
30, 1995. Each director attended more than 75% of the aggregate of the number of
meetings of the Board of Directors and the number of meetings of all Committees
on which he served.
5
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is currently composed of Dennis I. Meyer, Sabin
C. Streeter, H. Michael Weaver and Francis T. Vincent, Jr.
Donaldson Lufkin & Jenrette Securities Corporation, of which Sabin C.
Streeter is Managing Director, has provided investment banking services to the
Company during the past fiscal year and such firm may provide similar services
to the Company during the current fiscal year.
Weaver, Grubar & Black Company, a real estate broker of which H. Michael
Weaver is Chairman of the Board and principal shareholder, has performed
brokerage services for the Company in connection with the Company's purchase and
sale of certain properties and received $39,600 from the Company during fiscal
1995 for such services. In addition, W. H. Weaver Construction Company, of which
Mr. Weaver is Chairman of the Board and principal shareholder, is serving as
construction manager in connection with the construction of the Company's new
headquarters in Greensboro, North Carolina. W. H. Weaver Construction Company
will receive $440,000 for such services.
The law firm of Kennedy Covington Lobdell & Hickman, L.L.P., of which
Clarence W. Walker is a partner and Myles E. Standish, Senior Vice President and
General Counsel of the Company, is of counsel, has served as counsel to the
Company since 1971. It is expected that such firm will continue to serve as
counsel to the Company during the current fiscal year.
Compensation Committee Report
Compensation Committee. The Compensation Committee (the "Committee") is a
standing committee of the Board of Directors composed of directors who are not
employees of the Company. Mr. Streeter is the Chairman. Messrs. Meyer, Vincent
and Weaver are the other members.
The Committee attempts to insure that the executive compensation programs
of the Company are developed, implemented and administered in a way that
supports the Company's objective of linking compensation to performance. The
Committee reviews and sets the base salaries and incentive compensation of
senior executives, including the President and Chief Executive Officer, Nicholas
J. St. George, and administers the Company's 1990 Long Term Performance Plan,
including the granting of stock options and stock appreciation rights ("SARs")
and long-term cash incentive compensation awards thereunder.
In the future the Committee will administer annual and long term incentive
compensation of senior executives under two new Plans that are being recommended
for shareholder approval at this meeting: the Executive Incentive Compensation
Plan and the Key Employee Stock Plan, assuming they receive shareholder
approval. Both of those Plans are intended to qualify for the exclusion of
"performance-based compensation" for purposes of the $1 million limit on
deductible annual compensation imposed by Section 162(m) of the Internal Revenue
Code. They are more fully described herein under the headings bearing their
respective names.
Corporate Compensation Philosophy. The Committee believes that base
compensation should be at a level sufficient to enable the Company to attract
and retain the highly qualified executives it needs and that incentives should
be provided to maximize the Company's financial and operating results each year
and over the long term. A major portion of each executive's annual compensation
is provided through bonuses dependent on the accomplishment of annual
performance goals set by the Committee and long-term incentives are provided
through long-term cash incentive compensation awards and grants of stock
options, SARs and restricted stock, which link the interests of the Company's
executives and shareholders.
6
<PAGE>
Executive Compensation. The Company's executive compensation program is
composed of three basic elements: (A) base salary; (B) annual incentive
opportunities to earn significant additional cash; and (C) long-term
opportunities to accumulate shares of Common Stock and SARs and to earn cash
awards based upon the Company's performance over time.
Base Salary. Base salaries for fiscal 1995 were approximately 34% higher
than in fiscal 1994, reflecting the Committee's decision to bring base salaries
into the 40th to 50th percentile range of base salaries for like positions in
companies of comparable size. It remains the Company's philosophy to set base
salaries at the minimum levels required to attract and retain qualified
executives and to require above-average profit performance as the basis for
paying above-average compensation.
Annual Incentive Compensation. The Committee establishes an annual
incentive compensation pool to be distributed among participating executive
officers (according to predetermined participation percentages) if a level of
net earnings set by the Committee is met. This pool diminishes if net earnings
are less, and increases if net earnings are greater. The executives eligible to
participate and their percentage participation are determined by the Committee
based upon the participant's level of responsibility and capacity to contribute
to the achievement of annual profit goals. The Committee attempts to set an
incentive compensation pool that will allow executives' annual cash compensation
(base salary plus incentive compensation) to significantly exceed the median
annual cash compensation levels at companies of comparable size if the Company
achieves significant increases in net earnings. In making these determinations
the Committee utilizes data obtained for it by nationally recognized benefits
consultants. The average bonuses received in fiscal 1995 by the four most highly
compensated executive officers other than Mr. St. George were 33% higher than in
fiscal 1994.
Long Term Incentive Awards. The Committee provides long term incentives in
the form of stock options, SARs, restricted stock grants and performance-based
cash awards. In the past these long term incentive awards have been granted
under the Company's 1990 Long Term Performance Plan and in the future they will
be granted under the new plans discussed elsewhere herein if they are approved
by the shareholders. See "Approval of Oakwood Homes Corporation Key Employee
Stock Plan" and "Approval of Oakwood Homes Corporation Executive Incentive
Compensation Plan."
The stock options, SARs and restricted stock seek to advance the long term
interests of the shareholders by providing rewards to executives if the price of
the Company's stock appreciates. The number of stock options and SARs granted by
the Committee is based on the level of responsibility of the executive and the
executive's performance. The executive's right to exercise stock options or SARs
vests over a period generally ranging from one to five years. Certain options
and SARs granted by the Committee are contingent upon the Company meeting
certain target performance levels.
The Committee made no long-term cash incentive awards in fiscal 1995
because in fiscal 1994 the Committee established a three-year performance
program consisting of grants of stock options exercisable in November 1996 and
performance-based cash awards to be paid in November 1996 based upon the
Company's net income over the three-year period ending September 30, 1996.
Deductibility of Compensation. The Committee generally attempts to see that
cash compensation paid to executive officers is deductible for federal income
tax purposes. To that end the Committee and the Board of Directors are
recommending that the shareholders approve the Executive Incentive Compensation
Plan and the Key Employee Stock Plan at this meeting. If such shareholder
approval is not obtained, the Committee will retain the right to pay
compensation in excess of $1 million, whether or not such compensation is
deductible, and will do so if the Committee determines that such payments are
necessary or desirable to attract and retain quality executives. Many of the
stock options granted by the Committee are incentive stock options, and the
Company receives no tax deduction on the exercise of such options.
7
<PAGE>
Chief Executive Officer Compensation. The Company's compensation for the
President and Chief Executive Officer, Mr. Nicholas J. St. George, consists of
the same three basic elements as for the Company's other executive officers.
Base Salary. Mr. St. George's base salary was set for fiscal 1995 at
$450,000, which represents an increase of 38% in Mr. St. George's base salary
over fiscal 1994, bringing his base salary to slightly below the median base
salaries of chief executive officers of companies of comparable size.
Annual Incentive Compensation. Mr. St. George's fiscal 1995 participation
in the incentive compensation pool for senior executives was significantly
higher than any of the other executives who participated in the pool, reflecting
Mr. St. George's level of responsibility. Mr. St. George's bonus for fiscal 1995
was $712,250, an increase of 6% over fiscal 1994.
Approximately $150,000 of Mr. St. George's compensation for fiscal 1995
will be non-deductible because it exceeded the $1 million limit on deductible
annual compensation and no exception was available for incentive compensation
paid under the existing plan. It is expected that future incentive compensation
will be excludable from the $1 million limit if the Oakwood Executive Incentive
Compensation Plan is approved at this meeting.
Long Term Incentive Awards. Mr. St. George was one of the executive
officers selected by the Committee to receive stock options and
performance-based cash awards in November 1993. Mr. St. George was granted
options to purchase a total of 82,500 shares of Common Stock exercisable in
November 1996 along with certain rights to receive cash payments at the time of
exercise to help offset Mr. St. George's tax obligations resulting from the
exercise of a 50,000 share nonqualified portion of the option. In addition, Mr.
St. George was awarded the opportunity to earn a target amount of $1,102,000 in
a performance-based cash award. In light of the Company's performance in the
first two years of the program, it is expected that this amount will be
significantly increased based upon the net income of the Company over the
three-year period.
Sabin C. Streeter, Chairman
Dennis I. Meyer
H. Michael Weaver
Francis T. Vincent, Jr.
8
<PAGE>
Shareholder Return Performance Graph
Presented below is a line graph comparing the yearly percentage change in
the Company's cumulative shareholder return on the Company's Common Stock
against the cumulative total return of the Standard & Poors ("S&P") 500 Index
and a peer group for the period commencing October 1, 1990 and ending September
30, 1995, covering the Company's last five fiscal years. The peer group consists
of the following publicly traded companies, all of which are engaged in aspects
of the manufactured housing industry: Cavalier Homes, Inc., Champion
Enterprises, Inc., Clayton Homes, Inc., Fleetwood Enterprises, Inc., Liberty
Homes, Inc., Schult Homes Corporation and Skyline Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX AND PEER GROUP
OAKWOOD HOMES CORPORATION
Total Cumulative Shareholder Return for Period Ending September 30, 1995
[The table below is represented as a line graph in the printed report]
September 30,
------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Oakwood Homes 100.00 216.59 373.16 649.32 629.55 886.09
Peer Group 100.00 182.21 217.66 313.97 334.40 384.81
S&P 500 100.00 131.05 145.47 164.29 170.40 220.90
This graph assumes that $100 was invested in the Company's Common Stock on
October 1, 1990 in the S&P 500 Index and in the peer group, and assumes
reinvestment of all dividends.
