<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 240.14a-12
</TABLE>
CAPITAL PACIFIC HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)
STEVEN O. SPELMAN, JR.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] 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
CAPITAL PACIFIC HOLDINGS, INC.
4100 MACARTHUR BOULEVARD
SUITE 200
NEWPORT BEACH, CALIFORNIA 92660
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 15, 1999
The Annual Meeting of Stockholders (the "Meeting") of Capital Pacific
Holdings, Inc. (the "Company") will be held at the Four Seasons Hotel, 690
Newport Center Drive, Newport Beach, California on July 15, 1999 at 9:00 a.m.
(Pacific Daylight Savings Time) for the following purposes:
1. To elect directors whose terms expire at the Meeting; and
2. To consider such other matters as may properly come before the Meeting
or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on June 10, 1999, will be entitled to notice of and to vote at the
Meeting or any adjournment thereof. The Company's stock transfer books will
remain open.
A Proxy Statement and Proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the Proxy promptly. All
stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors
[SIG]
STEVEN O. SPELMAN, JR.
Corporate Secretary
June 15, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE> 3
CAPITAL PACIFIC HOLDINGS, INC.
4100 MACARTHUR BOULEVARD
SUITE 200
NEWPORT BEACH, CALIFORNIA 92660
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 15, 1999
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Capital Pacific Holdings, Inc. (the
"Company") for use at the Annual Meeting of Stockholders (the "Meeting") to be
held on July 15, 1999, and at any adjournment thereof, for the purposes set
forth herein. All properly completed proxies will be voted in the manner
specified therein, if no choice as to Proxy Item No. 1 (Election of Directors)
is specified, proxies will be voted for the election to the Board of Directors
of the nominees listed below under "ELECTION OF DIRECTORS." Any proxy given
pursuant to this solicitation may be revoked prior to the Meeting by delivering
an instrument revoking it or by delivering a duly executed proxy bearing a later
date to the Secretary of the Company. A stockholder may elect to attend the
Meeting and vote in person notwithstanding the fact that such stockholder has a
proxy outstanding.
The Board of Directors has established June 10, 1999, as the record date
for determining the stockholders entitled to notice of and to vote at the
Meeting. At the close of business on the record date, there were outstanding and
entitled to vote 13,947,511 shares of the Company's common stock, $.10 par value
per share (the "Common Stock"), with each share being entitled to one vote.
The Company intends to mail this Proxy Statement and the accompanying form
of proxy to stockholders on or about June 15, 1999. Copies of the Company's 1999
Annual Report will be mailed to the Company's stockholders along with this Proxy
Statement.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Company's Board of Directors is comprised of four directors, each of
whom are to serve until the next meeting at which directors are elected. At the
Meeting, four persons will be elected to serve as directors.
Each of the nominees listed below is currently a director and has been
nominated by the Board to serve as a director of the Company until the next
annual meeting of the stockholders of the Company following his election. When
properly executed and returned, the enclosed proxy will be voted in favor of the
election of each of the nominees, unless authority to vote for a nominee is
withheld. In the event that a nominee is unable to serve (an event which is not
anticipated) or does not receive sufficient votes to be elected, then the person
acting pursuant to the authority granted under the proxy will cast votes for the
remaining nominees and, in his best judgment, for such other person as he may
select in place of such nominee.
1
<PAGE> 4
The following table sets forth the name, age, and background information
concerning the nominees. Information regarding the nominee's ownership of Common
Stock appears under the heading "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT" below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE INFORMATION ABOUT NOMINEES
---- --- -------- --------------------------
<S> <C> <C> <C>
Hadi Makarechian 51 1992 Mr. Makarechian has been Chairman of the Board of the
Company since August, 1992 and served as Chief Executive
Officer of the Company from March, 1993 until May, 1996
and since January 1998. Mr. Makarechian has also served
as President of the Company since January 1999. Mr.
