<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 [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (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>
THE PRESLEY COMPANIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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
[PRESLEY LOGO]
April 16, 1998
Dear Stockholder:
This letter accompanies the Proxy Statement for our Annual Meeting of
Holders of Series A Common Stock to be held at 3:30 p.m. on Thursday, May 14,
1998, at The Westin South Coast Plaza Hotel, 686 Anton Blvd., Costa Mesa,
California. We hope that it will be possible for you to attend in person.
At the meeting, the holders of the Company's Series A Common Stock will be
asked to elect two Class A directors and to ratify the Board's selection of
auditors. In addition, we will present a report on the operations and activities
of the Company. Following the meeting, management will be pleased to answer your
questions about the Company.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the matters upon which stockholders will vote at the upcoming meeting,
and we urge you to read these materials carefully. We also urge you to sign and
return your proxy card so that you may vote on these proposals for stockholder
action.
Sincerely,
/s/ WILLIAM LYON
-----------------------------------
William Lyon
Chairman of the Board
/s/ WADE H. CABLE
-----------------------------------
Wade H. Cable
President and Chief
Executive Officer
19 Corporate Plaza, Newport Beach, California 92660
<PAGE> 3
[PRESLEY LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF HOLDERS OF
SERIES A COMMON STOCK
To be held May 14, 1998
To the Holders of Series A Common Stock of The Presley Companies:
The Annual Meeting of Holders of Series A Common Stock of The Presley
Companies will be held at The Westin South Coast Plaza Hotel, 686 Anton Blvd.,
Costa Mesa, California, on Thursday, May 14, 1998 at 3:30 p.m., for the
following purposes:
1. To elect two Class A Directors; and
2. To consider and act upon a proposal to ratify the selection of
Ernst & Young LLP as the Company's auditors for the fiscal year ending
December 31, 1998; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of record of Series A Common Stock at the close of business on
April 3, 1998 will be entitled to vote at the meeting.
By order of the Board of Directors,
/s/ LINDA L. FOSTER
--------------------------------------
Linda L. Foster
Vice President and Corporate Secretary
Newport Beach, California
April 16, 1998
TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, YOU ARE REQUESTED
TO SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID,
ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE MEETING YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE
SENT IN YOUR PROXY.
<PAGE> 4
[PRESLEY LOGO]
------------------------
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Series A Directors of the Board
of Directors of The Presley Companies ("Presley" or the "Company") for use at
the Annual Meeting of Holders of Series A Common Stock (the "Annual Meeting") to
be held at The Westin South Coast Plaza Hotel, 686 Anton Blvd., Costa Mesa,
California, on Thursday, May 14, 1998, at 3:30 p.m. and at any adjournments or
postponements thereof. The shares represented by the proxy will be voted at the
meeting if the proxy is properly executed and returned to the Company. Any
stockholder giving a proxy has the right to revoke it by giving written notice
to the Vice President and Corporate Secretary of the Company at any time prior
to the voting, or by executing and delivering a later dated proxy, or by voting
in person at the Annual Meeting. A holder of record of Series A Common Stock at
the close of business on April 3, 1998, if present at the Annual Meeting, may
vote in person whether or not he has previously given a proxy. This Proxy
Statement and its enclosures are being mailed to the Company's Series A Common
stockholders on or about April 16, 1998.
The cost of the solicitation will be paid by the Company. In addition to
solicitation of proxies by use of the mails, directors, officers or employees of
the Company may solicit proxies personally, or by other appropriate means. The
Company will request banks, brokerage houses and other custodians, nominees or
fiduciaries holding stock in their names for others to send proxy materials to
and to obtain proxies from their principals; the Company will reimburse them for
their reasonable expenses in doing so. The Company has retained the services of
Proxy Express, Inc. to assist in the distribution of proxies at an estimated
cost of $550 plus certain out-of-pocket expenses.
VOTING
As of April 3, 1998, the securities of the Company entitled to vote at the
Annual Meeting consist of 20,516,371 shares of Series A Common Stock, par value
$.01 per share ("Series A Common"). Only holders of record of Series A Common on
the books of the Company at the close of business on that date will be entitled
to vote at the Annual Meeting, and such stockholders are entitled to one vote
for each share of common stock held by such person. All proxies received and not
revoked will be voted as directed.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to a capital restructuring approved by the Company's stockholders
in 1994, the Company's then outstanding common stock was reclassified into
Series A Common, and a new series of common stock ("Series B Common") was
subsequently issued to certain of the Company's lenders. (Each share of Series B
Common became convertible to a share of Series A Common from and after May 20,
1997.) As part of the capital restructuring, two series of directors were
established, the Series A Directors, to be elected by Series A Common, and the
Series B Directors, to be elected by Series B Common; additionally, the Series A
Directors were classified into three classes, Class I directors whose current
term expires at the Annual Meeting, and the Class II directors and the Class III
directors, whose respective current terms will expire upon the election of
successor directors at the annual meetings of holders of Series A Common to be
held in 1999 (for the Class II directors) and in 2000 (for the Class III
directors).
