<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
M.D.C. HOLDINGS, INC.
---------------------
(Name of Registrant as Specified In Its Charter)
BOWNE OF DENVER
---------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
0
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[MDC HOLDINGS, INC. LETTERHEAD]
March 31, 2000
To Our Shareowners:
You are invited to attend the 2000 Annual Meeting of Shareowners (the
"Meeting") of M.D.C. Holdings, Inc. (the "Company") to be held at 3600 South
Yosemite Street, Lower Level Conference Room A, Denver, Colorado, on Friday, May
19, 2000, at 8:00 a.m., Denver time.
Following this letter is the formal notice of the Meeting and a proxy
statement describing the matters to be acted upon at the Meeting. Shareowners
also are entitled to vote on any other matters which properly come before the
Meeting.
While some of our shareowners have exercised their right to vote their
shares in person, we recognize that many of you are unable to attend the
Meeting. Accordingly, enclosed is a proxy card that enables shareowners to vote
their shares on the matters to be considered at the Meeting, even if they are
unable to attend. All you need to do is mark the proxy card to indicate your
vote, date and sign the proxy card and return it to the Company in the enclosed
postage-paid envelope as soon as conveniently possible. If you desire to vote in
accordance with management's recommendations, you need not mark your vote on the
proxy card, but need only sign, date and return it in the enclosed postage-paid
envelope.
WHETHER YOU OWN FEW OR MANY SHARES OF STOCK, PLEASE BE SURE YOU ARE
REPRESENTED AT THE MEETING BY ATTENDING IN PERSON OR BY RETURNING YOUR PROXY
CARD AS SOON AS POSSIBLE.
Sincerely,
Larry A. Mizel
Chairman of the Board
<PAGE> 3
[MDC HOLDINGS, INC. LETTERHEAD]
-----------
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
-----------
To Our Shareowners:
The 2000 Annual Meeting of Shareowners (the "Meeting") of M.D.C.
Holdings, Inc. (the "Company") will be held at 3600 South Yosemite Street, Lower
Level Conference Room A, Denver, Colorado, on Friday, May 19, 2000, at 8:00
a.m., Denver time, to consider and act upon the following matters:
1. the election of Steven J. Borick and David D. Mandarich, two
Class III Directors, for three-year terms expiring in 2003; and
2. such other business as properly may come before the Meeting and
any postponements or adjournments thereof.
Only shareowners of record at the close of business on March 24, 2000,
the record date, will be entitled to vote at the Meeting.
Management and the Board of Directors desire to have maximum
representation at the Meeting and respectfully request that you date, execute
and timely return the enclosed proxy in the postage-paid envelope provided.
BY ORDER OF THE BOARD OF DIRECTORS,
Daniel S. Japha
Secretary
March 31, 2000
<PAGE> 4
[MDC HOLDINGS, INC. LETTERHEAD]
-----------
PROXY STATEMENT
ANNUAL MEETING OF SHAREOWNERS
MAY 19, 2000
-----------
To Our Shareowners:
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors (the "Board of
Directors") of M.D.C. Holdings, Inc. (the "Company") to be used at the Annual
Meeting of Shareowners of the Company (the "Meeting") to be held at 3600 South
Yosemite Street, Lower Level Conference Room A, Denver, Colorado, on Friday, May
19, 2000, at 8:00 a.m., Denver time, and any postponements or adjournments
thereof. The Meeting is being held for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareowners. This Proxy Statement, the
accompanying proxy card and the Notice of Annual Meeting, collectively referred
to as the "Proxy Materials," are first being sent to shareowners on or about
March 31, 2000.
GENERAL INFORMATION
SOLICITATION
The enclosed proxy is being solicited by the Board of Directors of the
Company. In addition to solicitations by mail, solicitations may be made by
personal interview, telephone and telegram by directors, officers and regular
employees of the Company. No compensation will be paid for the solicitation of
proxies, although the Company will reimburse bankers, brokers and others holding
shares in their names or in the names of nominees or otherwise for reasonable
out-of-pocket expenses incurred in sending the Proxy Materials to the beneficial
owners of such shares.
VOTING RIGHTS
Holders of shares of the Company's common stock, $.01 par value (the
"Common Stock"), at the close of business on March 24, 2000, (the "Record
Date"), are entitled to notice of, and to vote at, the Meeting. As of February
29, 2000, approximately 21,930,000 shares of Common Stock were outstanding. The
presence, in person or by proxy, of the holders of one-third of the total number
of shares of Common Stock outstanding constitutes a quorum for transacting
business at the Meeting. Each share of Common Stock outstanding on the Record
Date is entitled to one vote on each matter presented at the Meeting.
1
<PAGE> 5
VOTING PROXIES
Shares of Common Stock represented by properly executed proxy cards
received by the Company in time for the Meeting will be voted in accordance with
the choices specified in the proxies. Unless contrary instructions are indicated
on a proxy, the shares of Common Stock represented by such proxy will be voted
FOR the election as Directors of the nominees named in this Proxy Statement.
Abstentions and broker non-votes (proxies that do not indicate that brokers or
nominees have received instructions from the beneficial owner of shares) will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulating the total number
of votes cast on proposals presented to shareowners, whereas broker non-votes
are not counted for purposes of determining the total number of votes cast.
Management and the Board of Directors of the Company know of no other
matters to be brought before the Meeting. If other matters are properly
presented to the shareowners for action at the Meeting and any adjournments or
postponements thereof, it is the intention of the proxy holders named in the
proxy to vote in their discretion on all matters on which the shares of Common
Stock represented by such proxy are entitled to vote.
REVOCABILITY OF PROXY
The giving of the enclosed proxy does not preclude the right of a
shareowner to vote in person. A proxy may be revoked at any time prior to its
exercise by notice of revocation in writing sent to the Secretary of the
Company, by presenting to the Company a later-dated proxy card executed by the
person executing the prior proxy card or by attending the Meeting and voting in
person.
ANNUAL REPORT
The Company's 1999 Annual Report to Shareowners, including the
Company's 1999 audited financial statements (the "Annual Report"), is enclosed
with these Proxy Materials. The 1999 Annual Report is not incorporated into this
Proxy Statement by reference nor is it a part of the Proxy Materials.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for three classes
of Directors with staggered terms of office, to be divided as equally as
possible. Nominees of each class serve for terms of three years (unless a
nominee is changing to a different class) and until election and qualification
of their successors or until their resignation, death, disqualification or
removal from office.
The Board of Directors currently consists of six members, including two
Class I Directors whose terms expire in 2001, two Class II Directors whose terms
expire in 2002 and two Class III Directors whose terms expire in 2000. At the
Meeting, two Class III Directors are to be elected to three-year terms expiring
in 2003. The nominees for the Class III Directors are Messrs. Steven J. Borick
and David D. Mandarich. Both nominees presently serve on the Board of Directors
of the Company.