9
<PAGE>
Executive Compensation
The table below shows certain compensation information for the three fiscal
years ended September 30, 1995 concerning the Company's Chief Executive Officer
and the Company's other four most highly compensated executive officers and
Robert D. Harvey, Sr., who was an executive officer during a portion of fiscal
1995 and during fiscal 1994 and 1993 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------- ----------------------
Awards
------
All Other
Name and Other Annual Options/ Compen-
Principal Fiscal Salary Bonus Compensation SARs sation
Position Year ($) ($) ($)(1) (#) ($)(2)
- -------- ---- --- --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
Nicholas J. St. George 1995 450,000 712,250 -- 0 5,716
President and Chief 1994 325,000 673,000 -- 82,500/0 14,015
Executive Officer 1993 200,000 758,400 -- 0 6,302
A. Steven Michael 1995 255,000 370,000 -- 0 11,686
Executive Vice President 1994 180,000 282,000 -- 17,000/0 10,385
of the Company 1993 115,000 327,300 -- 0 8,708
C. Michael Kilbourne 1995 200,000 286,750 -- 0 4,730
Executive Vice President 1994 140,000 206,800 -- 11,000/0 4,837
of the Company 1993 100,000 252,800 -- 0 6,302
J. Michael Stidham 1995 140,000 265,400 -- 0 8,085
Executive Vice President 1994 105,000 177,000 -- 5,000/0 5,169
--Retail of Oakwood 1993 90,000 164,450 -- 0 5,034
Mobile Homes, Inc.
Larry T. Gilmore 1995 140,000 211,200 -- 0 7,609
Executive Vice President 1994 115,000 142,500 -- 5,000/0 6,428
--Consumer Finance of 1993 85,000 149,500 -- 0 7,128
Oakwood Acceptance
Corporation
Robert D. Harvey(3) 1995 167,500 239,063 -- 0 10,434
Vice President-- 1994 145,000 206,800 -- 10,500/0 10,568
Administration of the 1993 110,000 229,650 -- 0 13,060
Company
</TABLE>
- ----------
10
<PAGE>
(1) No Named Executive Officer has received personal benefits during the listed
years in excess of the lesser of $50,000 or 10% of annual salary and bonus.
(2) The components of the amounts shown in this column consist of Company
contributions under the Company's various retirement plans for Messrs. St.
George, Michael, Kilbourne, Stidham, Gilmore and Harvey, respectively, of
approximately $4,050, $8,356, $4,440, $6,757, $6,590 and $3,864 for 1995,
$13,655, $8,149, $4,717, $4,377, $5,905 and $5,436 for 1994 and $6,302,
$6,302, $6,302, $4,309, $6,778 and $6,302 for 1993, and the interest
accrued on deferred compensation accounts that are considered by the
Securities and Exchange Commission to be at above-market rates in the
amounts of $1,666, $3,330, $290, $1,328, $1,019 and $6,570 for the accounts
of Messrs. St. George, Michael, Kilbourne, Stidham, Gilmore and Harvey,
respectively, for 1995, $360, $2,236, $120, $792, $523 and $5,132 for the
accounts of Messrs. St. George, Michael, Kilbourne, Stidham, Gilmore and
Harvey, respectively, for 1994 and $2,406, $725, $350 and $6,758 for the
accounts of Messrs. Michael, Stidham, Gilmore and Harvey, respectively, for
1993.
(3) Mr. Harvey served as Executive Vice President--Manufacturing until June 30,
1995 and Vice President-- Administration since that time. His compensation
reflects compensation received in both positions.
No options or SARs were granted to any of the Named Executive Officers
during the fiscal year ended September 30, 1995.
The table below sets forth, on an aggregated basis, each exercise of stock
options or SARs during the fiscal year ended September 30, 1995 by each of the
Named Executive Officers and the 1995 fiscal year-end value of unexercised
options and SARs.
AGGREGATED OPTION/SAR EXERCISES IN THE 1995
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable (#) Unexercisable ($)
- ---- -------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Nicholas J. St. George 31,000 $687,260 158,215/156,660 4,623,529/2,706,687
A. Steven Michael 4,000 $ 89,620 56,875/77,000 1,758,948/1,686,513
C. Michael Kilbourne 5,000 $102,800 16,521/53,000 503,758/1,172,853
J. Michael Stidham 0 0 13,837/41,000 423,576/967,383
Larry T. Gilmore 2,000 $ 32,445 10,300/41,000 277,817/967,383
Robert D. Harvey, Sr. 0 0 64,304/46,500 1,973,306/1,014,476
</TABLE>
11
<PAGE>
Compensation of Directors
The directors of the Company who are not employees are paid an annual fee
of $28,000 plus $1,000 for each Board meeting attended, $1,000 for each
Committee meeting attended and not held on the same day as a Board meeting and
$500 for each Board meeting participated in by conference telephone.
Non-employee directors are also eligible to receive stock options under the
Company's 1990 Director Stock Option Plan under which each non-employee director
was granted an option to purchase 7,500 shares of the Common Stock on each of
July 30, 1992 and 1994 and will be granted an option to purchase 7,500 shares of
Common Stock on July 30, 1996 at an option price equal to the fair market value
of the Common Stock on such dates. The number of shares granted on July 30, 1996
may be adjusted downward if there is not a sufficient number of shares reserved
under the plan.
Employment Contracts, Termination of Employment and
Change of Control Arrangements
The Company has entered into employment agreements with Messrs. St. George
and Michael. The agreements provide that in the event of a change of control of
the Company, as defined in the agreements, before or on January 30, 1996, these
executives will remain in the employ of the Company for two years after such
change of control. If the employment of an executive is terminated within two
years after such change of control for reason other than death, disability or
cause, as defined in the agreements, or if an executive resigns during such time
for good reason, as defined in the agreements, the executive is entitled to a
lump sum payment equal to two times his annual compensation. The agreements are
intended to provide key executives a greater sense of security, assure their
objectivity in analyzing any potential change in control and preserve continuity
of management in the event of a change in control.
The Company has entered into an Executive Disability Benefit Agreement with
Mr. St. George. Under the disability agreement, the Company will pay to Mr. St.
George his then current base salary for the first 180 days he is totally
disabled. After such time, he will be paid specified sums so long as he is
totally disabled and under the age of 65. The agreement provides for Mr. St.
George to receive $23,942 per month in the event of his total disability. In the
event of a partial disability, Mr. St. George will receive lesser payments. In
no event, however, will the Company be obligated under the disability agreement
to pay more than twice the amount of the payments the Company will receive
pursuant to disability income policies purchased by the Company to insure Mr.
St. George.
The Company has entered into Executive Retirement Benefit Employment
Agreements with Messrs. St. George, Michael, Kilbourne, Stidham, Gilmore and
Harvey. Pursuant to the retirement agreements, these executives will receive
monthly retirement benefit payments for a period of fifteen years. The amount of
such retirement payments will vary according to the reason for the termination
of the executive's employment and the age of the executive at the time of
termination. Mr. St. George is entitled to payments if he retires after reaching
age 55 and Messrs. Michael, Kilbourne, Stidham and Harvey after reaching age 60.
The annual retirement benefit payable upon retirement at age 65 to each of the
Named Executive Officers is as follows: $403,212 for Mr. St. George, $315,680
for Mr. Michael, $150,399 for Mr. Kilbourne, $158,351 for Mr. Stidham, $90,298
for Mr. Gilmore and $65,543 for Mr. Harvey. The benefit amount decreases for
each year the executive retires before age 65, except for benefits payable to
Mr. Harvey, which are fixed at $65,543 annually. Retirement benefits will be
paid to an executive if he leaves the Company before the minimum retirement age
as a result of a termination without cause or a voluntary termination with the
approval of the Board of Directors or if an executive is terminated without his
consent and without cause after a change of control of the Company.
12
<PAGE>
Compliance with Section 16(a) of Securities Exchange Act of 1934
Section 16(a) of the Securities and Exchange Act of 1934 (the Exchange Act)
requires the Company's directors and executive officers and persons who own more
than 10% of the Company's Common Stock to file with the SEC initial reports of
ownership and reports of changes in ownership of the Common Stock and other
equity securities. Officers, directors and greater than 10% shareholders are
required to furnish the Company with copies of all such reports they file. To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended September 30, 1995, all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial shareholders were complied with, except that Larry T.
Gilmore, an executive officer, failed to report three transactions on a timely
basis and C. Michael Kilbourne, an executive officer and director, failed to
report three transactions on one report on a timely basis. Such transactions
have since been reported.
Approval of Key Employee Stock Plan
The Board of Directors has adopted, subject to shareholder approval, the
Oakwood Homes Corporation Key Employee Stock Plan (the "Stock Plan"). The Stock
Plan reserves a number of shares of the Company's Common Stock for issuance to
certain key employees of the Company in the form of stock options, stock
appreciation rights ("SARs"), restricted stock and performance shares.
