<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Kaufman and Broad Home Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Kimberly King
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which 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:
---------------------------------------------------------------------
(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
KAUFMAN AND BROAD HOME CORPORATION
10990 Wilshire Boulevard
Los Angeles, California 90024
(310) 231-4000
------------------------
BRUCE KARATZ
Chairman and Chief Executive Officer
------------------------
February 21, 1995
Dear Fellow Stockholder:
Your officers and directors join me in inviting you to attend the Annual Meeting
of Stockholders of Kaufman and Broad Home Corporation at 9:00 a.m. on March 23,
1995 at the Westwood Marquis Hotel in Los Angeles, California.
The matters expected to be acted on at the meeting are described in detail in
the attached Notice of Annual Meeting of Stockholders and Proxy Statement. In
addition to specific agenda items, by attending the meeting you will have an
opportunity to hear about our plans for the future and to meet your officers and
directors. Whether or not you plan to attend, please sign and date the enclosed
Proxy Card and return it as soon as possible in the envelope provided to ensure
that your shares will be represented.
We look forward to seeing you on March 23rd.
Sincerely,
/s/ Bruce Karatz
BRUCE KARATZ
Chairman and Chief Executive Officer
<PAGE> 3
[LOGO]
KAUFMAN AND BROAD HOME CORPORATION
------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
To Be Held March 23, 1995
To the Holders of the Common Stock
of Kaufman and Broad Home Corporation:
The Annual Meeting of Stockholders of Kaufman and Broad Home Corporation (the
"Company") will be held on Thursday, March 23, 1995 at 9:00 a.m. local time in
the Marquis Room of the Westwood Marquis Hotel, 930 Hilgard Avenue, Los Angeles,
California for the following purposes:
(1) To elect four Class III directors, each to serve for a term of three years;
(2) To approve the Performance-Based Incentive Plan for Senior Management; and
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 10, 1995 as
the record date for
determination of holders of Common Stock entitled to notice of, and to vote at,
the meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kimberly N. King
KIMBERLY N. KING
Corporate Secretary and
Associate Counsel
Los Angeles, California
February 21, 1995
<PAGE> 4
TABLE OF CONTENTS
------------------------
GENERAL INFORMATION: 1
PROPOSAL ONE: ELECTION OF DIRECTORS: 2
THE BOARD AND ITS COMMITTEES: 8
BENEFICIAL OWNERSHIP OF COMPANY STOCK: 10
EXECUTIVE COMPENSATION: 11
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS: 14
PERSONNEL, COMPENSATION AND STOCK PLAN COMMITTEE REPORT ON EXECUTIVE
COMPENSATION: 16
COMMON STOCK PRICE PERFORMANCE: 20
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION: 21
PROPOSAL TWO: PERFORMANCE-BASED INCENTIVE PLAN FOR SENIOR MANAGEMENT: 23
OTHER MATTERS: 29
<PAGE> 5
[LOGO]
KAUFMAN AND BROAD HOME CORPORATION
10990 Wilshire Boulevard
Los Angeles, California 90024
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
to be Held March 23, 1995
------------------------
GENERAL INFORMATION
Your Board of Directors furnishes this Proxy Statement in connection with its
solicitation of your Proxy in the form enclosed to be used at the Company's
Annual Meeting of Stockholders to be held on Thursday, March 23, 1995 (the
"Annual Meeting"), at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. A copy of the Company's
Annual Report to Stockholders for the fiscal year ended November 30, 1994,
including audited financial statements, is also being mailed to stockholders
concurrently with this Proxy Statement.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend, please date, sign and return your Proxy Card promptly in the
envelope enclosed. You may revoke your Proxy at any time prior to its exercise
at the Annual Meeting by written notice to the Company's Secretary, and, if you
attend the Annual Meeting, you may vote your shares in person.
Only holders of record of the 32,382,217 shares of Common Stock outstanding at
the close of business on February 10, 1995 will be entitled to vote at the
Annual Meeting. Each holder of Common Stock is entitled to one vote for each
share held. There is no right to cumulative voting.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
Annual Meeting. In accord with Delaware law, abstentions and broker nonvotes
will be counted as present in determining whether the quorum requirement is
satisfied. Shares not voted, whether by abstention, broker nonvote or otherwise,
will have no effect on the matters submitted for stockholder vote.
The persons named as proxies on the enclosed Proxy Card are Bruce Karatz,
Chairman and Chief Executive Officer, Albert Z. Praw, Senior Vice President,
Real Estate, and Kimberly N. King, Corporate Secretary and Associate Counsel.
1
<PAGE> 6
PROPOSAL ONE:
ELECTION OF DIRECTORS
------------------------
At the meeting, the Board of Directors will present as nominees and recommend
to the stockholders that each of the four persons listed below be elected as
Class III Directors to serve for a three-year term ending at the 1998 Annual
Meeting of Stockholders. Should any of these nominees become unable to serve as
a director, the persons named on the enclosed Proxy Card will, unless otherwise
directed, vote for the election of such other person as the present Board of
Directors may recommend in place of such nominee.
Messrs. Eli Broad and David O. Maxwell, current Class III Directors, have each
determined to retire as directors of the Company and will not be standing for
reelection at the Annual Meeting. The Board of Directors has nominated two
candidates to stand for election as Class III Directors in their stead, Messrs.
Ronald W. Burkle and Luis G. Nogales, and has also nominated for reelection
Messrs. Irani and Nafilyan. A brief summary of each nominee's principal
occupation, business affiliations and other information follows.
2
<PAGE> 7
RON BURKLE
[PHOTOGRAPH]
RONALD W. BURKLE, age 42, is the Managing Partner and majority owner of The
Yucaipa Companies, a private investment firm and the majority shareholder in
Food 4 Less Supermarkets, Inc., which operates Alpha Beta, Boys and Viva
supermarkets, among others. Mr. Burkle has served as Chairman and Chief
Executive Officer of Food 4 Less Supermarkets, Inc. since 1987, and Chairman of
Smitty's Supermarkets, Inc. since 1994. Mr. Burkle's professional affiliations
include serving as a member of the Board of the California Retailers
Association, the Board of the Food Marketing Institute and the Board of the Food
Employers Council Serving California. He is a member of the Board of Advisors of
Project Angel Food, the Board of Fellows of the Claremont University Center, the
U.S. Small Business Administration National Advisory Council, the Board of the
Western NIS Enterprise Fund, and the Industry Policy Advisory Committee -- U.S.
Department of Commerce; and he is the founder and trustee of the Food 4 Less
Foundation.
DR. RAY R. IRANI
[PHOTOGRAPH]
DR. RAY R. IRANI, age 60, is Chairman, President and Chief Executive Officer of
Occidental Petroleum Corporation ("Occidental"). He joined Occidental in 1983 as
Chairman and Chief Executive Officer of Occidental Chemical Corporation, an
Occidental subsidiary, and as Executive Vice President of Occidental. In 1984 he
was elected to the Board of Directors of Occidental and was named President and
Chief Operating Officer. He assumed the responsibilities of Chairman and Chief
Executive Officer, in addition to President, in 1990. Dr. Irani joined
Occidental in 1983, and has served as Chairman of Canadian Occidental Petroleum,
an Occidental affiliate, since 1986 and as a director since 1984. An Honorary
Fellow of the American Institute of Chemists, Dr. Irani is a director of the
National Association of Manufacturers, the American Petroleum Institute, the
National Committee on United States-China Relations, Bank Audi, and the Jonsson
Cancer Center Foundation/UCLA. He is a member of The President's Export Council,
the National Petroleum Council, the Scientific Research Society of America, the
American Chemical Society, and the Industrial Research Institute. He is a
trustee of the University of Southern California and serves on the CEO Board of
Advisors of the University's School of Business Administration. He is also a
trustee of the American University of Beirut, and St. John's Hospital and Health
Center Foundation. Dr. Irani has been a director of the Company since 1992.
3
<PAGE> 8
GUY NAFILYAN
[PHOTOGRAPH]
GUY NAFILYAN, age 50, has been President and Chief Executive Officer of Kaufman
and Broad France, the Company's operation based in Paris, France, and Executive
Vice President and President of European Operations of the Company since April
1992. He was a Senior Vice President of the Company from 1987 to 1992, and from
1983 through 1987 he was President of Kaufman and Broad, S.A. (the predecessor
to Kaufman and Broad France). Mr. Nafilyan has been a director of the Company
since 1987.
LUIS G. NOGALES
[PHOTOGRAPH]
LUIS G. NOGALES, age 51, has been Chairman and Chief Executive Officer of
Embarcadero Media, Inc., a media acquisition firm specializing in Spanish
language radio stations, since 1992. From 1990 through 1993, he was President of
Nogales Partners, and from 1989 to 1990 he was General Partner in Nogales Castro
Partners, both media acquisition firms. From 1986 to 1988, Mr. Nogales was
President of Univision, the nation's largest Spanish language television
network, and from 1983 to 1986 he was Chairman and Chief Executive Officer of
United Press International. He is a director of Adolph Coors Company and
Southern California Edison Company; a member of the Inter-American Dialogue; a
trustee of The Ford Foundation and Vice President of the Board of Trustees of
Stanford University.