Unless otherwise specified, the enclosed proxy card will be voted FOR
the election of Messrs. Borick and Mandarich. Management and the Board of
Directors are not aware of any reasons which would cause Messrs. Borick or
Mandarich to be unavailable to serve as Directors. If Messrs. Borick or
Mandarich become unavailable for election, discretionary authority may be
exercised by the proxy holders named in the enclosed proxy card to vote for a
substitute nominee or nominees proposed by the Board of Directors.
2
<PAGE> 6
The affirmative vote of the holders of a plurality of the shares
present or represented and entitled to vote at the Meeting will be required for
election to the Board of Directors. The Board of Directors recommends a vote FOR
the election of Messrs. Borick and Mandarich as Directors.
Certain information with respect to Messrs. Borick and Mandarich, the
nominees for election, and the continuing Directors of the Company, furnished in
part by each such person, appears below:
<TABLE>
<CAPTION>
Shares Beneficially
Positions and Offices with the Company Owned as of the
NAME Age and Other Principal Occupations Record Date (1)(2) Percentage of Class (3)
------ --- ------------------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
NOMINEES:
CLASS III
TERMS EXPIRE IN 2000
Steven J. Borick 47 Director and Executive Vice President of 25,500 *
Superior Industries International, Inc. and
President of Texakota, Inc. and a General
Partner in Texakota Oil Company
David D. Mandarich 52 President and Chief Operating Officer of 1,721,249(4) 7.6%
the Company
CONTINUING DIRECTORS:
CLASS I
TERMS EXPIRE IN 2001
Herbert T. Buchwald 69 Principal in the law firm of Herbert T. 59,926 *
Buchwald, P.A. and President and
Chairman of the Board of Directors of BPR
Management Corporation
Larry A. Mizel 57 Chairman of the Board of Directors and 4,740,663(5) 21.0%
Chief Executive Officer of the Company
CLASS II
TERMS EXPIRE IN 2002
Gilbert Goldstein 81 Principal in the law firm of Gilbert 60,000 *
Goldstein, P.C.
William B. Kemper 63 Private real estate investor 100,000 *
</TABLE>
- -----------
* Represents less than one percent of the outstanding shares of Common
Stock.
(1) Includes, where applicable, shares of Common Stock owned by such
person's minor children and spouse and by other related individuals or
entities over whose shares such person has custody.
3
<PAGE> 7
(2) Includes the following shares of Common Stock that such persons have
the right to acquire within 60 days of the Record Date by the exercise
of stock options at prices ranging from $6.75 to $18.625 per share:
Gilbert Goldstein 50,000, William B. Kemper 100,000, Steven J. Borick
25,000, Herbert T. Buchwald 50,000, Larry A. Mizel 225,000 and David D.
Mandarich 275,000.
(3) The percentage shown is based on the number of shares of Common Stock
outstanding as of December 31, 1999 as reported in the Company's 1999
Annual Report on Form 10-K and includes shares of Common Stock actually
owned and shares of Common Stock which the person had the right to
acquire within 60 days of the Record Date. All shares of Common Stock
which the person had the right to acquire within 60 days of the Record
Date are deemed to be outstanding for the purpose of computing the
percentage of shares of Common Stock owned by such person but are not
deemed to be outstanding for the purpose of computing the percentage of
shares of Common Stock owned by any other person.
(4) Includes 8,000 shares owned by Mr. Mandarich's minor children.
(5) Includes 33,291 shares held in Mr. Mizel's IRA Account, 1,005,500
shares held by Mr. Mizel's wife and 405,314 shares of Common Stock with
respect to which Mr. Mizel may be considered the "beneficial owner," as
defined under the Securities Exchange Act of 1934 (the "1934 Act"),
because he is a beneficiary of certain trusts which own all of the
outstanding stock of CVentures, Inc., a corporation which controls the
voting of these shares of Common Stock. Mr. Mizel is a director and
officer of CVentures, Inc. Also includes 94,032 shares of Common Stock
owned by certain trusts for the benefit of Mr. Mizel and certain
members of his immediate family, over which shares Mr. Mizel does not
exercise voting control, although he has a limited power of appointment
allowing him to direct the trustee to gift all or a portion of such
shares to any person other than himself or a creditor. Mr. Mizel
disclaims beneficial ownership of the 94,032 shares.
OTHER INFORMATION RELATING TO DIRECTORS
The following is a brief description of the business experience during
at least the past five years of each nominee for the Board of Directors of the
Company and of the continuing members of the Board.
Steven J. Borick is executive vice president of Superior Industries
International, Inc., a New York Stock Exchange-listed manufacturer of automobile
accessories and has been the president of Texakota, Inc., an oil and gas
exploration and development company, and a general partner in Texakota Oil
Company, a private oil and gas partnership, for more than the past five years.
He also is a director of Richmond American Homes of Colorado, Inc., a wholly
owned subsidiary of the Company ("Richmond American Homes"). Mr. Borick has been
a Director of the Company since April 1987 and is Chairman of the Compensation
Committee and a member of the Audit Committee.
David D. Mandarich was elected President of the Company in July 1999,
Chief Operating Officer in March 1996, Co-Chief Operating Officer in September
1994 and Executive Vice President-Real Estate in April 1993. He was appointed a
Director of the Company in March 1994. In April 1990, Mr. Mandarich was elected
as Chairman of the Board of Directors of Richmond American Homes. Mr. Mandarich
also was a Director of the Company from September 1980 until April 1989.
Gilbert Goldstein has been engaged in private law practice for more
than the past five years as the principal in the law firm of Gilbert Goldstein,
P.C. See "Certain Relationships and Related Transactions" below. Mr. Goldstein
has been a Director of the Company since January 1976. Mr. Goldstein is the
Chairman of the Legal Committee.
William B. Kemper has been engaged in private real estate investments,
real estate development and property management since May 1982. Prior to May
1982, he was president of Gold Crown, Inc., a real estate development company.
He also is a director of HomeAmerican Mortgage Corporation, the Company's wholly
owned mortgage lending subsidiary
4
<PAGE> 8
("HomeAmerican"). Mr. Kemper has been a Director of the Company since January
1972. He is Chairman of the Audit Committee and a member of the Compensation
Committee.
Herbert T. Buchwald has been a principal in the law firm of Herbert T.
Buchwald, P.A. and president and chairman of the board of directors of BPR
Management Corporation, a property management company located in Denver,
Colorado, for more than the past five years. He is also a director of M.D.C.
Land Corporation, a wholly owned subsidiary of the Company. Mr. Buchwald was
appointed to the Company's Board of Directors in March 1994 and is a member of
the Audit, Compensation and Legal Committees.
