<PAGE>
Proxy materials filed with the Securities and Exchange Commission must include a
cover page in the form indicated below in Schedule 14A and the appropriate box
on the cover page must be checked to indicate the type of filing.
Please mark up the template below for your filing.
================================================================================
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
NVR, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (check the appropriate box):
[X] No filing fee needed.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- ---------
* Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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:
Notes:
<PAGE>
[LOGO OF NVR APPEARS HERE]
NVR, INC.
7601 LEWINSVILLE ROAD
MCLEAN, VA 22102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 6, 1997
The Annual Meeting (the "Meeting") of Shareholders of NVR, Inc. (the
"Company") will be held at the Ritz Carlton at Tysons Corner, 1700 Tysons
Boulevard, McLean, Virginia 22102 on Tuesday, May 6, 1997, at 1:00 P.M.,
Eastern Time, for the purpose of considering and acting upon the following
matters:
1. The election of three (3) directors to serve three (3) year terms and
until their successors are duly qualified and elected;
2. Ratification of appointment of independent auditors for the year
ending December 31, 1997; and
3. Such other business as may properly be brought before the Meeting or
any adjournment thereof.
The Board of Directors has established the close of business on March 3,
1997 as the record date for the Meeting. Only shareholders of record as of
that date shall be entitled to notice of and to vote at the Meeting or any
adjournment thereof.
You are urged to date and sign the enclosed proxy card and return it
promptly in the accompanying envelope. You are invited to attend the Meeting
in person. If you do attend the Meeting, you may withdraw your proxy and vote
in person.
By order of the Board of Directors,
/s/ James M. Sack
James M. Sack
Vice President, Secretary and
General Counsel
April 4, 1997
<PAGE>
NVR, INC.
7601 LEWINSVILLE ROAD
MCLEAN, VA 22102
PROXY STATEMENT
This Proxy Statement is being mailed on or about April 4, 1997 in connection
with the solicitation on behalf of the Board of Directors of NVR, Inc., a
Virginia corporation ("NVR" or the "Company"), of proxies for use at the
Annual Meeting of Shareholders of the Company to be held on Tuesday, May 6,
1997, at the Ritz Carlton at Tysons Corner, 1700 Tysons Boulevard, McLean,
Virginia 22102 at 1:00 P.M., Eastern Time, and at any and all postponements
and adjournments thereof.
The cost of solicitation of proxies will be borne by NVR, including expenses
in connection with preparing, assembling and mailing the proxy solicitation
materials and all papers accompanying them. The Company may reimburse brokers
or persons holding shares in their names or in the names of their nominees for
their expenses in sending proxies and proxy material to beneficial owners. In
addition to solicitation by mail, certain officers, directors and regular
employees of the Company, who will receive no extra compensation for their
services, may solicit proxies by telephone, telecopy or personally. The
Company has retained Corporate Investor Communications, Inc. to assist in the
solicitation of brokers, bank nominees and institutional holders for a fee of
$3,000 plus out-of-pocket expenses.
All voting rights are vested exclusively in the holders of the Company's
common stock, par value $.01 per share (the "Common Stock"). Only shareholders
of record as of the close of business on March 3, 1997 (the "Record Date") are
entitled to receive notice of and to vote at the Annual Meeting.
The persons named in the accompanying proxy card will vote shares of Common
Stock represented by all valid proxies in accordance with the instructions
contained thereon. In the absence of instructions, shares represented by
properly executed proxies will be voted in favor of the election of those
three persons designated hereinafter as nominees for Class I directors of the
Company, in favor of the ratification of KPMG Peat Marwick LLP as the
Company's Independent Auditors for 1997, and in the discretion of the named
proxies with respect to any other matters presented at the Annual Meeting.
With respect to the tabulation of proxies, abstentions and broker non-votes
have no effect on the vote. Any shareholder may revoke his or her proxy at any
time prior to its use by filing with the Secretary of the Company, at 7601
Lewinsville Road, McLean, Virginia 22102, written notice of revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting
and voting in person. Execution of the enclosed proxy will not affect your
right to vote in person if you should later decide to attend the Annual
Meeting.
As of the Record Date, the Company had outstanding a total of 12,401,444
shares of Common Stock, each share of which is entitled to one vote. The
presence, either in person or by proxy, of persons entitled to vote a majority
of the outstanding Common Stock is necessary to constitute a quorum for the
transaction of business at the Annual Meeting. Under the Company's Restated
Articles of Incorporation and Bylaws, holders of Common Stock are not entitled
to vote such shares on a cumulative basis.
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Board of Directors is divided into three classes. At the 1997
Annual Meeting, the following persons constituting Class I of the directors
are to be elected to hold office for a three year term and until their
successors are duly qualified and elected:
C. Scott Bartlett, Jr.
William A. Moran
Richard H. Norair, Sr.
