CAVALIER HOMES, INC.
POST OFFICE BOX 300
HIGHWAY 41 NORTH AND CAVALIER ROAD
ADDISON, ALABAMA 35540
March 23, 1995
Dear Stockholder:
You are cordially invited to join us at our 1995 Annual Meeting of
Stockholders to be held on Wednesday, May 10, 1995, beginning at 10:00 A.M.,
C.D.T., at The Summit Club, Suite 3100, AmSouth-Harbert Plaza, 1901 6th Avenue
North, Birmingham, Alabama. At the meeting, we will consider the election of
directors, the selection by the Board of Directors of Deloitte & Touche LLP as
independent public accountants for the Company and any other business as may
properly come before the Annual Meeting.
Stockholders of the Company who are unable to be present personally at
the Annual Meeting may vote by proxy. The enclosed Notice and Proxy Statement
contain important information concerning the matters to be considered, and we
urge you to review them carefully. You will also find enclosed a copy of the
Company's Annual Report to Stockholders for the fiscal year ended December 31,
1994, which we encourage you to read.
It is important that your shares be voted whether or not you plan to be
present at the meeting. Whether you plan to attend or not, please complete,
sign, date and return the enclosed form or forms of proxy promptly so that the
Company may be assured of the presence of a quorum at the Annual Meeting. If you
attend the meeting and wish to vote your shares personally, you may revoke your
proxy.
We look forward to seeing you on May 10.
Sincerely yours,
CAVALIER HOMES, INC.
/s/ Barry B. Donnell
Barry B. Donnell
Chairman of the Board
/S/ Jerry F. Wilson
Jerry F. Wilson
President and Chief Executive Officer
<PAGE>
CAVALIER HOMES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1995
TO THE STOCKHOLDERS OF CAVALIER HOMES, INC.:
The Annual Meeting of Stockholders of Cavalier Homes, Inc. a Delaware
corporation (the "Company"), will be held at The Summit Club, Suite 3100,
AmSouth-Harbert Plaza, 1901 6th Avenue North, Birmingham, Alabama, on Wednesday,
May 10, 1995, at 10:00 A.M., C.D.T. for the following purposes:
(1) To elect five directors;
(2) To consider the ratification and approval of the
appointment by the Board of Directors of Deloitte & Touche
LLP as independent public accountants for the Company; and
(3) To transact such other business as may properly come before
the meeting.
Details respecting these matters are set forth in the accompanying Proxy
Statement.
Holders of record of the Common Stock of the Company at the close of
business on March 15, 1995 are entitled to notice of and to vote at the Annual
Meeting. A list of the stockholders of the Company who are entitled to vote at
the Annual Meeting will be available for inspection at 2000 B Southbridge
Parkway, Birmingham, Alabama for a period of ten days prior to the Annual
Meeting and at the Annual Meeting. The meeting may be adjourned from time to
time without notice other than such notice as may be given at the meeting or any
adjournment thereof, and any business for which notice is hereby given may be
transacted at any such adjourned meeting.
You are cordially invited to attend the Annual Meeting of the
Stockholders of your Company, and we hope you will be present at the meeting.
WHETHER YOU PLAN TO ATTEND OR NOT, PLEASE SIGN AND RETURN THE ENCLOSED PROXY SO
THAT THE COMPANY MAY BE ASSURED OF THE PRESENCE OF A QUORUM AT THE MEETING. A
postage-paid envelope is enclosed for your convenience in returning your proxy
to the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David A. Roberson
David A. Roberson, Secretary
Post Office Box 300
Highway 41 North and Cavalier Road
Addison, Alabama 35540
March 23, 1995
<PAGE>
CAVALIER HOMES, INC.
POST OFFICE BOX 300
HIGHWAY 41 NORTH AND CAVALIER ROAD
ADDISON, ALABAMA 35540
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 1995
The accompanying proxy is solicited on behalf of the Board of Directors
of Cavalier Homes, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders and any adjournments thereof (the "Annual
Meeting") to be held at The Summit Club, Suite 3100, AmSouth-Harbert Plaza, 1901
6th Avenue North, Birmingham, Alabama, on Wednesday, May 10, 1995, at 10:00
A.M., C.D.T. This Proxy Statement and the enclosed form of proxy are first being
mailed or given to stockholders on or about March 23, 1995.