Larry A. Mizel has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company for more than five years and was elected
President of the Company in March 1996 . Mr. Mizel resigned as President of the
Company in July 1999. Mr. Mizel has been a Director of the Company since
founding the Company in January 1972. Mr. Mizel also serves as a director of
Richmond American Homes. Mr. Mizel also is a Trustee of Marsico Investment Fund,
an open-end investment company that currently offers three investment
portfolios, the Marsico Focus Fund, the Marsico Growth and Income Fund and the
Marsico 21st Century Fund. Mr. Mizel is a member of the Legal Committee.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1999, the Board of Directors held 11 regularly scheduled
meetings and one special meeting. The Directors also considered Company matters
and had numerous communications with the Chairman of the Board of Directors and
other officials of the Company wholly apart from the formal Board meetings. In
1999, all of the Company's Directors attended at least 75% of the total number
of meetings of the Board of Directors and of the committees of the Board of
Directors on which they served.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors consists currently of
Messrs. Borick, Buchwald and Kemper, who serves as its Chairman. The Audit
Committee met 11 times during 1999. The Audit Committee is responsible for
reviewing and approving the scope of the annual audit undertaken by the
Company's independent accountants and meets with them to review the progress and
results of their work as well as their recommendations. The Audit Committee
recommends to the Board of Directors the appointment of, has direct access to
and reviews the fees of the Company's independent accountants. In connection
with the internal accounting controls of the Company, the Audit Committee
reviews internal audit procedures and reporting systems.
The Director of Internal Audit for the Company reports directly to the
Audit Committee on, among other things, the Company's compliance with certain
Company procedures which are designed to enhance management's consideration of
major transactions involving the Company. The Audit Committee has direct control
over staffing and compensation of the Internal Audit Department. Additionally,
the Audit Committee reviews the Company's Corporate Code of Conduct. On at least
a quarterly basis, the Company's Chief Financial Officer reports directly to the
Audit Committee on any significant accounting issues.
COMPENSATION COMMITTEE
The Compensation Committee currently consists of Messrs. Buchwald,
Kemper and Borick, who serves as its Chairman. During 1999, the Compensation
Committee met five times. The Compensation Committee is active in approving the
design of executive compensation plans, reviewing salaries, bonuses and other
forms of compensation for officers and key employees of the Company,
establishing salaries, benefits and other forms of compensation for new
employees and in other compensation and personnel areas as the Board of
Directors from time to time may request. For a discussion of the criteria
utilized and factors considered by the Compensation Committee in reviewing and
making recommendations with respect to executive compensation, see the "Report
of the Compensation Committee" below.
5
<PAGE> 9
LEGAL COMMITTEE
The Legal Committee currently consists of Messrs. Goldstein, Buchwald
and Mizel. During 1999, the Legal Committee met twice. The Legal Committee is
chaired by Mr. Goldstein and has been active in reviewing legal issues and
interacting with the Company's inside and outside legal counsel.
OTHER COMMITTEES
The Company has no executive or nominating committees. Procedures for
nominating persons for election to the Board of Directors are contained in the
Company's By-Laws.
DIRECTOR COMPENSATION
Each Director who is not an officer of the Company is paid $3,000 per
month as a retainer, $1,500 for each board meeting attended and $750 for
attending each meeting of the Legal, Audit and Compensation Committees and is
granted options to purchase 25,000 shares of Common Stock annually. Effective
January 1, 2000 each Director who is not an officer of the Company is to receive
$1,500 for attending meetings of the Legal, Audit and Compensation Committees.
Each Director also is reimbursed for expenses related to his attendance at Board
of Directors and committee meetings.
Messrs. Borick and Kemper each received fees of $1,500 per meeting
during 1999 for services as a director of Richmond American Homes and
HomeAmerican, respectively. Richmond American Homes' board held 11 meetings in
1999. During 1999, Mr. Kemper attended seven meetings of the HomeAmerican Board
of Directors. Effective January 1, 2000, Mr. Buchwald is to receive $1,500 per
month as a retainer and $1,500 per meeting for service as a director of M.D.C.
Land Corporation.
Mr. Kemper and his wife are covered by the Company's self-funded
contributory medical plan, for which he pays 100% of the premiums. For the
medical plan's fiscal year ended September 30, 1999, Mr. Kemper paid premiums in
excess of the cost of claims paid on behalf of Mr. Kemper and his wife.
EXECUTIVE OFFICERS
Set forth below are the names and offices held by the executive
officers of the Company as of the Record Date. The executive officers of the
Company are elected annually and hold office until their successors are duly
elected and qualified or until their resignation, retirement, death or removal
from office. Biographical information on Messrs. Mizel and Mandarich, who serve
as Directors and executive officers of the Company, is set forth in "Election of
Directors" above. Biographical information for the other executive officers of
the Company is set forth below.
<TABLE>
<CAPTION>
NAME Offices Held as of the Record Date
- ------------------ --------------------------------------------------------------------------
<S> <C>
Larry A. Mizel Chairman of the Board of Directors and Chief Executive Officer
David D. Mandarich President, Chief Operating Officer and a Director
Paris G. Reece III Executive Vice President, Chief Financial Officer and Principal Accounting
Officer
Michael Touff Senior Vice President and General Counsel
</TABLE>
Paris G. Reece III, 45, was elected Executive Vice President of the
Company in July 1999, Senior Vice President in September 1994, Treasurer in
September 1993, Chief Financial Officer in June 1990, Secretary in February 1990
and a Vice President of the Company in August 1988. Mr. Reece resigned as
Treasurer of the Company in November 1996 and as Secretary of the Company in May
1996. Mr. Reece also is an officer, director or both of most of the Company's
subsidiaries.
6
<PAGE> 10
Michael Touff, 55, was elected Senior Vice President and the General
Counsel of the Company in July 1999 and as Vice President and General Counsel in
December 1994. From August 1992 through December 1994, he was an officer in the
law firm of Ireland, Stapleton, Pryor & Pascoe, P.C. Prior to August 1992, Mr.
Touff was an officer in the law firm of Holmes & Starr, A Professional
Corporation.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the Chief
Executive Officer and the three other executive officers for the three fiscal
years ended December 31, 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION RESTRICTED SHARES
NAME AND --------------------- OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS($)(4) OPTIONS COMPENSATION (1)
-------------------- ------ -------- ------------- ------------ ------------ ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry A. Mizel, 1999 $800,000 $4,586,470(2) N/A - 0 - 150,000(5) $5,000
Chairman of the Board 1998 $660,000 $2,525,809(2) N/A - 0 - 100,000 $5,200
of Directors and Chief 1997 $600,000 $1,027,100(2) N/A - 0 - 100,000 $2,850
Executive Officer
David D. Mandarich, 1999 $650,000 $4,586,470(2) N/A - 0 - 150,000(5) $5,000
President, Chief 1998 $550,000 $2,525,809(2) N/A - 0 - 100,000 $5,200
Operating Officer 1997 $500,000 $1,027,100(2) N/A - 0 - 100,000 $2,850
and a Director
Paris G. Reece III, 1999 $250,000 $276,000 N/A $150,000 70,000(5) $5,000
Executive Vice President 1998 $228,800 $170,000 N/A $185,000 30,000 $5,200
and Chief Financial 1997 $208,000 $248,200(3) N/A - 0 - 20,000 $2,850
Officer
Michael Touff 1999 $256,240 $175,000 N/A $20,000 30,000(5) $5,000
Senior Vice President 1998 $248,768 $165,000 N/A $20,000 10,000 $5,200
and General Counsel 1997 $239,200 $164,400(3) N/A - 0 - 10,000 $2,850
</TABLE>
- -----------
(1) The amounts in this column consist of Company contributions allocated
to the named executive officers' accounts pursuant to the Company's
401(k) Savings Plan. One hundred percent of the Company's 1999
contribution was funded with shares of Common Stock valued at $14.44
per share, the closing price of the Common Stock on December 7, 1999,
the date as of which the Company approved the stock portion of the
allocation.
