=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_________________
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
_________________
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement Confidential, For Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Materials Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ENGLE HOMES, INC.
------------------------------------------------
(Name of Registrant as specified in its Charter)
------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
Title of each class of securities to which transaction
applies:
Aggregate number of securities to which transaction applies:
Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
Proposed maximum aggregate value of transaction:
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.
Amount Previously Paid:
Form, Schedule or Registration No.:
Filing Party:
Date Filed:
=================================================================
ENGLE HOMES
123 N.W. 13th Street, Boca Raton, Florida 33432
-----------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on February 25, 1999
-----------------------------------------------
To the Shareholders
of Engle Homes, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders
(the "Annual Meeting") of Engle Homes, Inc., a Florida corporation
(the "Company"), will be held at 11:00 a.m., local time, on
Thursday, February 25, 1999, at the Company's offices located at
123 N.W. 13th Street, Suite 300, Boca Raton, Florida for the
following purposes:
(1) To elect seven members to the Company's Board of Directors
to hold office until the Company's 2000 Annual Meeting of
Shareholders or until their successors are duly elected
and qualified;
(2) To consider and vote on a proposal to approve the material
terms of the performance goals relating to the incentive
compensation provisions set forth in the Employment
Agreement between the Company and Alec Engelstein,
Chairman of the Board, President and Chief Executive
Officer of the Company, as set forth in Appendix A hereto;
and
(3) To transact such other business as may properly come
before the Annual Meeting and any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on December
21, 1998 as the record date for determining those shareholders
entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
Whether or not you expect to be present, please sign, date and
return the enclosed proxy card in the enclosed pre-addressed
envelope as promptly as possible. No postage is required if mailed
in the United States.
By Order of the Board of Directors
ALEC ENGELSTEIN
Chairman of the Board, President and
Chief Executive Officer
Boca Raton, Florida
January 20, 1999
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO
ATTEND THE MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS
ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN
PERSON.
<PAGE>
1999 ANNUAL MEETING OF SHAREHOLDERS
OF
ENGLE HOMES, INC.
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Engle Homes, Inc., a
Florida corporation (the "Company"), of proxies from the holders of
the Company's Common Stock, par value $.01 per share (the "Common
Stock"), for use at the 1999 Annual Meeting of Shareholders of the
Company to be held on Thursday, February 25, 1999, or at any
adjournment(s) or postponement(s) thereof (the "Annual Meeting"),
pursuant to the foregoing Notice of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the
enclosed form of proxy are first being sent to shareholders is
January 20, 1999. Shareholders should review the information
provided herein in conjunction with the Company's 1998 Annual
Report to Shareholders which accompanies this Proxy Statement. The
Company's principal executive offices are located at 123 N.W. 13th
Street, Suite 300, Boca Raton, Florida 33432, and its telephone
number is (561) 391-4012.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to
vote in person should any shareholder giving the proxy so desire.
Shareholders have an unconditional right to revoke their proxy at
any time prior to the exercise thereof, either in person at the
Annual Meeting or by filing with the Company's Secretary at the
Company's headquarters a written revocation or duly executed proxy
bearing a later date; however, no such revocation will be effective
until written notice of the revocation is received by the Company
at or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement,
the Notice of Annual Meeting of Shareholders and the enclosed proxy
is to be borne by the Company. In addition to the use of mail,
employees of the Company may solicit proxies personally and by
telephone. The Company's employees will receive no compensation
for soliciting proxies other than their regular salaries. The
Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their
principals and to request authority for the execution of proxies.
The Company may reimburse such persons for their expenses in doing
so.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will
consider and vote upon the following matters:
The election of seven members to the Company's Board of
Directors to serve until the Company's 2000 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
A proposal to approve the material terms of the performance
goals relating to the incentive compensation provisions set forth
in the Employment Agreement between the Company and Alec
Engelstein, Chairman of the Board, President and Chief Executive
Officer of the Company, as set forth in Appendix A hereto (the
"Employment Agreement"); and
Such other business as may properly come before the Annual
Meeting including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed
proxy, all shares represented by valid proxies received pursuant to
this solicitation (and which have not been revoked in accordance
with the procedures set forth above) will be voted (i) FOR the
election of the seven nominees for director named below under
"Election of Directors; Nominees," (ii) FOR approval of the
material terms of the performance goals relating to the incentive
compensation provisions set forth in the Employment Agreement, as
set forth below under "Proposal to Approve the Material Terms of
the Performance Goals Relating to the Incentive Compensation
Provisions Set Forth in the Employment Agreement" and (iii) by the
proxies in their discretion upon any other proposals as may
properly come before the Annual Meeting. In the event a
shareholder specifies a different choice by means of the enclosed
proxy, such shareholder's shares will be voted in accordance with
the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on
December 21, 1998 as the record date (the "Record Date") for
determining shareholders of the Company entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date, there were
11,187,196 shares of Common Stock issued and outstanding, all of
which are entitled to be voted at the Annual Meeting. Each share
of Common Stock is entitled to one vote on each matter submitted to
shareholders for approval at the Annual Meeting. Shareholders do
not have the right to cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting is necessary to constitute a quorum.