4
<PAGE> 9
The other directors of the Company and their respective principal occupations,
business affiliations and other information for at least the past five years are
as follows.
- --------------------------------------------------------------------------------
JANE EVANS
[PHOTOGRAPH]
JANE EVANS, age 50, has been Vice President and General Manager, Home and
Personal Services Division, U S West Communications, Inc. since 1991. From 1987
to 1989 she was a general partner of Montgomery Securities, and from 1989 until
1991 she was President and Chief Executive Officer of the InterPacific Retail
Group. Ms. Evans serves as a director of Philip Morris Companies, Inc., Edison
Brothers Stores, Inc., Georgia Pacific, BancOne-Arizona, the Heard Museum, the
Ladies Professional Golf Association, Young President's Organization and the
Phoenix United Way. Ms. Evans was elected to the Board in 1993 and her term
expires in 1996.
ANTOINE JEANCOURT-
GALIGNANI
[PHOTOGRAPH]
ANTOINE JEANCOURT-GALIGNANI, age 58, was named Chairman and Chief Executive
Officer of Assurances Generales de France, one of France's largest insurance
companies, in 1994. From 1981 through 1993, he served as the Chairman and Chief
Executive Officer of Banque Indosuez. He joined Banque Indosuez in 1979 as
President, and was named Chairman in 1981. Prior to joining Banque Indosuez, he
was Executive Vice President of Credit Agricole. Mr. Jeancourt-Galignani is a
director of Bouygues, Total, Gartmore plc., Societe Generale, Paribas, and
Aachener und Munchener (AMB); and a member of the Supervisory Board of Euro
Disney S.C.A. He is a graduate of l'Ecole Nationale d'Administration (l'ENA).
Mr. Jeancourt-Galignani has been a director of the Company since 1989 and his
term expires in 1997.
5
<PAGE> 10
JAMES A. JOHNSON
[PHOTOGRAPH]
JAMES A. JOHNSON, age 51, has been Chairman and Chief Executive Officer of the
Federal National Mortgage Association ("Fannie Mae") since 1991, and served as
Fannie Mae's Vice Chairman from 1990 until his election to his present position.
Prior to joining Fannie Mae, Mr. Johnson served as Managing Director of Lehman
Brothers, an investment banking firm, from 1985 until 1989. He is Chairman of
The Brookings Institution and is a trustee of the Council on Foreign Relations.
He serves on the boards of United HealthCare Corporation, the Alliance to Save
Energy, the Board of Overseers of the Wharton School of the University of
Pennsylvania, The Enterprise Foundation, the National Housing Endowment, the
National Alliance to End Homelessness, Carnegie Corporation of New York and
Carnegie Endowment for International Peace. Mr. Johnson has been a member of the
Board of Directors since 1992, and his term expires in 1996.
BRUCE KARATZ
[PHOTOGRAPH]
BRUCE KARATZ, age 49, has been President, Chief Executive Officer and a director
of the Company since 1986 and was named Chairman in 1993. He joined the
Company's predecessor in 1972 and, from 1976 through 1980 he was President of
its French homebuilding subsidiary. From 1980 until the formation of the Company
in 1986, Mr. Karatz was President of Kaufman and Broad Development Group. Mr.
Karatz is a director of Honeywell Inc., National Golf Properties, Inc., and
MacFrugal's Bargains - Close-outs Inc. Among his civic and professional
activities, Mr. Karatz is a trustee of the RAND Corporation; a member of the
Executive Committee of the California Business Roundtable, the board of the
National Park Foundation, and the University of Southern California Law Center
Board of Councilors; Co-Chairman of the Mayor's Alliance for a Safer L.A., and
Vice Chairman of the Board of Trustees of Pitzer College. His term as a director
expires in 1997.
6
<PAGE> 11
LESTER POLLACK
[PHOTOGRAPH]
LESTER POLLACK, age 61, has been Chief Executive Officer of Centre Partners,
L.P. and a general partner of Lazard Freres & Co. since 1986, and Senior
Managing Director of Corporate Partners, L.P. since 1988. He is a director of
Continental Cablevision, Inc., Loews Corporation, Parlex Corporation, Polaroid
Corporation, Sphere Drake Holdings Limited, SunAmerica Inc. and Tidewater Inc.
Mr. Pollack is a trustee of New York University, a member of the Board of
Directors of United Way of Tri-State, Inc., a member of The Council on Foreign
Relations, Chairman of Conference of Presidents of Major American Jewish
Organizations, Vice Chairman of the Anti-Defamation League, and most recently
President of the Jewish Community Centers Association of North America. He will
next stand for election in 1997, and has been a director of the Company since
1986.
SANFORD C. SIGOLOFF
[PHOTOGRAPH]
SANFORD C. SIGOLOFF, age 64, has been Chairman, President and Chief Executive
Officer of Sigoloff & Associates, Inc. since 1989 and in 1994 was appointed to
the California State Board of Education by California Governor Pete Wilson. Mr.
Sigoloff was President and Chief Executive Officer of L. J. Hooker Corporation
from 1989 to 1992, and was Chairman, President and Chief Executive Officer of
Wickes Companies, Inc., a retail and wholesale merchandiser, from 1982 to 1988.
Mr. Sigoloff was a Presidential appointee to the United States Holocaust
Memorial Council in Washington, D.C. from 1988 through 1994 and is a Fellow in
the American College of Bankruptcy. Mr. Sigoloff is a director of K-tel
International, Inc., SunAmerica Inc., Movie Gallery, Inc. and Wickes PLC-London,
England. Among his many civic involvements, Mr. Sigoloff is a director of the
National Conference of Christians and Jews and the Center Theater Group; a
trustee of the UCLA Foundation, the Medical Centers of Cedars-Sinai and Chaim
Sheba; a member of the Executive Committee of the City of Hope and the Executive
Board of the American Jewish Committee; and a national trustee and Vice
President of the National Jewish Center for Immunology and Respiratory Medicine.
He has been a director of the Company since 1986. His term expires in 1996.
7
<PAGE> 12
THE BOARD AND ITS COMMITTEES
------------------------
The Company's Board of Directors held four regular meetings during the fiscal
year ended November 30, 1994. In addition, management conferred frequently with
directors on an informal basis to discuss Company affairs. During fiscal 1994,
all directors attended 75% or more of the total aggregate number of meetings of
the Board of Directors and meetings of the committees of the Board on which they
served, except Messrs. Irani and Pollack.
The committees of the Board of Directors consist of the Personnel,
Compensation and Stock Plan Committee, the Audit and Compliance Committee, the
Nominating Committee and the Executive Committee.
PERSONNEL, COMPENSATION AND STOCK PLAN COMMITTEE
The Personnel, Compensation and Stock Plan Committee reviews and makes
recommendations regarding compensation and other employment benefits for the
Company's officers and other members of senior management. The committee also
reviews and approves all awards made under the Company's employee stock plans,
the annual merit increase guidelines for base salaries for all employees and all
officer nominations. Throughout 1994, the members of the Personnel, Compensation
and Stock Plan Committee were Messrs. Broad, Irani, Maxwell and Pollack; Mr.
Johnson was elected to
the committee in April 1994. Mr. Maxwell served as Chairman. The committee held
two meetings during fiscal 1994, and members of committee conferred frequently
with management on an informal basis between meetings to discuss compensation
issues. See the "Personnel, Compensation and Stock Plan Committee Report on
Executive Compensation" (the "Compensation Committee Report") at pages 16-19.
AUDIT AND COMPLIANCE COMMITTEE
The function of the Audit and Compliance Committee is to approve the selection
of, and review all services performed by, the Company's independent auditors; to
meet, consult with, and receive reports from the Company's independent auditors,
its financial and accounting staff and its internal audit department; and to
review and act or make recommendations to the Board of Directors with respect to
the scope of the audit procedures, accounting practices, and internal accounting
and financial controls of the Company. The Audit and Compliance Committee held
two meetings during fiscal 1994, and is comprised of Ms. Evans, who was elected
to the committee in April 1994, and Messrs. Maxwell and Sigoloff. Mr. Sigoloff
serves as Chairman.
NOMINATING COMMITTEE
The Nominating Committee is responsible for recommending director candidates for
the Board, setting policies regarding and evaluating existing directorships,
recommending assignments to the committees of the Board, recommending director
compensation and reviewing management succession planning. During 1994, Mr.
Johnson served as Chairman of the Nominating Committee, of which Messrs. Broad,
Irani, Pollack and Ms. Evans, who joined in April 1994, were also members. The
committee met three times during the year.
The Nominating Committee will consider stockholder recommendations for
director nominees. Stockholders wishing to make such recommendations should
submit the name of the candidate and the candidate's background and
qualifications to
8
<PAGE> 13
the Nominating Committee, c/o the Secretary of the Company, 10990 Wilshire
Boulevard, Los Angeles, California 90024, not later than January 1 of the year
in which the proposed candidate is to be considered for nomination.