<PAGE> 5
Accordingly, only the Class I Series A Directors are to be elected at this
Annual Meeting, and to that end, the Board of Directors has nominated and
recommended for election as a Class I Series A Director each of the two persons
named below, for the term to expire upon the election of a successor Class I
Series A Director at the annual meeting of Series A Common stockholders to be
held in 2001. To be elected as a director, the nominee must receive the
favorable vote of a plurality of the shares represented and entitled to be voted
at the Annual Meeting. The candidate receiving the highest number of affirmative
votes for each director's position to be elected at the Annual Meeting will be
deemed elected to that position. At future Annual Meetings, so long as the
Series A Directors of the Company are so classified, the holders of Series A
Common will vote only for nominees for the class of Series A Directors whose
terms expire at that Annual Meeting. The holders of Series B Common, voting as a
separate class, elect the Series B Directors at a separate meeting or by written
consent. Holders of Series B Common are not entitled to vote in the election of
Series A Directors.
Since there is no specified percentage of either the outstanding shares or
the shares represented at the Annual Meeting required to elect a director,
abstentions of voting and broker non-votes will have the same effect as the
failure of shares to be represented at the Annual Meeting, except that the
shares subject to such abstentions or non-votes will be counted in determining
whether there is a quorum for taking stockholder action. Unless additional
persons are nominated, withholding a vote from a nominee will not adversely
affect the election of that nominee. If additional persons are nominated, each
vote withheld from a nominee may adversely affect the election of that nominee.
The proxies solicited hereby are intended to be voted only for the nominees
whose names are listed below, unless otherwise indicated. In the event that a
nominee for director is proposed at the Annual Meeting, the proxy may be voted
in favor of or against such nominee or any other nominee proposed by the Series
A Directors.
Both of the following nominees currently are Directors on Presley's Board
of Directors. The Company has no reason to believe that the nominees will not be
available for election to serve their prescribed terms. However, the persons
named in the proxy will have discretionary authority to vote for others if any
nominee is unable or unwilling to serve. Any vacancy that occurs in the number
of Series A Directors serving as directors during the prescribed terms may be
filled only by the vote of a majority of the Series A Directors then in office
or, if the Series A Directors fail to fill the vacancy within 60 days of its
occurrence, by the vote of a majority of outstanding shares of Series A Common.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- -------------------- --------
<S> <C> <C> <C>
James E. Dalton 67 President of Logicon R&D Associates 1991
Steven B. Sample 57 President of the University of Southern 1991
California
</TABLE>
OTHER DIRECTORS; COMMITTEES
The Company's Board of Directors consists of the following Series A
Directors and Series B Directors; only the two named above are up for election
at this Annual Meeting.
SERIES A DIRECTORS
GENERAL WILLIAM LYON, age 75, was elected director and Chairman of the
Board of the Company in 1987. Additionally, General Lyon serves on the Company's
Compensation Committee. General Lyon is also the Chairman of the Board,
President and Chief Executive Officer of William Lyon Homes, Inc. General Lyon
is a retired USAF Major General and was Chief of the Air Force Reserve from 1975
to 1979.
GENERAL JAMES E. DALTON, USAF (RET.), age 67, was elected to the Board in
1991. He serves as Chairman of the Company's Audit Committee and is a member of
the Stock Option Committee and the Compensation Committee. General Dalton is the
President of Logicon R&D Associates, a subsidiary of Logicon Corporation (a
defense contractor providing advanced technology systems and services), a
position he has held since 1985. He also has served as General Manager of
Logicon's Defense Technology Group since 1995. Logicon was acquired by Northrop
Grumman in 1997.
2
<PAGE> 6
WADE H. CABLE, age 49, has served as President and Chief Executive Officer
of Presley and has been a director of the Company since 1985. Prior to joining
the Company, he worked for thirteen years with Pacific Enterprises as a senior
executive in various of its real estate operations.