(2) These bonuses were paid in February following the year indicated in
accordance with the terms of the M.D.C. Holdings, Inc. Executive
Officer Performance-Based Compensation Plan approved by the Company's
stockholders at the 1994 Annual Meeting (the "Executive Compensation
Plan"). The amount of these bonuses is determined based on the
Company's "Adjusted Pre-Tax Return on Average Stockholders' Equity" (as
defined in the Executive Compensation Plan). Bonuses are not payable
under the Executive Compensation Plan unless the Company's Adjusted
Pre-Tax Return on Average Stockholders' Equity equals or exceeds 10%.
In 1999, 20% of these bonuses, or $917,294, was paid in the form of
60,141 shares of Common Stock in accordance with the Executive
Compensation Plan. In 1998, 20% of these bonuses, or $505,162, was paid
in the form of 24,611 shares of Common Stock in accordance with the
Executive Compensation Plan. The 1997 bonuses were paid in cash.
(3) Portions of these bonuses were paid in shares of the Common Stock
valued at the closing price of the Common Stock on the New York Stock
Exchange on the date the Compensation Committee of the Board of
Directors approved the bonuses ($11.375 for 1997). In 1997, Mr. Reece
elected to receive $95,000 of his bonus (8,348 shares) and Mr. Touff
elected to receive $75,000 of his bonus (6,591 shares) in the form of
Common Stock. The Compensation Committee
7
<PAGE> 11
also granted the employees who received bonuses in the form of stock
the right to borrow from the Company the amount of taxes due on the
stock portion of the bonus. Messrs. Reece and Touff borrowed $52,581
and $41,511, respectively, in 1997. These amounts were secured by a
pledge of the number of shares of Common Stock equal to 125% of the
original amounts borrowed, divided by the price of the Common Stock on
the respective date of the loan. The loans bear interest at LIBOR plus
one percent, are amortized over 10 years with annual principal and
interest payments due each December 30 of each year of employment and
mature on the earliest of (1) five years from the date of the notes;
(2) 90 days after the date of termination for cause; or (3) one year
after termination without cause.
(4) In 1999, the Company granted restricted stock awards to 13 employees,
including Messrs.Touff and Reece, pursuant to Restricted Stock
Agreements that became effective as of November 19, 1999. The awards
were valued at $15.56 per share, the closing price of the Common Stock
on the date of the awards. In 1998, the Company granted restricted
stock awards to 17 employees, including Messrs. Touff and Reece on
November 20, 1998. The awards were valued at $18.0625 per share, the
closing price of the Common Stock on the date of the awards. The
restrictions on the vesting of the shares granted pursuant to the
Restricted Stock Agreements lapse as to 25% of such shares each year,
commencing on the first anniversary of the grant. All of the
restrictions on vesting of the restricted shares lapse in the event of
(1) the closing of a change in control transaction; (2) the employee's
termination of employment as a result of death or disability; or (3)
the employee's termination of employment by the Company other than for
cause.
(5) See "Option Grants in Last Fiscal Year," below.
N/A: Disclosure is not applicable under the Securities and Exchange
Commission's rules.
Severance benefits for Messrs. Mizel and Mandarich are included in
their employment agreements. Severance benefits for Messrs. Reece and Touff are
included in their change in control agreements. See "Employment Agreements and
Change in Control Agreements" below.
The Company's severance pay policy also provides severance pay to
eligible employees, including each of the named executive officers, whose
employment is involuntarily terminated by the Company for reasons other than
gross misconduct. Employees are eligible for severance pay under this policy if
involuntarily terminated after 90 days of employment. The amount of severance
pay under the policy is based on the length of service with the Company and
payment of severance is conditioned upon execution of a release agreement with
the Company. For each of the named executive officers, (other than Messrs. Mizel
and Mandarich, whose severance pay is provided for in their employment
agreements) the amount of pay would be one week for each year of service to a
maximum of 12 weeks; provided, however, the Compensation Committee of the Board
of Directors may approve additional severance payments for situations involving
management personnel.
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<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The table below provides information on option grants in fiscal 1999 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
------------------------------------------------------------------ ASSUMED ANNUAL RATES OF
PERCENT OF TOTAL STOCK PRICE APPRECIATION FOR
NUMBER OF SHARES OPTIONS GRANTED TO OPTION TERM
UNDERLYING EMPLOYEES IN FISCAL EXERCISE EXPIRATION -----------------------------
NAME OPTIONS (1) YEAR (2) PRICE ($/SH) DATE 5% 10%
- ----------------------- ---------------- ------------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry A. Mizel......... 150,000 22.19% $15.56 11/19/04 $644,924 $1,425,113
David D. Mandarich..... 150,000 22.19% $15.56 11/19/04 $644,924 $1,425,113
Paris G. Reece III..... 70,000 10.36% $15.56 11/19/04 $300,965 $ 665,053
Michael Touff.......... 30,000 4.44% $15.56 11/19/04 $128,985 $ 285,023
</TABLE>
- -----------
(1) Options granted in 1999 are exercisable 25% per year beginning on
November 19, 2000. The closing price of the Common Stock on the New
York Stock Exchange on the date of the grants was $15.56.
(2) The Company granted options representing 676,000 shares of Common Stock
to employees in fiscal 1999.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The table below provides information on option exercises in fiscal 1999
by the named executive officers and the value of such officers' unexercised
options at December 31, 1999.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED VALUE ----------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ------------ ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry A. Mizel............... -0- -0- 425,000(3) 275,000 $3,200,290 $215,990
David D. Mandarich........... 50,000 $337,500 375,000(3) 275,000 $2,784,125 $234,200
Paris G. Reece III(2)........ 50,000 $475,000 17,500 102,500 $ 43,075 $ 51,860
Michael Touff(2)............. 50,000 $486,240 7,500 42,500 $ 21,538 $ 25,303
</TABLE>
- ---------
(1) The closing price of the Common Stock on December 31, 1999 on the New
York Stock Exchange was $15.69.
(2) Mr. Reece borrowed $288,316 and Mr. Touff borrowed $181,434 and
$118,566, respectively, to pay a portion of the sum of the exercise
price and the federal and state income taxes realized on the exercise
of options pursuant to the M.D.C. Holdings, Inc. Executive Option
Purchase Program. See "Certain Relationships and Related Transactions"
below.
(3) Messrs. Mizel and Mandarich exercised options on 200,000 and 100,000
shares of common stock, respectively, on February 7, 2000.
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
EXCHANGE ACT THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE COMPENSATION
COMMITTEE AND PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILING.
The Compensation Committee of the Board of Directors of the Company
(the "Committee") is comprised solely of Directors who are not employees of the
Company. The Committee is responsible for setting executive compensation
policies and determining the compensation paid to executive officers of the
Company.