Directors will be elected by a plurality of the votes cast by the
shares of Common Stock represented in person or by proxy at the
Annual Meeting. The affirmative votes of the holders of a majority
of shares of Common Stock represented in person or by proxy at the
Annual Meeting will be required for approval of the material terms
of the performance goals relating to the incentive compensation
2
provisions set forth in the Employment Agreement. Any other matter
that may be submitted to a vote of the shareholders will be
approved if the number of shares of Common Stock voted in favor of
the matter exceeds the number of shares voted in opposition of the
matter unless such other matter is one for which a greater vote is
required by law or by the Company's Articles of Incorporation or
Bylaws. If less than a majority of outstanding shares entitled to
vote are represented at the Annual Meeting, a majority of the
shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date,
time or place if the new date, time or place is announced at the
meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or
more inspectors of election for the meeting. Such inspector(s)
shall determine the number of shares of Common Stock represented at
the Annual Meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive, count and tabulate ballots
and votes and determine the results thereof.
Abstentions are considered as shares present and entitled to
vote for purposes of determining the presence of a quorum and will
be counted as votes cast for purposes of determining the outcome of
any matter submitted to the shareholders for a vote, but are not
counted as votes "for" or "against" any matter. The inspectors of
election will treat shares referred to as "broker or nominee non-
votes" (shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have
discretionary voting power on a particular matter) as shares that
are present and entitled to vote for purposes of determining the
presence of a quorum. For purposes of determining the outcome of
any matter as to which the proxies reflect broker or nominee non-
votes, shares represented by such proxies will be treated as not
present and not entitled to vote on that subject matter and
therefore will not be considered by the inspectors of election when
counting votes cast on the matter (even though those shares are
considered entitled to vote for quorum purposes and may be entitled
to vote on other matters). Accordingly, broker or nominee non-
votes will not have the same effect as a vote against the election
of any director or against the proposal to approve the material
terms of the performance goals relating to the incentive
compensation provisions set forth in the Employment Agreement.
Abstentions will not have the same effect as a vote against the
election of any director but will have the same effect as a vote
against the proposal to approve the material terms of the
performance goals relating to the incentive compensation provisions
set forth in the Employment Agreement.
3
SECURITY OWNERSHIP
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock by (i) each of
the "Named Executive Officers" (as defined below in "Executive
Compensation "Summary Compensation Table"), (ii) each other
director of the Company, (iii) all directors and executive officers
of the Company as a group and (iv) each person known by the Company
to be a beneficial owner of more than 5% of the Common Stock.
<TABLE>
<CAPTION>
Percent of
Amount and Nature Outstanding
Name of Beneficial Owner of Beneficial Ownership(1) Shares
- ------------------------ -------------------------- -----------
<S> <C> <C>
Alec Engelstein 3,185,780 (2) 27.8%
Harry Engelstein 753,219 (3) 6.7%
John A. Kraynick 49,455 (4) *
Lawrence R. Shawe 46,000 (5) *
David Shapiro 328,910 (6) *
Paul M. Leikert 10,300 (7) *
Henry H. Fishkind, Pd.D. 1,400 *
Ronald J. Korn 7,499 *
Alan Shulman 5,000 *
All directors and executive officers
as a group (9 persons) 4,387,563 (8) 37.6%
FMR Corp
82 Devonshire Street
Boston, Massachusetts 02109 1,257,400 (9) 11.2%
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202 1,022,450 (10) 9.1%
________________
<FN>
*Less than 1%
(1) Unless otherwise indicated, amounts are as of January 4, 1999
and each person has sole voting and investment power with
respect to such shares.
(2) Includes 232,468 shares held of record by Sheila Engelstein,
Alec Engelstein's wife, and 272,000 shares issuable upon
exercise of outstanding options.
(3) Includes 111,000 shares issuable upon exercise of outstanding
options.
(4) Includes 38,900 shares issuable upon exercise of outstanding
options.
(5) Includes 46,000 shares issuable upon exercise of outstanding
options.
