<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SOUTHERN ENERGY HOMES, INC.
- --------------------------------------------------------------------------------
(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] No fee 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:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
SOUTHERN ENERGY HOMES, INC.
Notice of 1999 Annual Meeting of Stockholders
June 1, 1999
To the Stockholders:
The 1999 Annual Meeting of the Stockholders of SOUTHERN ENERGY HOMES,
INC. will be held on Tuesday, June 1, 1999, at 10:00 A.M. at The Harbert Center,
Bruno Hall, 2019 4th Avenue North, Birmingham, Alabama, for the following
purposes:
1. To elect a Board of seven Directors, to serve until the next annual
meeting of stockholders and until their successors shall be elected and
qualified, as more fully described in the accompanying Proxy Statement.
2. To consider and act upon any other business which may properly come
before the meeting.
The Board of Directors has fixed the close of business on April 9,
1999, as the record date for the meeting. All stockholders of record on that
date are entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors
Keith W. Brown
Secretary
Addison, Alabama
April 28, 1999
<PAGE> 3
SOUTHERN ENERGY HOMES, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Southern Energy Homes, Inc. ( the
"Corporation") for use at the 1999 Annual Meeting of Stockholders to be held on
Tuesday, June 1, 1999, at the time and place set forth in the notice of the
meeting, and at any adjournments thereof. The approximate date on which this
Proxy Statement and form of proxy are first being sent to stockholders is April
28, 1999.
If the enclosed proxy is properly executed and returned, it will be
voted in the manner directed by the stockholder. If no instructions are
specified with respect to any particular matter to be acted upon, proxies will
be voted in favor thereof. Any person giving the enclosed form of proxy has the
power to revoke it by voting in person at the meeting, or by giving written
notice of revocation to the Secretary of the Corporation at any time before the
proxy is exercised.
The holders of a majority in interest of all Common Stock issued,
outstanding and entitled to vote are required to be present in person or to be
represented by proxy at the meeting in order to constitute a quorum for
transaction of business. The election of the nominees for Director will be
decided by plurality vote. Abstentions and "non-votes" are counted as present in
determining whether the quorum requirement is satisfied. Abstentions and
"non-votes" have the same effect as votes against proposals presented to
stockholders other than election of directors. Abstentions and "non-votes" will
have no effect on the election of directors. A "non-vote" occurs when a nominee
holding shares for a beneficial owner votes on one proposal, but does not vote
on another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
The Corporation will bear the cost of the solicitation. It is expected
that the solicitation will be made primarily by mail, but regular employees or
representatives of the Corporation (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy materials to their principals
at the expense of the Corporation.
The Corporation's principal executive offices are located at Highway 41
North, Addison, Alabama 35540 and its telephone number is (256) 747-8589.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on April 9, 1999
are entitled to notice of and to vote at the meeting. On that date the
Corporation had outstanding and entitled to vote 12,132,990 shares of Common
Stock, par value $.0001 per share. Each outstanding share of the Corporation's
Common Stock entitles the record holder to one vote.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Seven Directors of the Corporation are to be elected to hold office
until the next annual meeting and until their successors shall be duly elected
and qualified. The persons named in the accompanying proxy will vote, unless
authority is withheld, for the election of the seven nominees named below. If
any of such nominees should become unavailable for election, which is not
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<PAGE> 4
anticipated, the persons named in the accompanying proxy will vote for such
substitutes as management may recommend. No nominee is related to any other
nominee or to any executive officer of the Corporation or its subsidiaries,
except for Wendell L. Batchelor, who is the uncle of Keith O. Holdbrooks,
Executive Vice President and Chief Operating Officer and Director of the
Corporation.
<TABLE>
<CAPTION>
Year First
Elected a Position With the Corporation or Principal
Name of Nominee Age Director Occupation During the Past Five Years
- --------------- --- ---------- ------------------------------------------
<S> <C> <C> <C>
Wendell L. Batchelor 56 1982 Chairman of the Corporation's Board since 1996. Since 1982,
President, Chief Executive Officer and a Director of the
Corporation.