There are three primary objectives of the Company's executive
compensation program. First, this program is designed to attract, retain and
reward highly qualified executives. Second, the stock-based portion of the
compensation program is designed to create and maintain a strong and direct link
between executive pay, the Company's financial performance and total returns to
shareowners. Third, the Company's compensation program is intended to address,
among other things, the Committee's concern that the Company's highly
experienced executives could be targeted by the Company's competitors.
The three main components of the Company's executive compensation
program are: base salary, annual performance-based incentive compensation and
stock-based, long-term incentive. The Company operates with comparatively few
middle management employees. Because of this, base salaries for the Company's
executive officers, including the Chief Executive Officer, are at or above the
average rates paid by competitors in order to enable the Company to retain its
experienced and skilled executives. However, based upon a study of executive
compensation sponsored by another major homebuilding company, the Committee
believes that the Company's overall management costs are reasonably comparable
to those of other major homebuilders, including those that are part of the Peer
Group Index shown on the performance graph below.
Base salaries are reviewed annually and adjusted based on individual
performance, annual salary increases in the industry, local economic and
employment conditions, the Company's performance and the compensation paid for
similar positions at comparable companies.
1999 COMPENSATION
The Committee considered the following factors in setting total
compensation for 1999, including incentive compensation: the Company's record
earnings per share, home closings, revenues, orders for homes, year-end backlog,
annual operating earnings, homebuilding and mortgage lending profits and home
gross margins; the Company's 26.2% return on average stockholders' equity;
achieving the Company's goal of entering the top quintile of the homebuilding
industry in most financial performance measures; additional coverage by Wall
Street analysts; the rating upgrade of the Company's senior notes by Standard &
Poor's and Duff & Phelps Credit Rating Co.; the extensions and increases of the
Company's homebuilding line of credit and mortgage warehousing line of credit;
the continued reduction of debt; and the Company's improved financial ratios.
Incentive compensation paid to Messrs. Mizel and Mandarich for 1999 was
based upon the Company's Executive Compensation Plan. This plan was designed (i)
to provide the Company's most senior executive officers annual incentive
compensation based on achievement of specific performance objectives linked to
return on equity; and (ii) to permit the Company to deduct executive
compensation for tax purposes.
The Company also maintains an annual bonus program for the Company's
other officers and key management employees. Bonuses are intended to compensate
management and other employees for the attainment of the Company's annual
financial performance goals and other criteria, as determined by the Committee.
Because the Company met or exceeded the 1999 performance goals for these
performance criteria, the Committee authorized the bonuses set forth in the
10
<PAGE> 14
summary compensation table for Messrs. Reece and Touff, the named executive
officers other than Messrs. Mizel and Mandarich.
The Committee also uses long-term, stock-based incentives in the form
of stock options and grants of restricted stock to provide compensation to
executive officers and other key employees that is linked directly to the
performance of the Company's Common Stock. In 1999, the Committee awarded stock
options to acquire 676,000 shares of Common Stock to a total of 51 employees,
including the named executive officers, and 21,655 shares of restricted stock to
13 employees, including Messrs. Reece and Touff. These incentives are designed
and intended to link management and shareowner interests and to motivate
executives to make long-term decisions and investments that will serve to
increase the long-term total return to shareowners. Vesting requirements
contained in the option grants and restricted stock award agreements serve as an
additional long-term incentive to retain key officers and other employees.
CEO COMPENSATION
Mr. Mizel's base salary for 1999 was $800,000 and was based on the
factors described below. The Committee approved a bonus of $4,586,470 for Mr.
Mizel for 1999 in accordance with the terms of the Executive Compensation Plan
described above.
The Committee approved Mr. Mizel's 1999 base salary based on the
following factors, in order of importance to the Committee: (i) achieving the
Company's goal of entering the top quintile of the homebuilding industry in most
financial performance measures; (ii) the Company's record operating results
during 1999; (iii) the Company's improved financial ratios; (iv) the extensions
and increases of the Company's homebuilding line of credit and mortgage
warehousing line; (v) additional coverage by Wall Street analysts; and (vi)
credit rating agency upgrades.
The primary financial performance improvements on which the Committee
relied in determining Mr. Mizel's 1999 base salary were the 70% increase in the
Company's diluted operating earnings per share in 1999 and achieving the
Company's goal of entering the top quintile of the homebuilding industry in most
financial performance measures.
COMPENSATION COMMITTEE
Steven J. Borick, Chairman
William B. Kemper
Herbert T. Buchwald
11
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly change in the
cumulative total return of the Common Stock with the cumulative total return of
the Standard & Poor's 500 Stock Index and with that of a peer group of other
homebuilders over the five-year period ending on December 31, 1999.
It is assumed in the graph that $100 was invested (1) in the Company's
Common Stock; (2) in the stocks of the companies in the Standard & Poor's 500
Index; and (3) in the stocks of the peer group companies just prior to the
commencement of the period and that all dividends received within a quarter were
reinvested in that quarter. The peer group index is composed of the following
companies: Centex Corporation, Pulte Corporation, U.S. Home Corporation, The
Ryland Group, Inc., Toll Brothers, Inc., Kaufman and Broad Home Corporation,
Lennar Corporation, Hovnanian Enterprises, Inc., Del Webb Corporation, D.R.
Horton Inc., M/I Schottenstein Homes, Inc., Beazer Homes USA, Inc. and NVR Inc.
The stock price performance shown on the following graph is not
indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF MDC COMMON STOCK, THE S&P 500 INDEX
AND A SELECTED PEER GROUP
[GRAPH]
FIVE YEAR PLOT POINTS
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
M.D.C. Holdings, Inc. 100.00 145.00 178.49 315.63 451.75 335.26
Weighted Avg. Peer Group 100.00 154.60 158.55 265.03 335.45 251.72
S&P 500 100.00 133.34 161.30 211.31 267.67 319.93
</TABLE>
12
<PAGE> 16
EMPLOYMENT AGREEMENTS AND
CHANGE IN CONTROL AGREEMENTS
EMPLOYMENT AGREEMENTS
Mr. Mizel and Mr. Mandarich (each an "Executive" or together the
"Executives") each entered into an Employment Agreement with the Company
effective October 1, 1997 (the "Employment Agreements"). The Employment
Agreements provide for each Executive's continued employment by the Company; Mr.
Mizel as Chairman, President and Chief Executive Officer and Mr. Mandarich as
Executive Vice President - Real Estate and Chief Operating Officer, until
September 30, 2002 (the Initial Term). When he resigned as President of the
Company in June of 1999, Mr. Mizel acknowledged that the resignation did not
constitute a "Material Change" (see below) under his Employment Agreement.
Unless either the Company on the one hand or either Executive on the other hand
elects by notice in writing delivered to the other at least six months prior to
the expiration of the Initial Term or any extension thereof, such term shall be
extended automatically for two additional years, subject to earlier termination
by either Executive's voluntary resignation or otherwise as provided pursuant to
the terms of the Employment Agreement (the "Employment Term").