The affirmative vote of the holders of a plurality of the votes cast by the
shares entitled to vote in person or by proxy at the Annual Meeting is
required for the election of each of the three nominees named above. Unless
marked otherwise, proxies received will be voted for the election of each of
the three nominees named above. The Board of Directors of the Company does not
contemplate that any of its proposed nominees listed above will become
unavailable for any reason, but if any such unavailability should occur before
the Annual Meeting, proxies may be voted for another nominee selected by the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE FOREGOING NOMINEES AS DIRECTORS OF THE COMPANY.
The following sets forth certain pertinent information with respect to the
current directors of the Company, including the nominees listed above.
<TABLE>
<CAPTION>
YEAR FIRST ELECTED/
NAME AGE TERM EXPIRES
---- --- -------------------
<S> <C> <C>
Dwight C. Schar(2)(3)(4)........................ 55 1993/1999
C. Scott Bartlett, Jr.(1)(4).................... 64 1993/1997
Manuel H. Johnson(1)(4)......................... 48 1993/1998
William A. Moran(2)(3).......................... 50 1993/1997
Richard H. Norair, Sr.(1)(4).................... 68 1993/1997
David A. Preiser(2)(4).......................... 40 1993/1998
George E. Slye(1)(3)............................ 66 1993/1999
John M. Toups(2)(3)............................. 71 1993/1998
Frederick W. Zuckerman(2)(3).................... 63 1993/1999
</TABLE>
- --------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Executive Committee
(4) Member of Nominating Committee
Dwight C. Schar has been chairman of the board, president and chief
executive officer of NVR, as well as chairman of the board of NVR Homes, Inc.
("Homes") and NVR Financial Services, Inc. ("NVRFS"), since September 30,
1993. Until September 30, 1993, Mr. Schar had been the chief executive officer
of NVR L.P. since April 1986, a director and the chairman of the NVCompanies
Inc. ("NVC") board of directors since September 1984 (NVC was the general
partner of NVR L.P.'s managing general partner) and chairman of Ryan Homes,
Inc. ("RHI")'s board of directors since December 1986. Mr. Schar was also a
director of NVR Savings Bank ("NVRSB") from December 1988 through March 1994.
C. Scott Bartlett, Jr. has been a director of NVR since September 30, 1993.
Mr. Bartlett is self-employed as a consultant, working with financial
institutions in the areas of credit policy, loan approval, and loan workouts.
In conjunction with such activities, he served as senior vice president and
chief credit officer of MTB Bank from
2
<PAGE>
1992 to 1994. Mr. Bartlett is also a director of The Bibb Company, Bucyrus
International, Inc., Darling International, Inc., Harvard Industries, Inc.,
Janus, Inc., Ocean View Capital, Inc., MTB Bank and Western Systems, Inc.
Manuel H. Johnson has been a director of NVR since September 30, 1993. Dr.
Johnson is co-chairman and senior partner in Johnson Smick International,
Inc., an international financial policy consulting firm. During 1996, Mr.
Johnson was named a trustee of the Financial Accounting Foundation, which
oversees the Financial Accounting Standards Board. He was also Koch Professor
of International Economics and Director of the Center for Global Market
Studies at George Mason University from September 1990 to September 1994. Dr.
Johnson is a founder and co-chairman of the Group of Seven Council, an
international commission supporting economic cooperation among the major
industrial nations. He is a director of Dean Witter Intercapital Funds Group,
Trust Company of the West/Dean Witter Funds, Greenwich Capital Markets, Inc.,
and the NASDAQ Stock Market, Inc.
William A. Moran has been a director of NVR since September 30, 1993. From
September 1984 until September 30, 1993, Mr. Moran had been a director of NVC.
Mr. Moran was a director of NVRSB from 1988 through March 1994. In addition,
Mr. Moran is the chairman of Elm Street Development, Inc. ("Elm Street"). Mr.
Moran is also a director and shareholder of Craftmark, Inc., a small
homebuilder in Virginia and Maryland, and The Gables, Inc. which develops,
invests in and periodically sells apartments and condominiums in Virginia and
Maryland.
Richard H. Norair, Sr. has been a director of NVR since September 30, 1993.
Mr. Norair has been involved in the Norair Companies for 47 years. The Norair
Companies are engaged in real estate development, prime construction
contracting, nursing home development, and manufacturing of specialized
equipment and parts for the power generating industry, worldwide. Mr. Norair
is chairman of the board of Norair Engineering Corporation, the parent company
of the Norair Companies, and also chairman of NorCare, Inc. and Mericare
Associates. He is president of Norair Corporation and Norair International.
Mr. Norair has been president of various trade groups, including Master
Builders Association, Construction Contractors Council, Sheetmetal Contractors
Association, and Joint Carpentry Apprentice Council.
David A. Preiser has been a director of NVR since September 30, 1993. Mr.
Preiser is a managing director of the investment banking firm of Houlihan
Lokey Howard & Zukin ("Houlihan Lokey"), where he has been employed in
coordinating the firm's real estate and financial restructuring activities
since September 1990. Mr. Preiser is a director of Jos. A Bank Clothiers, Inc.