(6) Includes 18,000 shares issuable upon exercise of outstanding
options and 265,984 shares held in irrevocable trusts for the
benefit of Alec Engelstein's and Harry Engelstein's children
and grandchildren. David Shapiro or his wife, is a trustee
of such trusts with shared voting and dispositive power.
(7) Includes 8,000 shares issuable upon exercise of outstanding
options.
4
(8) Includes an aggregate of 493,900 shares issuable upon exercise
of outstanding options and 265,984 shares held in irrevocable
trusts for the benefit of Alec Engelstein's and Harry
Engelstein's children and grandchildren. David Shapiro or
his wife, is a trustee of such trusts with shared voting and
dispositive power.
(9) The indicated amount is as of January 31, 1998 and includes
1,257,400 shares of Common Stock beneficially owned by FMR
Corp. ("FMR Corp.") FMR has sole dispositive power over
1,257,400 such shares. This disclosure of FMR's beneficial
ownership is based solely upon information set forth in FMR's
Schedule 13G dated February 10, 1998.
(10) The indicated amount is as of May 31, 1998 and includes
1,022,450 shares of Common Stock beneficially owned by
Heartland Advisors, Inc. ("Heartland Advisors"). Heartland
Advisors has sole dispositive power over 1,022,450 such shares
and sole voting power over 955,750 such shares. This
disclosure of Heartland Advisors' beneficial ownership is
based solely upon information set forth in Heartland Advisors'
Schedule 13G dated June 5, 1998.
</FN>
</TABLE>
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own
more than 10 percent of the Company's outstanding Common Stock, to
file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of
Common Stock. Such persons are required by SEC regulations to
furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written
representations that no other reports were required, all Section
16(a) filing requirements applicable to its officers, directors and
greater than 10 percent beneficial owners have been complied with.
(Remainder of page intentionally blank.)
5
ELECTION OF DIRECTORS; NOMINEES
The Company's Articles of Incorporation provide that the number of
directors constituting the Company's Board of Directors shall not
be less than three nor more than nine, as determined in the matter
provided by the Company's Bylaws. The Company's Bylaws provide
that the number of directors shall be fixed from time to time by
resolution of the Board of Directors. The Board of Directors has
fixed at seven the number of directors that will constitute the
Board for the ensuing year. Each director elected at the Annual
Meeting will serve for a term expiring at the Company's 2000 Annual
Meeting of Shareholders or when his successor has been duly elected
and qualified.
Each of the current members of the Board of Directors has been
nominated by the Company to be re-elected as a director at the
Annual Meeting. The Board of Directors has no reason to believe
that any nominee will refuse or be unable to accept election;
however, in the event that one or more nominees are unable to
accept election or if any other unforeseen contingencies should
arise, each proxy that does not direct otherwise will be voted for
the remaining nominees, if any, and for such other persons as may
be designated by the Board of Directors.
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company are as
follows:
<TABLE>
<CAPTION>
Name Age Position with Company
- ------------------ --- -------------------------
<S> <C> <C>
Alec Engelstein 69 Chairman of the Board,
President and Chief
Executive Officer
Harry Engelstein 64 Executive Vice President,
Chief Construction
Officer and Director
John A. Kraynick 44 Executive Vice President
and Director
Lawrence R. Shawe 43 Senior Vice President-
Sales and Marketing
David Shapiro 43 Vice President-Finance,
Chief Financial Officer
and Director
Paul M. Leikert 42 Senior Vice President-
Chief Accounting Officer
6
Henry H. Fishkind, Ph.D.49 Director
Ronald J. Korn 58 Director
Alan L. Shulman 66 Director
</TABLE>
Alec Engelstein, a co-founder and Chairman of the Board of the
Company, has served as its President and Chief Executive Officer
since its organization in August 1982. Alec Engelstein has over 36
years of experience in the homebuilding industry and has been
actively engaged as a homebuilder in southeast Florida since 1969.
Harry Engelstein, a co-founder and director of the Company and
Alec Engelstein's brother, has served as Executive Vice President
and Chief Construction Officer since the Company's inception in
August 1982. Harry Engelstein has over 31 years of experience in
home construction.
John A. Kraynick has served as a Vice President of the Company
since August 1986, was appointed Senior Vice President in July 1991
and appointed Executive Vice President in December 1998. Mr.
Kraynick is responsible for administrative matters and coordinating
the Company's compliance with Federal, state and local regulatory
requirements. Mr. Kraynick has over 20 years of experience in the
homebuilding industry.