STEVEN B. SAMPLE, age 57, was elected to the Board in 1991 and is a member
of the Company's Audit Committee, the Stock Option Committee and the
Compensation Committee. Dr. Sample is the President of the University of
Southern California, a position he has held since March 1991. He was the
President of the State University of New York at Buffalo from 1982 to 1991. Dr.
Sample is a director of UNOVA, Inc., the Santa Catalina Island Company and the
Wm. Wrigley Jr. Company.
MARSHALL E. STEARNS, age 38, was elected to the Board in 1997. Mr. Stearns
is Managing General Partner of Foothill Partners II, L.P. and Foothill Partners
III, L.P., and a Vice President of The Foothill Group, Inc., a wholly owned
subsidiary of Norwest Corporation. Prior experience includes development of
multi-family real estate.
RAY A. WATT, age 79, was elected to the Board in 1997. Mr. Watt is the
Founder and Chairman of the Board of Watt Group, Inc., a commercial and
residential real estate development and building company. Mr. Watt has served on
the Boards of several civic organizations.
SERIES B DIRECTORS
GREGORY P. FLYNN, age 41, was elected to the Board in 1994. He is a
Managing Partner of ING Equity Partners, where he has worked since 1994. From
1989 to 1994, Mr. Flynn worked with ING Capital Holdings, a wholly-owned
subsidiary of Internationale Nederlanden Groep, a diversified financial services
company based in Amsterdam. From 1981 to 1988, Mr. Flynn was employed by The
Chase Manhattan Bank. Mr. Flynn is a director of Ladish Co., Inc.
CHARLES FROLAND, age 49, was elected to the Board in 1995. He is Managing
Director of Fixed Income for General Motors Investment Management Corporation
where he has worked since June 1995. From 1987 to 1995, Mr. Froland worked with
Stanford Management Co.; his prior employment includes Grubb & Ellis Realty
Advisors, and other investment and commercial banking firms.
KAREN S. SANDLER, age 39, was elected to the Board in 1995. She is Managing
General Partner of Foothill Partners II, L.P. and Foothill Partners III, L.P.,
and a Vice President of The Foothill Group, Inc., a wholly owned subsidiary of
Norwest Corporation. Ms. Sandler serves on many lender and creditor committees.
Prior to joining Foothill, she worked at Price Waterhouse and Security Pacific
Bank.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS AND DIRECTORS' FEES
The Company's Board of Directors has an Audit Committee, a Compensation
Committee and a Stock Option Committee, but not a nominating committee. The
current members of the Audit Committee are Messrs. Dalton, Sample and Watt. The
Audit Committee monitors the Company's basic accounting policies, reviews audit
and management reports and financial releases and makes recommendations
regarding the appointment of the independent auditors. The current members of
the Compensation Committee are Messrs. Lyon, Dalton, Flynn, Froland, Sample and
Watt, and Ms. Sandler. The Compensation Committee deals with salary and
incentive compensation policies for officers and executives. The current members
of the Stock Option Committee are Messrs. Dalton, Flynn, Froland, Sample and
Watt, and Ms. Sandler. The Stock Option Committee administers the stock option
program of the Company, determines the persons to whom options are to be
granted, and fixes the number of shares to be subject to such options and the
other terms of the option agreements, subject to the provisions of the relevant
option plan.
3
<PAGE> 7
During the year ended December 31, 1997, the Board of Directors held four
meetings, the Audit Committee held five meetings, the Compensation Committee
held one meeting, and the Stock Option Committee held no meetings. No Series A
director attended fewer than 75% of all meetings of the Board of Directors
during the fiscal year ended December 31, 1997.
The Company compensates each of Messrs. Dalton, Sample and Watt (the
"Outside Series A Directors") for services performed in his capacity as a
director at a rate of $20,000 a year plus $1,000 for each meeting attended. None
of the other directors receives any compensation as directors. In addition, each
Outside Series A Director is paid $1,000 a year per committee for service on
committees of the Board of Directors. If he so elects, each Outside Series A
Director is entitled to defer payment of his compensation until his retirement
date, at which time he would receive all deferred amounts and all interest
accrued thereon. The rate of interest on such deferred compensation is adjusted
quarterly and is the prime rate used by the Company's principal corporate lender
on the quarterly adjustment date, plus one percent.