Makarechian was the founder and chairman of Capital
Pacific Homes Inc., a real estate development firm
located in Newport Beach, California, until it was
merged into the Company in 1994.
Karlheinz M. Kaiser 40 1993 Mr. Kaiser is a principal with Christinger Partner AG, a
printing company in Switzerland. From August of 1992
through December 1994 Mr. Kaiser was a management
consultant with Friedli & Partner, a management
consulting firm in Switzerland.
Allan L. Acree 56 1992 Mr. Acree is a principal in A.L. Acree & Associates, a
real estate consulting firm based in Rockville,
Maryland. Prior to forming A.L. Acree & Associates in
1989, Mr. Acree was Vice President and Regional Manager
of Goldome Realty Credit Corporation.
William A. Funk 58 1994 Effective March 1, 1999, Mr. Funk assumed the position
of Senior Vice President, Commercial Development at the
Company. Prior to that, Mr. Funk was Senior Vice
President with Holmes & Narver, an international
engineering, design and construction company based in
Orange, California. Until June 1997, Mr. Funk was a
principal and the Vice President and Manager of The
Austin Company, an international design and construction
firm based in Cleveland, Ohio. Except for the period
described below, Mr. Funk served in various positions
with The Austin Company for over 25 years. From May 1984
to June 1985, Mr. Funk was a Vice President and Manager
of the Carlson Group, a design and construction firm in
Boston, Massachusetts.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTORS' COMPENSATION
Each member of the Board of Directors of the Company who is not also an
officer of the Company is compensated at a rate of $5,000 per year, plus $1,000
for each meeting of the Board which he attends, and is reimbursed for the
expenses of attending meetings. The Board of Directors held ten meetings during
the fiscal year ended February 28, 1999.
The Board of Directors has a standing Executive Committee whose current
members are Hadi Makarechian and William A. Funk. Messrs. Makarechian and Funk
are not compensated for serving on the Executive Committee.
The Board of Directors has a standing Audit Committee whose current members
are Allan L. Acree and Karlheinz M. Kaiser. Messrs. Acree and Kaiser each
receive $3,000 per year for participating on the Audit Committee. The Audit
Committee has the responsibility of reviewing the Company's financial
statements, evaluating internal accounting controls, reviewing reports of
regulatory authorities and determining that all audits and examinations required
by law are performed. The Audit Committee held two meetings during the fiscal
year ended February 28, 1999.
The Board of Directors has a standing Compensation Committee whose current
members are Allan L. Acree and Karlheinz M. Kaiser. Messrs. Acree and Kaiser
each receive $1,000 for each meeting attended. The primary function of the
Compensation Committee is to advise the Board of Directors with respect to all
matters relating to executive compensation. The Compensation Committee held two
meetings for the fiscal year ended February 28, 1999.
2
<PAGE> 5
The Board of Directors does not have a standing nominating committee or
other standing committees performing similar functions.
Each current director who was a director at the time of such meetings
attended at least 75% of the total of the Board meetings and meetings of the
committees of the Board of which he is a member.
EXECUTIVE OFFICERS
In addition to Messrs. Makarechian and Funk, the Company's executive
officers are as follows:
<TABLE>
<CAPTION>
NAME AND POSITION INFORMATION ABOUT
WITH COMPANY AGE EXECUTIVE OFFICERS
----------------- --- ------------------
<S> <C> <C>
Stephen P. Couig 33 Mr. Couig joined the Company in January 1997 and assumed
Senior Vice President, his current position in May 1999. Prior to joining the
Residential Division Company he served as Executive Vice President in charge
of acquisitions for Troon Golf, a Scottsdale, AZ based
golf course owner and operator. After receiving his MBA
from Dartmouth College in 1993 he was, until 1996, an
Associate at Morgan Stanley in the Equity Capital
Markets department focusing on business development
opportunities.