Background and Purpose. As described in the Compensation Committee Report,
one of the fundamental components of compensation for the Company's key
employees is long-term incentive compensation. The Company has for a number of
years provided long-term incentive compensation to its key employees pursuant to
the 1990 Oakwood Long Term Performance Plan (the "1990 Plan"). The 1990 Plan
provides for awards of both cash-based and equity-based long term incentive
compensation, including stock options, SARs, restricted stock and performance
units.
Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits the
deductibility to the Company of certain compensation paid to certain key
employees in excess of one million dollars. Section 162(m) excludes from this
limit compensation that qualifies as "performance-based compensation." In order
to provide both short and long term cash incentive awards and equity-based
incentive awards that meet the requirements of "performance-based compensation"
under Section 162(m), the Board recommends replacing the 1990 Plan with two new
plans: (1) the Oakwood Homes Corporation Executive Incentive Compensation Plan
(the "EIC Plan"), which would provide both short and long term cash-based
incentive compensation, and (2) the Stock Plan, which would provide equity-based
incentive compensation. (The EIC Plan, which would also replace an annual cash
incentive compensation plan adopted by the Board in 1980, is described in more
detail beginning on page 17.)
The Stock Plan would, like the 1990 Plan, have a great deal of flexibility
in the types of awards that could be made under it and the terms and conditions,
including performance-related conditions, applicable to those awards. Approval
of the Stock Plan, together with the EIC Plan, would better position the Company
to take advantage of the "performance-based compensation" exception to the
deduction limits of Section 162(m) and would enhance the Company's ability to
put greater emphasis on variable, performance-related compensation. The
following is a summary of the material terms of the Stock Plan as proposed.
13
<PAGE>
Number of Shares. Initially, 1,000,000 shares of Common Stock plus 1 1/2%
of the outstanding Common Stock on October 1, 1995 (332,556 shares) or a total
of 1,332,556 shares (approximately 6% of the current outstanding Common Stock)
will be available for granting awards under the Stock Plan. Then, each October
1, beginning with October 1, 1996, an additional number of shares will be made
available for granting awards under the Stock Plan equal to 1.5% of the
outstanding shares of Common Stock as of such October 1. All shares available
for granting awards in any year that are not used, as well as shares allocated
to awards under the Stock Plan that are canceled or forfeited, will be available
for use in subsequent years. If the Stock Plan is approved, the 1990 Plan will
be terminated.
Administration. The Plan will be administered by the Compensation Committee
of the Board of Directors (the "Committee"). It is intended that the Committee
will at all times be composed of "disinterested persons" within the meaning of
Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934 and that all of its members acting with respect to matters governed by
Section 162(m) will be "outside directors" within the meaning of Section 162(m),
subject to applicable transition rules. Under the Stock Plan, the Committee will
(i) select the key employees to receive awards from time to time, (ii) make
awards in such amounts as it determines, (iii) impose such limitations,
restrictions and conditions upon awards as it deems appropriate, (iv) establish
performance targets and allocation formulas for awards of restricted stock or
performance shares intended to be "performance-based compensation" under Section
162(m), (v) certify the attainment of performance goals, if applicable, as
required by Section 162(m), (vi) interpret the Stock Plan and adopt, amend and
rescind administrative guidelines and other rules and regulations relating to
the Stock Plan, (vii) correct any defect or omission or reconcile any
inconsistency in the Stock Plan or any award granted thereunder and (viii) make
all other determinations and take all other actions necessary or advisable for
the implementation and administration of the Stock Plan. The Committee will also
have the authority to accelerate the vesting and/or waive any restrictions of
any outstanding awards, subject to the requirements of Section 162(m). No awards
of "incentive stock options" will be made under the Stock Plan after November
14, 2005. In no event may an individual receive awards under the Stock Plan for
a given calendar year covering in excess of 250,000 shares.
Eligibility. Only "key employees" of the Company may participate in the
Stock Plan. "Key employees" are those employees who occupy managerial or other
important positions and who have made or are expected to make important
contributions to the business of the Company, as determined by the Committee.
Initially, approximately 100 employees are expected to be eligible to
participate. As mentioned above, the Committee in its discretion will select
which key employees will in fact receive awards from time to time.
Awards of Stock Options and Stock Appreciation Rights. The Stock Plan
provides for the grant of options to purchase shares of Common Stock at option
prices determined by the Committee as of the date of grant. For stock option
awards intended to qualify as "performance-based compensation" under Section
162(m) or for incentive stock options (described below), the option price will
not be less than the fair market value of shares of Common Stock at the close of
business on the date of grant. (The fair market value of the Common Stock as of
December 18, 1995 was $41.69.) The Stock Plan also provides for the grant of
SARs (either in tandem with stock options or freestanding), which entitle
holders upon exercise to receive either cash or shares of Common Stock or a
combination thereof, as the Committee in its discretion shall determine, with a
value equal to the difference between (i) the fair market value on the exercise
date of the shares with respect to which an SAR is exercised and (ii) the fair
market value of such shares on the date of grant (or, if different, the exercise
price of the related option in the case of a tandem SAR).
Awards of options under the Stock Plan, which may be either incentive stock
options (which qualify for special tax treatment) or non-qualified stock
options, are determined by the Committee. The terms and conditions of each
option and of any SAR are to be determined by the Committee at the time of
grant.
14
<PAGE>
Exercise of an option (or an SAR) will result in the cancellation of any
related SAR (or option) to the extent of the number of shares in respect of
which such option or SAR has been exercised. Options and SARs granted under the
Stock Plan will expire not more than 10 years from the date of grant, and the
option agreements entered into with the optionees will specify the extent to
which options and SARs may be exercised during their respective terms, including
in the event of the optionee's death, disability or termination of employment.
Payment for shares issuable pursuant to the exercise of an option may be
made either in cash or by tendering shares of Common Stock of the Company with a
fair market value at the date of the exercise equal to the portion of the
exercise price which is not paid in cash.
Awards of Restricted Stock and Performance Shares. The Stock Plan provides
for the issuance of shares of restricted stock to such key employees and on such
terms and conditions as are determined from time to time by the Committee. The
restricted stock award agreement with the participant will set forth the terms
of the award, including the applicable restrictions. Such restrictions may
include the continued service of the participant with the Company, the
attainment of specified performance goals or any other conditions deemed
appropriate by the Committee.
The stock certificates evidencing the restricted stock will bear an
appropriate legend and will be held in the custody of the Company until the
applicable restrictions have been satisfied. The participant cannot sell,
transfer, pledge, assign or otherwise alienate or hypothecate shares of
restricted stock until the applicable restrictions have been satisfied. Once the
restrictions are satisfied, the shares will be delivered to the participant.
During the period of restriction, the participant may exercise full voting
rights with respect to the restricted stock. The participant will also be
credited with dividends with respect to the restricted stock. Such dividends may
be payable currently or subject to additional restrictions as determined by the
Committee and set forth in the award agreement.
In addition to restricted stock, the Committee may award performance shares
to selected key employees. The value of a performance share will equal the fair
market value of a share of Common Stock. The Stock Plan provides that the number
of performance shares granted and/or the vesting of granted performance shares
can be contingent on the attainment of certain performance goals or other
conditions over a period of time (called the "performance period"), all as
determined by the Committee and evidenced by an award agreement. During the
performance period, the Committee will determine what number (if any) of
performance shares have been earned. Earned performance shares may be paid in
cash, shares of Common Stock or a combination thereof having an aggregate fair
market value equal to the value of the earned performance shares as of the
payment date. Common Stock used to pay earned performance shares may have
additional restrictions as determined by the Committee. In addition, the
Committee may cancel any earned performance shares and replace them with stock
options determined by the Committee to be of equivalent value based on a
conversion formula specified in the participant's performance share award
agreement. Earned but unpaid performance shares may have dividend equivalents
rights as determined by the Committee and evidenced in the award agreement.
Code Section 162(m). Because stock options and SARs granted under the Stock
Plan that are intended to qualify as "performance-based compensation" under
Section 162(m) must have an exercise price equal at least to fair market value
at the date of grant, compensation from the exercise of such stock options and
SARs should be treated as "performance-based compensation" for Section 162(m)
purposes.
15
<PAGE>
In addition, the Stock Plan authorizes the Committee to make awards of
restricted stock or performance shares that are conditioned on the satisfaction
of certain performance criteria. For such awards intended to result in
"performance-based compensation," the Committee will establish prior to or
within 90 days after the start of the applicable performance period the
applicable performance conditions. The Committee may select from the following
performance measures for such purpose: (i) return on average common
shareholders' equity of the Company, (ii) return on average assets of the
Company, (iii) net income of the Company, (iv) earnings per common share of the
Company, (v) Company revenues or (vi) total shareholder return of the Company.
The performance conditions will be stated in the form of an objective,
nondiscretionary formula, and the Committee will certify in writing the
attainment of such performance conditions prior to any payout with respect to
such awards.
Withholding for Payment of Taxes. The Stock Plan provides for the
withholding and payment by a participant of any payroll or withholding taxes
required by applicable law. The Stock Plan permits a participant to satisfy such
requirement, with the approval of the Committee and subject to the terms of the
Stock Plan, by having the Company withhold from the participant a number of
shares of Common Stock otherwise issuable under the award having a fair market
value equal to the amount of the applicable payroll and withholding taxes.