Johnny R. Long 52 1982 Executive Vice President since 1996. Since 1982, Vice
President of the Corporation and a Director.
Keith O. Holdbrooks 38 1998 Director since 1998. Since 1996, Executive Vice President and
Chief Operating Officer of the Corporation. General Manager of
the Corporation's Southern Homes division from 1991 to 1996.
Keith W. Brown 43 1989 Executive Vice President since 1996. Chief Financial Officer
of the Corporation since 1982; Treasurer since January 1993;
Secretary from 1982 to January 1993 and from September 1993 to
present; and a Director since 1989.
Jonathan O. Lee 48 1989 Chairman of the Corporation's Board of Directors from 1989 to
1996. President of a private equity investment firm, Lee
Capital Holdings, since its formation in 1980 (Now Lee Capital
Holdings, LLC). Chairman of the Board of Directors of Globe
Metallurgical, Inc., Fesil ASA, HSC Hospitality, Inc., and
Heritage Consumer Products LLC. Director of First Security
Services Corporation, PAR Associates, Inc., and Citizen's
Capital Inc.
Joseph J. Incandela 52 1993 From June 1991 until December 1998, a Managing Director, and
since January, 1999, Consulting Managing Director, of the
Thomas H. Lee Company, a firm engaged in investment
activities, and a consultant to the Thomas H. Lee Company from
November 1989 until 1991. Chairman of Amerace Corporation from
1986 to 1989 and Chief Executive Officer of Conductron
Corporation from 1983 to 1986. Director of Morgan Grenfell
SmallCap Mutual Fund.
Paul J. Evanson 57 1993 President of Florida Power and Light Co. (FPL) since January
1995. From 1992 through January 1995, Senior Vice President of
Finance and Chief Financial Officer of Florida Power and Light
Company and Vice President and Chief Financial Officer of FPL
Group, Inc. From 1988 to 1992, President and Chief Operating
Officer of Lynch Corporation, a diversified company with
interests in telecommunications, transportation and
manufacturing. Director of Lynch Corporation, Florida Power
and Light Company, and FPL Group, Inc.
</TABLE>
-3-
<PAGE> 5
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1998, there were three meetings of the Board of Directors
of the Corporation. All of the directors attended at least 75% of the aggregate
of (i) the total number of meetings of the Board of Directors and (ii) the total
number of meetings held by Committees of the Board of Directors on which they
served. The Board of Directors does not have a Nominating Committee.
The Corporation pays Jonathan O. Lee, Joseph J. Incandela and Paul J.
Evanson $12,000 per annum, in quarterly installments, for their attendance at
and participation in meetings of the Board of Directors and its Committees. The
Corporation currently has no arrangement for the compensation of any of its
other Directors for their services on the Corporation's Board of Directors or
participation in Committees of the Board of Directors. The Corporation does,
however, reimburse all Directors for any expenses which they may incur in
attending meetings of the Board of Directors or its Committees. From 1989 to
1996, the Corporation had a Management Agreement pursuant to which Lee Capital
Holdings received $150,000 per year for management and other consulting
services, plus reimbursement for certain expenses. Jonathan O. Lee, a nominee
for Director, was Chairman of the Corporation's Board of Directors and is the
President of Lee Capital Holdings, LLC.
The Board of Directors has a Compensation Committee whose members are
Jonathan O. Lee, Joseph J. Incandela and Paul J. Evanson. The Compensation
Committee recommends to the Board of Directors compensation for the
Corporation's key employees. The Compensation Committee met once in 1998.
The Board of Directors has a Stock Option Committee, whose members are
Jonathan O. Lee and Paul J. Evanson, which administers the 1993 Stock Option
Plan. The Stock Option Committee met four times during 1998.