Under the Company's Non-Qualified Retirement Plan for Outside Directors
(the "Plan"), each Outside Series A Director of the Company is to receive $2,000
per month beginning on the first day of the month following death, disability or
retirement at age 72; or, in the case of an Outside Series A Director who ceases
participation in the Plan prior to death, disability or retirement at age 72 but
has completed at least ten (10) years of service as a director, eligibility for
benefit payments pursuant to the Plan begins on the first day of the month
following the latter of (a) the day on which such person attains the age of 65,
or (b) the day on which such person's service terminates after completing at
least ten (10) years of service as a director. Effective from December 1991, the
monthly payments are to continue for the number of months that equals the number
of months the Outside Series A Director served as a director of the Company. If
a retired Outside Series A Director receiving payments under the Plan resumes
his status as a director or becomes an employee of the Company, the payments
under the Plan are suspended during the period of such service.
4
<PAGE> 8
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as to the number of
shares of the Series A Common Stock and the Series B Common Stock beneficially
owned as of April 3, 1998. Holders of Series A Common Stock are entitled to
elect six of the nine members of the Company's Board of Directors and holders of
Series B Common Stock are currently entitled to elect three members of the Board
of Directors. Except for voting as separate classes on the election of directors
and certain charter amendments, the shares of Series A Common Stock and Series B
Common Stock have the same voting rights. Series B Common Stock became
convertible into a like number of shares of Series A Common Stock from and after
May 20, 1997. The following table includes information for (a) each person or
group that is known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of Common Stock, (b) each of the directors of the
Company, (c) each executive officer named in the Summary Compensation Table, and
(d) all officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AS OF APRIL 3, 1998
------------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY PERCENTAGE OF
OF BENEFICIAL OWNER OWNED ALL STOCK
------------------- ------------------- -------------
<S> <C> <C> <C>
SERIES A COMMON STOCK
General William Lyon..................................................... 7,939,589 15.21%
c/o William Lyon Homes, Inc.
4490 Von Karman, Newport Beach, CA 92660
Wade H. Cable and Susan M. Cable, Trustees of
The Cable Family Trust Est. 7-11-88.................................... 463,527(1) *
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
General James E. Dalton.................................................. 2,000 *
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Gregory P. Flynn......................................................... 0 N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Charles Froland.......................................................... 0 N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Nancy M. Harlan and John H. Harlan, Trustees of The
Harlan Family Revocable Living Trust
Est. 7-24-96........................................................... 401(2) *
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
W. Douglass Harris....................................................... 0 N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Brian P. McGowan......................................................... 0 N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Steven B. Sample......................................................... 500 *
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Karen S. Sandler......................................................... 0(3) N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
David M. Siegel and Linda A. Siegel, Trustees of
The Siegel Family Trust U/D/T Est. 6-20-89............................. 133,479(4) *
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Marshall E. Stearns...................................................... 0(3) N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Ray A. Watt.............................................................. 0 N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
All directors and executive officers of the Company as a group
(14 persons)........................................................... 8,552,852 16.39%
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
AS OF APRIL 3, 1998
------------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY PERCENTAGE OF
OF BENEFICIAL OWNER OWNED ALL STOCK
------------------- ------------------- -------------
<S> <C> <C> <C>
SERIES B COMMON STOCK
Foothill Capital Corporation and The Foothill
Group, Inc....................................... 16,112,470(5) 30.87%
11111 Santa Monica Blvd., Los Angeles, CA 90025
Pearl Street, L.P.................................. 5,920,362 11.34%
c/o Goldman, Sachs & Co.
85 Broad Street, New York, NY 10004
First Plaza Group Trust (Mellon Bank, N.A., acting
as trustee as directed by General Motors
Investment Management Corporation)............... 5,099,206 9.77%
767 Fifth Avenue, New York, NY 10153
International Nederlanden (U.S.) Capital
Corporation...................................... 4,547,269 8.71%
135 East 57th Street, New York, NY 10022
Karen S. Sandler................................... 0(3) N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
Marshall E. Stearns................................ 0(3) N/A
c/o The Presley Companies
19 Corporate Plaza, Newport Beach, CA 92660
</TABLE>
- ---------------
* Less than 1%
(1) Does not include 6,017 shares directly owned by children of Mr. Cable, as to
which shares Mr. Cable disclaims beneficial ownership.
(2) Does not include 100 shares held as trustee for benefit of daughter, as to
which shares Ms. Harlan disclaims beneficial ownership, but includes one
share owned directly by Ms. Harlan.
(3) Ms. Sandler and Mr. Stearns are managing general partners of Foothill
Partners II, L.P., a Delaware limited partnership that beneficially owns
11,429,878 shares of Series B Common Stock. Series B Common Stock became
convertible into a like number of shares of Series A Common Stock from and
after May 20, 1997.
(4) Does not include 400 shares directly owned by children and family of Mr.