Changes in Capitalization and Similar Changes. In the event of any change
in the outstanding shares of Common Stock of the Company by reason of any stock
dividend, split, spin-off, recapitalization, merger, consolidation, combination,
exchange of shares or otherwise, the aggregate number of shares of Common Stock
with respect to which awards may be made under the Stock Plan, and the terms,
types of shares and number of shares of any outstanding awards under the Stock
Plan may be equitably adjusted by the Committee in its discretion to preserve
the benefit of the award for the Company and the participant.
Changes in Control. The Stock Plan provides that in the event of a change
in control of the Company, all options and SARs will be fully exercisable as of
the date of the change in control and shall remain exercisable through their
full term. Outstanding awards of restricted stock and performance shares will
become immediately vested, and any applicable performance conditions shall be
deemed satisfied (at the target performance condition, if applicable) as of the
date of the change in control.
Amendment and Termination of the Plan. The Board of Directors will have the
power to amend, modify or terminate the Stock Plan on a prospective basis.
Shareholder approval will be required for any change to the material terms of
the Stock Plan to the extent required by Section 162(m) or Section 16(b) under
the Securities Exchange Act of 1934.
Federal Income Tax Treatment. Incentive Stock Options. Incentive stock
options ("ISOs") granted under the Stock Plan will be subject to the applicable
provisions of the Internal Revenue Code, including Code Section 422. If shares
of Common Stock of the Company are issued to an optionee upon the exercise an
ISO, and if no "disqualifying disposition" of such shares is made by such
optionee within one year after the exercise of the ISO or within two years after
the date the ISO was granted, then (i) no income will be recognized by the
optionee at the time of the grant of the ISO, (ii) no income, for regular income
tax purposes, will be realized by the optionee at the date of exercise, (iii)
upon sale of the shares acquired by exercise of the ISO, any amount realized in
excess of the option price will be taxed to the optionee, for regular income tax
purposes, as a long-term capital gain and any loss sustained will be a long-term
capital loss, and (iv) no deduction will be allowed to the Company for federal
income tax purposes. If a "disqualifying disposition" of such shares is made,
the optionee will realize taxable ordinary income in an amount equal to the
excess of the fair market value of the shares purchased at the time of exercise
over the option price (the bargain purchase element) and the Company will be
entitled to a federal income tax deduction equal to such amount. The amount of
any gain in excess of the bargain purchase element realized upon a
"disqualifying disposition" will be taxable as capital gain to the holder (for
which the Company will not be entitled a federal income tax deduction). Upon
exercise of an ISO, the optionee may be subject to alternative minimum tax.
16
<PAGE>
Nonqualified Stock Options. With respect to nonqualified stock options
("NQSOs") granted to optionees under the Stock Plan, (i) no income is realized
by the optionee at the time the NQSO is granted, (ii) at exercise, ordinary
income is realized by the optionee in an amount equal to the difference between
the option price and the fair market value of the shares on the date of
exercise, and the Company receives a tax deduction for the same amount, and
(iii) on disposition, appreciation or depreciation after the date of exercise is
treated as either short-term or long-term capital gain or loss depending on
whether the shares have been held for more than one year.
Restricted Stock. Upon becoming entitled to receive shares at the end of
the applicable restriction period without a forfeiture, the recipient has
ordinary income in an amount equal to the fair market value of the shares at
that time. However, a recipient who makes an election under Code Section 83(b)
within 30 days of the date of the grant will have ordinary taxable income on the
date of the grant equal to the fair market value of the shares of restricted
stock as if the shares were unrestricted and could be sold immediately. If the
shares subject to such election are forfeited, the recipient will not be
entitled to any deduction, refund or loss for tax purposes. Upon sale of the
shares after the forfeiture period has expired, the holding period to determine
whether the recipient has long-term or short-term capital gain or loss begins
when the restriction period expires, and the tax basis will be equal to the fair
market value of the shares when the restriction period expires. However, if the
recipient timely elects to be taxed as of the date of grant, the holding period
commences on the date of the grant and the tax basis will be equal to the fair
market value of the shares on the date of the grant as if the shares were then
unrestricted and could be sold immediately. The Company generally will be
entitled to a deduction equal to the amount that is taxable as ordinary
compensation income to the recipient.
Performance Shares. A participant who is awarded performance shares will
not recognize income and the Company will not be allowed a deduction at the time
the award is made. When a participant receives payment for performance shares in
cash or shares of Common Stock of the Company, the amount of the cash and the
fair market value of the shares received will be ordinary income to the
participant and will be allowed as a deduction for federal income tax purposes
to the Company. However, if there is a substantial risk that any shares used to
pay out earned performance shares will be forfeited (for example, because the
Committee conditions such shares on the performance of future services), the
taxable event is deferred until the risk of forfeiture lapses. In this case, the
participant can elect to make a Code Section 83(b) election as previously
described. The Company can take the deduction at the time the income is
recognized by the participant.
The Board recommends a vote FOR approval of the Stock Plan. The affirmative
vote of a majority of votes cast is required for approval of the Stock Plan.
Abstentions and broker non-votes will not be counted for this purpose.
Approval of Executive Incentive Compensation Plan
The Board of Directors has adopted, subject to shareholder approval, the
Oakwood Homes Corporation Executive Incentive Compensation Plan (the "EIC
Plan"). The EIC Plan is designed to provide both annual and long term cash
incentive compensation to certain key employees of the Company in the event
certain objective financial performance goals are achieved.
Background and Purpose. Section 162(m) of the Code limits the deductibility
to the Company of certain compensation paid to certain key employees in excess
of one million dollars. Section 162(m) excludes from this limit compensation
that qualifies as "performance-based compensation." The Company desires to
establish the EIC Plan to provide both annual and long term cash incentive
compensation that qualifies as "performance-based compensation." The following
is a summary of the material terms of the EIC Plan as proposed.
17
<PAGE>
Administration. The EIC Plan will be administered by a Committee of
"outside directors" within the meaning of Section 162(m), subject to applicable
transition rules. The Committee will be comprised of all of the members of the
Compensation Committee of the Board of Directors who are "outside directors."
Eligibility. Only "key employees" of the Company may participate in the EIC
Plan. "Key employees" are those employees of the Company who occupy managerial
or other important positions and who have made or are expected to make important
contributions to the business of the Company, as determined by the Committee.
Initially, approximately 100 employees are expected to be eligible to
participate. The Committee in its discretion will select which key employees
will in fact be eligible to receive annual or long term cash incentive
compensation.
Operation. Annual Incentive Compensation. Annual incentive compensation
under the EIC Plan will be determined on the basis of each fiscal year of the
Company (a "Plan Year"). No later than December 30 of a Plan Year, the Committee
will determine (i) which key employees will be eligible for annual incentive
compensation under the EIC Plan for that Plan Year, (ii) for each eligible key
employee, a target annual bonus and (iii) a formula based on the net income of
the Company for the Plan Year under which the key employee would receive none,
some, all or more than all of the key employee's target annual bonus depending
on actual net income for the Plan Year. The formula will be a fixed formula that
does not permit any Committee discretion.
Long Term Incentive Compensation. Long term incentive compensation under
the EIC Plan will be determined on the basis of a period consisting of a Plan
Year and one or more additional Plan Years (a "Performance Period") as
determined by the Committee no later than December 30 of the first Plan Year of
such period. For each Performance Period established by the Committee, the
Committee will determine at the time the Performance Period is established (i)
which key employees will be eligible for long term incentive compensation under
the EIC Plan for the Performance Period, (ii) a formula for determining a long
term incentive compensation pool (a "Pool") with respect to the Performance
Period based on the net income of the Company for the Performance Period, (iii)
a threshold level of return on average common shareholders' equity of the
Company for the Performance Period below which no Pool would be established and
(iv) a formula for allocating any Pool among the eligible key employees for the
Performance Period. The formula for determining a Pool and the formula for
allocating a Pool among eligible key employees will be a fixed formula for the
Performance Period that does not permit any Committee discretion.
Payment of Incentive Compensation. Any annual or long term incentive
compensation payable under the EIC Plan will be paid partly in cash and partly
in shares of restricted stock issued under the Oakwood Homes Corporation Key
Employee Stock Plan (the "Stock Plan"). (The Stock Plan is described in more
detail beginning on page 13.) At least 10% of an amount payable to a key
employee under the EIC Plan, and up to 50% of such amount, will be payable in
shares of restricted stock. The number of shares will equal the number of shares
of Common Stock that could be purchased with the applicable amount if such
shares were purchased at a discount from the fair market value of such stock,
the applicable discount rate being either 20% or 30% as selected by the key
employee. The period of restriction for the restricted stock will depend on the
discount rate selected by the key employee: a two year period of restriction
would apply if the 20% discount rate is selected, and a four year period of
restriction would apply if a 30% discount rate is selected.
In no event will any participant be paid in cash more than (i) $2,500,000
in annual incentive compensation for a Plan Year or (ii) more than $2,500,000 in
long term incentive compensation for each Plan Year comprising a Performance
Period. Any shares of restricted stock payable as described above for annual or
long term incentive compensation will be subject to a limitation under the Stock
Plan which provides that a participant cannot receive awards covering more than
250,000 shares in any given calendar year.