George E. Slye has been a director of NVR since September 30, 1993. Mr. Slye
has been the chief executive officer and owner of GESCOM, Inc., a real estate
investment firm, since 1983. Mr. Slye is also a director of Manufacturers
Advisor Corporation.
John M. Toups has been a director of NVR since September 30, 1993. Mr. Toups
held various management positions with Planning Research Corporation from 1970
through 1987, for which he was chief executive officer from 1978 to 1987 and
chairman from 1982 to 1987. He is also a director of the George Mason
University Foundation, INOVA Health System Foundation, Halifax Corporation,
CACI International, Telepad Corporation and Thermatrix, Inc.
Frederick W. Zuckerman has been a director of NVR since September 30, 1993.
Mr. Zuckerman is currently a partner in Zuckerman, Firstenberg & Associates
LLC, a boutique investment bank. Mr. Zuckerman was vice president and
treasurer of IBM Corporation from September 1993 to January 1995. Previously,
he was senior vice president and treasurer of RJR Nabisco, Inc. from February
1991 to August 1993. Mr. Zuckerman is also a director of Meditrust, The
Singapore Fund, The Japan Equity Fund, Turner Corporation, Olympic Financial
Limited, Caere Corporation and Designer Holdings, Inc.
3
<PAGE>
The Board of Directors has an Audit, Compensation, Executive and Nominating
Committee. The primary functions of these committees are as follows:
The Audit Committee provides guidance on financial reporting and makes
recommendations concerning the appointment of the Company's independent
public accountants. The Committee reviews the audit services and the scope
of the annual audit performed by the Company's independent auditors. The
Committee also reviews the adequacy of the Company's internal controls and
reviews the scope and activities of the Company's Internal Audit
Department.
The Compensation Committee determines the compensation of the Chief
Executive Officer and reviews the recommendation of compensation made by
the Chief Executive Officer for all other officers of the Company. The
Option Subcommittee of the Compensation Committee administers and
interprets incentive compensation and option plans for employees of the
Company. The Option Subcommittee consists of Messrs. Preiser, Toups and
Zuckerman.
The Executive Committee has such powers, authority and responsibilities
as may be determined by a majority of the entire Board of Directors.
The Nominating Committee recommends to the Board of Directors candidates
for election as directors. Shareholders wishing to communicate with the
Nominating Committee concerning potential director candidates may do so by
corresponding with the Secretary of the Company and including the name and
biographical data of the individual being suggested.
The Board of Directors met eight times in 1996. Also, during 1996 the
Compensation Committee met five times, the Audit Committee met four times, and
the Nominating Committee met once.
Each outside director of the Board is paid $5,000 per quarter for serving as
a director and fees of $750 for each meeting he attended.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as to the beneficial
ownership of Common Stock by each person known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock as of the
dates indicated and each director and executive officer and by all directors
and executive officers as a group as of March 3, 1997. Except as otherwise
indicated, all shares are owned directly and the owner has sole voting and
investment power with respect thereto.
CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME AND ADDRESS OF HOLDER NUMBER OF SHARES PERCENT OF CLASS
-------------------------- ---------------- ----------------
<S> <C> <C>
Sanford A. Bernstein & Co............... 1,299,100(1) 10.48%
One State Street Plaza
New York, NY 10004
</TABLE>
- --------
(1) Based upon information contained within a Schedule 13G filing by such
entity dated January 30, 1997.
4
<PAGE>
DIRECTORS AND MANAGEMENT
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT OF CLASS
---- ---------------- ----------------
<S> <C> <C>
Dwight C. Schar........................ 868,665(1) 6.80%
C. Scott Bartlett, Jr.................. 24,750(2) *
Manuel H. Johnson...................... 22,750(2) *
William A. Moran....................... 107,795(2) *
Richard H. Norair, Sr.................. 22,750(2) *
David A. Preiser....................... 23,750(2) *
George E. Slye......................... 22,750(2) *
John M. Toups.......................... 30,900(3) *
Frederick W. Zuckerman................. 24,662(2) *
Michael J. Cannizzo.................... 132,101(4) 1.06%
William J. Inman....................... 171,261(4) 1.37%
James M. Sack.......................... 1,114 *
Paul C. Saville........................ 186,796(4) 1.50%
Dennis M. Seremet...................... 37,671(5) *
---------
All directors and executive officers as
a group
(14 persons).......................... 1,677,715
</TABLE>
- --------
* Less than 1%.
(1) Includes 380,381 vested options, 28,481 shares owned by his wife, and
1,101 vested shares held by the NVR Employee Stock Ownership Plan in
trust.
(2) Includes 22,750 options issued under the NVR Directors' Long Term
Incentive Plan.
(3) Includes 22,750 options issued under the NVR Director's Long Term
Incentive Plan, and 43 shares owned by his wife.
(4) Includes 75,000 vested options, and 1,101 vested shares held by the NVR
Employee Stock Ownership Plan in trust.
(5) Includes 14,900 vested options, and 1,101 vested shares held by the NVR
Employee Stock Ownership Plan in trust.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Compensation Committee (the "Committee") of the NVR Board of Directors
is responsible for determining and periodically evaluating the various levels
and methods of compensating the Company's executive officers and directors.