EXECUTIVE COMMITTEE
The Executive Committee has the authority of the Board of Directors between
meetings of the Board of Directors except to the extent that the authority may
be limited by the Company's By-laws (which do not currently provide for any such
limitation) or by applicable law. The members of the Executive Committee during
1994 were Messrs. Broad and Karatz.
COMPENSATION PAID TO BOARD MEMBERS
Directors are reimbursed for travel and other expenses related to attendance at
Board of Directors and committee meetings. Directors who are employees of the
Company receive no additional compensation for their service on the Board of
Directors. During 1994, directors who were not employees of the Company were
paid a quarterly retainer of $5,000, plus $1,000 for each meeting attended of
the Board of Directors or of a committee; if two such meetings were held on the
same day, only $500 was paid for the second meeting. Additionally, each
committee chairman received a quarterly retainer of $1,250. Directors may defer
all or a portion of their fees until a later specified event, such as
retirement. The Company also has a retirement benefit plan for directors who
serve a minimum of three years, which provides for the continuation of one-half
of their annual retainer for each year of service up to a maximum of ten years.
In addition, pursuant to the Company's 1993 Director Stock Plan, each
non-employee director who is a director of the Company immediately following any
Annual Meeting of Stockholders, and who has served as a director for a specified
period of time immediately prior to such meeting, receives additional annual
compensation consisting of a grant of 500 shares of the Company's Common Stock.
9
<PAGE> 14
BENEFICIAL OWNERSHIP OF COMPANY STOCK
------------------------
The following information is furnished as of January 31, 1995 to indicate the
beneficial ownership of each class of equity securities of the Company by each
director, director nominee, and each of the executive officers named in the
Summary Compensation Table individually, and by all directors, director
nominees, and all executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP(1) COMMON STOCK
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Eli Broad Common 3,191,421 9.8%(2)
Ronald W. Burkle(3) 0 *
Jane Evans Common 500 *
Dr. Ray R. Irani Common 11,000 *
Antoine Jeancourt-Galignani Common 1,000 *
James A. Johnson Common 12,000 *
Bruce Karatz Common 1,231,537 3.7%(4)
David O. Maxwell Common 17,325 *
Guy Nafilyan Common 215,000 *
Luis G. Nogales(3) 0 *
Lester Pollack Common 3,650 *
Sanford C. Sigoloff Common 14,300 *
Roger B. Menard Common 67,056 *
Albert Z. Praw Common 4,697 *
Preferred(5) 2,825 *
Michael F. Henn Common 20,000 *
All directors, director nominees and Common 4,819,736 14.4%(6)
executive officers as a group (20 persons) Preferred 3,210 *
- ---------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
(1) Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.
(2) Of these holdings, 660,017 shares are held in a trust formed by Mr. Broad of
which he is the beneficiary and 1,067,968 shares are registered in the name
of a corporation as to which Mr. Broad exercises voting and investment
power.
(3) Messrs. Burkle and Nogales are new director nominees who are standing for
election at the Annual Meeting.
(4) Of these holdings, 1,067,968 shares represent stock options held by Mr.
Karatz issued under the Company's employee stock plans as to which he has no
voting power, and 137,500 shares represent shares of performance-accelerated
restricted stock ("Restricted Stock") granted in 1991 under the Company's
1988 Employee Stock Plan as to which Mr. Karatz has no investment power.
(5) Shares of the Company's Series B Mandatory Conversion Premium Dividend
Preferred Stock, $1.00 par value.
(6) Of these aggregate holdings, 1,135,118 shares represent stock options held
by executive officers of the Company under the Company's employee stock
plans as to which no voting power is held; and 242,917 shares represent
Restricted Stock as to which no investment power is held.
Based on filings delivered to the Company made under Section 13 or Section 16
of the Securities Exchange Act of 1934, as amended, as of January 31, 1995 the
only person known to be beneficial owner of more than 5% of the Company's Common
Stock was Mr. Broad.
Based upon its review of Forms 3, 4 and 5 and any amendments thereto furnished
to the Company in compliance with Section 16 of the Securities Exchange Act of
1934, all such Forms were filed on a timely basis by the Company's reporting
persons during fiscal 1994, except for one inadvertent late filing of a Form 4
reporting a purchase of Common Stock by Mr. Sigoloff.
10
<PAGE> 15
EXECUTIVE COMPENSATION
------------------------
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation for the
past three fiscal years earned by each of the five most highly compensated
executive officers of the Company at the end of fiscal year 1994 (the "named
executive officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------------ RESTRICTED UNDERLYING
FISCAL OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) SARS(#) COMPENSATION($)(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Karatz 1994 $600,000 $1,339,249 $ -- $-0- -0- $39,223
Chairman, 1993 515,425 1,167,500 -- -0- 30,000 45,161
President
and Chief 1992 462,917 825,000 -- -0- 40,000 36,702
Executive Officer
- ---------------------------------------------------------------------------------------------------------------------
Roger Menard 1994 $248,333 $ 762,257 -- -0- -0- $15,757
Executive Vice 1993 229,167 950,206 -- -0- 15,000 18,316
President and 1992 205,833 677,509 -- -0- 20,000 14,815
President of
United States
Operations
- ---------------------------------------------------------------------------------------------------------------------
Guy Nafilyan 1994 $248,400 $ 100,000 -- -0- -0- $ 862
Executive Vice 1993 241,500 87,500 -- -0- 15,000 4,221
President and 1992 218,750 489,946 -- -0- 20,000 2,480
President of
European
Operations
- ---------------------------------------------------------------------------------------------------------------------
Albert Z. Praw(4) 1994 $232,895 $ 170,000 -- -0- -0- --
Senior Vice 1993 -- -- -- -0- -0- --
President,
Real Estate 1992 139,167 70,833 -- -0- -0- --
- ---------------------------------------------------------------------------------------------------------------------
Michael F. Henn(5) 1994 $118,269 $ 150,000 -- -0- 20,000 --
Senior Vice 1993 -- -- -- -0- -0- --
President
and Chief 1992 -- -- -- -0- -0- --
Financial Officer
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The officers listed in this table receive certain personal benefits;
however, such benefits do not exceed the lesser of $50,000 or 10% of such
officer's salary and bonus for any of the years reported.
(2) Each of the named executive officers, except Messrs. Praw and Henn, hold
shares of Restricted Stock granted to certain executives of the Company in
1991. Mr. Praw, who rejoined the Company in 1994, was the Company's Senior
Vice President and General Counsel from 1989 through 1992. In 1991, Mr. Praw
received an award of 10,000 shares of Restricted Stock, but such award
lapsed in 1992 when he temporarily left the Company to join a private law
practice. Shares of Restricted Stock vest in twelve equal installments, the
first installment of which vested in 1994; full vesting will occur in the
year 2005. In all cases, executives must be employed by the Company at the
time of vesting to receive the shares.
The number of shares represented by the unvested portion of these awards and
their value as of November 30, 1994, as represented by the closing price of
the Company's Common Stock as reported in the Wall Street Journal, were as
follows: Mr. Karatz 137,500 shares, $1,753,125; Mr. Menard 36,667 shares,
$467,504; and Mr. Nafilyan 68,750 shares, $876,563. These values do not give
effect to the diminution of value attributable to the restrictions on such
shares. Dividends on Restricted Stock are paid to the named executive
officers.
(3) These amounts represent the Company's aggregate contributions to the
Company's 401(k) Savings Plan, Supplemental Non-Qualified Deferred
Compensation Plan and the amount of interest earned on the Executive
Deferred Compensation Plan at a rate in excess of 120% of the applicable
federal rate. In fiscal 1994, the named executive officers accrued the
following respective amounts
11
<PAGE> 16
under such plans: Mr. Karatz $9,240, $26,880 and $3,103; Mr. Menard $9,240,
$5,660 and $857; and Mr. Nafilyan -0-, -0- and $862. Messrs. Praw and Henn
did not participate in these plans.
(4) Amounts set forth in the table for fiscal year 1994 represent compensation
earned since March 7, 1994 when Mr. Praw joined the Company as Senior Vice
President, Real Estate. Amounts set forth in the table for fiscal year 1992
represent compensation paid through July 31, 1992. See discussion in
footnote 2 above.
(5) Amounts set forth in the table represent compensation earned since July 11,
1994 when Mr. Henn joined the Company as Senior Vice President and Chief
Financial Officer.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
PERCENT OF ASSUMED ANNUAL RATE OF
NUMBER OF TOTAL STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Karatz 0 0% $ 0.00 N/A $ 0 $ 0
Roger B. Menard 0 0 0.00 N/A 0 0
Guy Nafilyan 0 0 0.00 N/A 0 0
Albert Z. Praw 0 0 0.00 N/A 0 0
Michael F. Henn 20,000 38 14.38 7/10/09 310,300 913,776
</TABLE>
(1) All options granted in 1994 are for shares of Common Stock and are
exercisable in cumulative 20% installments commencing one year from the date
of grant, with full vesting occurring on the fifth anniversary of the date
of grant. Vesting may be accelerated upon certain events related to changes
in the Company's ownership.