18
<PAGE>
Amendment and Termination of the EIC Plan. The Board of Directors of the
Company will have the power to amend, modify or terminate the EIC Plan on a
prospective basis. As required by Section 162(m), no material term of the EIC
Plan will be amended without shareholder approval.
The Board recommends a vote FOR approval of the EIC Plan. The affirmative
vote of a majority of votes cast is required for approval of the EIC Plan.
Abstentions and broker non-votes will not be counted for this purpose.
Although the Board of Directors intends the EIC Plan to be the principal
source of annual and long term cash incentive compensation for the Company's key
employees, the adoption and approval of the EIC Plan will not affect the
Company's right to pay cash incentive compensation to a key employee outside of
the EIC Plan that does not qualify as "performance-based compensation" under
Section 162(m). The Board retains this right because the strictly objective,
mechanical formulas of the EIC Plan required by Section 162(m) ignore
potentially important components of an individual's performance that are not
reflected in the Company's net income or return on equity (such as a key
employee's contributions towards the achievement of strategic objectives). Any
incentive compensation paid outside the EIC Plan to a key employee whose
compensation is subject to Section 162(m) could result in a portion of such
compensation being nondeductible.
Ratification of Selection of Independent Public Accountants
The Board of Directors has selected Price Waterhouse LLP as independent
public accountants to examine the financial statements of the Company and its
subsidiaries for the fiscal year ending September 30, 1996. This selection is
being presented to the shareholders for their ratification at the Annual
Meeting.
The firm of Price Waterhouse LLP has examined the financial statements of
the Company since 1977. Representatives of Price Waterhouse LLP are expected to
be present at the Annual Meeting of Shareholders with an opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR ratification of the selection
of Price Waterhouse LLP as independent public accountants to examine the
financial statements of the Company and its subsidiaries for the fiscal year
ending September 30, 1996, and proxies solicited by the Board of Directors will
be so voted unless shareholders specify otherwise.
Shareholder Proposals
Any proposal that a shareholder intends to present for action at the 1997
Annual Meeting of Shareholders, currently scheduled for January 29, 1997, must
be received by the Company no later than August 29, 1996 in order for the
proposal to be included in the proxy statement and form of proxy for the 1997
Annual Meeting of Shareholders. The proposal should be sent to Secretary,
Oakwood Homes Corporation, Box 7386, Greensboro, North Carolina 27417-0386.
19
<PAGE>
OAKWOOD HOMES CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 31, 1996
The undersigned hereby appoints RALPH L. DARLING and NICHOLAS J. ST.
GEORGE, and each or either of them proxies, with full power of substitution,
with the powers the undersigned would possess if personally present, to vote, as
designated below, all shares of the $.50 par value Common Stock of the
undersigned in Oakwood Homes Corporation at the Annual Meeting of Shareholders
to be held January 31, 1996, and at any adjournment thereof.
This proxy will be voted FOR the election of all nominees as directors and
FOR items 2, 3 and 4 unless otherwise specified. The Board of Directors
recommends voting for on each item.
1. ELECTION OF DIRECTORS: Nominees are Nicholas J. St. George, A. Steven
Michael and Sabin C. Streeter
/ / FOR all listed nominees / / WITHHOLD AUTHORITY to vote for
(except do not vote for the the listed nominees
nominee(s) whose name(s)
I have written below)
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2. APPROVAL OF KEY EMPLOYEE STOCK PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF EXECUTIVE INCENTIVE COMPENSATION PLAN
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on the reverse)
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4. RATIFICATION OF SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Receipt of the Notice of Annual Meeting and accompanying Proxy Statement is
hereby acknowledged. This proxy will be voted as specified herein, and, unless
otherwise directed, will be voted FOR the election of all nominees and FOR items
2, 3 and 4.
Please date, sign exactly as printed below and return promptly in the
enclosed postage-paid envelope.
Dated:_________________________, 199__ .
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(When signing as attorney, executor,
administrator, trustee, guardian, etc.,
give title as such. If a joint account,
each joint owner should sign
personally.)
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Oakwood Homes Corporation
Key Employee Stock Plan
Effective Date: November 15, 1995
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Contents
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Page
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Article 1. Establishment, Purpose, and Duration 1
Article 2. Definitions 1
Article 3. Administration 5
Article 4. Shares Subject to the Plan 6
Article 5. Eligibility and Participation 7
Article 6. Stock Options 7
Article 7. Stock Appreciation Rights 9
Article 8. Restricted Stock 11
Article 9. Performance Shares 12
Article 10. Performance Measures 13
Article 11. Beneficiary Designation 14
Article 12. Deferrals 14
Article 13. Rights of Key Employees 14
Article 14. Change in Control 14
Article 15. Amendment, Modification, and Termination 17
Article 16. Withholding 17
Article 17. Indemnification 18
Article 18. Successors 18
Article 19. Legal Construction 18
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Oakwood Homes Corporation
Key Employee Stock Plan
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Oakwood Homes Corporation, a North Carolina
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "Oakwood Homes Corporation Key
Employee Stock Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, and
Performance Shares.
Subject to approval by the Company's shareholders, the Plan shall become
effective as of November 15, 1995 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof. The Plan shall not become effective
unless shareholder approval is obtained.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of the Company's shareholders, and by providing
Participants with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment, interest and special effort the successful conduct of its operation
largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award of an ISO be granted under the Plan after November 14, 2005.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
2.1 "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock or Performance Shares.
2.2 "Award Agreement" means an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.3 "Board" or "Board of Directors" means the Board of Directors of the
Company.
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2.4 "Change in Control" of the Company shall have occurred when any
Acquiring Person (other than the Company, any employee benefit plan of the
Company, or any person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall become the beneficial owner of 25% or more
of the shares of Common Stock of the Company then outstanding (except pursuant
to an offer for all outstanding shares of the Company's Common Stock at a price
and upon such terms and provisions as a majority of the Continuing Directors
determine to be in the best interests of the Company and its shareholders [other
than the Acquiring Person or any Affiliate or Associate thereof on whose behalf
the offer is being made]), and the Continuing Directors no longer constitute a
majority of the Board. For purposes of this definition, the following terms
shall have the following meanings:
(a) "Acquiring Person" means any individual, firm, corporation or other
entity who or which, together with all Affiliates and Associates,
shall be the beneficial owner of a substantial block of the Company's
Common Stock.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 as promulgated under the Exchange
Act.
(c) "Continuing Director" means any individual who is a member of the
Board, while such individual is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative or nominee of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board prior to the
occurrence of the Change in Control date; or any successor of a
Continuing Director, while such successor is a member of the Board,
and who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate, and is recommended or
elected to succeed the Continuing Director by a majority of the
Continuing Directors.
2.5 "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to the Code shall include the valid and binding governmental
regulations, court decisions and other regulatory and judicial authority issued
or rendered thereunder.
2.6 "Committee" means the Compensation Committee of the Board, as specified
in Article 3 herein, appointed by the Board to administer the Plan with respect
to grants of Awards.
2.7 "Common Stock" means the common stock of the Company.
2.8 "Company" means Oakwood Homes Corporation, a North Carolina
corporation, and any successor as provided in Article 18 herein.
2.9 "Director" means any individual who is a member of the Board of
Directors of the Company.
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2.10 "Disability" with respect to a Participant, means "disability" as
defined from time to time under any long-term disability plan of the Company or
Subsidiary with which the Participant is employed.
2.11 "Earnings Per Share" means "earnings per common share" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.12 "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.14 "Fair Market Value" with respect to a share of the Company's Common
Stock at a particular time, shall be that value as determined by the Committee
which shall be (i) if such Common Stock is listed on a national securities
exchange, on any given date, (A) the average of the highest and lowest market
prices of shares of Common Stock, as reported on the consolidated transaction
reporting system for such exchange for that date, or if shares of Common Stock
were not traded on such date, on the next preceding day on which shares of
Common Stock were traded, or (B) if the Common Stock is not reported on the
consolidated transaction reporting system for such exchange, the mean between
the highest price and the lowest price at which the Common Stock shall have been
sold regular way on a national securities exchange on said date, or, if no sales
occur on said date, then on the next preceding date on which there were such
sales of Common Stock; or (ii) if the Common Stock shall not be listed on a
national securities exchange, the mean between the average high bid and low
asked prices last reported by the National Association of Securities Dealers,
Inc. for the over-the-counter market on said date or, if no bid and asked prices
are reported on said date, then on the next preceding date on which there were
such quotations; or (iii) if at any time quotations for the Common Stock shall
not be reported by the National Association of Securities Dealers, Inc. for the
over-the-counter market and the Common Stock shall not be listed on any national
securities exchange, the fair market value determined by the Committee on the
basis of available prices for such Common Stock or in such other manner as the
Committee may deem reasonable.
2.15 "Freestanding SAR" means an SAR that is granted independently of any
Options.
2.16 "Incentive Stock Option" or "ISO" means an option to purchase Shares,
granted under Article 6 herein, and which is designated as an Incentive Stock
Option which is intended to meet the requirements of Section 422 of the Code.
2.17 "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
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2.18 "Key Employee" means an employee of the Company, including an officer
of the Company, in a managerial or other important position who can make
important contributions to the Company, all as determined by the Committee in
its discretion.