Lawrence R. Shawe has served as the Company's Vice President-
Sales and Marketing since April 1986 and was appointed Senior Vice
President Sales and Marketing in December, 1998. Mr. Shawe joined
the Company in April 1984 and since such time has been responsible
for the Company's sales and marketing efforts. Mr. Shawe has over
18 years of experience in the homebuilding industry.
David Shapiro joined the Company in June 1991, has served as
the Company's Chief Financial Officer since July 1991, was
appointed Vice President-Finance in October 1991 and was appointed
as a director on December 17, 1997. David Shapiro is Alec
Engelstein's son-in-law.
Paul M. Leikert has served as the Vice President-Chief of
Accounting since March 1994, in January of 1995, was appointed Vice
President--Chief Accounting Officer and appointed Senior Vice
President-Chief Accounting Officer in December, 1998. Mr. Leikert
is a certified public accountant and has over 14 years of
experience in the homebuilding industry.
Henry H. Fishkind, Ph.D., has served as a director of the
Company since October 1991 and is a member of the Compensation and
Audit Committees of the Board of Directors. Dr. Fishkind has
served as President of Fishkind & Associates, Inc., an economic and
financing consulting firm based in Orlando, Florida, since 1988.
From January 1984 until December 1987, Dr. Fishkind served as
president of M.G. Lewis Econometrics, Inc., the research subsidiary
7
of an investment banking firm based in Winter Park, Florida. Dr.
Fishkind also serves as editor of Econocast, a quarterly economic
forecast, since 1984, and as a director of Summit Properties.
Ronald J. Korn, chairman of the Compensation and Audit
Committees of the Board of Directors, has served as a director of
the Company since October 1991. Since July 1991, Mr. Korn has
served as President of Ronald Korn Consulting, a business
consulting firm, and as Chairman of the Board of Carole Korn
Interiors, Inc., an interior design firm. From August 1985 until
June 1991, Mr. Korn served as the managing partner of the Miami
office of KPMG Peat Marwick, a nationally recognized firm of
independent public accountants. Mr. Korn serves as a director of
ManSur Industries, Inc, which develops and produces self-contained
recycling industrial parts washers. He is also a director of
Horizon Bank, FSB, a Federal Savings Bank in organization. Mr.
Korn served as a director of Magicworks Entertainment, Inc. from
1996 until September, 1998 when Magicworks was acquired by a
subsidiary of SFX Entertainment. Mr. Korn served as a director of
Vacation Break USA, Inc. ("Vacation Break") from December 1995 to
December 1997 when Vacation Break merged with Fairfield
Communities, Inc.
Alan L. Shulman was appointed as a director of the Company on
December 17, 1997. Mr. Shulman is currently a private investor.
Mr. Shulman served on the board of directors of Island National
Bank in Palm Beach, Florida from its inception in 1989 until April
1, 1997 when the bank was sold and currently serves on the board of
directors of CV Reit, Inc., a New York Stock Exchange listed
Company.
There are no arrangements or understandings with respect to
the selection of officers or directors.
Meetings and Committees of the Board of Directors
During the Company's fiscal year ended October 31, 1998, the
Company's Board of Directors held four meetings and took certain
actions by written consent. During the 1998 fiscal year, no
director attended fewer than 75% of the aggregate of (i) the number
of meetings of the Board of Directors held during the period he
served on the Board, and (ii) the number of meetings of committees
of the Board of Directors held during the period he served on such
committees.
The only committees of the Board of Directors are the Audit
Committee and the Compensation Committee. The Board does not have
a nominating or similar committee.
Messrs. Fishkind and Korn are the current members of the Audit
Committee, which held one meeting during the 1998 fiscal year. The
duties and responsibilities of the Audit Committee include (a)
recommending to the Board of Directors the appointment of the
8
Company's auditors and any termination of engagement, (b) reviewing
the plan and scope of audits, (c) reviewing the Company's
significant accounting policies and internal controls, (d) having
general responsibility for all related auditing matters, and (e)
reporting its recommendations and findings to the full Board of
Directors.
Messrs. Fishkind and Korn are the current members of the
Compensation Committee, which held one meeting during the 1998
fiscal year. The Compensation Committee reviews and approves the
compensation of the Company's executive officers and administers
the Company's stock option plan and performance bonus plan.
Director Compensation
The Company pays each director who is not an employee an
annual retainer of $16,000 and a $500 fee for each meeting of the
Board of Directors attended. The Company reimburses all directors
for expenses incurred in connection with their activities as
directors.