Pursuant to the Employment Agreements, the Executives' base salaries
("Base Salaries") are subject to annual review by the Board of Directors.
Messrs. Mizel and Mandarich also are to be paid incentive compensation pursuant
to the Executive Compensation Plan ("Annual Incentive Compensation") and
long-term incentive compensation pursuant to the Company's Employee Equity
Incentive Plan (the "Equity Plan").
Each Executive will be entitled to a retirement benefit under the
Employment Agreement. Mr. Mizel's retirement benefit required that he remain
employed by the Company through September 30, 1999, and Mr. Mandarich's requires
that he remain employed by the Company through September 30, 2002, in each case
unless such employment is terminated by the Company without cause, in the event
of the Executive's death or total disability or if the Executive elects to
terminate his employment upon a "Change in Control" or because of a "Material
Change" (as those terms are described below). The retirement benefit shall be
equal to 70% of the Executive's highest Base Salary during the final three years
of the Employment Term and shall be payable for the duration of the Executive's
life. In addition, the Employment Agreements provide for medical insurance
benefits, reimbursement of certain expenses, and entitle each of the Executives
to participate in the Company's benefit plans. If Mr. Mizel retired at the end
of 1999 and Mr. Mandarich retires at the end of 2002, respectively, assuming
their Base Salaries remain the same as in 1999, their annual retirement benefits
would approximate $560,000 and $455,000, respectively.
Messrs. Mizel and Mandarich may be terminated for cause, as defined in
the Employment Agreements. If an Executive is terminated without cause
(including the Company's election not to extend the term of the Employment
Agreement) during the Employment Term, he will be entitled to receive (i) an
amount equal to the aggregate Base Salary earned by the Executive during the
three years prior to such termination, plus (ii) an amount equal to 100% of the
Annual Incentive Compensation paid for the year prior to termination, and (iii)
the retirement benefits payable under the Employment Agreement commencing on the
date of termination. In addition, in the event of termination without cause,
each Executive's options and other rights under the Equity Plan shall vest
immediately and the Executive and his spouse and dependents shall be entitled to
continued medical benefits.
If a Change in Control occurs, all options, dividend equivalents and
other rights granted to Executives under the Equity Plan and any other Company
plans shall be accelerated and become exercisable immediately prior to the
occurrence of the transaction giving rise to the Change in Control.
Within two years after a Change in Control or a Material Change, the
Executive may terminate his employment, if not already terminated by the
Company. In the event of such termination or a termination of employment by the
Company without cause upon or within two years following a Change in Control,
then (A) each Executive shall receive the amounts payable in the event the
Executive's employment were terminated without cause as described above, (B)
with respect to the
13
<PAGE> 17
retirement benefit, either (1) the Company shall establish and fund an
irrevocable grantor trust in conformance with the model trust set forth in IRS
Revenue Procedure 92-64, or (2) the Company shall, if it so elects, pay to the
Executive, in a lump sum cash payment, the amount that otherwise would be
required to be contributed to such trust.
If the amounts payable upon the occurrence of a Change in Control or
Material Change, either alone or together with any other payments which the
Executive has the right to receive, would be subject to an excise tax as an
"excess parachute payment" under Section 4999 of the Internal Revenue Code, each
Executive agrees in his Employment Agreement that such aggregate amounts shall
be paid in annual installments over the shortest period of time over which such
aggregate amounts may be paid and not be treated as "excess parachute payments"
under Section 4999.
For purposes of this description of the Employment Agreements, a
"Change in Control" shall occur if:
(i) a report on Schedule 13D is filed with the Securities and
Exchange Commission disclosing that any person, other than the Company or any
employee benefit plan sponsored by the Company, or any director of the Company
as of the date of the Employment Agreements, or affiliate of such director, is
the beneficial owner, directly or indirectly, of twenty percent (20%) or more of
the combined voting power of the then-outstanding securities of the Company;
(ii) any person, other than the Company or any employee
benefit plan sponsored by the Company or any director of the Company as of the
date of the Employment Agreements, or affiliate of such director, shall purchase
securities pursuant to a tender offer or exchange offer to acquire any Common
Stock of the Company (or securities convertible into Common Stock) for cash,
securities or any other consideration, provided that after consummation of the
offer, the person in question is the beneficial owner of twenty percent (20%) or
more of the combined voting power of the then-outstanding securities of the
Company;
(iii) the shareowners of the Company shall approve: (A) any
consolidation or merger of the Company (1) in which the Company is not the
continuing or surviving corporation; or (2) pursuant to which shares of Common
Stock of the Company would be converted into cash, securities or other property;
or (B) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of the
Company; or
(iv) there shall have been a change in a majority of the
members of the Board of Directors of the Company within a twelve month period,
unless the election or nomination for election by the Company's shareowners of
each new director during such twelve month period was approved by the vote of
two-thirds of the directors then still in office who were directors at the
beginning of such twelve month period.
For purposes of the Employment Agreements, a "Material Change" shall
occur if:
(i) the Company makes any of certain specified adverse changes
in an Executive's reporting relationship, titles, functions, duties or
responsibilities from those that the Executive occupied on October 1, 1997 or,
if the Employment Agreements have been renewed or extended, the date of the last
renewal or extension;
(ii) the Company assigns or reassigns the Executive (without
his written permission) to another place of employment;
(iii) the Company reduces the Executive's Base Salary, Annual
Incentive Compensation or long-term incentive compensation or the manner in
which such compensation is determined, or retirement benefits, unless such
reduction similarly applies to all "Senior Executive Officers of the Company,"
as defined in the Employment Agreements, or the Company breaches the terms of
the Employment Agreements; provided, however, that nothing in this clause (iii)
shall be construed to permit the Company to reduce either Executive's retirement
benefit, as provided in the Employment Agreements, in any event, and regardless
of whether such reduction would similarly apply to all Senior Executive Officers
of the Company; or
14
<PAGE> 18
(iv) a purchaser of all or substantially all of the Company's
assets or any successor or assignee of the Company fails to assume the
Employment Agreements.
CERTAIN OTHER CHANGE IN CONTROL AGREEMENTS
Messrs. Reece and Touff have entered into change in control Agreements
with the Company (the "Agreements")*. The Agreements are effective January 26,
1998 and terminate on the earlier of termination of the employee's employment or
December 31, 2000. Unless either party elects by notice in writing delivered to
the other by September 30, 2000, or at least 90 days prior to December 31 of
each subsequent year, the term of the Agreement will be renewed automatically
for successive one year terms. In addition, if an Agreement has not been
terminated prior to a "Change in Control" (as defined below), upon a Change in
Control, the term of an Agreement shall extend automatically for two years.
For purposes of the Agreements, the definition of "Change in Control"
is generally the same as the definition of "Change in Control" in the
description of the Employment Agreements as described above.
For purposes of the Agreements, a "Change in Control Event" occurs if a
Change in Control is followed by a "Material Change" within two years. A
Material Change is defined in the Agreements to occur if the employee's
employment is terminated without "cause" (as defined in the Agreements) or if
any of the events set forth under the definition of "Material Change" described
above with respect to the Employment Agreements takes place, taking into account
the titles, positions and reporting relationships of Messrs. Reece or Touff.