The Corporation also has an Audit Committee whose members are Jonathan
O. Lee, Joseph J. Incandela and Paul J. Evanson. The Audit Committee reviews
with the Corporation's independent accountants the scope of the audit for the
year, the results of the audit when completed and the independent accountants'
fee for services performed. The Audit Committee also recommends independent
accountants to the Board of Directors and reviews with the independent
accountants the Corporation's internal accounting controls and financial
management practices. During fiscal 1998, there was one meeting of the Audit
Committee.
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<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 9, 1999 certain information
with respect to beneficial ownership of the Corporation's Common Stock by: (i)
each person known by the Corporation to own beneficially more than 5% of the
Corporation's Common Stock; (ii) each of the Corporation's directors, (iii) each
of the executive officers named in the Summary Compensation Table elsewhere in
this Proxy Statement; and (iv) all directors and executive officers as a group.
This information is based upon information received from or on behalf of the
named individual. Unless otherwise noted, each person identified possesses sole
voting and investment power over the shares listed.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership (2) Percent of Class
------------------------ ------------------------ ----------------
<S> <C> <C>
Wendell L. Batchelor 933,946 7.6%
Johnny R. Long 780,003 6.4%
Lee Capital Holdings, LLC 405,134 3.3%
Jonathan O. Lee (1)
One International Place
Suite 3040
Boston, MA 02110
Keith W. Brown 247,430 2.0%
Keith O. Holdbrooks 144,500 1.2%
Paul J. Evanson 21,500 *
Joseph J. Incandela 21,250 *
Heartland Advisors, Inc. 2,418,400 19.9%
790 North Milwaukee Street
Milwaukee, WI 53202
Lincluden Management, Inc. 939,200 7.7%
1275 North Service Road West
Suite 607
Oakville, Ontario L6M 3G4
FMR Corp. 1,426,000 11.8%
82 Devonshire Street
Boston, MA 02109
All executive officers and directors 2,553,763 20.3%
as a group (7 persons)
</TABLE>
- --------------------------
* Less than one percent
(1) 347,634 of such shares are owned by Lee Capital Holdings, LLC, a
limited liability company of which Mr. Lee is the Managing Member. Mr.
Lee has sole voting and investment power with respect to such shares.
Lee Capital Holdings has pledged 340,967 of its shares of Common Stock
to Fleet National Bank.
(2) Includes currently exercisable options to purchase 118,779, 18,750,
118,778, 124,999, 15,000, 15,000 and 7,500 shares of common stock held
by Messrs. Batchelor, Long, Brown, Holdbrooks, Evanson, Incandela, and
Lee, respectively.
-5-
<PAGE> 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Corporation's Compensation Committee currently consists of Messrs.
Lee, Incandela and Evanson. None of the members of the Compensation Committee is
an officer or employee of the Company or any of its subsidiaries. Mr. Lee was
formerly Chairman of the Board of Directors of the Company.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by
or paid to the Corporation's Chief Executive Officer and each of the
Corporation's Executive Officers (other than the Chief Executive Officer) whose
total annual salary and bonus exceeded $100,000 for all services rendered in all
capacities to the Corporation and its subsidiaries for the Corporation's three
fiscal years ended January 1, 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Other Securities All Other
Name and Year Salary Bonus Annual underlying Compensation(4)
Principal Position Ended ($) ($) Compensation options(#)(3) ($)
------------------ -------- ------- ------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Wendell L. Batchelor 01/01/99 440,004 435,060 (2) 158,779 2,746
Chairman, President & CEO 01/02/98 440,004 501,257 (2) 40,000 2,517
01/03/97 300,769(1) 556,331 (2) 20,029 2,277
Johnny R. Long 01/01/99 75,000 380,680 (2) 18,750 790
Executive 01/02/98 75,000 438,489 (2) None 770
Vice President 01/03/97 77,404 486,789 (2) None 956
Keith W. Brown 01/01/99 135,000 380,680 (2) 158,778 946
Executive Vice-President 01/02/98 135,000 438,809 (2) 40,000 1,202
Chief Financial Officer, 01/03/97 109,904(1) 486,789 (2) 20,028 494
Treasurer and Secretary
Keith O. Holdbrooks 01/01/99 150,000 380,680 (2) 164,999 525
Executive Vice-President, 01/02/98 150,000 438,809 (2) 40,000 525
and Chief Operating 01/03/97 75,962(1) 458,516 (2) 7,500 279
Officer
</TABLE>
---------------
(1) Effective June 14, 1996, Mr. Batchelor's base salary was increased from
$10,000 to $36,667 per month, and Mr. Brown's base salary was increased
from $6,250 to $11,250 per month. Effective October 1, 1996, Mr.