Siegel, as to which shares Mr. Siegel disclaims beneficial ownership, but
includes one share owned directly by Mr. Siegel.
(5) Although all of these shares are owned directly by Foothill Capital
Corporation ("Capital"), Foothill Partners, L.P. ("Partners") has a claim to
2,846,482 of the shares and Foothill Partners II, L.P. ("Partners II") has a
claim to 11,429,878 of the shares. The Foothill Group, Inc., the parent of
Capital, is one of the general partners of Partners and Partners II and is a
wholly owned subsidiary of Norwest Corporation.
Except as otherwise indicated in the above notes, shares shown as
beneficially owned are those as to which the named person possesses sole voting
and investment power. However, under California law personal property owned by a
married person may be community property which either spouse may manage and
control, and the Company has no information as to whether any shares shown in
this table are subject to California community property law.
6
<PAGE> 10
PRESLEY MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of Presley during the last fiscal year and their
ages are set forth in the following table. There are no family relationships
between any director or executive officer and any other director or executive
officer of Presley. Executive officers serve at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
General William Lyon 75 Director and Chairman of the Board
Wade H. Cable 49 Director, Chief Executive Officer and
President
David M. Siegel 56 Senior Vice President, Chief Financial
Officer and Treasurer
Nancy M. Harlan 51 Senior Vice President and General Counsel
Linda L. Foster 50 Vice President and Corporate Secretary
W. Douglass Harris 55 Vice President and Corporate Controller
Brian P. McGowan 46 Vice President -- Financial Operations
</TABLE>
GENERAL WILLIAM LYON was elected director and Chairman of the Board of the
Company in 1987. Additionally, General Lyon serves on the Company's Compensation
Committee. General Lyon is also the Chairman of the Board, President and Chief
Executive Officer of William Lyon Homes, Inc. General Lyon is a retired Major
General and was Chief of the Air Force Reserve from 1975 to 1979.
WADE H. CABLE has served as President and Chief Executive Officer of
Presley and has been a director of the Company since 1985. Prior to joining the
Company, he worked for thirteen years with Pacific Enterprises as a senior
executive in various of its real estate operations, including two years as an
Executive Vice President of Pacific Lighting Real Estate Group and four years as
the President of Fredricks Development Company, a residential developer and
homebuilder.
DAVID M. SIEGEL, a Senior Vice President, has been Chief Financial Officer
and Treasurer of Presley since February 1985. Prior to joining Presley, Mr.
Siegel was Executive Vice President and Chief Financial Officer for two
homebuilding companies. Mr. Siegel, a certified public accountant, was also a
partner with Kenneth Leventhal & Company, Certified Public Accountants, from
1972 to 1978, and has been involved with the real estate development and
homebuilding industry for more than 30 years.
NANCY M. HARLAN, a Senior Vice President and General Counsel, joined
Presley in October 1987 after six years with Pacific Enterprises as Counsel to
its Real Estate Development subsidiaries. Ms. Harlan has been involved with the
real estate development and homebuilding industry for 20 years.
LINDA L. FOSTER, Vice President and Corporate Secretary since 1987, has
been employed by the Company since 1979 as Corporate Secretary and in other
administrative positions. Ms. Foster has been involved with the real estate
development and homebuilding industry for more than 15 years.
W. DOUGLASS HARRIS, Vice President and Corporate Controller, joined the
Company in June 1992, after seven years with Shapell Industries, Inc., another
major California home builder, as its vice president and corporate controller.
Mr. Harris has been involved with the real estate development and homebuilding
industry for more than 20 years.
BRIAN P. MCGOWAN, Vice President -- Financial Operations, joined the
Company in July 1995, after ten years with Sunrise Company, a privately held
company which develops large scale master-planned country club communities, as
its vice president and corporate controller.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation of the
Company's Chief Executive Officer and four additional most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000 during
the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------------
BONUS EARNED
BONUS PAID IN DURING
SPECIFIED YEAR SPECIFIED YEAR
BUT EARNED IN BUT PAYABLE
EARLIER YEARS IN FUTURE YEARS
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) ($)(2)(4) ($)(3)(4)
--------------------------- ---- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Wade H. Cable 1997 399,500 74,988 0
Director, Chief Executive 1996 399,500 74,988 0
Officer and President 1995 399,500 74,988 0
David M. Siegel 1997 220,000 37,494 0
Director, Senior Vice 1996 196,620 37,494 0
President, Chief Financial 1995 196,620 37,494 0
Officer and Treasurer
Nancy M. Harlan 1997 130,000 13,749 0
Senior Vice President 1996 118,700 3,749 0
and General Counsel 1995 118,700 3,749 0
Brian P. McGowan 1997 116,000 15,000 0
Vice President -- 1996 110,000 0 0
Financial Operations 1995 52,250(5) 0 0
W. Douglass Harris 1997 116,000 10,000 0
Vice President 1996 110,000 0 0
and Corporate Controller 1995 110,000 8,000 0
</TABLE>
- ---------------
(1) Includes amounts which the executive would have been entitled to be paid,
but which at the election of the executive were deferred by payment into the
Company's 401(k) plan ("executive elected deferrals"). The Company makes no
contributions for executives into the plan other than executive elected
deferrals.