The Committee's philosophy regarding executive compensation is to provide a
total compensation program for executive officers which is competitive with
the compensation packages of other companies in the homebuilding and mortgage
banking businesses and which includes performance based compensation which
effectively aligns the interests of management with those of the Company's
shareholders. The Company's compensation package consists of base salary,
annual incentive compensation and long-term incentives consisting of non-
qualified stock options and stock awards ("Performance Shares"). This
performance orientation is accomplished by placing a large portion of
executive compensation at risk, dependent upon the achievement of annual and
long-term financial objectives tied to the Company's business plan and is
intended to enhance shareholder value. During 1996, the Company retained
compensation consultants from KPMG Peat Marwick LLP, an independent and
nationally known public accounting and consulting firm, to review the
reasonableness and appropriateness of the executive compensation program.
After extensive analysis, KPMG Peat Marwick LLP concluded that the Company's
executive compensation program, as more fully described below, is consistent
with the Company's philosophy of creating long-term shareholder value and is
strongly linked to performance based financial objectives.
5
<PAGE>
BASE SALARY
The base salary levels for the executive officers are reviewed annually by
the Committee. Salaries, including executive salaries, are generally
established at the average market rate of other companies of comparable size,
particularly major homebuilding and residential mortgage companies, some of
which are companies included in the Dow/Home Construction Index. In addition,
consideration is given to individual experience as well as individual
performance and the performance of those operations for which the executive is
responsible. The executive officers' 1997 base salaries were not increased
over their 1996 base salaries.
ANNUAL INCENTIVE COMPENSATION
All of the executive officers participate in the Company's annual incentive
compensation plan. Each participant has a maximum potential payout which is
limited to a fixed percentage of the executive's salary. Each executive
officer has an opportunity to earn an annual incentive award which is based on
actual financial results achieved compared to the business plan approved by
the Board of Directors. The maximum incentive opportunity is earned only if
certain business objectives are met or exceeded. At the beginning of each
year, financial targets are established by the Committee for predetermined key
result areas which are tied to the Company's annual business plan. These
annual objectives are consistent with the current year's portion of the
Company's five year business plan. The key result areas used throughout the
homebuilding operation are earnings before interest and taxes, pre-tax profit
and return on assets. The primary key result areas used for the mortgage
banking operation are pre-tax profit and return on invested capital. The key
result area for corporate executives is predicated upon pre-tax profit. For
1996, the executive officers substantially exceeded their financial objectives
and received the maximum incentive award (100% of base salary).
LONG-TERM COMPENSATION
NVR's long-term incentive programs, administered by the Committee, are
designed to focus the attention of executive officers on the Company's long-
term goals and link the interests of executive officers to those of the
shareholders. Awards under the Company's long-term incentive programs also
encourage the retention of key executive personnel. In support of these
objectives, the Company's executive officers have historically participated in
long-term, stock-based incentive programs designed to award grants of stock
options or performance shares over a long-term vesting schedule if certain
cash flow, financial or employment objectives are met.
Because the Company exceeded its operating cash flow objectives for 1996,
the named executive officers earned 49,200 Performance Shares under the NVR
Management Equity Incentive Plan. Beginning in 1997 through 1999, the named
executive officers will be eligible to earn Performance Shares granted in
prior years under the NVR, Inc. 1994 Management Equity Incentive Plan if
certain earnings targets are met or exceeded. In addition, and as demonstrated
in the summary compensation table below, the named executive officers also
received grants of stock options under the Management Long-Term Stock Option
Plan adopted by the Company's shareholders at the 1996 Annual Meeting. A
portion of the stock options will vest in each of 2000, 2001, and 2002 based
upon continued employment.
The named executive officers, as well as other key members of senior
management, also participate in the NVR, Inc. High Performance Compensation
Plan ("Plan"). The objective of the Plan is to reward the named executive
officers and members of senior management for superior performance by the
Company, measured by the three-year aggregate growth in earnings per share
over a threshold equal to the base year earnings per share compounded by ten
percent over the same three year period. Eligible participants will be
allocated a specified percentage of a pool, the aggregate amount of which will
be equal to a percentage of earnings in excess of the threshold. Payments to
participants under the Plan will be made in three installments, with fifty
percent (50%) payable in 1999, and twenty-five (25 %) percent payable in each
of the years 2000 and 2001. Participants may elect to defer receipt of their
payments and instead accrue phantom stock units that would be paid on
specified future dates. Generally, a participant not employed by the Company
on the last day of the three-year measurement period forfeits all rights to
receive benefits under the Plan.
6
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Dwight C. Schar has been Chairman of the Board, President and Chief
Executive Officer of the Company since its inception. The compensation program
for the CEO is linked to the long-term strategic and financial goals of the
Company, and encourages the creation of shareholder value. A significant
amount of the CEO's compensation is tied to the Company's performance and is
at risk, in the form of annual incentive compensation, stock options, and
performance shares. The Committee believes the compensation program for the
CEO is consistent with the Company's philosophy for compensating executive
officers and it encourages long-term shareholder value.