Holdbrooks' base salary was increased from $4,167 to $12,500 per month.
(2) The aggregate amount of perquisites and other personal benefits,
securities or property did not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus for the named executive officer.
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<PAGE> 8
(3) Options granted to executive officers during the periods were granted
pursuant to the Corporation's 1993 Stock Option Plan, and have been
adjusted for subsequent stock splits through January 1, 1999. In
connection with a repricing of outstanding options, each executive
officer surrendered and was granted replacement options as follows: Mr.
Holdbrooks, 124,999 shares, Mr. Batchelor, 118,779 shares, Mr. Brown,
118,778 shares, and Mr. Long, 18,750 shares.
(4) Includes the following for 1998: (i) matching contributions in the
amount of $525 made by the Corporation to its 401(k) plan during 1998
on behalf of each named executive officer, ; (ii) $1,431, $421, and
$266, which represents the portion of the premium payment that is
attributable to term insurance coverage for Messrs. Batchelor, Brown,
and Long, respectively, as determined by tables supplied by the
Internal Revenue Service.
STOCK OPTION PLANS
The following tables set forth certain information with respect to the
stock options granted to the named executive officers during the fiscal year
ended January 1, 1999 and the aggregate number and value of options exercisable
and unexercisable held by the named executive officers at the end of such fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------
Potential
Realizable Value
Number of % of Total at Assumed
Securities Options Annual Rates of
Underlying Granted to Stock Price
Options Employees Exercise Appreciation For
Granted in Price Expiration Option Term (4)
Name (#)(1) Fiscal Year $/Share Date 5% ($) 10%($)
- ---- ---------- ----------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Wendell L. Batchelor 118,779(2) 21% 5.50 12/14/08 410,847 1,041,167
40,000(3) 23% 10.125 06/10/08 254,702 645,466
Johnny R. Long 18,750(2) 3% 5.50 12/14/08 64,855 164,355
Keith W. Brown 21% 5.50 12/14/08 410,844 1,041,158
118,778(2) 23% 10.125 06/10/08 254,702 645,466
40,000
Keith O. Holdbrooks 124,999(2) 22% 5.50 12/14/08 432,362 1,045,689
40,000(3) 23% 10.125 06/10/08 254,702 645,466
</TABLE>
(1) Options are fully exercisable upon grant.
(2) Represents options granted to the named executive officer in connection
with a repricing and surrender of the same number of outstanding
options.
(3) Options granted to the named executive and subsequently surrendered in
connection with the repricing referred to in the foregoing footnote.
(4) The 5% and 10% assumed rates of annual compounded stock price
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future Common Stock prices.
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<PAGE> 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Shares Value Underlying Unexercised Value of Unexercised In-the-
Acquired on Realized Options at 1/1/99(#) Money Options at 1/1/99($)(2)
Name Exercise(#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- ------------------------- -----------------------------
<S> <C> <C> <C> <C>
Wendell L. Batchelor -0- -0- 118,779/-0- 74,249/-0-
Johnny R. Long -0- -0- 18,750/-0- 11,719/-0-
Keith W. Brown -0- -0- 118,778/-0- 74,236/-0-
Keith O. Holdbrooks -0- -0- 124,999/-0- 78,124/-0-
</TABLE>
(1) The "value realized" reflects the appreciation on the date of exercise
(based on the excess of the fair market value of the shares on the date
of exercise over the exercise price). However, because the executive
officers may keep the shares they acquired upon the exercise of the
options (or sell them at a different price), these amounts do not
necessarily reflect cash realized upon the sale of those shares.