GENERAL INFORMATION
Outstanding Voting Shares; Voting Procedures
Holders of record of the Common Stock of the Company outstanding at the
close of business on March 15, 1995, are entitled to notice of, and to vote at,
the Annual Meeting. A total of 4,698,352 shares of Common Stock were outstanding
on such date and will be entitled to vote at the Annual Meeting. Each holder of
shares of Common Stock entitled to vote has the right to one vote for each share
held of record on the record date for each matter to be voted upon.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company entitled to vote, consisting of at least
2,349,177 shares, is necessary to constitute a quorum at the Annual Meeting.
Shares of Common Stock represented by a properly executed proxy will be treated
as present at the Annual Meeting for purposes of determining the presence or
absence of a quorum without regard to whether the proxy is marked as casting a
vote for or against or abstaining with respect to a particular matter. In
addition, shares of Common Stock represented by "broker non-votes" will be
treated as present for purposes of determining a quorum. In accordance with the
Bylaws of the Company, the five nominees receiving the highest vote totals will
be elected as directors of the Company. Accordingly, assuming the presence of a
quorum, abstentions and broker non-votes will not affect the outcome of the
election of directors at the Annual Meeting. The affirmative vote of the holders
of a majority of the outstanding shares of Common Stock of the Company present
in person or represented by proxy at the Annual Meeting and entitled to vote
thereon is required for the approval and ratification of the selection of the
Company's independent auditors. Abstentions will be included for purposes of
determining whether the requisite number of affirmative votes have been cast
with respect to such ratification and, accordingly, will have the same effect as
a negative vote. Broker non-votes with respect to the proposal to approve and
ratify the selection of auditors will not be considered as present and entitled
to vote, and therefore will have no effect on the outcome of the vote.
Voting Your Proxy
Proxies, in the form enclosed, properly executed by a stockholder and
returned to the Board of Directors of the Company, with instructions specified
thereon, will be voted at the Annual Meeting in accordance with such
instructions. If no specification is made, a properly executed proxy will be
voted in favor of:
(i) The election to the Board of Directors of the five nominees
named in this Proxy Statement; and
(ii) The ratification of action taken by the Board of Directors in
selecting Deloitte & Touche LLP as independent public
accountants for the Company.
1
<PAGE>
As of the date of this Proxy Statement, the Board of Directors knows of no
business to be presented for consideration or action at the Annual Meeting other
than the matters stated above. If any other matters properly come before the
meeting, however, it is the intention of the persons named in the enclosed form
of proxy to vote in accordance with their best judgment on such matters.
A stockholder may revoke a proxy by notice in writing delivered to the
Secretary of the Company, David A. Roberson, at any time before it is exercised.
A proxy may also be revoked by attending the Annual Meeting and voting in
person. The presence of a stockholder at the Annual Meeting will not
automatically revoke a proxy previously given to the Company.
Costs of Solicitation
The cost of soliciting proxies, including the preparation, printing and
mailing of this Proxy Statement, will be borne by the Company. The Company may
reimburse investment bankers, brokers and other nominees for their expenses
incurred in obtaining voting instructions from beneficial owners of Common Stock
held of record by such investment bankers, brokers and other nominees; however,
the Company has not entered into any written contract or arrangement for such
repayment of expenses. In addition to the use of mails, proxies may be solicited
by personal interview, telephone or facsimile machine by the directors, officers
and employees of the Company, without additional compensation.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors of not fewer
than one nor more than ten members, the exact number to be determined by
resolution of the Board of Directors or the stockholders. The present Board of
Directors has fixed the number of directors at five members and proposes the
election of the five persons listed below, each of whom has consented to being
named and to serving in such capacity as directors until the next Annual Meeting
of Stockholders and until their successors are duly elected and shall have
qualified. Unless otherwise directed, it is intended that shares of Common Stock
represented by all proxies received by the Board of Directors will be voted in
favor of the nominees listed below. Should any such nominee become unable or
decline to accept election, which is not anticipated, it is intended that such
shares of Common Stock will be voted for the election of such person or persons
as the Board of Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE NOMINEES
SET FORTH BELOW.
The following table sets forth certain information concerning each
nominee, each of whom is currently serving as a director and was previously
elected by the stockholders. Each nominee has occupied the position indicated
for at least the last five years.
Name Age Principal Occupation Director Since
Thomas A. Broughton, III 39 President of First 1986
Commercial Bank
(a state banking corporation)
Barry B. Donnell 55 Chairman of the Board 1986
of the Company
2
<PAGE>
Lee Roy Jordan 53 President of Lee Roy Jordan 1993
Redwood Lumber Company
(lumber supply business) and
Southern Valve Services, Inc.