Paul P. Makarechian 25 Mr. Makarechian joined the Company in January 1997 and
Senior Vice President, was promoted to Vice President, Acquisitions and Finance
Commercial Division in January 1998. He assumed his current position in
April 1999. Prior to joining the Company, Mr.
Makarechian worked as a financial analyst for McFarland,
Dewey & Company. Mr. Makarechian is the son of Hadi
Makarechian, the Chairman of the Board and Chief
Executive Officer of the Company.
Steven O. Spelman, Jr. 38 Mr. Spelman joined the Company in November 1997 as Vice
Senior Vice President, President, Finance and assumed the Chief Financial
Chief Financial Officer and Officer position in January 1998. He was named Corporate
Corporate Secretary Secretary in September 1998 and promoted to Senior Vice
President in April 1999. Prior to joining the Company,
Mr. Spelman served with Arthur Andersen LLP for thirteen
years, most recently as a Senior Audit Manager, after
receiving his MBA from the University of Southern
California in 1984.
Marquis L. Cummings 60 Prior to assuming his current position in January 1998,
Vice President Mr. Cummings served as Vice President, Finance, Chief
and Treasurer Financial Officer and Secretary from January 1997 until
January 1998. In addition, effective March 1999, Mr.
Cummings assumed the position of President, Southern
California Coastal Division. Previously, Mr. Cummings
was Vice President, Finance and Administration for the
San Diego division of the Company from August 1987 until
February 1991. He then served as Vice President of the
Company until October 1993 when he assumed the position
of Vice President, Sales and Marketing. In May 1994 Mr.
Cummings assumed the position of Director of Subsidiary
Operations, Nevada. In April 1995 Mr. Cummings returned
to California as Vice President. From March 1996 until
January 1997, Mr. Cummings served as the Company's Vice
President, Finance.
Tim Hamilton 44 Mr. Hamilton joined the Company as Vice President, Sales
Vice President, Sales, Marketing and Marketing in May 1994. Since 1989 Mr. Hamilton had
and been a consultant to the real estate industry. Prior to
Product Development -- Southern establishing his consulting firm Mr. Hamilton spent more
California than 13 years with British homebuilder Barratt
Developments PLC, including seven years as Vice
President of Sales and Marketing for their American
division in Irvine, California.
</TABLE>
All executive officers serve at the pleasure of the Board of Directors.
3
<PAGE> 6
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash compensation paid during the fiscal
years ended February 28, 1999, February 28, 1998 and February 28, 1997 to each
of the five most highly compensated executive officers of the Company in all
capacities in which they served, and such other individuals as are required to
be disclosed.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ----------------------
FISCAL -------------------- NUMBER OF SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION(C)
--------------------------- ------ -------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Hadi Makarechian............... 1999 $284,896 $312,560(a) -- $180
Chairman and Chief 1998 270,625 -- -- 204
Executive Officer 1997 257,500 190,426(b) -- 252
Dale Dowers.................... 1999 260,938 100,000(a) -- 180
Former President and 1998 270,625 -- -- 204
Chief Operating Officer(d) 1997 257,500 192,455(b) -- 252
Tim Hamilton................... 1999 148,250 123,900 10,000 180
Vice President, Sales, 1998 143,000 55,750 -- 204
Marketing and Product 1997 143,000 42,250 -- 252
Development --
Southern California
Stephen P. Couig............... 1999 175,000 67,500 15,000 180
Senior Vice President, 1998 155,208 42,500 -- 204
Residential Division 1997 21,634(e) -- -- 34
Steven O. Spelman, Jr. ........ 1999 157,500 57,500 15,000 180
Senior Vice President, 1998 46,875(f) 1,250(f) -- 68
Chief Financial Officer 1997 -- -- -- --
and Corporate Secretary
Marquis L. Cummings............ 1999 138,875 49,000 7,500 180
Vice President and 1998 135,000 55,750 -- 204
Treasurer 1997 112,083 13,059 -- 204
</TABLE>
- ---------------
(a) Bonuses were earned in FY 1999 but were paid in FY 2000.