The CEO's 1996 annual incentive compensation opportunity was based on
predetermined pre-tax profit objectives tied to the Company's business plan
which was approved by the Board of Directors. As previously noted, for 1996,
the pre-tax profit objectives for the Company were substantially exceeded and
the CEO received the maximum award of 100% of his base salary.
The CEO received a non-qualified stock option grant of 500,000 stock options
during 1996 under the Management Long-Term Stock Option Plan. As with the
named executive officers above, the CEO earned 64,092 Performance Shares under
the Management Equity Incentive Plan, is eligible to earn Performance Shares
under the 1994 Management Equity Incentive Plan for the years 1997-1999 if
certain earnings objectives are met, and became a participant in the NVR, Inc.
High Performance Compensation Plan as described above.
STOCK OWNERSHIP REQUIREMENTS OF THE CHIEF EXECUTIVE OFFICER, EXECUTIVE
OFFICERS AND CERTAIN MEMBERS OF SENIOR MANAGEMENT
The Committee has established and adopted guidelines that require the Chief
Executive Officer, other executive officers and certain members of senior
management ("Management") to acquire and hold a specified minimum level of the
Company's common stock (the "Guidelines"). Under the Guidelines adopted by the
Board, Management must acquire and hold Shares with a total fair market value
ranging from one (1) to eight (8) times their annual base salaries, with the
Chief Executive Officer required to acquire and hold NVR common stock with a
fair market value equal to a minimum of eight (8) times his annual base
salary. The Committee believes that the imposition of a long-term holding
requirement for Management provides for additional incentive to enhance
shareholder value by linking the interests of such persons directly to those
of the shareholders. Management must comply with the Guidelines by December
31, 2000. In the event of non-compliance at December 31, 2000, or at any date
thereafter, a Participant subject to the Guidelines will receive one-half of
any earned annual incentive compensation in restricted stock until compliance
with the Guidelines is attained.
INTERNAL REVENUE SERVICE CODE SECTION 162(M)
The U.S. Treasury Department issued regulations under Section 162(m) of the
Internal Revenue Code (the "Code") which prevent publicly traded companies
from receiving a tax deduction for compensation paid in any one year to any
executive officer named in the Summary Compensation Table for that year (a
"Named Executive Officer") to the extent that such compensation exceeds
$1,000,000. The deduction limit does not apply to compensation under a plan
approved by shareholders that qualifies as "performance based" compensation.
The Company's principle objective in structuring its compensation programs
and determining the appropriateness of individual awards is to create
incentives for, and to reward achievement of the Company's strategic business
goals, taking into consideration competitive conditions, market economics and
other factors. To the extent that compliance with Section 162(m) is consistent
with the Company's incentive and compensation objectives, it is the Company's
policy to structure and administer its compensation plans such that
compensation paid is deductible.
COMPENSATION COMMITTEE AND OPTION SUBCOMMITTEE
The Committee consists of the five individuals named below, all of whom,
except Mr. Dwight C. Schar, are outside directors of the Company.
The Option Subcommittee of the Compensation Committee administers and
interprets incentive compensation and option plans for employees of the
Company. The Option Subcommittee consists of Messrs. Preiser, Toups and
Zuckerman.
7
<PAGE>
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
John M. Toups, Chairman, William A. Moran, David A. Preiser, Dwight C.
Schar, and Frederick W. Zuckerman
EXECUTIVE COMPENSATION
Shown below is certain information concerning the compensation for services
in all capacities to NVR for the years ended December 31, 1996, 1995 and 1994
of those persons who were, at December 31, 1996, (i) the Chief Executive
Officer, (ii) the four most highly compensated executive officers of NVR.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ----------------------------------
NAME AND INCENTIVE OTHER ANNUAL STOCK LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION(1) COMPENSATION OPTIONS(2) PAYOUTS(3) COMPENSATION
- ------------------ ---- -------- --------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dwight C. Schar......... 1996 $681,000 $681,000 $ -- 500,000 $833,196 $ 7,750(4)
President and Chief 1995 642,500 642,500 -- -- 640,092 7,750(5)
Executive Officer of 1994 630,000 547,155 -- -- 528,762 11,792(6)
NVR; Chairman of the
Board of Directors of
NVR
Michael J. Cannizzo..... 1996 $234,000 $234,000 $ -- -- $208,000 $ 7,750(4)
Senior Vice President-- 1995 229,500 229,500 -- -- 160,000 7,750(5)
Administration of Homes 1994 308,700 298,513 -- -- 132,000 11,792(6)
(NVR's Homebuilding
Operation)
William J. Inman........ 1996 $289,000 $289,000 $ -- 100,000 $208,000 $ 7,500(4)
President of NVRFS 1995 277,800 277,800 -- -- 160,000 7,500(5)
(NVR's Mortgage Banking 1994 277,800 60,283 -- -- 132,000 11,792(6)
Operation)
Paul C. Saville......... 1996 $244,000 $244,000 $ -- 175,000 $208,000 $ 7,750(4)
Senior Vice President, 1995 230,400 230,400 -- -- 160,000 7,750(5)
Chief Financial Officer 1994 225,800 196,107 -- -- 132,000 11,792(6)
and Treasurer of NVR
Dennis M. Seremet....... 1996 $130,000 $130,000 $ -- 60,000 $ 15,600 $ 7,750(4)
Vice President and 1995 119,800 119,800 -- -- 12,000 7,750(5)
Controller of NVR and 1994 104,200 90,498 -- -- 9,900 10,571(6)
Vice President of
Finance, Homes
</TABLE>
- --------
(1) Incentive compensation is reflected in the year earned. All incentive
compensation earned for the periods presented was paid in March of the
subsequent calendar year.