(remanufacturer and installer
of industrial valves)
John W Lowe 53 Partner, James, Lowe & 1984
Mobley (law firm)
Jerry F. Wilson 55 President and Chief Executive 1984
Officer of the Company
Information Regarding Board of Directors and Committees
During 1994, the Board of Directors of the Company held four regular
meetings and five meetings in which the directors participated by conference
telephone. Each director attended at least 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 held in 1994.
The Company currently pays each nonemployee director $2,500 and each
director who is employed by the Company $1,250 for each regular Board meeting at
which he is in attendance. Each director who participates in a telephone
conference Board meeting receives $250 per meeting. Directors also receive $750
for attendance at each committee meeting held on a date when no Board meeting is
held and $250 for each committee meeting held by conference telephone. Directors
are also reimbursed for travel and out-of-pocket expenses incurred in connection
with attending Board and committee meetings.
Pursuant to the Company's 1993 Amended and Restated Nonemployee
Directors Stock Option Plan (the "Nonemployee Directors Plan"), options to
purchase 25,000 shares of Common Stock are granted to each nonemployee director
upon first being elected to the Board of Directors. In addition to such initial
grants, on January 15 of each year, each nonemployee director who has been
serving as a director continuously for the preceding calendar year receives an
option to purchase 6,250 shares of Common Stock. All such options are granted at
an exercise price equal to the fair market value of the Common Stock, which is
determined on the basis of the closing price of the Common Stock on the New York
Stock Exchange on the date of grant. All options granted under the Nonemployee
Directors Plan have a term of ten years, and are exercisable in whole or in part
at any time beginning six months after the date of grant; provided, however,
that no option is exercisable unless, at all times during the period from the
date of grant and ending 12 months before the date of exercise, the optionee was
a director of the Company. Pursuant to the Nonemployee Directors Plan, including
an amendment to such plan approving the cancellation, regranting and repricing
of options granted in January 1994, the following nonemployee directors have
options to purchase Common Stock of the Company as follows: (i) Mr. Broughton:
25,000 shares at $9.70 per share, 4,085 shares at $10.875 per share and 6,250
shares at $10.375 per share; (ii) Mr. Jordan: 25,000 shares at $11.20 per share,
4,085 shares at $10.875 per share and 6,250 shares at $10.375 per share; and
(iii) Mr. Lowe: 25,000 shares at $9.70 per share, 4,085 shares at $10.875 per
share and 6,250 shares at $10.375 per share.
The Board of Directors has two standing committees: the Compensation
Committee and the Audit Committee. The Compensation Committee, which held four
meetings during 1994, is currently composed of Thomas A. Broughton, III, Lee Roy
Jordan and John W Lowe. The Compensation Committee administers the Company's
stock option plans (other than the Nonemployee Directors Plan) and fixes the
compensation of the executive officers of the Company.
3
<PAGE>
The Audit Committee held two meetings during 1994. The Audit Committee
is currently composed of Thomas A. Broughton, III, Lee Roy Jordan and John W
Lowe. The Audit Committee, among other things, recommends the selection each
year of the Company's independent public accountants, reviews and evaluates the
Company's financial statements for reliability and informativeness, reviews the
external and internal audit procedures, scope and controls practiced by the
Company's independent public accountants and its internal accounting personnel,
and evaluates the services performed and fees charged by the Company's
independent public accountants to determine, among other things, that the
non-audit services performed by such auditors do not compromise their
independence.
RATIFICATION AND APPROVAL OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has unanimously selected, subject
to ratification by the stockholders, the accounting firm of Deloitte & Touche
LLP as the independent public accountants for the Company for fiscal year 1995.
Deloitte & Touche LLP has served as the Company's auditors for many years.
Ratification of the selection of auditors is being submitted to the stockholders
of the Company because the Board of Directors believes it is an important
corporate decision in which stockholders should participate. If the stockholders
do not ratify the selection of Deloitte & Touche LLP or if Deloitte & Touche LLP
shall decline to act, resign or otherwise become incapable of acting, or if its
engagement is otherwise discontinued, the Board of Directors will select other
auditors for the period remaining until the 1996 Annual Meeting of Stockholders
when engagement of auditors is expected to again be subject to ratification by
the stockholders at such meeting.
Representatives of Deloitte & Touche LLP will be in attendance at the
Annual Meeting and will be provided an opportunity to address the meeting and to
answer questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION
AND APPROVAL OF DELOITTE & TOUCHE LLP.
EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
Executive Officers
The following table sets forth certain information concerning the
executive officers of the Company, who are elected annually by the Board of
Directors:
Name Age Position with the Company
Jerry F. Wilson 55 President and Chief Executive Officer
Barry B. Donnell 55 Chairman of the Board
David A. Roberson 38 Chief Financial Officer and Secretary -Treasurer
Messrs. Wilson's and Donnell's business experience is set forth above (see
"Election of Directors"). Mr. Roberson, who is the nephew of Mr. Wilson, has
been the Secretary-Treasurer of the Company, and has functioned as its principal
financial and accounting officer since 1984.
Ownership of Equity Securities
Except as set forth below regarding members of management and directors
of the Company, there was no person or group who was known by the Company as of
March 15, 1995 to be the beneficial owner of more than 5 % of the outstanding
Common Stock of the Company. Set forth below is information as of March 15,
1995, with respect to the beneficial ownership of the Common Stock of the
Company by (a) each of the directors of the Company (which directors also
constitute the nominees for election as directors at the Annual Meeting), (b)
the Company's Chief Executive Officer and the two other executive officers of
the Company during the fiscal year ended December 31, 1994 and (c) all directors
and executive officers of the Company as a group.
4
<PAGE>
Number of Shares
Name of Common Stock Percent of Class(1)
Thomas A. Broughton, III 51,531 (2) 1.0%
Barry B. Donnell 321,973 (3) 6.2%
Lee Roy Jordan 25,000 (4) *
John W Lowe 111,499 (5) 2.2%
Jerry F. Wilson 212,500 (6) 4.1%
David A. Roberson 70,548 (7) 1.4%
Directors and Executive
Officers as a Group 793,051 (8) 15.4%
(six persons)
* Represents beneficial ownership of less than 1% of the outstanding shares of
the Company's Common Stock.
(1) Beneficial ownership in the foregoing table is based upon
information furnished by the persons listed. For the purposes of the foregoing
table, the percentage of class beneficially owned has been computed, in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934 (the
"Exchange Act"), on the basis of 4,698,352 shares of Common Stock, plus 457,718
shares of Common Stock issuable pursuant to the exercise of outstanding options
exercisable on March 15, 1995 or within 60 days thereafter. Except as otherwise
indicated in these notes to the foregoing table, beneficial ownership includes
sole voting and investment power.
(2) Includes 7,031 shares beneficially owned in an Individual
Retirement Account and 25,000 shares issuable pursuant to stock options
exercisable on March 15, 1995 or within 60 days thereafter.
(3) Includes 62,500 shares issuable pursuant to stock options
exercisable on March 15, 1995 or within 60 days thereafter, and 11,973 shares
held by the Donnell Foundation, of which Mr. Donnell is co-trustee.
(4) Constitutes shares issuable pursuant to stock options exercisable
on March 15, 1995 or within 60 days thereafter.
(5) Includes 25,000 shares issuable pursuant to stock options
exercisable on March 15, 1995 or within 60 days thereafter. Includes 6,250
shares owned by adult children of Mr. Lowe, with respect to which Mr. Lowe
disclaims beneficial ownership.
(6) Includes 62,500 shares issuable pursuant to stock options
exercisable on March 15, 1995 or within 60 days thereafter.
(7) Includes 1,800 shares beneficially owned in an Individual
Retirement Account and 50,000 shares issuable pursuant to stock options
exercisable on March 15, 1995 or within 60 days thereafter.
(8) See notes 1-7 above.
EXECUTIVE COMPENSATION
The following tables, graphs and other information provide details
concerning executive compensation.
5
<PAGE>
Performance Graph
The following indexed graph compares the yearly percentage change in
the Company's cumulative total stockholder return on its Common Stock with the
cumulative total return of (i) the Standard and Poor's 500 Stock Index and (ii)
a group of public companies, each of which is engaged in the business of
designing, producing and selling manufactured homes. The industry group
companies included in the index are: Cavco Industries, Inc.; Champion
Enterprises, Inc.; Clayton Homes, Inc.; Fleetwood Enterprises, Inc.; Kit
Manufacturing Company; Liberty Homes, Inc.;Nobility Homes, Inc.; Oakwood Homes
Corporation; Schult Homes Corporation; and Skyline Corporation.