9
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the fiscal years ended October 31,
1998, 1997 and 1996, respectively, the aggregate compensation paid to the
Company's Chief Executive Officer and the four other most highly compensated
officers of the Company (the Chief Executive Officer and such other executive
officers are sometimes referred to herein as the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Compensation
Number of All
Fiscal Annual Compensation(1) Options Other
Name and Principal Position Year Salary Bonus Granted Compensation
- -------------------------------- ------ --------------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Alec Engelstein 1998 $370,833 $300,000 - $5,353
Chairman of the Board, 1997 $338,417 $193,750 - $4,700
President and Chief 1996 $279,583 $175,000 - $4,600
Executive Officer
Harry Engelstein 1998 $254,167 $147,500 - $2,725
Executive Vice President 1997 $223,200 $105,000 - $2,775
and Chief Construction Officer 1996 $213,500 $ 90,000 - $2,675
John A. Kraynick 1998 $216,667 $227,500 80,000 $7,183
Senior Vice President 1997 $195,227 $105,000 - $6,381
1996 $174,978 $ 90,000 - $6,281
Lawrence R. Shawe 1998 $175,000 $117,500 80,000 $8,006
Vice President--Sales & 1997 $161,667 $ 60,000 - $5,936
Marketing 1996 $199,800 $ 30,000 - $5,836
Paul M. Leikert 1998 $175,000 $ 91,250 20,000 $2,947
Vice President--Chief 1997 $147,950 $ 41,250 - $6,400
Accounting Officer 1996 $137,250 $ 30,000 - $6,300
10
__________
<FN>
(1) The column for "Other Annual Compensation" has been omitted because
there is no compensation required to be reported in such column.
The aggregate amount of perquisites and other personal benefits provided
to each Named Executive Officer is less than 10% of the total of annual
salary and bonus of such officer.
</FN>
</TABLE>
11
Options Grants in Last Fiscal Year
The following table sets forth information on option grants in fiscal
1998 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at
Number of % of Total Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise Appreciation
Options Employees in Price Expiration For Option Term (2)
Name Granted(1) Fiscal Year Per Share Date 5% 10%
- ----------------- ---------- ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John A. Kraynick 80,000 26.7% $13.75 6/01/08 $691,784 $1,753,116
Lawrence A. Shawe 80,000 26.7% $13.75 6/01/08 $691,784 $1,753,116
Paul M. Leikert 20,000 6.7% $13.75 6/01/08 $172,946 $ 438,279
_______________
<FN>
(1) All such options were granted under the Company's 1991 Stock Option Plan
and become exercisable at the rate of 20% per year commencing one year
from the date of grant, with full vesting occurring on the fifth
anniversary of the grant date.
(2) In accordance with the rules of the Commission, the potential realizable
values for such options shown in the table are based on assumed rates of
stock price appreciation of 5% and 10% compounded annually from the date
the respective options were granted to their expiration date. These
assumed rates of appreciation do not represent the Company's estimate or
projection of the appreciation of shares of Common Stock of the Company.
</FN>
</TABLE>
12
Aggregated Stock Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth certain information concerning options
exercised by Named Executive Officers during the 1998 fiscal year and the
unexercised stock options held by the Named Executive Officers at the end
of the 1998 fiscal year.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
1998 Fiscal 1998 Fiscal
Number of Shares Year End Year End
Acquired Upon Value Exercisable (E) Exercisable (E)
Name Exercise Realized ($) Unexercisable (U) Unexercisable (U)(1)
- ---------------- ---------------- ------------ ----------------- --------------------
<S> <C> <C> <C> <C>
Alec Engelstein 0 0 264,000 (E) $424,320 (E)
16,000 (U) $ 62,080 (U)
Harry Engelstein 0 0 107,000 (E) $177,660 (E)
8,000 (U) $ 31,040 (U)
John A. Kraynick 7,100 $53,250 34,900 (E) $ 60,412 (E)
88,000 (U) $100,640 (U)
Lawrence R. Shawe 0 0 42,000 (E) $ 87,960 (E)
88,000 (U) $100,640 (U)
Paul Leikert 0 0 6,000 (E) $ 23,280 (E)
24,000 (U) $ 32,920 (U)
<FN>
(1) Based on the closing price of the Common Stock on October 30,
1998 ($12.88) as reported on the Nasdaq National Market System
</FN>
</TABLE>
Long-Term Incentive and Pension Plans
The Company does not have any long-term incentive or pension plans.
13
Employment Agreements
For information regarding the Employment Agreement between the
Company and Alec Engelstein, Chairman of the Board, Chief Executive
Officer and President of the Company, see "Proposal to Approve the
Material Terms of the Performance Goals Relating to the Incentive
Compensation Provisions Set Forth in the Employment Agreement"
below.