(2) 33 1/3% of the options vest on each of December 31, 2000, 2001 and 2002
with vesting based upon continued employment. The options expire in May
2006 and are exerciseable at $10.625 per share.
(3) Includes the vested portion of the 1993 Performance Shares awarded in the
1993 Plan. For this table, the 1993 Performance Shares were assigned
values of $13.00 per share, $10.00 per share and $5.50 per share for 1996,
1995, and 1994, respectively. The values assigned represent the respective
closing prices of NVR Common Stock on December 31, 1996, 1995 and 1994.
(4) Amount contributed to the Profit Sharing Trust Plan and the Employee Stock
Ownership Plan for the year ended December 31, 1995.
(5) Amount contributed to the Profit Sharing Trust Plan and the Employee Stock
Ownership Plan for year ended December 31, 1994.
(6) Amount contributed to the Profit Sharing Trust Plan for the Plan year
ended December 31, 1993.
8
<PAGE>
STOCK OPTION GRANTS, EXERCISES AND YEAR-END VALUES
Stock Option Grants in 1996
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL
TOTAL REALIZABLE
GRANTED TO OPTIONS VALUE
STOCK EMPLOYEES EXERCISE USING THE BLACK-
OPTIONS FOR THE PRICE EXPIRATION SCHOLES OPTION
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE PRICING MODEL(1)
- ---- ----------- ----------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Dwight C. Schar......... 500,000 32.2% $ 10.625 5/30/06 $ 3,085,000
William J. Inman........ 100,000 6.4% 10.625 5/30/06 617,000
Paul C. Saville......... 175,000 11.3% 10.625 5/30/06 1,079,750
Dennis M. Seremet....... 60,000 3.9% 10.625 5/30/06 370,200
</TABLE>
- --------
(1) The fair value was calculated under the following assumptions: i) the
estimated option life is equal to ten years, ii) the risk free interest
rate was 7.0% (based on a U.S. Treasury Strip due in a number of years
equal to the stock option term as quoted by the Wall Street Journal on the
date of grant), iii) the expected volatility equals 28.9%, and iv) the
estimated dividend yield is equal to 0%.
The options were granted on May 30, 1996 at an exercise price of $10.625 per
share which was equal to the closing price of the underlying Common Stock as
reported by the American Stock Exchange on May 29, 1996. The options vest as
to one-third of the underlying shares on each of December 31, 2000, 2001, and
2002 based upon continued employment.
Aggregated Stock Option Exercises in 1996 and Year-end Stock Option Values
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-
NUMBER OF UNEXERCISED THE-
OPTIONS AT YEAR-END MONEY OPTIONS AT YEAR-END
--------------------------- ---------------------------
SHARES ACQUIRED
NAME ON EXERCISE VALUE REALIZED EXERCISEABLE UNEXERCISEABLE EXERCISEABLE UNEXERCISEABLE
- ---- --------------- -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Dwight C. Schar......... -- -- 380,381 500,000 $2,046,449 $1,187,500
Michael J. Cannizzo..... -- -- 75,000 -- 403,500 --
William J. Inman........ -- -- 75,000 100,000 403,500 237,500
Paul C. Saville......... -- -- 75,000 175,000 403,500 415,625
Dennis M. Seremet....... -- -- 14,900 60,000 80,162 142,500
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee is comprised of Mr. Schar, Mr. Moran, Mr.
Zuckerman, Mr. Toups, and Mr. Preiser, all of whom, except Mr. Schar, are
outside directors of the Company. Compensation Committee interlocks and
insider participation during 1996 were as follows:
For the period January 1, 1996 through the March 3, 1997 Record Date, NVR
entered into new agreements to purchase lots for a total purchase price of
approximately $10,000,000 with Elm Street Development which is controlled by
Mr. Moran. As required under the terms of the indenture governing NVR's 11%
Senior Notes due 2003, these transactions were approved by a disinterested
majority of the Board of Directors. During 1996, NVR purchased developed lots
at market prices from Elm Street for approximately $6,612,000.
CERTAIN TRANSACTIONS
During the year ended December 31, 1996 the law firm of Sack & Associates,
of which Mr. Sack, an executive officer of NVR, was a partner during that
period, billed NVR approximately $344,000 in fees and expenses for legal
services.