(2) All options were granted at market value on the date of grant. The term
"market value" as used with respect to this table was computed as the
average of the high and low stock prices for the Company's Common Stock as
reported in the Wall Street Journal on the date of grant. The exercise price
and tax withholding obligations related to exercise may be paid by delivery
of already owned shares or by withholding a number of the underlying shares,
subject to certain conditions.
(3) Gains are net of the option exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation over
the 15-year term of the options. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock,
overall stock market conditions, as well as the optionholders' continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved, or may be exceeded.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS AT
SHARES AT FISCAL YEAR END(#) FISCAL YEAR END($)(2)
ACQUIRED ON VALUE --------------------------- --------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Karatz 0 $ 0 1,067,968 48,000 $8,336,204 $ 0
Roger B. Menard 0 0 26,000 24,000 120,000 0
Guy Nafilyan 20,000 185,000 11,000 24,000 0 0
Albert Z. Praw 0 0 0 0 0 0
Michael F. Henn 0 0 0 20,000 0 0
</TABLE>
(1) Represents the difference between the market value of the Company's Common
Stock at exercise minus the exercise price of the options.
(2) Represents the difference between the closing price of the Company's Common
Stock on November 30, 1994 as reported in the Wall Street Journal and the
exercise price of the options.
12
<PAGE> 17
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table provides information on long-term performance awards
granted in 1994 to the named executive officers under the Company's 1988
Employee Stock Plan. See also the Compensation Committee Report at page 18.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS OR OTHER PERIOD UNTIL ----------------------------------------
NAME OTHER RIGHTS(#)(1) MATURATION OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bruce Karatz 78,000 3 years 0 78,000 117,000
Roger B. Menard 27,000 3 years 0 27,000 40,500
Guy Nafilyan 23,000 3 years 0 23,000 34,500
Albert Z. Praw 10,000 3 years 0 10,000 15,000
Michael F. Henn 10,000 3 years 0 10,000 15,000
</TABLE>
(1) In 1994, the Company awarded performance units ("Performance Units") under
the Company's 1988 Employee Stock Plan in lieu of stock options to officers
and other key employees, including the named executive officers. Performance
Units represent the opportunity to receive shares of Common Stock, the
number of which will be equally determined by the varying levels of (i) the
Company's cumulative earnings per share and (ii) the growth in total
stockholder return as compared to the S&P 500 Stock Index, over the period
beginning in fiscal year 1994 and ending in fiscal year 1996. The range of
payout may vary from 0% to 150% of the target depending on the Company's
performance. Payment, if any, of an award under a Performance Unit will be
valued at the fair market value of the Company's Common Stock on November
30, 1996. One-third of the award will vest at November 30, 1996 and, at the
Company's discretion, may be paid in cash or shares of Common Stock. The
remaining two-thirds will be paid in shares of restricted Common Stock which
must be held until November 30, 1997 in order to vest. Participants must be
employed at the time of vesting to qualify for the award.
13
<PAGE> 18
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
------------------------
EMPLOYMENT AGREEMENTS
Mr. Karatz is employed under an agreement with the Company that was entered into
in 1988 and is automatically renewed for a one-year period each January 31st,
subject to the right of the Company or Mr. Karatz to terminate on six months'
prior notice. Mr. Karatz's agreement provides that if a majority interest in the
Company is sold or his employment with the Company is terminated prior to the
agreement's expiration, under certain circumstances, including as a result of a
"change in control" of the Company, he will receive a payment of two times his
average annual compensation for the prior three fiscal years. Mr. Karatz's
agreement provides for similar benefits in the event of death or disability. Mr.
Karatz' agreement was amended in February 1995 in connection with the proposed
Performance-Based Incentive Plan for Senior Management. See the Compensation
Committee Report at page 19 and "Performance-Based Incentive Plan for Senior
Management" at pages 25-26 for a further discussion of these amendments; see
also the Compensation Committee Report at page 19 for a discussion of the
compensation provisions in Mr. Karatz' agreement.
Mr. Menard is employed pursuant to an agreement that was entered into in 1992,
and was scheduled to expire on November 30, 1995. In February 1995, certain
amendments were made to Mr. Menard's agreement which were retroactively
effective as of December 1, 1994. Among other things, the amendments: (i) extend
the term of the agreement until November 30, 1997; (ii) increase Mr. Menard's
base salary for fiscal 1995 to $350,000; (iii) amend the annual incentive
compensation formula set forth in his agreement by reducing the percentage of
pre-tax income of the Company's domestic operations to which Mr. Menard is
entitled in fiscal 1995; and (iv) provide that all incentive compensation paid
to Mr. Menard will be paid under and subject to the limits set forth in the
Performance-Based Incentive Plan for Senior Management, if approved by
stockholders. See "Performance-Based Incentive Plan for Senior Management" at
page 26 for a discussion of a further amendment to Mr. Menard's employment
agreement that was made in connection with the proposed Performance-Based
Incentive Plan for Senior Management. Mr. Menard's agreement also provides that
if Mr. Menard terminates his employment with the Company, he may not engage in a
competitive business for one year thereafter.
Mr. Praw is employed under an agreement with the Company dated February 20,
1994. Pursuant to his agreement, Mr. Praw receives a specified base salary. His
incentive compensation award for 1994 was guaranteed under the terms of his
agreement; all future annual incentive awards made to Mr. Praw will be based on
his performance. Upon joining the Company, Mr. Praw also received 10,000
Performance Units under the 1988 Employee Stock Plan in accord with the terms of
his agreement.
Mr. Henn is employed under an agreement with the Company dated June 7, 1994,
pursuant to which he receives a specified base salary. Mr. Henn's incentive
compensation award for 1994 was guaranteed pursuant to the terms of his
agreement; in the future, his incentive compensation awards will be determined,
in part, by a formula based on the pre-tax income of the Company and, in part,
by his performance. In accord with his
14
<PAGE> 19
agreement, upon joining the Company Mr. Henn also received 10,000 Performance
Units and 20,000 stock options under the 1988 Employee Stock Plan.
Under their respective agreements Messrs. Menard,
Praw and Henn are also eligible to receive other benefits afforded to Company
executives, including the receipt of stock option grants and other awards under
the Company's employee stock plans. If the employment of Messrs. Menard, Praw or
Henn is terminated under certain other circumstances, they will receive one
year's base compensation plus a specified percentage of the then-current fiscal
year's anticipated incentive compensation paid over a 12-month period.
CHANGE IN CONTROL ARRANGEMENTS
Under the Company's 1988 Employee Stock Plan, all outstanding stock options
shall become fully exercisable and all restrictions on outstanding shares of
restricted stock shall lapse upon a "change in ownership" in the Company. A
change in ownership will be deemed to occur if (i) current members of the Board
of Directors or other directors elected by three-quarters of the current members
or their respective replacements (excluding certain individuals who took office
in connection with an acquisition of 20% or more of the Company's voting
securities or in connection with an election contest) cease to represent a
majority of the Board or (ii) the Board determines that a change in control has
occurred.
The Company also maintains a non-qualified Executive Deferred Compensation
Plan. From 1985 to 1992, pursuant to the plan Messrs. Karatz and Menard,
deferred receipt of a certain amount of pre-tax income, plus a Company matching
contribution, until retirement, termination or certain other events, including a
"change in control." A change in control is defined in the plan to include the
acquisition by a person or "group" (as defined) of 25% or more of the Company's
voting power, a transaction which results change in a majority of the
then-incumbent Board or the Company ceasing to be publicly owned. No new
contributions to the Executive Deferred Compensation Plan may be made, but the
Company will continue to pay interest on prior contributions still held in the
plan.
15
<PAGE> 20
PERSONNEL, COMPENSATION AND STOCK PLAN
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
------------------------
THE COMMITTEE
The Personnel, Compensation and Stock Plan Committee of the Board of Directors
(the "Compensation Committee" or the "Committee") is composed entirely of
non-employee directors and is responsible for establishing, monitoring and
reviewing the compensation programs in which all executives of the Company
participate, including the named executive officers. The Committee also
regularly reviews and approves the annual cash compensation (consisting of
salaries and incentive awards) for each of the Company's executives, all awards
made under Company's employee stock plans, the annual merit increase guidelines
for base salaries for all employees, and all officer nominations.
COMPENSATION PHILOSOPHY
To promote the increase in net worth of the Company, maximize return to
stockholders and motivate senior management effectively, the executive
compensation philosophy of the Company has long been to closely align
compensation with Company performance. Accordingly, the Company's compensation
practices for management are intended to:
- - Align individual performance objectives with the interests of stockholders and
with the Company's performance;
- - Balance the elements of compensation to support achievement of short-term
business plans and long-term strategic goals;
- - Reward individuals for outstanding contributions to the Company's success; and
- - Attract, motivate and retain executives of the highest quality.
Of the foregoing objectives, however, the Committee places the greatest
emphasis on linking compensation with the interests of stockholders and with the
Company's performance. To this end, 63.5% of the named executive officers' total
cash compensation for 1994 was from incentives related to the Company's
performance. Mr. Karatz, the Company's Chairman and Chief Executive Officer,
received 69.1% of his cash compensation from performance-based incentives,
consistent with 69.4% in 1993. The Committee believes that these percentages
evidence the Company's commitment to a vital and explicit link between executive
compensation and the creation of stockholder value.