Comparison of Cumulative Total Return
(Assumes Initial Investment of $100 and Reinvestment of Dividends)
+-----------------------------------------------------------------------+
700 | |
| # |
600 | # |
D | # |
O 500 | # # # |
L | # # # |
L 400 | # # # |
A | # # ^ # ^ |
R 300 | # ^ # ^ # ^ |
S | # ^ # ^ # ^ |
200 | # ^ # ^ # ^ |
| ^ +^ #+^ #+^ #+^ |
100 | #+^ +^ #+ #+^ #+^ #+^ |
| #+^ #+^ #+ #+^ #+^ #+^ |
0 | #+^ #+^ #+ #+^ #+^ #+^ |
+-----------------------------------------------------------------------+
| 1989 1990 1991 1992 1993 1994 |
+-----------------------------------------------------------------------+
# - CAVALIER HOMES + - S & P 500 ^ - PEER GROUP
+-----------------------------------------------------------------------------+
| 1989 1990 1991 1992 1993 1994 |
+-----------------------------------------------------------------------------+
|CAVALIER HOMES 100 62.91 88.41 490.98 660.83 473.99 |
| |
|S & P 500 100 96.89 126.42 136.05 149.76 151.74 |
| |
|PEER GROUP 100 115.97 168.41 283.64 319.82 281.22 |
+-----------------------------------------------------------------------------+
Report of the Compensation Committee
General. The Compensation Committee of the Board of Directors consists
of three directors, Thomas A. Broughton, III, Lee Roy Jordan and John W Lowe.
The Compensation Committee is responsible for establishing the base salary and
annual bonus of the Company's executive officers. The Compensation Committee
also administers the terms, conditions and policies of, and the benefits granted
under, the Company's 1988 Nonqualified Stock Option Plan (the "1988 Plan"), the
Long Term Incentive Compensation Plan (the "1986 Plan") and the 1993 Amended and
Restated Nonqualified Stock Option Plan (the "1993 Nonqualified Plan").
6
<PAGE>
Compensation Policies. The Compensation Committee believes that the
most effective executive compensation program is one which provides incentives
to achieve both increased current profitability and longer term stockholder
value. In this regard, the Compensation Committee believes executive
compensation should be comprised of a reasonable annual base salary and an
annual cash bonus program that rewards the executive officers in a manner
directly related to the annual profitability of the Company. The Compensation
Committee further believes that annual base salary and bonus arrangements should
be supplemented with equity-based programs, pursuant to which the Company
affords the ownership and retention of the Company's Common Stock by its
executive officers and other key employees. The Compensation Committee endorses
the proposition that equity ownership by management is beneficial because it
aligns management's and stockholders' interest in the enhancement of stockholder
value. In general, considering the cyclical nature of the manufactured housing
industry and the Company's business, the philosophy of the Compensation
Committee has been to design a compensation system comprised of a cash component
that is conservative when the Company's operations are marginal and rewarding
when its operations are good, and an equity component that provides the
executive officers with a strong incentive to manage the Company's operations
with a view towards maintaining and increasing stockholder value. The
Compensation Committee feels that the combination of these programs helps to
assure that the Company's executive officers and other key employees have a
meaningful stake in the Company, its value, and its long-term and short-term
performance.
The Compensation Committee determines base salary, bonus and other
components of executive compensation upon the basis of corporate performance,
judged by revenues, earnings, stock trading prices, and strategies, and on the
basis of the Compensation Committee's subjective perception of a particular
executive's performance and worth to the Company, the Company's past
compensation practices and a comparison of the Company's executive compensation
with the compensation paid by other companies in the same industry (which
generally are the companies included in the industry group included in the index
for the performance graph set forth above) and, to a lesser extent, a random
selection of other companies. In making executive compensation decisions, the
Compensation Committee takes the views of Mr. Wilson and Mr. Donnell into
account and considers information provided by them. The Compensation Committee
has not established particular target levels to be used in judging corporate
performance and has not assigned relative weights or values to any of the
factors considered in judging corporate performance.
Generally, base salaries for executive officers are fixed at levels
which are comparable to the base salaries for persons in similar positions in
other companies in the manufactured housing industry. Bonuses are tied to
corporate performance and are set as a percentage of the Company's net income
before certain deductions. Stock options are the component of executive
compensation that is designed to motivate executives to improve the long-term
performance of the Company and the Common Stock in the market, to encourage the
Company's executives to achieve superior results over the longer term and to
align executive officers' and stockholders' interests. The Compensation
Committee's decisions respecting stock option grants generally are made using
the same criteria discussed above, and take into consideration the number of
unexercised options held by the executive officers, exercise prices and market
prices of the Company's Common Stock.
Chief Executive Officer Compensation. Mr. Wilson's compensation for
1994 was established according to the policies, bases and relationships to
corporate performance that are discussed above as being applicable to the
Company's executive officers generally. Mr. Wilson's base salary of $96,000 per
annum was fixed in 1992 and he received the same base salary in 1993. After
taking into account the above factors, the Committee decided there was no reason
to change this amount for 1994. In 1992, the Compensation Committee determined
that Mr. Wilson should receive an annual incentive bonus equal to 5% of the
Company's net income before certain deductions. In making such determination,
the Compensation Committee reviewed the Company's then anticipated possible
ranges of consolidated net income before income taxes and bonus compensation and
subjectively determined what fixed percentage of those figures would result in
reasonable compensation for and an adequate incentive to attain corporate
performance in those ranges. After reviewing the Company's anticipated
operations for 1994, and the criteria described above, the Compensation
Committee concluded that the same bonus arrangement should be utilized in 1994.