Pursuant to the Agreements, if a Change in Control Event occurs, the
employee may elect within 90 days after the Change in Control Event to terminate
the employee's employment, if not previously terminated by the Company, and to
receive a Change in Control payment. The Change in Control payment equals two
times the sum of the employee's Base Salary, in effect immediately prior to the
Change in Control Event, plus the amount of the employee's last regular annual
bonus, provided that the amount of such annual bonus shall not exceed 50% of the
employee's annual Base Salary in effect immediately prior to the Change in
Control Event.
If a Change in Control as defined above occurs, all options, dividend
equivalents and other rights granted to the employee under any Company equity
incentive plan shall be accelerated and become exercisable immediately prior to
the closing of the Change in Control. If the Change in Control is not
consummated, the employee's election to exercise such options and other rights
shall be of no effect and the employee's options shall remain subject to their
original restrictions.
Any amounts payable pursuant to the Change in Control Agreement are in
addition to any payments otherwise payable to the employee pursuant to any
agreement, plan or policy of the Company. If the amounts payable upon the
occurrence of a Change in Control Event, either alone or together with other
payments which the employee has the right to receive, would be subject to an
excise tax as a "excess parachute payment" under Section 4999 of the Internal
Revenue Code.
- --------
*Certain other employees of the Company (the "Covered Employees") have
been provided change in control agreements containing the same terms and
conditions as the Agreements described above for Messrs. Reece and Touff, taking
into account the respective titles, positions and reporting relationships of the
other Covered Employees and with changes to certain other provisions. If the
Agreements for the Covered Employees have not been terminated prior to a Change
in Control, upon a Change in Control, the term of the Agreements for the other
Covered Employees shall extend automatically for one year, rather than two years
as in the cases of Messrs. Reece and Touff. The Change in Control payment for a
Covered Employee would equal the sum of the Covered Employee's Base Salary in
effect immediately prior to the Change in Control Event plus an amount equal to
the Covered Employee's last regular annual bonus, provided that the amount of
such bonus shall not exceed 50% of the Covered Employee's annual Base Salary in
effect immediately prior to the Change in Control Event.
15
<PAGE> 19
Each employee agrees in the Change in Control Agreement that such
aggregate amounts shall be paid in annual installments over the shortest period
of time over which such amounts may be paid and not be treated as "excess
parachute payments" under Section 4999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its headquarters office space. Approximately 7,000
square feet in the Company's Denver office building is subleased by various
affiliates of Mr. Mizel for which they collectively paid rent, including for
parking, to the Company of approximately $98,397 in 1999.
In May 1999, Boulder County Land Venture (the "Venture") sold certain
real property to The County of Boulder, Colorado for approximately $6.6 million.
The Venture was formed in 1973. The Company had a 25% profits interest in, and
was the managing joint venturer of the Venture. Pacwest Resources, Inc., an
entity controlled by Mr. Mizel, acted as one of the brokers in the sale and was
paid a commission by Boulder County Land Venture of approximately $166,000 for
its brokerage services.
Effective October 1, 1998, the Company entered into a two-year
agreement with Gilbert Goldstein, P.C., of which Gilbert Goldstein, a Director
of the Company, is the sole shareholder. Pursuant to the agreement, Mr.
Goldstein acts as a consultant to the Company on legal matters. In return, the
Company (i) from October 1, 1998 through September 30, 1999, pays Mr.
Goldstein's firm $18,000 per month for a minimum of 25 hours per week in legal
services and, from October 1, 1999 through September 30, 2000, pays Mr.
Goldstein's firm $15,000 per month for a minimum of 20 hours per week in legal
services; (ii) from October 1, 1998 through September 30, 1999, pays Mr.
Goldstein's firm $180 per hour for services performed in excess of 100 hours in
any month and, from October 1, 1999 through September 30, 2000, pays Mr.
Goldstein's firm $180 per hour for services performed in any month in excess of
80 hours; (iii) provides office space with an estimated annual rental value of
$16,200 in the Company's leased office space; (iv) provides one full-time
secretary (in 1999, this secretary received a salary of approximately $30,000
plus benefits); and (v) reimburses actual expenses incurred related to services
provided. In the event that Mr. Goldstein retires from the practice of law,
becomes disabled or dies during the term of the agreement, the Company will pay
to Mr. Goldstein or his estate $7,000 per month during the remaining term of the
agreement. Payment of $209,000 was made directly to Mr. Goldstein's firm in 1999
for services performed. In October 1999, the agreement with Mr. Goldstein was
amended to extend the term of the agreement until September 30, 2001.
During 1999, the Company paid approximately $432,000 to PageWorks
Communication Design ("PageWorks"), a marketing and communications firm, for
annual report design, advertising and marketing design services. PageWorks is
owned by Mr. Mizel's brother-in-law.
During 1999, the Company paid a firm owned by Carol Mizel, Mr. Mizel's
wife, approximately $120,000 for consulting services.
On April 12, 1995, the Company's Board of Directors adopted the Option
Purchase Program. The purpose of the Option Purchase Program is to permit the
Company's key executive officers to increase their ownership of Common Stock and
more closely align their interests with those of the Company's other shareowners
by facilitating the exercise of options that would expire. Pursuant to the
Option Purchase Program, prior to November 4, 1997, Messrs. Mizel and Mandarich
each were able to borrow up to $810,000 and Mr. Reece could borrow up to
$243,000 for the purpose of paying two-thirds of the sum of the exercise price
of options exercised and federal and state income taxes due as a result of the
exercise of the options. On November 4, 1997 the Company's Board of Directors
adopted Amendment Number 1 to the Option Purchase Program. This amendment added
Michael Touff as an eligible participant to the program and increased the amount
that each of Messrs. Mizel and Mandarich may borrow to $1,000,000 and the amount
that each of Messrs. Reece and Touff may borrow to $300,000. All borrowings
under the Option Purchase Program are secured by a pledge of 100% of the stock
acquired upon exercise, are full recourse to the borrower and bear interest at
the average one month LIBOR plus 1%, adjusted monthly. Principal and accrued
interest are payable on April 1st of each year based on a 10-year amortization.
Additional principal
16
<PAGE> 20
is due on each April 1st in an amount required to reduce the outstanding
aggregate principal amount of the loans under the Option Purchase Program to
each borrower in an amount depending on each borrower's maximum permitted
borrowings. The unpaid principal balance is due on the earlier of: (i) the fifth
anniversary of the loan; (ii) 90 days after the borrower's employment with the
Company has been terminated for cause; or (iii) one year after the borrower's
employment with the Company has been terminated other than for cause.