(2) Represents amounts paid in 1997, 1996 or 1995, respectively, under the
Company's then existing executive bonus plan or employment agreement with
the executive, but which were earned prior to the year of payment.
(3) No bonus amounts were earned in 1997, 1996 or 1995, respectively, under the
Company's then existing executive bonus plan or employment agreement with
the executive.
(4) The 1997 Incentive Compensation Plan (the "Plan") provides that the Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO") are eligible
to receive bonuses at the discretion of the Compensation Committee of the
Board of Directors. In addition, the Plan for the area managers and
designated executives of the Company and Presley Homes stipulates annual
setting of individual bonus targets, expressed as a percent of each
executive's salary, with awards based on performance against business plan
goals pertaining to each participant's operating area. All awards will be
prorated downward if the sum of all calculated awards for the Company
exceeds 20% of the Company's consolidated pre-tax income before bonuses.
After completion of the Company's applicable annual audit, awards will be
paid out in three installments, with 50% paid following the determination of
bonus awards, 25% paid one year later, and 25% paid two years later. The
deferred amounts will be forfeited in the event of termination for any
reason except retirement, death or disability.
(5) Mr. McGowan joined the Company on July 10, 1995.
8
<PAGE> 12
1991 STOCK OPTION PLAN
Under the amended 1991 Stock Option Plan of the Company, options to
purchase an aggregate of not more than 2,642,000 shares of Series A Common Stock
may be granted from time to time to key employees, officers, directors,
consultants and advisors of Presley or any of its subsidiaries. The plan is
administered by the Stock Option Committee of the Board of Directors. The
committee is generally empowered to interpret the plan, prescribe rules and
regulations relating thereto, determine the terms of the option agreements,
amend them with the consent of the optionee, determine the employees to whom
options are to be granted, and determine the number of shares subject to each
option and the exercise price thereof. It is currently anticipated that the per
share exercise price for stock options will not be less than 100% of the fair
market value of a share of the Series A Common Stock on the date the option is
granted. The options will be exercisable for a term determined by the committee,
not to exceed ten years from the date of grant or upon a change of control.
The following table sets forth the information noted for all stock options
held at December 31, 1997 by the Chief Executive Officer and by the executive
officers named in the Summary Compensation Table above who hold options, and by
William Lyon, the Chairman of the Board. No stock options were granted or
exercised in 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------
EXERCISE
NUMBER OF PRICE EXPIRATION
NAME OPTIONS ($/SH) DATE
---- ---------- --------- -------------
<S> <C> <C> <C>
Wade H. Cable.................................. 175,000 $1.00 May 20, 2000
175,000 1.00 May 20, 2001
175,000 1.00 May 20, 2002
David M. Siegel................................ 66,666 1.00 May 20, 2000
66,667 1.00 May 20, 2001
66,667 1.00 May 20, 2002
Nancy M. Harlan................................ 5,000 2.875 May 20, 2000
5,000 2.875 May 20, 2001
5,000 2.875 May 20, 2002
W. Douglass Harris............................. 5,000 2.875 May 20, 2000
5,000 2.875 May 20, 2001
5,000 2.875 May 20, 2002
William Lyon................................... 250,000 2.875 May 20, 2000
250,000 2.875 May 20, 2001
250,000 2.875 May 20, 2002
</TABLE>
- --------------------------------------------------------------------------------
RETIREMENT SAVINGS PLAN
The Company maintains a trusteed Retirement Savings Plan (the "Savings
Plan") which is available to all homebuilding-related employees who are 18 years
old or older and have completed one year of service with the Company. The
Company currently makes no contributions to the Savings Plan. The Savings Plan,
which has been qualified under Section 401(a) of the Internal Revenue Code,
permits elective deferrals under Section 401(k) of the Code and permits
participants to contribute up to 20% of their pre-tax earnings to the Savings
Plan so long as this amount did not exceed $9,500 for 1997.