The process utilized by the Committee in determining executive compensation
takes into account both qualitative and quantitative factors. In 1994, the
Committee indexed elements of executive compensation against such corporate
performance measures as pre-tax income, earnings per share, and total return to
stockholders. Consistent with its approach during the last several years,
however, the Committee gave the most weight to the Company's pre-tax income in
determining executive compensation. The Committee also appreciates the
importance of achievements that may be difficult to quantify, and accordingly
may recognize qualitative factors, such as the successful implementation of
major corporate projects and the assumption of additional corporate
responsibilities.
While the Committee takes into account the compensation practices and
corporate financial performance of certain peer group companies in the
homebuilding industry (the "Compensation Peer Group"), the Committee does not
target total executive compensation to any specific point
16
<PAGE> 21
within, or outside, the range of the Compensation Peer Group results.
COMPENSATION COMPONENTS
The Company's executive compensation programs are based on three
components -- base salary, annual incentives and long-term compensation -- each
of which plays an integral role in the Company's overall approach to
compensation.
Base Salary. Salaries provide a necessary element of stability in the Company's
total compensation program and, as such, are typically not subject to
significant variability. Executive salaries are reviewed and established in
light of the duties and scope of responsibilities of each executive's position.
In establishing salaries for 1994, the Committee considered each executive's
contributions during the past fiscal year, the competitive market for equally
qualified executives, and the compensation for equivalent executive positions in
the Compensation Peer Group.
The Compensation Peer Group is comprised of the nine leading, publicly-held
homebuilding companies, and includes the companies (excluding the Company) that
comprise the S&P Homebuilding Index used in the "Kaufman and Broad Home
Corporation Common Stock Price Performance" graph on page 20, plus seven
additional companies. The Compensation Peer Group was used instead of the S&P
Homebuilding Index because the Committee believes the broader comparison
afforded by the Compensation Peer Group is a more constant and accurate
indicator of the compensation practices of the leading companies in the
homebuilding industry.
In 1994, the Committee did not set a specific percentile target for the named
executive officers' base salaries relative to the Compensation Peer Group. For
the past three years, however, base salaries paid to the named executive
officers as a group have been below or at the average for the Compensation Peer
Group; and Mr. Karatz's salary has been at the average or somewhat above the
average for chairmen and chief executive officers within the Compensation Peer
Group. The Committee believes that the Company's executive base salaries are
administered conservatively in light of the fact that the Company has typically
out-performed and is larger than most of the companies in the Compensation Peer
Group. Further, the Company is unique among the companies in the Compensation
Peer Group in that it competes in international markets and thus requires that
certain of its executives, including the Chief Executive Officer, have an
expertise in international business. The base salaries of Messrs. Karatz,
Menard, Praw and Henn are governed in part by their employment agreements with
the Company (see "Employment Agreements and Change in Control Arrangements" at
page 14).
The Committee authorized a 5% increase in base salaries for all Company
employees in 1994, consistent with the 5% increase in 1993. The salary increase
for 1994 was determined by general reference to national trends across
industries, and by specific reference to practices in the homebuilding industry
in California and the nation. For the three named executive officers who were
employed with the Company at the outset of 1994, their base salary increases for
fiscal 1994 averaged 1.9%, less than the Company-wide increase. Two of the named
executive officers joined the Company during 1994 and thus did not receive a
salary increase for the fiscal year.
Annual Incentive Awards. The Company's annual incentive awards are a
significant component of executive compensation, reflecting the Company's belief
that management's contribution to stockholder returns results from maximizing
the earnings potential of the Company. Accordingly, in 1994 Messrs. Karatz and
Menard, the Company's key operational officers, as well as each of the Company's
17
<PAGE> 22
division presidents, earned a cash award based upon a specific percentage of the
pre-tax income of the Company (or a particular division or operating unit, as
applicable). By its extensive reliance on this incentive award system, the
Committee links a substantial portion of the annual pay for key operational
executives directly to the Company's profitability. Annual incentive bonuses for
certain other executives, including Messrs. Nafilyan, Praw and Henn, were either
determined by reference to their employment agreement or the Committees'
subjective assessment of their job performance and contribution to the overall
goals of the Company.
In 1994, 63.5% of the total compensation for the named executive officers
consisted of incentives, as compared with an average of 39.2% for the
Compensation Peer Group.
Long-Term Compensation. Long-term incentive compensation is paid to executives
primarily in the form of stock-based awards pursuant to the Company's 1988
Employee Stock Plan. This aspect of the Company's compensation program is
intended to retain executives and motivate them to improve the long-term value
of stockholders' investments in the Company.
In most years, long-term incentive compensation is awarded to the Company's
executives in the form of stock options or shares of restricted stock that vest
over a period of years pursuant to a fixed schedule. The Committee does,
however, periodically provide substantially higher risk long-term incentive
compensation which, in turn, offers executives a corresponding opportunity to
earn higher returns.
To that end, in 1994 the Committee established the 1994 Performance Share
Program, administered under the Company's 1988 Employee Stock Plan, pursuant to
which it awarded Performance Units to the Company's key executives in lieu of
stock options. The value of each Performance Unit will be realized, if at all,
at the end of fiscal-year 1996 and will be determined equally by (i) the
Company's cumulative earnings per share ("EPS") and (ii) the Company's total
return to stockholders ("TRS") over the S&P 500 for the three year period from
December 1, 1994 through November 30, 1996. One-third of each award of
Performance Units made under the 1994 Performance Share Program will vest on
November 30, 1996 and, at the Company's discretion, may be paid in cash or
shares of Common Stock. The remaining two-thirds of each award will be paid in
shares of restricted Common Stock that must be held until November 30, 1997 in
order to vest.
In determining the number of Performance Units to be granted each of the named
executive officers in 1994, the Committee considered, in order of significance,
(i) the Committee's subjective assessment of the executive's actual and
anticipated contribution to the Company's business; (ii) the executive's total
proposed compensation for the year; and (iii) the executive's holdings of
previously granted stock-based awards. Accordingly, in 1994 the named executive
officers received awards ranging from 5,000 to 78,000 Performance Units (see
"Long-Term Incentive Plans -- Awards in Last Fiscal Year" at page 13).
By implementing the 1994 Performance Share Program, the Committee sought to
motivate senior management toward improving the Company's long-term performance,
to link compensation to performance through tying a portion of the payout to
EPS, to link compensation to the creation of stockholder value through tying a
portion of the payout to TRS, and to encourage executive retention.
In addition, pursuant to the terms of his employment agreement, the Committee
made a grant of certain stock options to Mr. Henn when he joined the Company in
1994 (see "Employment Agreements and Change in Control Arrangements" at pages
14-15). The Committee made no other stock option awards to executive officers
during the fiscal year.
18
<PAGE> 23
COMPENSATION OF CHIEF EXECUTIVE OFFICER IN FISCAL 1994
Mr. Karatz is employed under an agreement with the Company that was entered into
in 1988. Pursuant to his agreement, Mr. Karatz received a base salary of
$600,000 in 1994, reflecting no change from his base salary at the end of 1993,
and an annual cash incentive bonus that represented 1.75% of the Company's total
1994 pre-tax income. Mr. Karatz' agreement provides that he is entitled to
receive other benefits afforded to other executives of the Company and,
accordingly, in 1994 Mr. Karatz received a discretionary award of 78,000
Performance Units under the 1994 Performance Share Program in accord with the
principles described above.
The Compensation Committee believes that it is generally desirable that all
compensation paid to the Company's employees be tax deductible for the Company.
Section 162(m) of the Internal Revenue Code ("Section 162(m)") provides that
annual compensation paid in excess of $1 million to any named executive officer
may not be deducted unless such compensation is based on objective performance
criteria which have been approved by stockholders. The proposed
Performance-Based Incentive Plan for Senior Management (the "Incentive Plan") is
designed to qualify incentive compensation paid to the named executive officers,
including Mr. Karatz, for a deduction by the Company in accord with Section
162(m) (see "Performance-Based Incentive Plan for Senior Management" at pages
23-28). In February 1995, Mr. Karatz' employment agreement was amended to
provide that if the Incentive Plan is approved by stockholders, in an effort to
qualify such awards for a deduction under Section 162(m), all future cash and
stock-based incentive bonus awards made to Mr. Karatz under his agreement will
be made under and subject to the amount limitations set forth in the Incentive
Plan. The amendment further provides that if the Incentive Plan is not approved
by stockholders, Mr. Karatz' current employment agreement will terminate and he
will receive no future compensation thereunder. No other amendments were made to
the performance-based incentive compensation formula set forth in Mr. Karatz'
agreement.
POLICY ON DEDUCTIBILITY OF COMPENSATION
As a general matter, the Company intends to comply with the requirements of
Section 162(m) and maintain deductibility for all executive compensation, except
in circumstances when the tax benefit to the Company is outweighed by the burden
of compliance with Section 162(m) and the Committee feels that the actions
required to comply with Section 162(m) would not be in the best interests of the
Company or its stockholders. The proposed Incentive Plan is designed to meet the
requirements of Section 162(m).