The following table shows, as of December 31, 1999, the number of
shares exercised, the date of borrowings, and the principal and interest due as
of that date for each loan outstanding for the executive officers who have
participated in the Option Purchase Program:
<TABLE>
<CAPTION>
Number of Accrued
Shares Date of Note Balance Interest at
BORROWER Exercised Note at 12/31/99 12/31/99
- --------------------------- --------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Larry A. Mizel............. 175,000 10/3/97 $640,000 - 0 -
David D. Mandarich......... 497,000 4/17/95 $516,222 - 0 -
David D. Mandarich......... 350,000 1/12/96 $ 83,778 - 0 -
David D. Mandarich......... 175,000 5/19/98 $180,000 - 0 -
Paris G. Reece III......... 50,000 3/24/99 $288,316 - 0 -
Michael Touff.............. 30,000 3/24/99 $181,434 - 0 -
Michael Touff.............. 20,000 9/23/99 $118,566 - 0 -
</TABLE>
- -------------
In the ordinary course of its business, HomeAmerican has made
loans to certain officers and employees of the Company. Such loans were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collection or present other unfavorable
features.
HOLDERS OF FIVE PERCENT OR MORE OF VOTING SHARES
OF THE COMPANY AND OWNERSHIP OF MANAGEMENT
The table below sets forth those persons known by the Company to have
owned beneficially 5% or more of the outstanding shares of Common Stock
individually and the number of shares beneficially owned by the Company's named
officers individually and by all of the Company's officers and Directors as a
group, each as of the Record Date. The information as to beneficial ownership is
based upon statements furnished to the Company by such persons. Information with
respect to the beneficial ownership of shares of Common Stock held by each of
the Directors of the Company, two of whom beneficially own more than 5% of the
outstanding shares of Common Stock, is set forth in "Election of Directors"
above.
17
<PAGE> 21
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Owned Percent
NAME AND ADDRESS OF BENEFICIAL OWNER (1) Beneficially of Class (2)
- ---------------------------------------- ------------------- ------------
<S> <C> <C>
Dimensional Fund Advisors Inc.
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401 ................................................. 1,441,188(3) 6.46%
Vanguard Windsor Funds - Windsor Funds
P.O. Box 2600, 037
Valley Forge, PA 19482.................................................. 1,156,300(4) 5.18%
Paris G. Reece III
3600 S. Yosemite St., #900
Denver, Colorado 80202.................................................. 135,769(5) *
Michael Touff
3600 S. Yosemite St., #900
Denver, Colorado 80202.................................................. 89,266(6) *
All executive officers and directors as a group (8) persons............. 6,932,373 28.8%
</TABLE>
- -----------
* Less than 1%.
(1) The address of Messrs. Mizel and Mandarich, the Directors who
beneficially own more than 5% of the outstanding shares of Common Stock
is 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237. (See
"Election of Directors" above).
(2) In calculating the percentage of ownership, all shares of Common Stock
the identified person or group had the right to acquire within 60 days
of the Record Date by the exercise of options are deemed to be
outstanding for the purpose of computing the percentage of the shares
of Common Stock owned by such person or group but are not deemed to be
outstanding for the purpose of computing the percentage of the shares
of Common Stock owned by any other person.
(3) Based upon information in a Schedule 13G filed with the Commission on
or about February 4, 2000, Dimensional Fund Advisors Inc. exercises
sole voting power over all such shares, shared voting power over none
of such shares, sole dispositive power over all such shares and shared
dispositive power over none of such shares.
(4) Based upon information in a Schedule 13G filed with the Commission on
or about February 1, 2000, Vanguard Windsor Funds - Windsor Fund
exercises sole voting power over all such shares, shared voting power
over none of such shares, sole dispositive power over none of such
shares and shared dispositive power over all such shares.
(5) Includes 17,500 shares of Common Stock that Mr. Reece has the right to
acquire within 60 days of the Record Date by the exercise of 10,000
stock options at a price of $11.38 per share and 7,500 stock options at
a price of $18.0625 per share.
(6) Includes 7,500 shares of Common Stock that Mr. Touff has the right to
acquire within 60 days of the Record Date by the exercise of 5,000
stock options at a price of $11.38 and 2,500 stock options at a price
of $18.0625 per share.
18
<PAGE> 22
No change in control of the Company has occurred since the beginning of
the last fiscal year. The Company knows of no arrangement the operation of which
may, at a subsequent date, result in a change in control of the Company.
The Company's executive officers and Directors are required under
Section 16(a) of the 1934 Act to file initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company with the Securities and Exchange Commission and the New York Stock
Exchange and Pacific Exchange, Inc. Copies of those reports also must be
furnished to the Company. Based solely upon a review of the copies of reports
furnished to the Company and written representations that no other reports were
required, the Company believes that during the year ended December 31, 1999,
except for one report filed late by Mr. Mizel for October of 1999 and one report
filed late by Mr. Goldstein for August of 1999, all such reports were filed on a
timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected or retained independent accountants
for the year ended December 31, 2000. PricewaterhouseCoopers LLP examined the
Company's financial statements for the year ended December 31, 1999. A
representative of PricewaterhouseCoopers LLP currently is expected to be present
at the Meeting and available to respond to appropriate questions. Although
PricewaterhouseCoopers LLP has indicated that no statement will be made, an
opportunity for a statement will be provided.
OTHER MATTERS
Management and the Board of Directors of the Company know of no matters
to be brought before the meeting other than as set forth above. However, if any
other matters are properly presented to the shareowners for action, it is the
intention of the proxy holders named in the enclosed proxy to vote in their
discretion on all matters on which the shares represented by such proxy are
entitled to vote.
SHAREOWNER PROPOSALS
Any proposal which a shareowner may desire to present at the 2001
Annual Meeting of Shareowners must be received in writing by the Secretary of
the Company prior to December 15, 2000.
BY THE ORDER OF THE BOARD OF DIRECTORS,
Larry A. Mizel
Chairman of the Board
19
<PAGE> 23
M.D.C. HOLDINGS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREOWNERS -- MAY 19, 2000
PROXY
The undersigned hereby appoints PARIS G. REECE III, and MICHAEL
TOUFF, or either one of them, as proxies or proxy for the
undersigned, each with full power of substitution and resubstitution,
to attend the 2000 Annual Meeting of Shareowners and any adjournments
or postponements thereof (the "Meeting") and to vote as designated
below, all the shares of Common Stock of M.D.C. HOLDINGS, INC. held
of record by the undersigned on March 24, 2000. In their discretion,
the proxies are hereby authorized to vote upon such other business as
may properly come before the Meeting and any adjournments or
postponements thereof.
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
MESSRS. BORICK AND MANDARICH.
ELECTION OF DIRECTORS
NOMINEES: Steven J. Borick and David D. Mandarich
[ ] FOR [ ] WITHHELD
FOR, except vote withheld from the
following nominee(s):
[ ]
----------------------------------------
PLEASE SPECIFY YOUR CHOICE BY CLEARLY MARKING THE APPROPRIATE
BOX. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ITEM
1. ABOVE.
(continued and to be signed and dated on the other side)
Please sign exactly as your name appears on this proxy. Joint
owners should each sign individually. If signing as attorney,
executor, administrator, trustee or guardian, please include your
full title. Corporate proxies should be signed by an authorized
officer.
Signature(s):
----------------
Date:
------------------------
Signature(s):
----------------
Date:
------------------------