9
<PAGE> 13
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company has entered into an indemnification agreement with each of its
Series A Directors and certain of its executive officers named in the Summary
Compensation Table above, among others, to provide them with the maximum
indemnification allowed under its Bylaws and applicable law, including
indemnification for all judgments and expenses incurred as the result of any
lawsuit in which such person is named as a defendant by reason of being a
director, officer or employee of the Company, to the extent such indemnification
is permitted by the laws of Delaware.
COMPENSATION COMMITTEE REPORT
In connection with the Company's capital restructuring in 1994, the Company
entered into employment contracts with eight executive officers for terms which
expired in May 1997. The compensation arrangements currently in effect are being
reviewed. The following report summarizes the current arrangements:
Chief Executive Officer Compensation -- The salary of Wade H. Cable, the
chief executive officer ("CEO") of Presley, has not changed since May 16, 1990.
The CEO participates is a discretionary bonus program described below. The CEO
also receives an auto for his use and related auto expenses, a policy that has
been in place since 1985.
Compensation With Respect to Other Executive Officers -- The rate of
compensation for each of the other executive officers has been in effect for
varying periods, and is based in part upon the review of a survey of
compensation paid by other homebuilders of similar size.
1997 Incentive Compensation Plan -- Effective on January 1, 1997, the
Company's Board of Directors approved a new incentive compensation plan for all
full-time, salaried employees of the Company and Presley Homes -- including the
Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), Executives,
Managers, Field Construction Supervisors, and certain other employees. Under the
terms of this new plan, the CEO and CFO are eligible to receive bonuses at the
discretion of the Compensation Committee of the Board; in addition, the stock
options currently outstanding and held by the CEO and CFO were repriced from
$2.875 to $1.00.
In addition, the 1997 Executive Bonus Plan for Area Managers and designated
Executives of the Company and Presley Homes stipulates annual setting of
individual bonus targets, expressed as a percent of each executive's salary,
with awards based on performance against business plan goals pertaining to each
participant's operating area. All awards will be prorated downward if the sum of
all calculated awards exceeds 20% of the Company's consolidated pre-tax income
before bonuses. After completion of the Company's applicable annual audit,
awards will be paid out in three installments, with 50% paid following the
determination of bonus awards, 25% paid one year later, and 25% paid two years
later. The deferred amounts will be forfeited in the event of termination for
any reason except retirement, death or disability.
COMPENSATION COMMITTEE
William Lyon
James E. Dalton
Gregory P. Flynn
Charles Froland
Steven B. Sample
Karen S. Sandler
Ray A. Watt
10
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has ever been an officer
or employee of the Company, except for Mr. Lyon who has been Chairman of the
Board since 1987. Messrs. Flynn and Froland and Ms. Sandler are members of the
Compensation Committee, and also have the relationships to certain owners of the
Company's Series B Common Stock described in the following paragraph.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Presley Homes maintains a revolving lending facility (the "Working Capital
Facility") with a group of lenders that includes Foothill Capital Corporation,
First Plaza Group Trust, and International Nederlanden (U.S.) Capital
Corporation, all of which own Series B Common representing, in each case, more
than 5% of the Company's outstanding voting securities. The Working Capital
Facility is secured by substantially all of the assets of Presley Homes and
guaranteed by the Company. At December 31, 1997, there was $43 million
outstanding under the Working Capital Facility, and during 1997, amounts
outstanding ranged from $12.0 million to $71.4 million. Interest incurred during
1997 under the facility totaled $6.8 million. Marshall E. Stearns and Karen S.
Sandler, directors of the Company, are officers of an affiliate of Foothill
Capital Corporation; Charles Froland, a director of the Company, is the Managing
Director of Fixed Income for General Motors Investment Management Corporation,
which has the power to direct the trustee of First Plaza Group Trust; and
Gregory P. Flynn, a director of the Company, is a Managing Partner of ING Equity
Partners, an affiliate of International Nederlanden (U.S.) Capital Corporation.