PERSONNEL, COMPENSATION AND STOCK PLAN COMMITTEE
David O. Maxwell, Chairman
Eli Broad
Dr. Ray R. Irani
James A. Johnson
Lester Pollack
February 17, 1995
The above report of the Personnel, Compensation and Stock Plan Committee and
the following Common Stock Price Performance graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
19
<PAGE> 24
KAUFMAN AND BROAD HOME CORPORATION
COMMON STOCK PRICE PERFORMANCE
------------------------
The graph below compares the cumulative total return(1) of Kaufman and Broad
Home Corporation, the S&P 500 Index and the S&P Homebuilding Index. The Dow
Jones Home Construction Index(2) is presented for informational purposes only.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kaufman and Broad Home
Corporation $100 $52 $102 $120 $159 $103
-------------------------------------------------------------------------------------------
Dow Jones Home Construction
Index $100 $51 $87 $136 $162 $111
-------------------------------------------------------------------------------------------
S&P Homebuilding Index $100 $59 $110 $169 $219 $123
-------------------------------------------------------------------------------------------
S&P 500 Index $100 $97 $116 $138 $152 $153
-------------------------------------------------------------------------------------------
</TABLE>
The above graph is based upon the Common Stock and index prices calculated as
of November 30th for each of the last five fiscal year-end periods. The
Company's November 30, 1994 closing Common Stock price was $12.75 per share. On
January 31, 1995 the Company's Common Stock closed at $13.13 per share. The
stock price performance of the Company's Common Stock depicted in the graph
above represents past performance only and is not indicative of future
performance.
(1) Total return assumes reinvestment of dividends.
(2) The three companies that comprise the S&P Homebuilding Index are: Pulte
Corporation; Centex Corporation; and the Company. The six companies that
comprise the Dow Jones Home Construction Index include the foregoing
companies, as well as: Standard Pacific Corp.; The Ryland Group, Inc.; and
Clayton Homes, Inc.
20
<PAGE> 25
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
------------------------
The members of the Compensation Committee throughout 1994 were David O.
Maxwell, Chairman, Eli Broad, Dr. Ray R. Irani and Lester Pollack. Mr. Johnson
was elected to the Committee in April 1994. Mr. Broad, the Company's
Founder-Chairman throughout 1994, is the Chairman, President and Chief Executive
Officer of SunAmerica Inc. ("SunAmerica"), the Company's former parent. Messrs.
Maxwell and Pollack are also directors of SunAmerica.
TRANSACTIONS WITH SUNAMERICA INC.
Special Common Stock and Warrants. The Company's business originated in 1957
and was operated through various subsidiaries of SunAmerica, previously known as
Kaufman and Broad Inc., until 1986. At that time, SunAmerica transferred to the
Company all of the outstanding stock of the subsidiaries then conducting
SunAmerica's on-site housing businesses as well as the stock of Kaufman and
Broad Mortgage Company. The Company shortly thereafter completed an initial
public offering of its Common Stock, after which SunAmerica continued to own
approximately 92.6% of the Company's outstanding Common Stock. In 1989,
SunAmerica distributed substantially all of its holdings in the Company's Common
Stock pro-rata to holders of SunAmerica's common stock (the "Distribution").
Immediately prior to the Distribution, a wholly-owned subsidiary of SunAmerica,
Sun Life Insurance Company of America ("SLICA"), acquired warrants (the
"Warrants") to purchase up to 7,500,000 shares of the Company's Special Common
Stock in connection with the financing of a portion of the special cash dividend
paid to holders of the Company's Common Stock at the time of the Distribution.
In 1992, pursuant to the exercise of certain registration rights held by
SLICA, the Company registered shares of Special Common Stock issuable upon
exercise of the Warrants under the Securities Act of 1933, and subsequently
issued 5,123,000 shares in connection with a public offering. At the conclusion
of such offering, SLICA continued to retain the balance of Warrants to purchase
2,377,000 shares of Special Common Stock.
On November 8, 1993, the Company commenced a tender offer to purchase all of
its 5,123,000 outstanding shares of Special Common Stock at a price of $19.00
per share. The offer expired on December 7, 1993. A total of 2,331,785 shares of
Special Common Stock were tendered and 2,791,215 shares of Special Common Stock
were left remaining outstanding.
In addition, on December 23, 1993, the Company purchased the remaining
2,377,000 Warrants at a price equal to the tender offer price, less the $6.96
per Warrant exercise price. As a result of this transaction, SLICA no longer
holds any Warrants, nor beneficially owns any shares of the Company's Special
Common Stock.
The tender offer for the Special Common Stock, and the Warrant purchase, were
unanimously approved as fair to stockholders tendering in and remaining after
the tender offer and in the best interests of the Company (i) first by a
separate vote of all members of the Company's Board of Directors excluding those
directors who are also directors of SunAmerica, and (ii) then by the full Board
of Directors.
The remaining 2,791,215 outstanding shares of Special Common Stock were
subsequently exchanged by the Company on various dates in 1994 at a rate of .95
shares of Common Stock for each share of Special Common Stock. There were no
outstanding shares of Special Common Stock at November 30, 1994.
21
<PAGE> 26
Deferred Tax Liability Matter. In June 1994, the Company paid $4.4 million to
SunAmerica to settle an outstanding dispute between the companies concerning the
computation of certain deferred tax liabilities on the books of the Company
which arose before the Distribution.
A special committee of the Board of Directors, consisting of a disinterested
director who was not affiliated in any way with SunAmerica and had no interest
in the dispute, was appointed by the Board of Directors and was given authority
to independently investigate and resolve the dispute. The special committee
concluded that the settlement was fair, reasonable and in the best interests of
the Company and its stockholders. The special committee based its conclusion
upon an independent review of SunAmerica's claims and the Company's potential
defenses, and a number of other considerations including, among other things,
the amount of SunAmerica's claims, the advice of the special committee's outside
consultants, the potential expense to the Company of any litigation, and the
recommendations of disinterested board members, including the Company's
disinterested director who served on the special committee, appointed by the two
companies to resolve the dispute.
22
<PAGE> 27
PROPOSAL TWO:
PERFORMANCE-BASED INCENTIVE PLAN
FOR SENIOR MANAGEMENT
------------------------
At its January 1995 meeting, the Board of Directors approved the Incentive
Plan upon the recommendation of the Compensation Committee. The Incentive Plan
will provide for annual incentive awards to certain of the Company's key
executives and is being submitted to stockholders in an effort to assure that
such awards will be tax deductible for the Company. Section 162(m) places a $1
million annual limit on the amount of compensation paid to the named executive
officers that may be deducted by the Company for federal income tax purposes,
unless such compensation is based on the achievement of pre-established
performance goal(s) set by the Compensation Committee pursuant to an incentive
plan that has been approved by the Company's stockholders.
Stockholder approval of the Incentive Plan is necessary for maintaining the
tax-deductible status of incentive payments made to the named executive
officers, as well as to allow the Company to continue its long-standing policy
of rewarding those key employees who are largely responsible for the continued
growth and profitability of the Company by offering them the opportunity to earn
competitive levels of compensation. Further, the Incentive Plan is consistent
with the Company's belief that stockholder value is enhanced by basing a
significant portion of an executive's compensation on the performance of the
Company and/or his or her business unit.
The primary features of the Incentive Plan are summarized below.
PLAN SUMMARY
EFFECTIVE DATE
If approved by stockholders, the Incentive Plan will become effective
retroactive to December 1, 1994 (the beginning of the Company's 1995 fiscal
year), and will terminate on November 30, 2004. If the Incentive Plan is not
approved by stockholders, it will not go into effect. No award may be made under
the Incentive Plan after its expiration date, but awards made prior thereto may
extend beyond that date.
ADMINISTRATION
The Incentive Plan will be administered by the Compensation Committee, which is
composed entirely of non-employee directors who are ineligible to participate in
the Incentive Plan, are "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934 and are "outside directors" within the
meaning of Section 162(m). The Compensation Committee has full authority to
interpret the Incentive Plan and to establish rules for its administration. The
Compensation Committee has the authority to select the officers who will
participate in the Incentive Plan, to determine maximum individual awards (not
to exceed the stockholder approved maximums described below), to set targets at
the beginning of each performance year, to determine the degree of attainment of
performance goals, and to determine the amounts payable to each participant and
the timing and terms of such payment, unless otherwise provided for by contract.
The Committee may accelerate the date on which an option may be exercised or the
date of termination
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<PAGE> 28
of restrictions applicable to a restricted stock award if the Committee
determines that to do so would be in the best interests of the Company and the
participants in the Incentive Plan.
ELIGIBILITY
Awards may be made under the Incentive Plan to any person who was, during the
fiscal year for which the award is to be made, an officer of the Company or any
of its subsidiaries. Currently, Messrs. Karatz and Menard are the only officers
whom the Compensation Committee has selected to participate in the Incentive
Plan.