9
<PAGE>
For the period January 1, 1996 through the March 3, 1997 Record Date, the
Company repurchased shares of Common Stock and Warrants to repurchase shares
of Common Stock ("Warrants") from certain owners who at the time of the
respective repurchase transactions held more than a five percent beneficial
ownership interest in the outstanding equity of the Company. These
transactions were conducted pursuant to various equity repurchase programs
adopted by the Board of Directors. Specifically, the Company repurchased
577,588 shares of Common Stock and 92,857 Warrants at a total cost of
$6,183,301 from The Home Insurance Company, 993,251 shares of Common Stock at
a total cost of $10,714,105 from The Manufacturers Life Insurance Company and
2,020,141 shares of Common Stock and 211,878 Warrants at a total cost of
$25,454,479 from Franklin Resources, Inc.
EMPLOYMENT ARRANGEMENTS
NVR has an employment agreement with Mr. Schar effective January 1, 1996 to
serve as Chairman, President and Chief Executive Officer. The agreement
continues through January 1, 2002. The agreement provides for an annual
minimum base salary of $681,000 and an annual bonus of up to 100% of base
salary. If Mr. Schar's employment is terminated without cause, as defined in
the agreement, prior to January 1, 2002, he would be entitled to receive in
twelve monthly installments an amount equal to 200% of his annual base salary.
If Mr. Schar terminates his employment in connection with or within one year
after a change in control of NVR, he would be entitled to 200% of his annual
base salary in effect for the year in which such termination occurs, payable
in 12 monthly installments. Mr. Schar agreed that he will not compete with NVR
during the term of his employment and for one year thereafter if termination
is voluntary, without cause or within one year of a change in control, or two
years if he is terminated for cause*.
Homes and NVR have an employment agreement effective January 1, 1995 with
Mr. Cannizzo to serve as Senior Vice President-Administration of Homes. The
agreement continues through January 1, 2001. The agreement provides for an
annual minimum base salary of $225,000 and a bonus of up to 100% of base
salary. There has been a subsequent adjustment to Mr. Cannizzo's salary made
by the Compensation Committee to reflect a merit increase. Mr. Cannizzo's base
salary is now $234,000. If Mr. Cannizzo's employment is terminated without
cause, as defined in the agreement, prior to January 1, 2001, he would be
entitled to receive in twelve monthly installments an amount equal to 200% of
his base salary. If Mr. Cannizzo voluntarily terminates his employment within
one year after a change in control of NVR accompanied by a significant
reduction in Mr. Cannizzo's responsibilities, he would be entitled to 200% of
his then annual base salary payable in twelve monthly installments. Mr.
Cannizzo agreed that he will not compete with NVR during the term of his
employment and for one year thereafter if termination is voluntary, without
cause or within one year of a change in control, or, if termination is for
"cause*", two years thereafter.
NVR has an employment agreement with Mr. Saville effective January 1, 1995
to serve as NVR's Senior Vice President, Chief Financial Officer and
Treasurer. The agreement continues through January 1, 2001. The agreement
provides for an annual minimum base salary of $225,800 and an annual bonus of
up to 100% of base salary. There have been subsequent adjustments to Mr.
Saville's salary made by the Compensation Committee to reflect merit
increases. Mr. Saville's base salary is now $244,000. If Mr. Saville's
employment is terminated without cause, as defined in the agreement, prior to
January 1, 2001, he would be entitled to receive in twelve monthly
installments an amount equal to 200% of his base salary. If Mr. Saville
voluntarily terminates his employment within one year after a change in
control of the Company accompanied by a significant reduction in Mr. Saville's
responsibilities, he would be entitled to 200% of his then annual base salary
payable in twelve equal monthly installments. Mr. Saville agreed that he will
not compete with NVR during the term of his employment and for one year
thereafter if termination is voluntary, without cause or within one year of a
change of control, or, if termination is for "cause*," two years thereafter.
NVR has an employment agreement effective November 13, 1995 with Mr. Inman
to serve as president of NVRFS. The agreement continues until January 1, 2002.
The agreement provides for an annual minimum base salary of $277,800 and an
annual bonus of up to 100% of base salary. There has been a subsequent
adjustment to Mr. Inman's salary made by the Compensation Committee to reflect
a merit increase. Mr. Inman's base salary
10
<PAGE>
is now $289,000. If Mr. Inman's employment is terminated without cause, as
defined in the agreement, prior to January 1, 2002, he would be entitled to
receive in twelve monthly installments an amount equal to 200% of his base
salary. If Mr. Inman voluntarily terminates his employment within one year
after a change in control of the Company accompanied by a significant
reduction in Mr. Inman's responsibilities, he would be entitled to 200% of his
then annual base salary payable in twelve equal monthly installments. Mr.
Inman agreed that he will not compete with NVR during the term of his
employment and for one year thereafter if termination is voluntary, without
cause or within one year of a change of control, or, if termination is for
"cause*," two years thereafter.