Compensation Committee Report on Executive Compensation
Under rules established by the Securities and Exchange
Commission, the Compensation Committee of the Board of Directors of
the Company is required to provide a report explaining the
rationale and considerations that led to fundamental compensation
decisions affecting the Company's executive officers (including the
Named Executive Officers) during the past fiscal year.
The three primary components of the Company's executive
compensation are salary, bonus and stock options. These components
are designed to facilitate fulfillment of the compensation
objectives of the Company's Board of Directors and Compensation
Committee, which objectives include (i) attracting and retaining
competent management, (ii) rewarding management for short and long
term accomplishments, (iii) aligning the interests of management
with those of the Company's shareholders, and (iv) relating
management compensation to the achievement of Company goals and the
Company's performance.
Fiscal 1998 salary and bonus for the Company's executive
officers were determined and approved by the Compensation Committee
of the Company's Board of Directors in December 1997. The
Compensation Committee's determination of fiscal 1998 salary and
bonus for the Company's executive officers other than Alec
Engelstein was made after reviewing and considering a number of
factors, including each officer's level of job responsibility, each
officer's level of performance (with respect to specific areas of
responsibility and on an overall basis), achievement of Company
goals, Company performance during the 1997 fiscal year,
compensation levels at competitive companies, the Company's
historical compensation levels, and the Chief Executive Officer's
recommendations regarding fiscal 1998 compensation. Although
Company performance was one of the factors considered, the
Compensation Committee's decisions were based upon an overall
review of the relevant factors, and there was no specific
relationship or formula by which compensation was tied to Company
performance. The Compensation Committee's decisions were
generally in accordance with the Chief Executive Officer's
recommendations.
It is the Compensation Committee's practice periodically to
grant stock options to executive officers and other key management
employees. The Compensation Committee believes that stock options
14
serve to link closely management and shareholder interests and
motivate executives to make long-term decisions and investments
that will serve to increase the long-term total return to
shareholders. Vesting provisions also serve to provide long-term
incentives to retain key executive officers. Awards of stock
options for executive officers are intended to be consistent with
competitive practice, with the ultimate value received by option
holders directly linked to increases in the Company's stock price.
In determining the grant of stock options, the Compensation
Committee considers various subjective factors primarily relating
to the responsibilities of the individual officers, and also to
their expected future contributions and the number of shares owned
by the officer or which continue to be subject to vesting under
outstanding options. During fiscal 1998 stock options were granted
to the Named Executive Officers listed in the Options Grant Table
above and to certain other key management employees.
The principal factor considered by the Compensation Committee
in determining the fiscal 1998 salary and bonus for Alec
Engelstein, the Chairman of the Board, President and Chief
Executive Officer of the Company was the analysis of the
compensation of chief executive officers of public companies within
the homebuilding industry and public companies similar in size to
the Company (and it was the view of the Committee that Alec
Engelstein's combined fiscal 1998 salary and bonus was modest in
comparison). The Compensation Committee also considered the
Company's fiscal 1997 earnings and other performance measures in
determining Alec Engelstein's salary and bonus, but there was no
specific relationship or formula by which Mr. Engelstein's
compensation was tied to Company performance.
In December 1998, the Committee adopted the Employment
Agreement which shall govern the terms and conditions of the
employment of Alec Engelstein, the Company's Chairman of the Board,
President and Chief Executive Officer, including Alec Engelstein's
salary and bonus beginning in fiscal 1999. This Agreement is
designed to provide Mr. Engelstein with annual incentive
compensation based on achievement of specific performance
objectives linked to shareholder return, subject to shareholder
approval; and meet the requirements for exemption from limits on
the ability of the Company to deduct executive compensation.
Henry H. Fishkind, Pd.D.
Ronald J. Korn
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Henry H. Fishkind,
Pd.D. and Ronald J. Korn. No member of the Compensation Committee
was during the last fiscal year, nor has ever been, an officer or
employee of the Company.
15
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock from October 29, 1993 through October 31, 1998,
based on the market price of Common Stock and assuming reinvestment of
dividends, with (i) the Nasdaq Stock Market index prepared by the Center for
Research in Security Prices ("CRSP"), and (ii) CRSP's index for General
Building Contractors--Residential Buildings (SIC Industry Group No. 152).