(b) Bonuses were earned in FY 1997 but were paid in FY 1998.
(c) Represents premiums paid by the Company for term life insurance for the
benefit of the insured.
(d) Mr. Dowers resigned his position as President and Chief Operating Officer of
the Company effective January 29, 1999.
(e) Represents amounts paid for the period January 1997 through February 1997.
(f) Represents amounts paid for the period November 1997 through February 1998.
STOCK OPTIONS
Effective February 28, 1995, the Company, as approved by the stockholders
of the Company in July 1995, adopted the 1995 Stock Incentive Plan (the "1995
Plan"). The 1995 Plan permits a committee designated by the Board of the Company
to make awards to key employees and directors of the Company and its
subsidiaries. Subject to various restrictions, awards could be in the form of
stock options, restricted or unrestricted stock, stock appreciation rights or a
combination of the above. The maximum number of shares or share equivalents that
may be awarded under the 1995 Plan is 1,500,000. In February 1999, the Board of
Directors approved a grant of 256,000 stock options under the Plan. The grants
were effective on February 8, 1999. The stock underlying all of the option
grants is the Company's Non-Voting Common Stock, par value $.10 per share. As of
June 15, 1999, there is no Non-Voting Common Stock outstanding. Since there is
no
4
<PAGE> 7
market for the Non-Voting Common Stock, the value of such Non-Voting Common
Stock for purposes of calculating the value of the options (solely for purposes
of this Proxy Statement) is assumed to be the market price of the Company's
publicly traded voting common stock.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM(3)
------------------------------------------------------- ----------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
---- --------------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Hadi Makarechian............... (2) -- -- -- -- --
Tim Hamilton................... 10,000 3.9 2.75 2/8/09 17,300 43,800
Stephen P. Couig............... 15,000 5.9 2.75 2/8/09 25,950 65,700
Steven O. Spelman, Jr. ........ 15,000 5.9 2.75 2/8/09 25,950 65,700
Marquis L. Cummings............ 7,500 2.9 2.75 2/8/09 12,975 32,850
</TABLE>
- ---------------
(1) The nonqualified stock options granted by the Board are scheduled to vest at
a rate of 33 1/3% per year over the first three years and to lapse after ten
years unless sooner exercised or forfeited. All stock options will vest
immediately in the event of either (i) a merger in which the Company does
not survive or (ii) a sale of all or substantially all of the Company's
assets. All stock options were granted at the closing market price of the
Company's voting shares on the date of grant.
(2) Under the existing 1995 Stock Incentive Plan, Hadi Makarechian is not
eligible to receive stock options.
(3) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC, and therefore are not intended to forecast
possible future appreciation of the Company's stock price. In all cases the
appreciation is calculated from the award date to the end of the option
term.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END
(#)(1) ($)(3)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE(#) VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hadi Makarechian....... -- -- (2) -- -- --
Tim Hamilton........... -- -- -- 10,000 -- 2,500
Stephen P. Couig....... -- -- -- 15,000 -- 3,750
Steven O. Spelman,
Jr. ................. -- -- -- 15,000 -- 3,750
Marquis L. Cummings.... -- -- -- 7,500 -- 1,875
</TABLE>
- ---------------
(1) The nonqualified stock options granted by the Board are scheduled to vest at
a rate of 33 1/3% per year over the first three years and to lapse after ten
years unless sooner exercised or forfeited. All stock options will vest
immediately in the event of either (i) a merger in which the Company does
not survive or (ii) a sale of all or substantially all of the Company's
assets. All stock options were granted at the closing market price of the
Company's voting shares on the date of grant.
(2) Under the existing 1995 Stock Incentive Plan, Hadi Makarechian is not
eligible to receive stock options.
(3) Calculated per share by subtracting the exercise price from the market price
of the Company's voting shares on February 28, 1999.