2.19 "Named Executive Officer" means, for a calendar year, a Participant
who is one of the group of "covered employees" for such calendar year within the
meaning of Code Section 162(m) or any successor statute.
2.20 "Net Income" means "net income" of the Company determined in
accordance with generally accepted accounting principles that would be reported
in the Company's Annual Report to Shareholders.
2.21 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted to Key Employees under Article 6 herein, and which is not
intended to meet the requirements of Code Section 422.
2.22 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.23 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.24 "Participant" means a Key Employee who has outstanding an Award
granted under the Plan.
2.25 "Performance-Based Exception" means the performance-based exception
set forth in Code Section 162(m)(4)(C) from the deductibility limitations of
Code Section 162(m).
2.26 "Performance Share" means an Award granted to a Key Employee, as
described in Article 9 herein.
2.27 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28 "Restricted Stock" means an Award granted to a Participant pursuant to
Article 8 herein.
2.29 "Return on Assets" means "return on average assets" of the Company
determined in accordance with generally accepted accounting principles that
would be reported in the Company's Annual Report to Shareholders.
2.30 "Return on Equity" means "return on average common shareholders'
equity" of the Company determined in accordance with generally accepted
accounting principles that would be reported in the Company's Annual Report to
Shareholders.
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2.31 "Revenues" means the "revenues" of the Company determined in
accordance with generally accepted accounting principles that would be reported
in the Company's Annual Report to Shareholders.
2.32 "Shares" means the shares of Common Stock of the Company.
2.33 "Stock Appreciation Right" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
2.34 "Subsidiary" means any corporation, partnership, joint venture,
affiliate, or other entity in which the Company has an ownership interest, and
which the Committee designates as a participating entity in the Plan.
2.35 "Tandem SAR" means an SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall similarly be canceled).
2.36 "Total Shareholder Return" means the percentage change in value of an
initial investment in Shares over a specified period assuming reinvestment of
all dividends during the period.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Compensation
Committee of the Board or by any other Committee appointed by the Board
consisting of not less than two (2) Directors. All of the members of the
Committee shall comply with the "disinterested administration" rules of Rule
16b-3 under the Exchange Act, if applicable. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Directors. In addition, any action taken with respect to Named
Executive Officers for purposes of meeting the Performance-Based Exception shall
be taken by the Committee only if all of the members of the Committee are
"outside directors" within the meaning of Code Section 162(m), subject to any
applicable transition rules under Code Section 162(m). If all of the members of
the Committee are not "outside directors," such action shall be taken by a
subcommittee of the Committee comprised of at least two (2) members who are
"outside directors."
3.2 Authority of the Committee. Except as limited by law, or by the
Articles of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Key Employees
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and provisions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan; establish, amend, or waive rules and regulations for the
Plan's administration; and (subject to the provisions of Article 15 herein),
amend the terms and provisions of any outstanding Award to the
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extent such terms and provisions are within the discretion of the Committee as
provided in the Plan. Further, the Committee shall make all other determinations
which may be necessary or advisable for the administration of the Plan. To the
extent permitted by law, the Committee may delegate its authority hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders, employees, Participants, and their
estates and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares Available for Grants. Beginning on the Effective Date,
there is hereby reserved for grants of Awards under the Plan a number of Shares
equal to:
(a) one million (1,000,000) Shares; plus
(b) one and one-half percent (1.5%) of the outstanding Shares as of
October 1, 1995 and each subsequent October 1.
Such Shares available for grants of Awards in any year shall be increased by the
number of Shares available under this Section 4.1 in previous years but not
covered by Awards granted under this Plan in those years plus any Shares as to
which Awards granted under this Plan have lapsed, expired, terminated, or been
canceled. The number of Shares reserved for grants of Awards under this Section
4.1 shall be subject to adjustment as provided in Section 4.3.
In no event shall a Participant receive an Award or Awards of Options,
Freestanding SARs, Restricted Stock or Performance Shares during any one (1)
calendar year covering in the aggregate more than Two Hundred Fifty Thousand
(250,000) Shares.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the
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Committee, in its sole discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of Shares subject to any Award shall always
be a whole number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan are all Key
Employees of the Company, as determined by the Committee, including Key
Employees who are Directors, but excluding Directors who are not Key Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Key Employees those
to whom Awards shall be granted and shall determine the nature and amount of
each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or an NQSO whose grant is intended not to fall under Code Section 422.
6.3 Option Price. The Committee shall determine the Option Price for each
grant of an Option under this Plan, which such Option Price shall be set forth
in the applicable Award Agreement; provided, however, that the Option Price
shall be at least equal to one hundred percent (100%) of the Fair Market Value
of a Share on the date the Option is granted with respect to the grant of either
(i) an Option granted to a Named Executive Officer that is intended to satisfy
the Performance-Based Exception or (ii) an ISO.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
6.5 Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve and which shall be set forth in the
applicable Award Agreement, which need not be the same for each grant or for
each Participant.
6.6 Payment. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
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The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price), or (c) by a combination of
(a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation G or Regulation T, subject to applicable securities
law restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable Federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 Termination of Employment. Each Participant's Option Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise the Option following termination of the Participant's employment with
the Company and its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with Participants, need not be uniform among all Options issued
pursuant to this Article 6, may reflect distinctions based on the reasons for
termination of employment and may include provisions relating to the
Participant's competition with the Company after termination of employment. In
that regard, if an Award Agreement permits exercise of an Option following the
death of the Participant, the Award Agreement shall provide that such Option
shall be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the Option or shall have died
intestate, by the Participant's executor or other legal representative.
6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under this Article 6 may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant.
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(b) Nonqualified Stock Options. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6
may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a
Participant's Award Agreement, all NQSOs granted to a Participant
under this Article 6 shall be exercisable during his or her lifetime
only by such Participant.
6.10 No Rights. A Participant granted an Option shall have no rights as a
shareholder of the Company with respect to the Shares covered by such Option
except to the extent that Shares are issued to the Participant upon the due
exercise of the Option.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and provisions of the Plan, SARs
may be granted to Key Employees at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
Shares covered by SARs granted hereunder (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
provisions pertaining to such SARs. The number of Shares covered by a
Freestanding SAR shall be counted against the number of Shares available for
grants of Awards under Section 4.1, but the number of Shares covered by a Tandem
SAR shall not be so counted.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and provisions the Committee, in its sole discretion, imposes
upon them.
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7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof; provided,
however, that from and after the date of a Change in Control, the exercise of an
SAR may be settled only in cash.
7.7 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
(or any successor provision) of the Exchange Act.
7.8 Termination of Employment. Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
In that regard, if an Award Agreement permits exercise of an SAR following the
death of the Participant, the Award Agreement shall provide that such SAR shall
be exercisable to the extent provided therein by any person that may be
empowered to do so under the Participant's will, or if the Participant shall
fail to make a testamentary disposition of the SAR or shall have died intestate,
by the Participant's executor or other legal representative.
7.9 Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
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7.10 No Rights. A Participant granted an SAR shall have no rights as a
shareholder of the Company with respect to the Shares covered by such SAR except
to the extent that Shares are issued to the Participant upon the due exercise of
the SAR.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Key Employees in such amounts as the Committee
shall determine.
8.2 Restricted Stock Award Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period of
Restriction, or Periods, the number of Shares of Restricted Stock granted, and
such other provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Restricted Stock
Award Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock Agreement. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.
8.4 Other Restrictions. The Committee may impose such other conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions on
vesting following the attainment of the performance goals, and/or restrictions
under applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8 or in the applicable Award
Agreement, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction.
8.5 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited
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with regular cash dividends paid with respect to the underlying Shares while
they are so held. The Committee may apply any restrictions to the dividends that
the Committee deems appropriate.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the remaining vesting period of
the Shares of Restricted Stock with respect to which the dividend is paid.
8.7 Termination of Employment. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
with the Company and its Subsidiaries. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement
entered into with Participants, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions based
on the reasons for termination of employment. In amplification but not
limitation of the foregoing, in the case of an award of Restricted Stock to a
Named Executive Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Restricted Stock may become
payable in the event of a termination of employment by reason of death,
Disability or Change in Control, such payment not to occur before attainment of
the related performance goal.
8.8 Coordination With Incentive Plan. The Company maintains the Oakwood
Homes Corporation Executive Incentive Compensation Plan (the "EIC Plan") to
provide annual and long-term cash incentives to certain executive officers of
the Company. In accordance with the EIC Plan, an executive officer receiving a
cash award under the EIC Plan must receive at least 10% of such award, and if
and as determined by the Committee as much as 50% of such award, as Shares of
Restricted Stock, with the number of such Shares determined on a discount basis
that depends on the length of the Period of Restriction selected by the
executive officer. Notwithstanding any provision of this Plan to the contrary,
the Committee shall award from this Plan any Shares of Restricted Stock to be
received by an executive officer under the EIC Plan as described above, the
number of such Shares and the applicable Period of Restriction to be determined
in accordance with the terms of the EIC Plan and set forth in an appropriate
Award Agreement.