<TABLE>
<CAPTION>
Comparison of Cumulative Total Return
[Insert Performance Graph]
10/93 10/94 10/95 10/96 10/97 10/98 10/97
<S> <C> <C> <C> <C> <C> <C>
Engle Homes 100 73.86 76.99 62.73 136.59 118.56
CRSP Index for Nasdaq Stock Market (US Companies) 100 100.55 135.43 159.82 210.35 235.87
CRSP Index for General Building Contractors
Residential Buildings 100 63.08 67.29 70.82 85.68 88.08
<FN>
Notes:
A. The lines represent annual index levels derived from compounded
daily returns that include all dividends.
B. If the annual interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
C. The index level for all series was set to 100 on 10/29/93.
</FN>
</TABLE>
16
CERTAIN TRANSACTIONS
During fiscal 1998, Alec Engelstein received aggregate
interest payments of $261,437 from the Company with respect to
$4,450,000 million principle amount of the Company's 11.75% Senior
Notes due 2000 (the "Senior Notes") owned by him. In July 1998,
Mr. Engelstein received $4,711,437.50 in connection with the
Company's redemption of all of the outstanding Senior Notes.
17
PROPOSAL TO APPROVE THE MATERIAL TERMS OF
THE PERFORMANCE GOALS RELATING TO
THE INCENTIVE COMPENSATION PROVISIONS
SET FORTH IN THE EMPLOYMENT AGREEMENT
Effective November 1, 1998, the Company entered into an
employment agreement with Alec Engelstein, the Chairman of the
Board, President and Chief Executive Officer of the Company (the
"Employment Agreement"). The Employment Agreement is attached
hereto as Appendix A. The material features of the Employment
Agreement are discussed below, but the description is subject to,
and is qualified in its entirety by, the full text of the
Employment Agreement.
Under the terms the Employment Agreement, payment of Mr.
Engelstein's incentive compensation is subject to approval by the
Company's shareholders of the material terms of the performance
goals upon which such incentive compensation are based. The
material terms of such performance goals relating to the incentive
compensation set forth in the Employment Agreement include
primarily the business criteria on which the performance goals are
based. The material terms of the performance goals relating to the
incentive compensation provisions set forth in the Employment
Agreement are therefore being submitted to the shareholders for
approval.
The Employment Agreement has a term of five years which such
term shall automatically extend each year for an additional one
year period unless the Company or Mr. Engelstein delivers written
notice to the other of its election or his election not to extend
the term. The Employment Agreement provides for an annual base
salary to Mr. Engelstein of $500,000 in the first year, subject to
increases in the discretion of the Compensation Committee. In
addition, the base salary shall be increased, but shall not be
decreased, by that percentage by which the Consumer Price Index,
for the Palm Beach, Florida area for the immediately preceding
calendar year exceeds such index for the next preceding calendar
year.
THIS PARAGRAPH AND THE FOLLOWING PARAGRAPH DISCUSS THE
MATERIAL TERMS OF THE PERFORMANCE GOALS OF THE INCENTIVE
COMPENSATION PROVISIONS OF THE EMPLOYMENT AGREEMENT THAT ARE THE
SUBJECT OF THIS PROPOSAL. The Employment Agreement provides for an
annual bonus to Mr. Engelstein based on objective performance
standards. Mr. Engelstein will be eligible to receive bonuses for
each fiscal year of the Company only in the event that the
Company's Adjusted Pre-Tax Income (as defined below) equals or
exceeds 10% of the Average Stockholders' Equity (as defined below),
for such fiscal year (the "Goal"). If the Goal is met, Mr.
Engelstein shall receive a bonus for such fiscal year equal to the
sum of (i) 1% of 10% of the Company's Adjusted Pre-Tax Income for
the year plus (ii) 2.5% of the amount by which the Adjusted Pre-Tax
Income exceeds 10% of the Adjusted Pre-Tax Income for such fiscal
18
year. "Adjusted Pre-Tax Income" means the Company's income or loss
before income taxes, extraordinary gains or losses and cumulative
effect of accounting changes plus any amounts paid or accrued for
bonuses payable to Mr. Engelstein pursuant to the Employment
Agreement. "Average Stockholders' Equity" means the average of the
Company's year-end stockholders' equity for the two fiscal years
preceding the fiscal year of the Company for which the bonus is
being determined. All amounts described in these defined terms are
those reported by the Company and audited by the Company's
independent public accountants.
Mr. Engelstein may elect to receive payment of all or any
portion of the Incentive Compensation payable for any fiscal year
in the form of cash or shares of Common Stock of the Company,
valued based upon the average closing price for the Company's
Common Stock as reported on the Nasdaq National Market during the
last calendar month of the fiscal year for which the bonus is being
determined. The Incentive Compensation shall be paid to Mr.