5
<PAGE> 8
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
None of the executive officers is currently working under an employment
contract.
COMPENSATION COMMITTEE DETERMINATION ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company's Board of
Directors establishes the Company's general compensation policies, compensation
plans, and specific compensation levels for the Company's Chief Executive
Officer and any other executive officer which may in the future be specifically
designated by the Board of Directors. Historically, the Committee has also had
responsibility for compensation decisions for the position of Chief Operating
Officer of the Company, a position which does not at this time exist at the
Company due to the recent resignation of the President of the Company and the
assumption of the additional title of President by the Chief Executive Officer.
The Compensation Committee also reviews the design, administration and
effectiveness of compensation programs for other key executives. The general
policy and philosophy of the Compensation Committee is to provide total
compensation opportunities that are competitive with the opportunities offered
to executives in similar positions at competing companies and that compensation
with a strong link to the financial performance of the Company enables the
Company to attract and retain the key personnel necessary to fuel continued
growth and profitability.
The Committee has examined the compensation of the executives of
comparatively placed homebuilders to determine whether or not the compensation
of the Company's Chief Executive Officer is within the range of his peers. In
undertaking such examination, the Committee has sought publicly available
information regarding homebuilders which are at a similar stage in their growth
and development to that of the Company and therefore compete for the same
executive personnel.
PERFORMANCE BASED COMPENSATION
The Committee has reviewed the diversification of the Company's activities
among various geographic areas and to certain non-homebuilding functions,
particularly including commercial and real estate development activities. In
light of the Company's Chief Executive Officer's continued responsibilities,
including over its newer activities, it was determined to leave his performance
based compensation of four percent (4%) of the pre-tax income of the Company for
fiscal year 1999, in light of existing contractual restrictions on increasing
the basis of the Chief Executive Officer's compensation.
Section 162(m) of the Internal Revenue Code of 1986 limits deductions for
certain executive compensation in excess of $1 million. The Code permits
deduction of compensation in excess of $1 million only if it is performance
based, the criteria for award are specified in detail, and stockholder approval
is obtained prior to payment. The policy of the Company is to maintain the tax
deductibility of all compensation paid to its executives. The annual cash bonus
has been structured to meet the requirements for deductibility. While the
Compensation Committee does not anticipate any payments exceeding $1 million
under the compensation structure it has approved, any such payments will be
contingent upon shareholder approval.
BASE SALARY
The annualized base salary of the Chief Executive Officer was $287,500 for
Fiscal Year 1999. The Committee has determined to recommend an increase of
$14,375 to $301,875 for Fiscal Year 2000, the maximum permitted by the
contractual restrictions on the compensation payable to the Chief Executive
Officer.
<TABLE>
<S> <C>
/s/ KARLHEINZ M. KAISER /s/ ALLAN L. ACREE
- -------------------------------------------- --------------------------------------------
Karlheinz M. Kaiser Allan L. Acree
</TABLE>
Dated: February 9, 1999
6
<PAGE> 9
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
returns for Capital Pacific Holdings Inc., American Stock Exchange Market Value
Index and Dow Jones Home Construction Industry Group.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
CAPITAL PACIFIC
HOLDINGS, INC. PEER GROUP INDEX AMEX MARKET INDEX
--------------- ---------------- -----------------
<S> <C> <C> <C>
'1994' 100.00 100.00 100.00
'1995' 70.00 74.18 91.73
'1996' 100.00 97.73 111.07
'1997' 70.00 105.00 118.34
'1998' 96.67 171.48 141.02
'1999' 80.00 140.25 137.87
</TABLE>
- ---------------
(1) The above graph compares the performance of Capital Pacific Holdings, Inc.
with that of the American Stock Exchange Market Value Index and the Dow
Jones Home Construction Industry Group.