- --------
* In each of the above described employment agreements, termination for
"cause" may result if the executive officer subject to the respective
employment agreement is convicted of any felony, other crime involving moral
turpitude, or any crime or offense which results in his incarceration for
more than three months, is guilty of gross misconduct in connection with the
performance of his duties as described within the respective employment
agreement, or if the executive officer materially breeches affirmative or
negative covenants or undertakings set forth in his respective employment
agreement.
11
<PAGE>
STOCK PERFORMANCE GRAPH
Comparison of Cumulative Total Equityholder Return on Equity
The following chart graphs NVR's performance in the form of cumulative total
return to equityholders since NVR completed its restructuring on September 30,
1993 in comparison to the Dow/Home Construction Index and the Dow Jones
Industrial Index for that same period. The Dow/Home Construction Index
includes Pulte Homes, Standard Pacific, Centex, Clayton Homes, Kaufman and
Broad, and Ryland.
[LINE GRAPH APPEARS HERE]
NVR, Inc
1997 Proxy Stock Table
<TABLE>
<CAPTION>
DOW JONES
Measurement Period DOWN INDUSTRIAL
(Fiscal Year Covered) NVR INC. HOME INDEX AVERAGE
- --------------------- -------------- ---------- ---------
<S> <C> <C> <C>
Measurement Pt-09/30/93(a) $100.00 $100.00 $100.00
FYE 12/30/93 $ 95.12 $106.88 $105.53
FYE 12/31/94 $ 53.66 $ 72.67 $110.85
FYE 12/29/95 $ 97.56 $107.96 $151.80
FYE 12/31/96 $126.83 $103.89 $195.38
</TABLE>
(a) Assumes that $100 was invested in NVR stock and the indices on September
30, 1993, the day NVR, Inc. completed its restructuring and issued a new class
of equity securities.
12
<PAGE>
APPROVAL OF INDEPENDENT AUDITORS
(PROPOSAL 2)
At the meeting, the Board of Directors of the Company will recommend
shareholder ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the year 1997. Representatives of
KPMG Peat Marwick LLP are expected to be present at the meeting to respond to
shareholders' questions and will have an opportunity to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"THE APPROVAL OF KPMG PEAT
MARWICK LLP AS THE COMPANY'SINDEPENDENT AUDITORS FOR 1997.
SHAREHOLDER PROPOSALS
Proposals of holders of Common Stock intended to be presented at the next
annual meeting of shareholders of the Company must be received by the Company
on or before December 9, 1997, and must comply with applicable rules of the
Securities and Exchange Commission in order to be included in the Company's
Proxy Statement and form of proxy relating to the 1998 annual meeting of
shareholders.
OTHER MATTERS
Management knows of no other business to be presented for action at the
meeting; but if any other business should properly come before the meeting, it
is intended that the proxies will be voted in accordance with the best
judgment of the persons acting thereunder.
COPIES OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WHICH THE COMPANY IS REQUIRED
TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE PROVIDED WITHOUT
CHARGE UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER. SUCH REQUESTS MAY BE SENT
TO INVESTOR RELATIONS, NVR, INC., 7601 LEWINSVILLE ROAD, MCLEAN, VIRGINIA,
22102.
By Order of the Board of Directors,
/s/ James M. Sack
James M. Sack
Vice President, Secretary and
General Counsel
McLean, Virginia
April 4, 1997
13
<PAGE>
SKU #3570-PS-97
<PAGE>
NVR, INC.
Proxy for Annual Meeting of Shareholders
May 6, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Sack, Paul C. Saville and Dennis
M. Seremet, or any of them, as proxies each with the power to appoint his
substitute, and hereby authorizes each of them to represent and vote, as
designated on the reverse side, all of the shares of common stock of NVR, INC.
held of record by the undersigned on March 3, 1997 at the Annual Meeting of
Shareholders to be held at the Ritz Carlton at Tysons Corner, 1700 Tysons
Boulevard, McLean, Virginia, 22102, on Tuesday, May 6, 1997, at 1:00 P.M., or at
any adjournment or adjournments thereof.
- --------------------------------------------------------------------------------
(Reverse)
If no choice is indicated, this proxy shall be deemed to grant authority to vote
FOR the election of director nominees, to vote FOR the proposal to ratify the
appointment of KPMG Peat Marwick LLP as independent auditors for the year 1997,
and to vote in the discretion of the named proxies as to any other matters that
come before the meeting.
1. ELECTION OF DIRECTORS (For a term of 3 years)
Nominees: C. Scott Bartlett, Jr., William A. Moran and Richard H. Norair, Sr.
FOR WITHHELD
[_] [_]
[_] _____________________________________________________________
(To withhold authority to vote for any individual nominee(s),
print the name(s) in the space above.)
<PAGE>
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS FOR THE YEAR 1997.
FOR AGAINST ABSTAIN
[_] [_] [_]
The shares represented by this proxy card will be voted in the discretion of the
named proxies as to any other matters that come before the meeting or any
adjournment(s) thereof.
The shareholder's signature should be exactly as the name appears at left. When
shares are held by joint tenants, both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature _____________________________ Date ______
Signature _____________________________ Date ______