Engelstein within two and one-half months after the end of the
fiscal year for which it is payable.
The specific Incentive Compensation to be paid to Mr.
Engelstein pursuant to the Employment Agreement is not determinable
in advance because of its dependency on future operating results of
the Company. However, if the Employment Agreement had been in
effect for the fiscal year ended October 31, 1998, Mr. Engelstein
would have been entitled to receive $666,700 as Incentive
Compensation.
Payment of the Incentive Compensation in certain years during
the term that would not otherwise be deductible by reason of
Section 162(m) of the Internal Revenue Code of 1986, as amended, is
subject to certain approvals, including the shareholder approval
being sought hereby. The Employment Agreement also contains
certain non-competition covenants and covenants against
solicitation of clients and employees for a competitive business
and provides for certain payments to Mr. Engelstein upon his
termination.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS
RELATING TO THE INCENTIVE COMPENSATION PROVISIONS SET FORTH IN THE
EMPLOYMENT AGREEMENT.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of BDO Seidman, LLP independent public accountants,
served as the Company's independent public accountants for the
fiscal year ended October 31, 1998. The Board of Directors, on the
recommendation of the Company's Audit Committee, has selected BDO
Seidman, LLP as the Company's independent public accountants for
the current fiscal year ending October 31, 1999. One or more of
the representatives of BDO Seidman, LLP are expected to be present
19
at the Annual Meeting, will have the opportunity to make a
statement if they desire to do so and are expected to be available
to respond to appropriate questions from shareholders.
OTHER BUSINESS
The Board knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly
come before the Annual Meeting, the persons named in the
accompanying proxy will vote proxies as in their discretion they
may deem appropriate, unless they are directed by a proxy to do
otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be
included in the Company's proxy statement for the Company's 2000
Annual Meeting of Shareholders must deliver a proposal in writing
to the Company's principal executive offices no later than
September 23, 1999.
By Order of The Board
of Directors
/S/ ALEC ENGLESTEIN
-------------------
ALEC ENGELSTEIN
Chairman of the
Board, President and
Chief Executive Officer
Boca Raton, Florida
January 20, 1999
20
APPENDIX A
EMPLOYMENT AGREEMENT
A-1
PROXY FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
of
ENGLE HOMES, INC.
123 NW 13th Street, Suite 300
Boca Raton, Florida 33432
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF
DIRECTORS
COMMON STOCK
The undersigned holder of Common Stock of Engle Homes, Inc.,
a Florida Corporation, hereby appoints Alec Engelstein and David
Shapiro, and each of them, as proxies for the undersigned, each
with full power of substitution, to act for the undersigned and to
vote, as designated below, all shares of stock of the Company and
that the undersigned is entitled to vote at the 1999 Annual Meeting
of Shareholders of the Company, to be held on Thursday, February
25, 1999 at 11:00 a.m. local time at the Company's offices located
at 123 N.W. 13th Street, Suite 300, Boca Raton, Florida, and at any
adjournment(s) or postponements(s) thereof.
The Board of Directors unanimously recommends a vote "FOR" the
election of all the director nominees listed in proposal (1) and
"FOR" approval of proposal (2) below.
(1) Election of Alec Engelstein, Harry Engelstein, John A.
Kraynick, David Shapiro, Henry Fishkind, Ph.D., Ronald Korn
and Alan L. Shulman as directors of the Company.
VOTE FOR all nominees listed above, except vote withheld from
the following nominees(s) (if any).
_________________________________________________________________
________________________________________________________________
VOTE WITHHELD from all nominees.
(2) Approval of the material terms of the performance goals
relating to the incentive compensation provisions set forth in
the Employment Agreement between the Company and Alec
Engelstein, Chairman of the Board, President and Chief
Executive Officer of the Company.
FOR AGAINST ABSTAIN
(3) The Proxies are authorized to vote in their discretion upon
such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
(SEE REVERSE SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR
NOMINEES LISTED IN PROPOSAL (1) AND "FOR" APPROVAL OF PROPOSAL (2)
ABOVE.
The undersigned hereby acknowledges receipt of (i) the Notice
of Annual Meeting and related Proxy Statement, and (ii) the
Company's 1998 Annual Report to Shareholders.
Dated: ____________________, 1999
_______________________________
(Signature)
________________________________
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears hereon and
mail it promptly even though you plan to attend the meeting. When
shares are held by joint tenants, both should sign. When signing
as an attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign fill
corporate name by president or other authorized officer. If a
partnership name, by authorized person.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT
IN THE ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE
UNITED STATES.