DETERMINATION OF AWARDS
In determining awards to be made under the Incentive Plan, the Committee may
approve a formula which is based on one or more objective criteria to measure
corporate performance ("Performance Criteria") as set forth in an employment
agreement, or in the first quarter of each fiscal year the Compensation
Committee may establish Performance Criteria and set annual performance
objectives ("Performance Goals") with respect to such Performance Criteria for
the Company, a business unit(s) or an individual. Performance Criteria may
include the Company's (or specified divisions') pre-tax income, after tax
income, cash flow, return on equity, return on capital, earnings per share, unit
volume, net sales or service quality, measured by preset quality objectives.
When used as Performance Criteria under the Incentive Plan, pre-tax and after
tax income may be calculated by including all incentive compensation paid to
employees of the Company and its subsidiaries during the relevant fiscal year.
The Committee will also determine in the first quarter of each fiscal year the
amount and form of compensation payable to the participant upon attainment of a
Performance Goal.
Payment of awards may be made in the form of cash, stock options, SARs,
restricted stock or a combination thereof. All determinations regarding the
achievement of Performance Goals and the determination of actual awards will be
made by the Compensation Committee. In addition, because they are regarded as
inherently performance-based for purposes of Section 162(m), awards of stock
options or SARs may be made based on the Compensation Committee's subjective
assessment of an officer's job performance, and not necessarily contingent on
the achievement of a Performance Goal. The Compensation Committee may in its
discretion decrease, but not increase, the amount of any award that otherwise
would be payable under the Incentive Plan.
AMOUNT AVAILABLE AND MAXIMUM INDIVIDUAL AWARDS
The amount available for awards in any year shall be determined by the
Compensation Committee. The aggregate maximum amount of cash compensation
payable pursuant to an award under the Incentive Plan in a given year to any
individual other than Chief Executive Officer cannot exceed $2 million; annual
cash awards to the Chief Executive Officer may not exceed $3 million.
No more than an aggregate total of 1,000,000 shares of the Company's Common
Stock may be issued under the Incentive Plan over its ten-year term. The Company
may determine to use shares of treasury stock or purchase shares on the open
market, in lieu of using newly authorized shares, to pay awards. To the extent
that a stock-based award is settled for cash or otherwise terminates without the
delivery of shares, the shares underlying such award will again become available
for subsequent awards under the Incentive Plan. In the event an option is
exercised through the delivery of shares or tax withholding liabilities are
satisfied by the withholding of shares otherwise deliverable under an award, the
number of shares available for awards under the Incentive Plan shall
24
<PAGE> 29
be increased by the number of shares so surrendered or withheld. No participant
in any given year may receive stock or a stock-based award(s) in excess of
100,000 shares; provided, however, that this number may be increased in any year
to the extent that stock-based awards in any prior years under the Incentive
Plan to that participant represented less than 100,000 shares. In addition to
awards received under the Incentive Plan, participants may also receive periodic
grants of stock options, restricted stock or other stock-based awards under the
Company's 1988 Employee Stock Plan or other employee compensation plans.
STOCK OPTION AWARDS
The Compensation Committee may grant either statutory incentive stock options
("Incentive Options") within the meaning of Section 422(b) of the Internal
Revenue Code (the "Code") or stock options that do not qualify for special
income tax treatment ("Non-Statutory Options").
Non-Statutory Options granted under the Incentive Plan may be exercisable for
a term of no longer than fifteen years (ten years in the case of Incentive Stock
Options) from the date of grant and shall have an exercise price per share of
not less than 100% of the fair market value of the Company's Common Stock on the
date of grant. Stock options may not be repriced under the Incentive Plan.
The aggregate fair market value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Options are first
exercisable by any eligible person during any calendar year may not exceed
$100,000.
SAR AWARDS
The Compensation Committee may grant stock appreciation rights ("SARs") alone,
or in tandem with stock options. SARs granted alone may not have a term longer
than fifteen years from the date of grant and provide the participant with the
right to receive upon exercise of the SAR, either in cash or in shares of Common
Stock as determined by the Compensation Committee, in an amount equal to the
excess of the fair market value of the Common Stock on the date of exercise over
the fair market value of the Common Stock on the date of grant.
SARs granted in tandem with a stock option (the "Related Option") will provide
to the participant the right to receive upon exercise of the SAR, either in cash
or in whole shares of Common Stock as determined by the Compensation Committee,
an amount equal to the excess of the fair market value of the Common Stock
subject to the Related Option surrendered by the participant on the date of
exercise over the exercise price of the Related Option. SARs granted in tandem
with a Related Option shall be exercisable only when the Related Option is
exercisable and shall have a term equal to the term of the Related Option.
RESTRICTED STOCK AWARDS
The Committee may also issue or transfer shares of the Company's Common Stock to
a participant under an award of restricted stock. Restricted stock awards will
be subject to certain conditions and restrictions during a specific period of
time, such as the grantee remaining in the employment of the Company and the
attainment of specified Performance Goals. Stock certificates for such shares
will be held by the Company during the restriction period and cannot be
transferred by the grantee prior to the termination of that period. The grantee,
however, may be entitled to vote the shares and receive dividends currently.
CONTRACTUALLY ESTABLISHED FORMULAS FOR SENIOR MANAGEMENT
Under their respective employment agreements, both Messrs. Karatz and Menard
receive annual performance-based incentive awards (see "Employment Agreements
and Change of Control Arrange-
25
<PAGE> 30
ments" at page 14). In February 1995, each of Messrs. Karatz' and Menard's
employment agreements with the Company were amended to provide, among other
things, that future incentive bonuses and other awards made thereunder (i) would
be made under the Incentive Plan, if approved by stockholders, and (ii) would be
subject to the amount limitations on cash and stock-based awards set forth in
the Incentive Plan. The amendments further provide that Messrs. Karatz' and
Menard's current agreements will immediately terminate if the Incentive Plan is
not approved by stockholders and no future compensation will be paid thereunder
(see "Employment Agreements and Change in Control Arrangements" at pages 14-15
for a further discussion of Messrs. Karatz' and Menard's employment agreements
and the amendments thereto).
NEW PLAN BENEFITS
Future awards under the Incentive Plan are not currently determinable. Set forth
below, however, are the incentive awards that would have been earned in 1994 by
Messrs. Karatz and Menard if the Incentive Plan had been in effect during 1994.
<TABLE>
<CAPTION>
PARTICIPANT AWARD
------------------ ----------
<S> <C>
Bruce Karatz...... $1,339,249
Roger Menard...... $ 762,257
</TABLE>
The foregoing calculation for Mr. Menard does not give effect to the February
1995 amendment to the performance-based incentive compensation formula in his
employment agreement.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
Non-Statutory Options and SARs. No taxable income generally is realized by a
participant and no deduction generally is then available to the Company upon the
grant of a Non-Statutory Option or SAR (each, a "Right"). Upon the exercise of a
Right and the transfer of cash or Common Stock to the participant, the excess
over the exercise price of the sum of cash a the fair market value of any Common
Stock issued pursuant to such exercise on the date of exercise will be ordinary
income to the participant subject to withholding and will generally be allowed
as a deduction to the Company at that time for federal income tax purposes. The
participant's basis in any such Common Stock will be the fair market value of
the Common Stock determined generally at the time of exercise.
A participant will generally realize capital gain or loss on the disposition
of Common Stock acquired upon exercise of a Right, and such disposition will not
result in any additional federal income taxes to the Company.
Incentive Options. No taxable income is realized by a participant and no tax
deduction is available to the Company upon either the grant or exercise of an
Incentive Option, provided that the exercise occurs while the participant is an
employee of the Company or a subsidiary or within three months after termination
of employment (one year if termination is because of disability). If Common
Stock acquired upon the exercise of an Incentive Option is held until the later
of more than one year after such exercise and more than two years after the date
of grant of such Incentive Option (the "holding period"), the difference between
the exercise price and the amount realized upon the sale of such Common Stock
will be treated as long-term capital gain or loss and no deduction will be
available to the Company. If the Common Stock is disposed of prior to the
expiration of the holding period (a "Disqualifying Disposition"), the excess of
the fair market value of such Common Stock on the date of exercise over the
aggregate option exercise price (but generally not more than the excess of the
sale price over the tax basis of the Common Stock on the date of disposition)
will be treated as ordinary income to the participant and will generally be
allowed as a deduction to the Company. Any gain
26
<PAGE> 31
realized in a Disqualifying Disposition in excess of the amount treated a
ordinary income, will be capital gain.
The excess of the fair market value of any Common Stock acquired pursuant to
the exercise of an incentive stock option over the exercise price of such option
may give rise at the time of exercise to alternative minimum taxable income
subject to the alternative minimum tax.
Restricted Stock. No taxable income generally is realized by a participant and
no deduction generally is then available to the Company upon the grant of Common
Stock that is not transferable and is subject to a substantial risk of
forfeiture within the meaning of Section 83 of the Code ("restricted stock").
Upon the lapse of either of such restrictions, the excess of the fair market
value of such stock at such time over the amount paid for such stock, if any,
will be ordinary income to the participant subject to withholding and will
generally be allowed as a deduction to the Company at that time.