In doing so, the Compensation Committee also took into account the key role
played by Mr. Wilson in the Company's operations, that Mr. Wilson's cash
compensation had been conservative when the Company's operations had been only
marginally profitable, and that under Mr. Wilson's leadership, the Company has
experienced a significant and substantial growth in its revenues and earnings.
7
<PAGE>
The Compensation committee also determined that the Company should
implement a split-dollar insurance arrangement for Mr. Wilson, and approved the
transfer of a term life policy to him. In making such decision, the Compensation
Committee determined that such an arrangement would be beneficial to Mr. Wilson,
who would have increased insurance protection and additional liquidity for his
estate. In the Compensation Committee's view, such an arrangement may also prove
to be beneficial to the stockholders of the Company since, with the increased
liquidity that will be provided through such insurance, Mr. Wilson's estate may
not be required to liquidate large amounts of the Company's Common Stock on Mr.
Wilson's death to provide liquidity that may not otherwise be available. The
Compensation Committee also concluded that such an arrangement should be
structured so that the Company would ultimately be repaid a substantial part of
the premiums paid on Mr. Wilson's behalf. The Compensation Committee did not
make any grants of stock options to Mr. Wilson during 1994 in light of the
grants already made to him under the 1993 Nonqualified Plan in the latter half
of 1993, which were subject to stockholder approval of such plan at the Annual
Meeting of Stockholders held in May 1994.
Members of the Compensation Committee: Thomas A. Broughton, III
Lee Roy Jordan
John W Lowe
Summary Compensation Table
The following summary compensation table sets forth Information concerning
compensation for services in all capacities, including cash and non-cash
compensation, awarded to, earned by or paid to the Company's Chief Executive
Officer and the two other executive officers of the Company in each of the last
three fiscal years, unless otherwise noted.
<TABLE>
<S> <C> <C> <C> <C> <C>
Long Term All Other
Annual Compensation Compensation Compensation
Awards ($)(4)
Name and Other Annual Securities
Principal Compensation Underlying
Position Year Salary ($) Bonus ($)(1 ($)(2) Options (#)(3)
Jerry F. Wilson 1994 96,000 671,015 - None 7,938
President and 1993 96,000 418,450 - 62,500 1,696
Chief Executive Officer 1992 85,000 258,792 - None 1,181
Barry B. Donnell 1994 84,000 405,309 - None 7,938
Chairman of the Board 1993 84,000 251,075 - 62,500 1,888
1992 72,000 155,125 - None 1,061
David A. Roberson 1994 60,000 238,347 - None 1,706
Chief Financial Officer; 1993 60,000 133,910 - 50,000 2,057
Secretary-Treasurer 1992 50,000 74,190 - None 1,252
</TABLE>
(1) Certain amounts that were included as Bonus for the years 1993 and
1992 in prior Proxy Statements have been reclassified as Other Annual
Compensation to conform to the classification for the year 1994.
(2) For the years ended December 31, 1994, 1993 and 1992 none of the
named executive officers received perquisites or other personal benefits in
excess of the amounts required to be disclosed under the revised rules on
executive compensation disclosure adopted by the Securities and Exchange
Commission; accordingly, the amounts of such benefits are omitted. Certain
amounts that were included as Other Annual Compensation for the year; 1993 and
1992 in prior Proxy Statements have been reclassified as All Other Compensation
to conform to the classification for the year 1994.
(3) Options granted to executive officers during 1993 were granted
pursuant to the 1993 Nonqualified Plan.
8
<PAGE>
(4) Includes the following for 1994: (i) matching contributions made by
the Company to its 401(k) plan during 1994 on behalf of each executive officer
in the amount of$1,688 each in the case of Messrs. Wilson and Donnell and $1,706
in the case of Mr. Roberson; (ii) directors' fees paid by the Company in 1994 to
each of Mr. Wilson and Mr. Donnell in the amount of $6,250; and (iii) payment by
the Company of life insurance premiums in the amount of $475 and $104,
respectively, in connection with certain split-dollar agreements between the
Company and certain associates of each of Mr. Wilson and Mr. Donnell. The amount
reflected in the column includes the portion of the premium that is attributable
to term insurance coverage for each such executive officer. The agreements
provide that the Company is to pay all premiums due on the insurance policies on
the life of each such officer, and that upon the earlier of the death of the
insured or the cancellation of the policy, the owner of the policy is to
reimburse the Company for such premiums, less an amount equal to the cost of
current life insurance protection as measured by tables supplied by the Internal
Revenue Service. Certain amounts that were included as Other Annual Compensation
for the years 1993 and 1992 in prior Proxy Statements have been reclassified as
All Other Compensation to conform to the classification for the year 1994.