(2) Based on the closing price of the Company's Common Stock on January 1,
1999 on the Nasdaq National Market of $6.125 minus the respective
option exercise prices.
10-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Length Of
Number of Original
Securities Market price Option Term
Underlying of Stock At Exercise Price Remaining At
Options/SARs Time Of at Time Of New Date Of
Repriced or Repricing Or Repricing or Exercise Repricing
Amended Amendment Amendment Price Or
Name Date (#) ($) ($) ($) Amendment
---- -------- ------------ ------------ -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Wendell L. Batchelor 12/14/98 40,000 5.50 10.125 5.50 113 months
12/14/98 40,000 5.50 7.33 5.50 102 months
12/14/98 20,029 5.50 6.93 5.50 87 months
12/14/98 18,750 5.50 6.67 5.50 78 months
Johnny R. Long 12/14/98 18,750 5.50 6.93 5.50 76 months
Keith W. Brown 12/14/98 40,000 5.50 10.125 5.50 113 months
12/14/98 40,000 5.50 7.33 5.50 102 months
12/14/98 20,028 5.50 6.93 5.50 87 months
12/14/98 18,750 5.50 6.67 5.50 76 months
Keith O. Holdbrooks 12/14/98 40,000 5.50 10.125 5.50 113 months
12/14/98 40,000 5.50 7.33 5.50 102 months
12/14/98 7,500 5.50 6.93 5.50 87 months
12/14/98 4,687 5.50 6.93 5.50 76 months
12/14/98 18,750 5.50 6.93 5.50 64 months
12/14/98 14,062 5.50 6.93 5.50 50 months
</TABLE>
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<PAGE> 10
EMPLOYMENT AGREEMENTS
The Corporation has entered into employment agreements, dated as of
June 8, 1989 and amended as of July 1, 1993 and June 14, 1996, with each of
Wendell L. Batchelor and Keith W. Brown. The Corporation also entered into an
employment agreement dated as of July 1, 1993 with Johnny R. Long. Mr.
Batchelor's agreement provides that he shall serve as President and Chief
Executive Officer of the Corporation at a base salary of $36,667 per month. In
addition to his base salary, Mr. Batchelor is entitled to receive monthly
incentive bonus compensation in an amount equal to 2% of the Corporation's
monthly net operating income before interest expenses, taxes and amortization
for organizational expenses, goodwill and covenants not to compete, and without
reduction for any management fees payable to Lee Capital Holdings ("Net
Income"). Such bonus was approximately $435,060 for the year ended January 1,
1999.
Mr. Long's agreement provides that he shall serve as Vice President in
charge of purchasing of the Corporation at a base salary of $6,250 per month. In
addition to his base salary, Mr. Long is entitled to receive monthly incentive
bonus compensation in an amount equal to 1.75% of the Corporation's monthly Net
Income. Such bonus was approximately $380,680 for the year ended January 1,
1999.
Mr. Brown's agreement provides that he shall serve as Chief Financial
Officer and Controller of the Corporation at a base salary of $11,250 per month.
In addition to his base salary, Mr. Brown is entitled to receive monthly bonus
compensation payable in an amount equal to 1.75% of the Corporation's monthly
Net Income. Such bonus was approximately $380,680 for the year ended January 1,
1999.
Each of the employment agreements automatically renews for successive
one-year periods unless sooner terminated by the specified executive or the
Corporation by notice not less than 90 days prior to the date of renewal or by
the Corporation immediately for "cause" or for other than "cause" upon 30 days'
prior notice. Each of the employment agreements provides for the payment of
severance of up to six months' base salary payable in six equal monthly
installments in the event the executive is terminated by the Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Since the Corporation became a public company on March 12, 1993, its
executive compensation program has been administered by the Compensation
Committee of the Board of Directors (the "Committee"). No officers of the
Corporation are members of the Committee.