If the participant so elects under Section 83(b) of the Code within 30 days of
a grant of restricted stock, the excess of the fair market value of such stock
at such time over the amount paid for such stock, if any, will be ordinary
income to the participant subject to withholding and will generally be allowed
as a deduction to the Company at that time. If the participant subsequently
forfeits the restricted stock, any loss realized by the participant will be a
capital loss and will be limited to the amount, if any, paid for the stock.
There would be no additional tax consequences to either the participant or the
Company upon the lapse of restrictions with respect to such stock.
Prior to the lapse of restrictions with respect to restricted stock, dividends
paid to a participant with respect to such stock for which no Section 83(b)
election has been made will be treated as additional compensation taxable as
ordinary income to the participant and will generally be allowed as a deduction
to the Company. Dividends paid to a participant on shares of restricted stock
with respect to which a valid Section 83(b) election has been made will be
treated as dividends taxable as ordinary income to the participant and will not
be allowed as a deduction to the Company, irrespective of whether the
restrictions with respect to such stock lapsed prior to such payment.
Cash. The amount of cash received by a participant is required to be recognized
by such participant as ordinary income subject to withholding and will generally
be allowed as a deduction to the Company.
General. Section 162(m) limits the deduction of compensation in excess of $1
million per year paid to certain of the Company's employees unless, among other
exceptions, the compensation is not performance-based compensation within the
meaning of that provision. The Internal Revenue Service has issued proposed
regulations under Section 162(m) (the "Proposed Regulations"), but there can be
no assurance that the final regulations will not differ materially from the
Propose Regulations or that compensation paid under the Incentive Plan will be
deductible by the Company. The Company, however, believes that Section 162(m),
as interpreted by the Proposed Regulations, will not limit the deduction of
compensation payable pursuant to the Incentive Plan.
Awards that are granted, accelerated or enhanced upon the occurrence of a
change in control may give rise, in whole or in part, to excess parachute
payments within the meaning of Section 280G of the Code ("Section 280G") to the
extent that such payments, when aggregated with other payments subject to
Section 280G, exceed the limitations contained in that provision. Such excess
parachute payments are not deductible by the Company and
27
<PAGE> 32
are subject to an excise tax of 20 percent payable by the recipient.
The Incentive Plan is not subject to any provision of ERISA and is not
qualified under Section 401(a) of the Code. Special rules may apply to a
participant who is subject to Section 16 of the Exchange Act of 1934. Certain
additional special rules apply if the exercise price for an option is paid in
Common Stock previously owned by the participant rather than in cash.
The preceding discussion of federal income tax consequences does not purport
to be a complete analysis of all of the potential tax effects of the Incentive
Plan. It is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change. No information is provided with respect to
foreign, state or local tax laws, or estate and gift tax considerations.
STOCKHOLDER APPROVAL
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to approve the material terms of the Incentive Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" THIS PROPOSAL
28
<PAGE> 33
OTHER MATTERS
------------------------
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements and notes thereto,
including selected financial information and management's discussion and
analysis of financial condition and results of operations for the fiscal year
ended November 30, 1994 are included on pages 24 through 45 of the Company's
1994 Annual Report to Stockholders, which was mailed to stockholders
concurrently with this Proxy Statement. Additional copies of the Annual Report
are available without charge upon request. The financial statements, the report
of independent auditors thereon, selected financial information, and
management's discussion and analysis of financial condition and results of
operations in the Annual Report are incorporated by reference herein.
INDEPENDENT ACCOUNTANTS
The firm of Ernst & Young LLP served as the Company's independent auditors for
fiscal 1994. This firm has advised the Company that it has no direct or indirect
financial interest in the Company. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting, with the opportunity to make a
statement, should they desire to do so, and will be available to respond to
appropriate questions from stockholders.
OTHER BUSINESS
The Board of Directors knows of no business other than that described herein
that will be presented for consideration at the Annual Meeting. If, however,
other business shall properly come before the Annual Meeting, the persons named
in the enclosed form of Proxy intend to vote the shares represented by properly
delivered Proxies on such matters in accordance with their judgment in the best
interest of the Company.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's 1996
Annual Meeting of Stockholders must be received by the Company for inclusion in
the Proxy Statement and form of Proxy for that meeting no later than December 5,
1995.
COST AND METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice of
Meeting, this Proxy Statement, and the Proxy itself, and the cost of soliciting
Proxies relating to the meeting will be borne by the Company. In addition to use
of the mails, proxies may be solicited by officers, directors, and other regular
employees of the Company by telephone, telegraph, or personal solicitation, and
no additional compensation will be paid to such individuals. The Company will,
if requested, reimburse banks, brokerage houses, and other custodians, nominees
and certain fiduciaries for their reasonable expenses incurred in mailing proxy
material to their principals. The Company will use the services of Corporate
Investor Communications, Inc., a professional soliciting organization, to assist
in proxy soliciting, distributing proxy materials to institutions, brokerage
houses, custodians, nominees and other fiduciaries. The Company estimates the
costs for such services will not exceed $5,000.
By Order of the Board of Directors,
Kimberly N. King
Corporate Secretary and
Associate Counsel
February 21, 1995
Los Angeles, California
29
<PAGE> 34
PICTURE AND GRAPH APPENDIX
------------------------
This Picture and Graph Appendix is filed to comply with the rules of the
Securities and Exchange Commission with respect to the electronic filing of
pictorial and graphic materials and describes the pictures set forth on pages 3
- -7 and the graph set forth on page 20.
<TABLE>
<CAPTION>
PAGE
NUMBER CHART DESCRIPTION
- ------- --------------------------------------------------------------------------
<S> <C>
- -- 3 Picture of Mr. Ronald W. Burkle next to textual presentation of certain
biographical information regarding Mr. Burkle.
- -- 3 Picture of Dr. Ray R. Irani next to textual presentation of certain
biographical information regarding Dr. Irani.
- -- 4 Picture of Mr. Guy Nafilyan next to textual presentation of certain
biographical information regarding Mr. Nafilyan.
- -- 4 Picture of Mr. Luis G. Nogales next to textual presentation of certain
biographical information regarding Mr. Nogales.
- -- 5 Picture of Jane Evans next to textual presentation of certain biographical
information regarding Ms. Evans.
- -- 5 Picture of Antoine Jeancourt-Galignani next to textual presentation of
certain biographical information regarding Mr. Jeancourt-Galignani.
- -- 6 Picture of Mr. James A. Johnson next to textual presentation of certain
biographical information regarding Mr. Johnson.
- -- 6 Picture of Bruce Karatz next to textual presentation of certain
biographical information regarding Mr. Karatz.
- -- 7 Picture of Lester Pollack next to textual presentation of certain
biographical information regarding Mr. Pollack.
- -- 7 Picture of Mr. Sanford C. Sigoloff next to textual presentation of certain
biographical information regarding Mr. Sigoloff.
- --20 Graph under caption "Kaufman and Broad Home Corporation Common Stock Price
Performance" depicts the performance of the Company's Common Stock over
the last five fiscal year-end periods relative to the S&P Homebuilding
Index, the Dow Jones Home Construction Index, and the S&P 500 Index. The
graph plots the dollar figures set forth in the electronically readable
matrix set forth immediately below the graph on page 20.
</TABLE>
<PAGE> 35
[KAUFMAN BROAD LOGO]
KAUFMAN AND BROAD HOME CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 23, 1995
The undersigned hereby appoints Bruce Karatz, Albert Z. Praw and Kimberly
N. King, and each of them, as proxies with full power of substitution and
revocation, to vote all of the shares of Kaufman and Broad Home Corporation
Common Stock the undersigned is entitled to vote at the Kaufman and Broad Home
Corporation Annual Meeting of Stockholders to be held on March 23, 1995, or at
any adjournment thereof, upon the Proposals set forth on the reverse side of
this Proxy and described in the accompanying Proxy Statement, and upon such
other business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED,
IT WILL BE VOTED FOR THE PROPOSALS AND ON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be signed on the other side.)
<PAGE> 36
Please mark your votes this way /X/
______________________
COMMON
The Board of Directors recommends a vote FOR the Proposals.
Proposal 1 - ELECTION OF DIRECTORS in Class III
Nominees: Ronald W. Burkle Guy Nafilyan
Dr. Ray R. Irani Luis G. Nogales
(INSTRUCTION: to withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list
above.)
Proposal 2 - PERFORMANCE - BASED INCENTIVE PLAN for Senior Management
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement for such meeting, dated February 21, 1995.
WITHHOLD
FOR / / AUTHORITY / /
(except as marked to the contrary) to vote for all nominees listed
FOR / / AGAINST / / ABSTAIN / /
Date _______________________________________, 1995
__________________________________________________
__________________________________________________
(Please sign EXACTLY as your name appears hereon.)
When signing as attorney, executor, administrator, trustee or guardian, please
give full title. If more than one trustee, all should sign. All joint owners
should sign. If a corporation, sign in full corporate name by President, or
other authorized officer. If a partnership, sign in partnership name by
authorized person.
IMPORTANT INFORMATION IS CONTAINED ON THE OTHER SIDE OF THIS CARD. PLEASE READ
BOTH SIDES OF THIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