Article 9. Performance Shares
9.1 Grant of Performance Shares. Subject to the terms and provisions of the
Plan, Performance Shares may be granted to eligible Key Employees in such amount
and upon such terms, and at such time(s), as shall be determined by the
Committee. The number and/or vesting of Performance Shares granted, in the
Committee's discretion, shall be contingent upon the degree of attainment of
specified performance goals or other conditions over a specified period (the
"Performance Period"). The terms and provisions of an Award of Performance
Shares shall be evidenced by an appropriate Award Agreement.
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9.2 Value of Performance Shares. The value of a Performance Share at any
time shall equal the Fair Market Value of a Share at such time.
9.3 Form and Timing of Payment of Performance Shares. During the course of
a Performance Period, the Committee shall determine the number of Performance
Shares as to which the Participant has earned a right to be paid pursuant to the
terms of the applicable Award Agreement. The Committee shall pay any earned
Performance Shares as soon as practicable after they are earned in the form of
cash, Shares or a combination thereof (as determined by the Committee) having an
aggregate Fair Market Value equal to the value of the earned Performance Shares
as of the date they are earned. Any Shares used to pay out earned Performance
Shares may be granted subject to any restrictions deemed appropriate by the
Committee. In addition, the Committee, in its discretion, may cancel any earned
Performance Shares and grant Stock Options to the Participant which the
Committee determines to be of equivalent value based on a conversion formula
stated in the Performance Shares Award Agreement.
The Committee, in its discretion, may also grant dividend equivalents
rights with respect to earned but unpaid Performance Shares as evidenced by the
applicable Award Agreement. Performance Shares shall not have any voting rights.
9.4 Termination of Employment. Each Performance Share Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unearned Performance Shares following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreements entered into with Participants, need not be uniform among all
Performance Shares awarded pursuant to the Plan, and may reflect distinctions
based on the reasons of termination of employment. In amplification but not
limitation of the foregoing, in the case of an award of Performance Shares to a
Named Executive Officer which is intended to qualify for the Performance-Based
Exception, the Award Agreement may provide that such Performance Shares may
become payable in the event of a termination of employment by reason of death,
Disability or Change in Control, such payment not to occur before attainment of
the related performance goal.
9.5 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant.
Article 10. Performance Measures
The performance measure(s) to be used for purposes of Awards (other than
Options) to Named Executive Officers which are designed to qualify for the
Performance-Based Exception shall be chosen from among the following
alternatives:
(a) Earnings Per Share;
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(b) Net Income;
(c) Return On Assets;
(d) Return On Equity;
(e) Revenues; or
(f) Total Shareholder Return.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
Article 12. Deferrals
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the satisfaction of
any requirements or goals with respect to Performance Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
Article 13. Rights of Key Employees
13.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company. For purposes of this Plan, a transfer of a Participant's employment
between the Company and a Subsidiary, or between Subsidiaries, shall not be
deemed to be a termination of employment.
13.2 Participation. No Key Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
Article 14. Change in Control
14.1 Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules
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and regulations of any governing governmental agencies or national securities
exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any restriction periods and restrictions imposed on shares of
Restricted Stock shall lapse; and
(c) The target payout opportunities attainable under all outstanding
Awards of Restricted Stock and Performance Shares shall be deemed to
have been fully earned for the entire Performance Period(s) as of the
effective date of the Change in Control, and the vesting of all Awards
shall be accelerated as of the effective date of the Change in
Control.
14.2 Limitation on Change-in-Control Benefits. It is the intention of the
Company and the Participants to reduce the amounts payable or distributable to a
Participant hereunder if the aggregate Net After Tax Receipts (as defined below)
to the Participant would thereby be increased, as a result of the application of
the excise tax provisions of Section 4999 of the Code. Accordingly, anything in
this Plan to the contrary notwithstanding, in the event that the independent
accountants regularly employed by the Company immediately prior to any "change"
described below (the "Accounting Firm") shall determine that receipt of all
Payments (as defined below) would subject the Participant to tax under Section
4999 of the Code, it shall determine whether some amount of Payments would meet
the definition of a "Reduced Amount," (as defined below). If the Accounting Firm
determines that there is a Reduced Amount, the aggregate Payments shall be
reduced to such Reduced Amount in accordance with the provisions of Section
14.2(b) below.
(a) For purposes of this Section 14.2(a):
(i) A "Payment" shall mean any payment or distribution in the nature
of compensation to or for the benefit of a Participant who is a
"disqualified individual" within the meaning of Section 280G(c)
of the Code and which is contingent on a "change" described in
Section 280G(b)(2)(A)(i) of the Code with respect to the Company,
whether paid or payable pursuant to this Plan or otherwise;
(ii) "Plan Payment" shall mean a Payment paid or payable pursuant to
this Plan (disregarding this Section 14.2);
(iii)"Net After Tax Receipt" shall mean the Present Value of a
Payment, net of all taxes imposed on the Participant with respect
thereto under Sections 1 and 4999 of the Code, determined by
applying the highest marginal rate under Section 1 of the Code
which applied to the Participant's Federal taxable income for the
immediately preceding taxable year;
(iv) "Present Value" shall mean such value determined in accordance
with Section 280G(d)(4) of the Code; and
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<PAGE>
(v) "Reduced Amount" shall mean the smallest aggregate amount of
Payments which (A) is less than the sum of all Payments and (B)
results in aggregate Net After Tax Receipts which are equal to or
greater than the Net After Tax Receipts which would result if all
Payments were paid to or for the benefit of the Participant.
(b) If the Accounting Firm determines that aggregate Payments should be
reduced to the Reduced Amount, the Committee shall promptly give the
Participant notice to that effect and a copy of the detailed
calculation thereof, and the Participant may then elect, in the
Participant's sole discretion, which and how much of the Payments,
including without limitation Plan Payments, shall be eliminated or
reduced (as long as after such election the Present Value of the
aggregate Payments is equal to the Reduced Amount), and shall advise
the Committee in writing of such election within ten (10) days of the
Participant's receipt of notice. If no such election is made by the
Participant within such ten (10) day period, the Committee may elect
which of the Payments, including without limitation Plan Payments,
shall be eliminated or reduced (as long as after such election the
Present Value of the aggregate Payments is equal to the Reduced
Amount) and shall notify the Participant promptly of such election.
All determinations made by the Accounting Firm under this Section 14.2
shall be binding upon the Company and the Participant and shall be
made within sixty (60) days immediately following the event
constituting the "change" referred to above. As promptly as
practicable following such determination, the Company shall pay to or
distribute for the benefit of the Participant such Payments as are
then due to the Participant under this Plan.
(c) At the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or
distributed by the Company to or for the benefit of the Participant
pursuant to this Plan which should not have been so paid or
distributed ("Overpayment") or that additional amounts which will have
not been paid or distributed by the Company to or for the benefit of
the Participant pursuant to this Plan could have been so paid or
distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the
Accounting Firm, based either upon the assertion of a deficiency by
the Internal Revenue Service against the Company or the Participant
which the Accounting Firm believes has a high probability of success
or controlling precedent or other substantial authority, determines
that an Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for the benefit of the Participant
shall be treated for all purposes as a loan ab initio to the
Participant which the Participant shall repay to the Company together
with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable by the
Participant to the Company if and to the extent such deemed loan and
payment would not either reduce the amount on which the Participant is
subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes.
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In the event that the Accounting Firm, based upon controlling
precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Participant together
with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
14.3 Termination, Amendment, and Modifications of Change-in-Control
Provisions. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards; provided, however, the Board of Directors, upon recommendation of the
Committee, may terminate, amend, or modify this Article 14 at any time and from
time to prior to the date of a Change in Control.
Article 15. Amendment, Modification, and Termination
15.1 Amendment, Modification, and Termination. The Board may at any time
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, however, that no amendment which requires shareholder
approval in order for the Plan to continue to comply with Rule 16b-3 under the
Exchange Act, including any successor to such Rule, shall be effective unless
such amendment shall be approved by the requisite vote of shareholders of the
Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
15.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
15.3 Acceleration of Award Vesting; Waiver of Restrictions. Notwithstanding
any provision of this Plan or any Award Agreement provision to the contrary, the
Committee, in its sole and exclusive discretion, shall have the power at any
time to (i) accelerate the vesting of any Award granted under the Plan,
including without limitation, acceleration to such a date that would result in
said Awards becoming immediately vested, or (ii) waive any restrictions of any
Award granted under the Plan.
Article 16. Withholding
16.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising as a result of this Plan.
16.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any
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<PAGE>
other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date as of which the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
Article 17. Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
Article 18. Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 19. Legal Construction
19.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
19.4 Securities Law Compliance. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions or Rule
16b-3 or its
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successors under the Exchange Act. To the extent any provision of the plan or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.
19.5 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by
the laws of the State of North Carolina.
19
OAKWOOD HOMES CORPORATION
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Name:
This plan shall be known as the "Oakwood Homes Corporation Executive
Incentive Compensation Plan" (the "Plan").
2. Purpose and Intent:
Oakwood Homes Corporation (the "Company") establishes this Plan effective
November 15, 1995 for the purpose of providing certain of its senior executive
officers with annual and long-term incentive compensation based on the
performance of the Company measured by certain objective corporate financial
performance criteria described herein. The intent of the Plan is to provide
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code. The provisions of the Plan shall be construed and interpreted to
effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the following
meanings:
(a) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and references thereto shall include the valid Treasury regulations
thereunder.