Since the Corporation's Executive Officers are compensated pursuant to
employment contracts, the Committee's deliberations involve a determination as
to whether the contracts should be amended to change the compensation or other
terms thereof, and whether to permit the contracts to automatically renew for
successive one year periods.
The compensation paid to executive officers pursuant to the employment
contracts consists of a combination of base salaries and monthly bonuses. The
bonus compensation payable under the contracts is tied to the Corporation's "net
income" as defined under the contracts and accordingly is intended to reward the
executive officers for improvements in the Corporation's financial results. A
significant component of the executive officers' compensation is the bonuses,
and accordingly their
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<PAGE> 11
compensation is in large measure directly related to the financial performance
of the Corporation as measured by its net income, as so defined. See "Executive
Compensation - Employment Agreements."
In its deliberations with respect to the review of the employment
contracts, the Committee considered the past performance of the officers, their
level of responsibilities, and the Committee's view of the level of compensation
necessary to attract and retain talented individuals in the competitive
environment in which the Corporation operates. The Committee assigned no
particular weight to any one factor, and viewed the deliberations as an exercise
of subjective judgment on the part of the Committee.
The executive officers of the Corporation are eligible to receive
options under the Corporation's 1993 Stock Option Plan. For the fiscal year
ended January 1, 1999, the Corporation repriced options to purchase 381,306
shares, which were held by the Executive Officers of the Corporation. See
"Executive Compensation Stock Option Plans". In connection with the repricing of
options held by the Executive Officers, the executive officers surrendered
options to purchase an aggregate 381,306 shares at a weighted average exercise
price of $8.04 per share, in exchange for options to purchase an aggregate
381,306 shares at an exercise price of $5.50. Due to the decline in the
Company's stock price, and the need to retain and motivate key employees, on
December 14, 1998, the Board of Directors authorized the repricing of all
outstanding employee stock options to $5.50, the fair market value of the
Company's common stock on that date.
COMPENSATION OF WENDELL BATCHELOR, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
The Committee established the compensation of Wendell L. Batchelor,
President and Chief Executive Officer of the Corporation for the fiscal year
ended January 1, 1999, using the same criteria that were used to determine the
compensation of other executive officers, as described above. Mr. Batchelor
received a salary of $440,004 and a bonus of $435,060 (2% of Net Income) for the
fiscal year ended January 1, 1999, in accordance with his employment agreement.
This bonus was intended to reward Mr. Batchelor for his role in the performance
by the Corporation. The Corporation's net income for the year ended January 1,
1999 decreased 22% over net income for the year ended January 2, 1998. Mr.
Batchelor's 1998 bonus decreased approximately $66,000 compared to his 1997
bonus.
The foregoing report has been approved by all members of the Committee.
COMPENSATION COMMITTEE
Jonathan O. Lee
Joseph J. Incandela
Paul J. Evanson
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<PAGE> 12
COMPARATIVE PERFORMANCE GRAPH
The following performance graph and table compare the cumulative total
return to shareholders on the Corporation's Common Stock with the cumulative
total return of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500
Index") and a peer group (the "Peer Group") of companies selected by the
Corporation whose primary business is manufactured housing. The Peer Group
consists of the following companies: Cavalier Homes, Inc., Cavco Industries,
Inc., Champion Enterprises, Inc., Clayton Homes, Inc., Fleetwood Enterprises,
Kit Manufacturing, Liberty Homes - Class A, Nobility Homes, Inc., Oakwood Homes
Corporation, Schult Homes Corp. and Skyline Corporation. It should be noted that
the companies in the Peer Group are not perfectly comparable to the Corporation.
Certain of the companies are either much larger or much smaller than the
Corporation; some are involved in the production of manufactured housing and
recreational vehicles; and some are vertically integrated to a much greater
extent than the Corporation and engage, for instance, in more significant retail
sales and local development activities.