Information Concerning Stock Options
The Company did not grant any stock options to any of its executive
officers during 1994. The following table sets forth the number and dollar value
of stock options held by executive officers of the Company that remained
unexercised at year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<S> <C> <C> <C> <C>
Number of Securities
Underlying Unexercised Value of Unexercised
Option at Fiscal In-the-Money Options
Shares Acquired Year End at Fiscal Year End
Name on Exercise Value Realized (All Exercisable) (All Exercisable)
Jerry F. Wilson 0 0 62,500 $73,438
Barry B. Donnell 0 0 62,500 $73,438
David A. Roberson 0 0 50,000 $58,750
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During 1994, the following directors of the Company served, and
continue to serve, as members of the Compensation Committee: Thomas A.
Broughton, III, Lee Roy Jordan and John W Lowe.
Mr. Lowe is a partner in the law firm of James, Lowe and Mobley, which
rendered legal services to the Company and its subsidiaries during 1994 and
which the Company expects to continue to render legal services during 1995, and
has an ownership interest in certain entities that lease certain facilities to
the Company, as described below. During 1994, the Company and its subsidiaries
paid James, Lowe and Mobley legal fees in the aggregate amount of $82,921.
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Cavalier Homes of Alabama, Inc., a subsidiary of the Company ("Cavalier
- Alabama"), leases a manufacturing facility, office premises and certain
equipment from a partnership, the partners of which include Jerry F. Wilson and
John W Lowe, each of whom owns a one-third interest in such partnership and
together own 6.3% of the Common Stock of the Company. The lease, which was
entered into in September 1984, expires in August 1996, and provides for rental
payments to be made by Cavalier - Alabama in the amount of $25,000 per month.
During 1994 Cavalier - Alabama made rental payments to such partnership in the
aggregate amount of $300,000 and expects to make rental payments in 1995 in the
aggregate amount of $300,000. Cavalier - Alabama has the option to purchase the
leased property at any time during the term of the lease for $1,750,000. The
Company believes that the payments made under the lease are reasonable compared
to amounts that would be paid to an unaffiliated entity for similar space.
Cavalier - Alabama leases another manufacturing facility from a
partnership, the partners of which include Jonathan B. Lowe, who owns a 5%
interest, and Michael P. Lowe, who owns a 5% interest, in such partnership, each
of whom is a son of John W Lowe; David A. Roberson, who owns a 10% interest in
such partnership; and Jerry F. Wilson, Jr., who owns a 10% interest, and
Jonathan D. Wilson, who owns a 10% interest, in such partnership, each of whom
is a son of Jerry F. Wilson. All of the partners of such partnership
beneficially own, in the aggregate, approximately 6% of the outstanding Common
Stock of the Company, not including the shares of Common Stock beneficially
owned by John W Lowe and Jerry F. Wilson. The lease, which was entered into in
May 1993, expires in May 1997 and may be renewed for an additional four years at
the option of Cavalier Alabama, provides for rental payments to be made by
Cavalier - Alabama in the amount of $240,000 per year. Rent during the optional
extension period is to be $264,000 per year. During 1994 Cavalier - Alabama made
rental payments to such partnership in the aggregate amount of $240,000 and
expects to make rental payments in 1995 in the aggregate amount of $240,000.
Cavalier - Alabama has the option to purchase the leased property at any time
during the term of the lease for $1,500,000. The Company believes that the
payments made under the lease are reasonable compared to amounts that would be
paid to an unaffiliated entity for similar space.