(2) The comparison of total return on investment (change in year end stock price
plus reinvested dividends) for each of the periods assumes that $100 was
invested on March 1, 1994 in each of Capital Pacific Holdings, Inc., the
American Stock Exchange Market Value Index and the Dow Jones Home
Construction Industry Group.
7
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of June 10, 1999, the number of shares of
Common Stock beneficially owned by each person known to the Company to own more
than five percent (5%) of the outstanding shares of Common Stock, by each
director of the Company or nominee who owned shares of Common Stock on that
date, by each of the officers that are among the five most highly compensated
officers of the Company, and by all directors and officers of the Company as a
group.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED(1) CLASS(1)
---------------- --------------------- ----------
<S> <C> <C>
CPH2, L.L.C. .......................................... 4,113,657 29.5%
4100 MacArthur Boulevard, Suite 200,
Newport Beach, California 92660
CPH3, L.L.C. .......................................... 4,640,694 33.3%
4100 MacArthur Boulevard, Suite 200
Newport Beach, California, 92660
Hadi Makarechian....................................... 7,079,614(2) 50.8%
4100 MacArthur Boulevard, Suite 200,
Newport Beach, California 92660
California Housing Finance, L.P........................ 2,809,851(3) 20.1%
One Maritime Plaza, Suite 1325
San Francisco, California 94111
Dale Dowers............................................ 1,674,737(4) 12.0%
4270 South Decatur, Suite A-7,
Las Vegas, Nevada 89103
All Directors and Officers of the Corporation as a
Group
(11 persons)......................................... 8,754,451 62.8%
</TABLE>
- ---------------
(1) Unless otherwise indicated, the Company believes the beneficial owner has
sole voting and investment power over such shares. The percentage of shares
of Common Stock is calculated assuming that the beneficial owner has
exercised any options or other rights to subscribe held by such beneficial
owner that are currently exercisable or exercisable within 60 days, and that
no other warrants, options or rights to subscribe have been exercised by
anyone else.
(2) Includes 2,438,920 shares of Common Stock held by CPH2, L.L.C., in which Mr.
Makarechian may be deemed to have a beneficial ownership interest due to his
ownership interest in CPH2, L.L.C. and 4,640,694 shares of Common Stock held
by CPH3, L.L.C. in which Mr. Makarechian may be deemed to have a beneficial
interest due to his ownership in CPH3, L.L.C. Mr. Makarechian and Mr. Dowers
as a group could be deemed beneficial owners of 8,754,351 shares of stock in
the Corporation.
(3) The number of shares beneficially owned by California Housing Finance, L.P.
is subject to adjustment based on contractual arrangements between the
Company and California Housing Finance, L.P.
(4) Includes 1,674,737 shares of Common Stock held by CPH2, L.L.C., in which Mr.
Dowers may be deemed to have a beneficial ownership interest due to his
ownership interest in CPH2, L.L.C. Mr. Dowers and Mr. Makarechian as a group
could be deemed beneficial owners of 8,754,351 shares of stock in the
Corporation. Mr. Dowers is the former President and Chief Operating Officer
of the Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH
OFFICERS, DIRECTORS AND AFFILIATES
The Company's policy is that all transactions between the Company and its
officers, directors and principal stockholders, and their respective affiliates,
must be on terms no less favorable to the Company than terms with unaffiliated
parties for similar transactions. All such transactions that are not in the
ordinary course of the Company's business must be approved by a majority of
independent directors who do not have a financial interest in the transaction.
8
<PAGE> 11
Mr. Spelman, an officer of the Company, purchased a home from one of the
Company's joint ventures in fiscal 1999 for $780,000.
Paul Makarechian is Senior Vice President of the Commercial Division for
the Company and is the son of Hadi Makarechian, the Company's Chairman and CEO.
Paul Makarechian received $75,000 in base salary and $57,500 in bonus
compensation for his services to the Company in fiscal 1999.