COMMON STOCK PRICE PERFORMANCE
The graph below compares the cumulative total return of the Company, the S
& P 500 Index and S & P Homebuilding Index:
<TABLE>
<CAPTION>
S&P
Measurement Period Homebuilding S&P 500 The Presley
(Fiscal Year Covered) Index Index Companies
--------------------- ------------ ------- -----------
<S> <C> <C> <C>
12/31/92 100 100 100
12/31/93 132 110 87
12/31/94 76 112 71
12/31/95 109 153 45
12/31/96 99 189 29
12/31/97 159 252 19
</TABLE>
The graph above is based upon common stock and index prices calculated as
of December 31, for 1992, 1993, 1994, 1995, 1996 and 1997. The base period is
December 31, 1992, on which date the Company's closing common stock price was
$3 7/8 per share. On December 31, 1997 and on April 3, 1998, the Company's
common stock closed at $ 3/4 and $1 1/8 per share, respectively. The stock price
performance of the Company's Series A Common Stock depicted in the graph above
represents past performance only and is not necessarily indicative of future
performance.
11
<PAGE> 15
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
The Board is seeking stockholder ratification of its selection of Ernst &
Young LLP to serve as the Company's auditors for the fiscal year ending December
31, 1998. Abstentions and broker non-votes will have the same effect as negative
votes. Kenneth Leventhal & Company, which merged with Ernst & Young LLP in 1995,
had served as the Company's auditors since 1987. Between 1984 and 1987, the
Company was a subsidiary of Pacific Enterprises (formally Pacific Lighting
Corporation) and Kenneth Leventhal & Company audited the Company's books and
records in connection with its audit of Pacific Enterprises' real estate
operations. In addition, from 1974 through 1984, Kenneth Leventhal & Company
served as the Company's auditors. It is anticipated that representatives from
Ernst & Young LLP will attend the Annual Meeting with the opportunity to make
any statement they may desire to make and will be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER BUSINESS
The Company knows of no other matters to be brought before the Annual
Meeting. If other matters should come before the Annual Meeting, it is the
intention of each person mentioned in the proxy to vote such proxy in accordance
with his judgment of such matters. Discretionary authority with respect to such
other matters is granted by the execution of the enclosed proxy.
STOCKHOLDERS' PROPOSALS
Proposals by stockholders intended to be presented at the next annual
meeting in 1999 must be sent in writing to the Vice President and Corporate
Secretary of the Company at the Company's principal executive offices and
received by November 30, 1998 to be considered for inclusion in the Company's
proxy material under the rules of the Securities and Exchange Commission.
FINANCIAL STATEMENTS; ANNUAL REPORT ON FORM 10-K
The Company's 1997 Annual Report on Form 10-K, exclusive of exhibits,
including financial statements for fiscal year 1997, accompanies this Proxy
Statement. Additional copies of the Company's 1997 Annual Report on Form 10-K
may be obtained by writing to: The Presley Companies, Attn: Investor Relations,
19 Corporate Plaza, Newport Beach, CA 92660.
12
<PAGE> 16
PROXY
THE PRESLEY COMPANIES
PROXY FOR ANNUAL MEETING OF HOLDERS OF SERIES A
COMMON STOCK TO BE HELD ON
MAY 14, 1998
The Undersigned hereby constitutes and appoints William Lyon and Wade
H. Cable, and each of them, the true and lawful attorneys, agents and proxies
of the undersigned, with full power of substitution, to vote, as specified
herein, with respect to all the shares of Series A Common Stock of The Presley
Companies (the "Company"), standing in the name of the undersigned at the close
of business on April 3, 1998, at the Annual Meeting of Holders of Series A
Common Stock to be held May 14, 1998 and at any and all adjournments or
postponements thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 17
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD Please mark
OF DIRECTORS OF THE PRESLEY COMPANIES your vote as [X]
indicated in
this example.
(1) ELECTION OF SERIES A DIRECTORS: FOR all WITHHOLD
Nominees listed AUTHORITY
(except as marked to vote for all
to the contrary below) Nominees listed below.
[ ] [ ]
NOMINEES: James E. Dalton and Steven B. Sample
(INSTRUCTION: To withhold authority to vote for any individual Nominee,
write that Nominee's name in the space provided below.)
-----------------------------------------------------------------------
(2) RATIFICATION OF AUDITORS FOR AGAINST ABSTAIN
Ratification of the selection of Ernst & Young [ ] [ ] [ ]
LLP as the Company's auditors for the fiscal
year ending December 31, 1998.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTIONS TO THE CONTRARY ARE
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTOR OF THE NOMINEES
NAMED ABOVE AND FOR RATIFICATION OF AUDITORS.
Signature(s) Dated: , 1998
------------------------------- ------------
IMPORTANT: Please sign exactly as name appears at the left. Each joint owner
should sign. Executors, administrators, trustees, etc., should give full
title. If a corporation, please sign in full corporate name by authorized
officer. If a partnership, please sign in partnership name by authorized
person.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
THE PRESLEY COMPANIES
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THE SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