During 1994 Quality Housing Supply, Inc., a subsidiary of the Company
("Quality"), leased a manufacturing facility from a corporation, the
shareholders of which include John W Lowe, who owns a 25% interest in such
corporation, and Jerry F. Wilson Jr. and Jonathan D. Wilson, each of whom owns a
12.5% interest in such corporation. The lease is for an initial term of five
years with an option to renew by Quality for an additional five years. Monthly
rental payments during the initial term are $6,000, and monthly rental payments
during the optional extension period are equal to the initial rent increased by
a factor based on increases in the Consumer Price Index ("CPI"). During 1994
Quality made rental payments to such corporation in the aggregate amount of
$48,000 and expects to make rental payments in 1995 in the aggregate amount of
$72,000. Quality also has the option at any time to purchase the land and
improvements subject to the lease for $875,000, subject to a CPI adjustment if
the purchase is during the renewal term. Quality also has a right of first
refusal to purchase the property in the event the lessor has a bona fide offer
to sell the property to a third party purchaser. The Company believes that the
payments made under the lease are reasonable compared to amounts that would be
paid to an unaffiliated entity for similar space.
In February 1994, the Company entered into a $13 million revolving,
warehouse and term loan agreement (the "Credit Facility") with First Commercial
Bank. The Credit Facility contains a revolving line of credit which provides for
borrowings (including letters of credit) of up to 80% and 50% of the Company's
eligible (as defined) accounts receivable and inventories, respectively, up to a
maximum of $5 million. Interest is payable under the revolving line of credit at
the bank's prime rate. The warehouse and term loan agreements contained in the
Credit Facility provide for borrowings of up to 80% of the Company's eligible
(as defined) installment sales contracts, up to a maximum of $8 million.
Interest on term notes is fixed for a period of five years from issuance at a
rate based on the weekly average yield on five year treasury securities averaged
over the preceding 13 weeks, plus 2.4%, and floats for the remaining two years
at a rate (subject to certain limits) equal to the bank's prime rate plus .75%.
The warehouse component of the Credit Facility provides for borrowings of up to
$2 million with interest payable at the bank's prime rate plus 1%. However in no
event may the aggregate borrowings under the warehouse and term loan agreement
exceed $8 million. The Credit Facility, which is renewable annually, was due to
expire in February 1995 but has been extended to June 30, 1995. Amounts
outstanding under the Credit Facility are secured by accounts receivable and
inventory, loans purchased and originated by Cavalier Acceptance Corporation, a
Company Subsidiary, and the capital stock of certain Company subsidiaries.
During 1994 the maximum principal balance outstanding under the term loan
component of the Credit Facility was $3,700,000, and the Company made interest
payments to First Commercial Bank in the aggregate amount of $61,832. In January
1995, the Company borrowed $2 million under the Credit Facility and during the
period from January 1, 1995 to March 15, 1995, the maximum principal balance
outstanding under the Credit Facility was $5,570,165 and the Company has paid
interest during such period in the aggregate amount of $83,523. The Company had
no borrowings under the revolving credit line component of the Credit Facility.
Mr. Broughton is the President of First Commercial Bank.
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CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
During 1994, Buccaneer Homes of Alabama, Inc., a subsidiary of the
Company ("Buccaneer"), leased a manufacturing facility from a corporation, the
shareholders of which include Jerry F. Wilson, Jr. and Jonathan D. Wilson, each
of whom owns a 12.5% interest in such corporation. The lease is for an initial
term of five years with an option to renew by Buccaneer for an additional five
years. Monthly rental payments during the initial term are $9,250, and monthly
rental payments during the optional extension period are equal to the initial
rent increased by a factor based on increases in the CPI. During 1994 Buccaneer
made rental payments to such corporation in the aggregate amount of $74,000 and
expects to make rental payments in 1995 in the aggregate amount of $111,000.
Buccaneer also has the option at any time to purchase the land and improvements
subject to the lease for $875,000, subject to a CPI adjustment if the purchase
is during the renewal term. Buccaneer also has a right of first refusal to
purchase the property in the event the lessor has a bona fide offer to sell the
property to a third party purchaser. The Company believes that the payments made
under the lease are reasonable compared to amounts that would be paid to an
unaffiliated entity for similar space.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Company's executive officers, directors and beneficial owners of
more than 10% of the Company's Common Stock are required under the Exchange Act
to file reports of ownership and changes in ownership with the SEC and the New
York Stock Exchange. Copies of these reports must also be furnished to the
Company. Based on a review of copies of such reports furnished to the Company,
the Company believes that during 1994 all applicable filing requirements were
complied with in a timely manner.
OTHER MATTERS
The Board of Directors does not know of any other business to be
presented for consideration at the Annual Meeting. If other matters properly
come before the Annual Meeting, the persons named in the accompanying form of
proxy will vote thereon in their best judgment.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for consideration at the 1996 Annual
Meeting of Stockholders must be received by the Company no later than November
25, 1995, to be included in the 1996 proxy material.
CAVALIER HOMES, INC.
David A. Roberson
Secretary-Treasurer
Addison, Alabama
March 23, 1995
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