(b) "Committee" means all of the members of the Compensation Committee of
the Board of Directors of the Company who are Outside Directors.
(c) "Common Stock" means the common stock of the Company.
(d) "Covered Employee" with respect to a Plan Year or Performance Period,
as applicable, means any key employee of the Company designated as such by the
Committee in accordance with the provisions of paragraphs 5 and 6 below.
(e) "Fair Market Value" of a share of Common Stock means "Fair Market
Value" as defined in the Stock Plan.
(f) "Net Income" means, with respect to a Plan Year, "net income" of the
Company for such Plan Year determined in accordance with generally accepted
accounting principles that would be reported in the Company's Annual Report to
Shareholders for such Plan Year.
(g) "Outside Director" means an "outside director" within the meaning of
Section 162(m)(4)(C)(i) of the Code, subject to any applicable transition rules
under Section 162(m) of the Code.
<PAGE>
(h) "Performance Period" means a period covering more than one (1) Plan
Year established by the Committee in accordance with the provisions of paragraph
6 below.
(i) "Period of Restriction" means "Period of Restriction" as defined in the
Stock Plan.
(j) "Plan Year" means the fiscal year of the Company beginning October 1
and ending September 30.
(k) "Pool" means a long term incentive compensation pool established under
the provisions of paragraph 6 pursuant to a formula based on the level of Net
Income for the applicable Performance Period.
(l) "Restricted Stock" means "Restricted Stock" as defined in the Stock
Plan.
(m) "ROE" means, with respect to a Plan Year, the Company's "return on
average common shareholders' equity" for such Plan Year determined in accordance
with generally accepted accounting principles that would be reported in the
Company's Annual Report to Shareholders for such Plan Year.
(n) "Stock Plan" means the Oakwood Homes Corporation Key Employee Stock
Plan, as the same may be amended from time to time.
4. Administration:
The Committee shall be responsible for administering the Plan. The
Committee shall have all of the powers necessary to enable it to properly carry
out its duties under the Plan. Not in limitation of the foregoing, the Committee
shall have the power to construe and interpret the Plan and to determine all
questions that shall arise thereunder. The Committee shall have such other and
further specified duties, powers, authority and discretion as are elsewhere in
the Plan either expressly or by necessary implication conferred upon it. The
Committee may appoint such agents, who need not be members of the Committee, as
it may deem necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties as the Committee may deem
expedient or appropriate that are not inconsistent with the intent of the Plan.
The decision of the Committee upon all matters within its scope of authority
shall be final and conclusive on all persons, except to the extent otherwise
provided by law.
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5. Annual Incentive Compensation:
The Plan shall provide for annual incentive compensation payable in
accordance with the provisions of this paragraph 5. No later than December 30 of
a Plan Year, the Committee shall determine (i) the Covered Employees who are
eligible for annual incentive compensation for the Plan Year under this
paragraph 5, (ii) for each such Covered Employee, a target annual bonus and
(iii) a formula based on the Net Income for such Plan Year pursuant to which a
given Covered Employee shall receive none, some, all or more than all of such
Covered Employee's target annual bonus depending on the actual Net Income for
such Plan Year. In that regard, the formula for determining the amount of a
Covered Employee's annual incentive compensation under this paragraph 5, if any,
for a Plan Year shall be a fixed formula that does not permit Committee
discretion. Any annual incentive compensation payable to a Covered Employee
under this paragraph 5 shall be paid in accordance with the provisions of
paragraph 8.
6. Long Term Incentive Compensation:
The Plan shall provide for long term incentive compensation payable in
accordance with the provisions of this paragraph 6. No later than December 30 of
any Plan Year during the term of this Plan, the Committee may in its discretion
establish a Performance Period consisting of such Plan Year and one or more
succeeding Plan Years. If a Performance Period is established, then at the time
such Performance Period is established the Committee shall determine (i) the
Covered Employees who are eligible for long term incentive compensation for the
Performance Period under this paragraph 6, (ii) a formula for determining a Pool
based on the Net Income of the Company for the Performance Period, (iii) a
threshold level of ROE for the Performance Period below which no Pool shall be
established and (iv) a formula for allocating among the Covered Employees for a
Performance Period any Pool for such Performance Period. In that regard, (A) the
formula for determining the amount of the Pool for a Performance Period and (B)
the formula for allocating any Pool among the Covered Employees for the
Performance Period shall be fixed formulas that do not permit Committee
discretion. Any long term incentive compensation payable to a Covered Employee
under this paragraph 6 shall be paid in accordance with the provisions of
paragraph 8.
7. Code Section 162(m) Provisions:
(a) In accordance with Section 162(m)(4)(C)(iii) of the Code, prior to any
payment under the Plan for a Plan Year or Performance Period, as applicable, the
Committee shall certify in writing the attainment of the levels of Net Income
and ROE under the formulas in effect under paragraphs 5 and 6 above for such
Plan Year or Performance Period, as applicable, and the amount of
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annual incentive compensation and long term incentive compensation, if any,
payable pursuant to such formulas for such Plan Year or Performance Period, as
applicable.
(b) Notwithstanding any provision of the Plan to the contrary, in no event
shall a Covered Employee be paid in cash more than (i) Two Million Five Hundred
Thousand Dollars ($2,500,000) of annual incentive compensation for any Plan Year
hereunder or (ii) Two Million Five Hundred Thousand Dollars ($2,500,000) of long
term incentive compensation for each Plan Year comprising a Performance Period
hereunder. See paragraph 8 below for provisions regarding restrictions
applicable to shares of Restricted Stock payable in accordance with this Plan.
8. Payment of Incentive Compensation:
Any annual or long term incentive compensation payable hereunder to a
Covered Employee shall be payable partly in cash and partly in shares of
Restricted Stock in accordance with, and subject to, the provisions of this
paragraph 8. At least ten percent (10%) of a Covered Employee's compensation
payable hereunder, and if and as determined by the Committee up to fifty percent
(50%) of such compensation, shall be payable in shares of Restricted Stock. The
number of shares of Restricted Stock shall equal the number of whole shares of
Common Stock that could be purchased with such compensation after applying
either a twenty percent (20%) or thirty percent (30%) discount from the Fair
Market Value of the Common Stock determined as of the last day of the applicable
Plan Year (in the case of an annual incentive compensation award hereunder) or
Performance Period (in the case of a long term incentive compensation award
hereunder). The Covered Employee shall elect the applicable discount rate. If
the Covered Employee elects the twenty percent (20%) discount rate, the
Restricted Stock shall have a two (2) year Period of Restriction beginning as of
the last day of the applicable Plan Year or Performance Period to which such
compensation relates, and if the Covered Employee elects the thirty percent
(30%) discount rate, the applicable Period of Restriction shall be four (4)
years beginning as of such date. Any shares of Restricted Stock to be issued to
a Covered Employee hereunder shall be issued from the pool of shares available
for issuance under the Stock Plan, shall be evidenced by an appropriate award
agreement under the Stock Plan and shall be subject to any applicable
limitations set forth in the Stock Plan regarding the number of shares which may
be awarded to an individual under the Stock Plan in any given calendar year. Any
cash payable hereunder shall be paid as soon as practicable following the end of
the applicable Plan Year or Performance Period. Notwithstanding the foregoing,
if a Covered Employee's employment with the Company and its affiliates is
terminated for any reason (including death) by any party prior to the Covered
Employee having received any cash or shares of Restricted Stock payable
hereunder, the Covered
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Employee shall forfeit and have no further right to receive any such cash or
shares of Restricted Stock. Any elections by a Covered Employee under this
paragraph 8 which are intended to provide for a deferral of compensation shall
be made by an irrevocable written election of the Covered Employee in such form
and at such time as is approved by the Committee. Any amount payable hereunder
shall be subject to applicable payroll and withholding taxes.
9. Shareholder Approval:
In accordance with Section 162(m)(4)(C)(ii) of the Code, the effectiveness
of the Plan and of any annual or long term incentive compensation awarded
hereunder is subject to the Plan's approval and ratification by the shareholders
of the Company after disclosure to the shareholders of the Company of the
material terms of the Plan, such approval and ratification to be obtained (i) on
or before September 30, 1996 and (ii) at such other times as required by Section
162(m)(4)(C)(ii) of the Code.
10. Amendment, Modification and Termination of the Plan:
The Board of Directors of the Company may amend, modify or terminate the
Plan at any time, provided that no amendment, modification or termination of the
Plan shall reduce the amount payable to a Covered Employee under the Plan as of
the date of such amendment, modification or termination.
11. Applicable Law:
The Plan shall be construed, administered, regulated and governed in all
respects under and by the laws of the United States to the extent applicable,
and to the extent such laws are not applicable, by the laws of the state of
North Carolina.
12. Miscellaneous:
A Covered Employee's rights and interests under the Plan may not be
assigned or transferred by the Covered Employee. To the extent the Covered
Employee acquires a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of any unsecured general creditor
of the Company. Nothing contained herein shall be deemed to create a trust of
any kind or any fiduciary relationship between the Company and the Covered
Employee. Designation as a Covered Employee in the Plan shall not entitle or be
deemed to entitle a Covered Employee to continued employment with the Company.
5