The graph and the table assume $100.00 was invested on March 12, 1993
in each of the Corporation's Common Stock, the S&P 500 Index and in the Peer
Group and also assumes reinvestment of dividends. The 1998 cumulative returns
were as follows: Southern Energy Homes, Inc., $60.84; S&P 500 Index, $293.91 and
Peer Group, $166.74.
[PERFORMANCE GRAPH]
COMPARISON OF CUMULATIVE RETURNS
Measurement Period
<TABLE>
<CAPTION>
Base Period December December December December December
Company Name/Index 12 March 93 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Southern Energy Homes, Inc. 100 58.94 115.89 114.23 79.47 60.84
S&P 500 Index 100 101.32 139.40 171.40 228.59 293.91
Peer Group 100 87.69 138.86 141.93 187.66 166.74
</TABLE>
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<PAGE> 13
CERTAIN TRANSACTIONS
In January 1993, the Corporation reincorporated as a Delaware
corporation by merging its predecessor, an Alabama corporation also known as
Southern Energy Homes, Inc. ("SEH Alabama"), into the Corporation. As the
surviving corporation, the Corporation assumed all of the obligations of SEH
Alabama.
On June 8, 1989, Lee Capital Holdings, then a Massachusetts general
partnership (now Lee Capital Holdings, LLC), and two of its employees (the "Lee
Group"), acquired 60% of the outstanding capital stock of SEH Alabama in a
leveraged buyout (the "Acquisition"). The Acquisition was effected through the
purchase of the stock of SEH Alabama by a newly formed corporation, SEH
Acquisition Corp., 60% of which was owned by the Lee Group and 40% of which was
owned by certain stockholders and members of SEH Alabama's management group.
In 1989, the Corporation entered into a Management Agreement pursuant
to which Lee Capital Holdings received, until May 1996, $150,000 per year for
management and other consulting services plus reimbursement for certain
expenses. See "Compensation Committee Interlocks and Insider Participation."
Since March 30, 1991, the Corporation has sold homes to a development
company which has developed a residential subdivision in Gardendale, Alabama.
This development company was until December, 1995 controlled by Wendell L.
Batchelor and his brother-in-law, Clinton O. Holdbrooks. In December of 1995,
Wendell L. Batchelor transferred his one-third interest in the development
company to his two children, and Clinton O. Holdbrooks transferred his one-third
interest in the development company to his two children, one of whom is Keith O.
Holdbrooks, Executive Vice President, Chief Operating Officer and Director of
the Corporation. For the fiscal year ended January 2, 1998 and January 1, 1999,
sales to this development company were approximately $273,000 and $3,000,
respectively. Transactions with the development company have been at prices and
on terms no less favorable to the Corporation than transactions with independent
third parties.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants to examine the consolidated financial statements of the
Corporation and its subsidiaries for the fiscal year ended December 31, 1999.
A representative of Arthur Andersen LLP is expected to be present at
the meeting and will have the opportunity to make a statement if he or she so
desires and to respond to appropriate questions. The engagement of Arthur
Andersen LLP was approved by the Board of Directors at the recommendation of the
Audit Committee of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors and persons owning more than 10% of the
outstanding Common Stock of the Corporation to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
Directors and greater than 10% holders of Common Stock are required by SEC
regulation to furnish the Corporation with copies of all Section 16(a) forms
they file.
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<PAGE> 14
Based solely on copies of such forms furnished as provided above, or
written representations that no Forms 5 were required, the Corporation believes
that during the year ended January 1, 1999, all Section 16(a) filing
requirements applicable to its officers, Directors and owners of greater than
10% of its Common Stock were complied with, except as follows: Keith W. Brown,
Chief Financial Officer and a director of the Corporation filed a Form 5, Annual
Statement of Changes in Beneficial Ownership, to report one transaction that
should have been reported on an earlier Form 4; and Joseph Incandela, a director
of the Corporation, filed a Form 5, Annual Statement of Changes in Beneficial
Ownership, to report a transaction that should have been reported on an earlier
Form 4.