During fiscal 1999, the Company paid approximately $207,000 to a company
which is 40% owned by Cyrus Makarechian, son of Hadi Makarechian, for services
rendered in connection with website design and maintenance and the development
of virtual reality home tour models. In addition, this company paid
approximately $15,000 in rent for office space leased from the Company during
fiscal 1999.
INDEPENDENT AUDITORS
Arthur Andersen LLP served as the Company's independent auditors for the
fiscal year ended February 28, 1999, and it is anticipated that Arthur Andersen
LLP will be approved to serve as such for the current fiscal year.
Representatives of Arthur Andersen LLP will be present at the Meeting to
respond to appropriate questions and will have the opportunity to make a
statement if they desire to do so.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the next
annual meeting of stockholders of the Company, and who wishes to have such
proposal included in the proxy statement and form of proxy prepared by the
management of the Company for that meeting, must notify the Company in writing
not later than February 29, 2000. The notice should be directed to Capital
Pacific Holdings, Inc., 4100 MacArthur Boulevard, Suite 200, Newport Beach,
California 92660, Attention: Corporate Secretary.
SOLICITATION OF PROXIES
Proxies may be solicited on behalf of the Company by its officers and
employees, who will receive no additional compensation for such services,
through the mail, in person, and by telephone and by other telecommunication
methods. The cost of such solicitation will be borne by the Company. Brokers,
custodians, and other fiduciaries will be required to forward the Company's
proxy solicitation materials to the beneficial owners of Common Stock held in
their names, and the Company will reimburse such fiduciaries for the out-
of-pocket expenses incurred by them in connection with such activities.
The Company's Annual Report for the fiscal year ended February 28, 1999 is
being delivered to shareholders together with this Proxy Statement. Copies of
the annual report on Form 10-K for the fiscal year ended February 28, 1999 as
filed with the Securities and Exchange Commission (except for the Exhibits
thereto) may be obtained, free of charge, upon written request by any
stockholder delivered to Capital Pacific Holdings, Inc., 4100 MacArthur
Boulevard, Suite 200, Newport Beach, California 92660, Attention: Steven O.
Spelman, Jr., Senior Vice President, Chief Financial Officer and Corporate
Secretary. Copies of all exhibits to the annual report on Form 10-K are
available upon a similar request, subject to payment of a $.15 per page charge
to reimburse the Company for its expenses in supplying any exhibit.
THE COMPANY'S MANAGEMENT HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN, AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
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OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The Board of Directors knows of no matters other than the election of
directors to be brought before the Meeting. However, if any other matter should
be presented for consideration, it is the intention of the persons named as
proxies in the enclosed form of Proxy to vote the Proxy in accordance with their
judgment.
By Order of the Board of Directors
[SIG]
STEVEN O. SPELMAN, JR.
Corporate Secretary
Dated: June 15, 1999
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CAPITAL PACIFIC HOLDINGS, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JULY 15, 1999.
The undersigned hereby appoints Marquis L. Cummings and Steven O. Spelman,
Jr., or either of them with individual power of substitution, proxies to vote
all shares of Common Stock of Capital Pacific Holdings, Inc. which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to be
held on July 15, 1999, and at all adjournments thereof, as follows:
1. ELECTION OF DIRECTORS
Hadi Makarechian, Allan L. Acree, Karlheinz M. Kaiser, William A. Funk
<TABLE>
<S> <C>
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) for all nominees listed above.
</TABLE>
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
If no preference is indicated, this proxy will be voted "FOR" the nominees.
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2. In accordance with their best judgment upon such other matters as may
properly come before the Meeting.
------------------------
Signature of Stockholder
------------------------
Signature of Stockholder
IMPORTANT: Please sign this
Proxy exactly as your name or
names appear hereon. If shares
are held by more than one
owner, each must sign.
Executors, administrators,
trustees, guardians, and others
signing in a representative
capacity should give their full
titles.
DATED: ________________, 1999
BE SURE TO DATE THIS PROXY
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