DEADLINES FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission,
any proposal submitted for inclusion in the Corporation's Proxy Statement
relating to the Annual Meeting of Stockholders to be held in 2000 must be
received at the Corporation's principal executive offices in Addison, Alabama on
or before December 26, 1999. Receipt by the Corporation of any such proposal
from a qualified stockholder in a timely manner will not ensure its inclusion in
the proxy material because there are other requirements in the proxy rules for
such inclusion.
OTHER MATTERS
Management knows of no matters which may properly be and are likely to
be brought before the meeting other than the matters discussed herein. However,
if any other matters properly come before the meeting, the persons named in the
enclosed proxy will vote in accordance with their best judgment.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be
specifically incorporated by reference into any filing by the Corporation under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, the sections of the Proxy Statement entitled "Compensation Committee
Report on Executive Compensation" and "Comparative Performance Graph" shall not
be deemed to be so incorporated, unless specifically otherwise provided in any
such filing.
10-K REPORT
THE CORPORATION WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES
WITH A COPY OF AN ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE CORPORATION'S MOST RECENT FISCAL YEAR, WITHOUT CHARGE, UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE SENT TO
KEITH W. BROWN, SOUTHERN ENERGY HOMES, INC., HIGHWAY 41 NORTH, ADDISON, ALABAMA
35540.
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<PAGE> 15
VOTING PROXIES
The Board of Directors recommends an affirmative vote on all proposals
specified. Proxies will be voted as specified. If signed proxies are returned
without specifying an affirmative or negative vote on any proposal, the shares
represented by such proxies will be voted in favor of the Board of Directors'
recommendations.
By order of the Board of Directors
Keith W. Brown, Secretary
Addison, Alabama
April 28, 1999
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<PAGE> 16
<TABLE>
<S> <C>
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SOUTHERN ENERGY HOMES, INC. 1. Election of Directors
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For All With- For All
Nominees hold Except
WENDELL L. BATCHELOR JOSEPH J. INCANDELA [ ] [ ] [ ]
KEITH W. BROWN JONATHAN O. LEE
PAUL J. EVANSON JOHNNY R. LONG
KEITH O. HOLDBROOKS
CONTROL NUMBER:
RECORD DATE SHARES: Note: If you do not wish your shares voted "For" a particular
nominee(s), mark the "For All Except" box and strike a line through
the name(s) of such nominee(s). Your shares will be voted for the
remaining nominee(s).
2. In their discretion, the proxies are authorized to vote upon such other
business as may property come before the meeting.
Mark box at right if you plan to attend the Meeting in person. [ ]
---------
Please be sure to sign and date this Proxy. Date
- ------------------------------------------------------ Mark box at right if an address change or comment has been [ ]
noted on the reverse side of this card.
Stockholder sign here Co-owner sign here
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</TABLE>
SOUTHERN ENERGY HOMES, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval.
These are discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, June 1,
1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Southern Energy Homes, Inc.
<PAGE> 17
SOUTHERN ENERGY HOMES, INC.
The undersigned hereby appoints Wendell L. Batchelor and Jonathan O. Lee, and
each of them acting singly, with full power of substitution, proxies to
represent the undersigned at the 1999 Annual Meeting of Stockholders of SOUTHERN
ENERGY HOMES, INC. to be held June 1, 1999 at 10:00 a.m. at The Harbert Center,
Bruno Hall, 2019 4th Avenue North, Birmingham, Alabama, and at any adjournment
or adjournments thereof, to vote in the name and place of the undersigned, with
all powers which the undersigned would possess if personally present, all the
shares of SOUTHERN ENERGY HOMES, INC. standing in the name of the undersigned
upon the matters set forth in the Notice and Proxy Statement for the Meeting in
accordance with the instructions on the reverse side and upon such other
business as may properly come before the Meeting.
THE BOARD RECOMMENDS A VOTE FOR ALL NOMINEES FOR THE ELECTION OF DIRECTORS.
SHARES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED WILL BE VOTED FOR ALL NOMINEES FOR THE ELECTION OF DIRECTORS.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
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Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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