<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
NVR, 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:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF NVR APPEARS HERE]
NVR, INC.
7601 Lewinsville Road
McLean, VA 22102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on Wednesday, May 3, 2000
The Annual Meeting of Shareholders (the "Meeting") of NVR, Inc. (the
"Company") will be held at the Company's headquarters at 7601 Lewinsville Rd.,
Suite 300, McLean, Virginia on Wednesday, May 3, 2000, at 11:30 A.M., Eastern
Time, for the purpose of considering and acting upon the following matters:
1. The election of the three (3) nominees for director to serve three (3)
year terms and until their successors are duly elected and qualified;
2. Ratification of appointment of KPMG LLP as independent auditors for
the year ending December 31, 2000; 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 1,
2000 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.
Whether or not you plan to attend the Meeting, 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,
[SIGNATURE OF JAMES M. SACK APPEARS HERE]
James M. Sack
Vice President, Secretary and
General Counsel
March 21, 2000
<PAGE>
NVR, INC.
7601 Lewinsville Road
Suite 300
McLean, VA 22102
PROXY STATEMENT
This Proxy Statement and the Annual Report for the year ended December 31,
1999 are being mailed on or about March 21, 2000 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 Wednesday, May 3, 2000, at the
Company's headquarters at 7601 Lewinsville Rd., Suite 300, McLean, Virginia
22102, at 11:30 A.M., Eastern Time, and at any and all postponements and
adjournments thereof. Except to the extent specifically incorporated by
reference, the Annual Report does not constitute "soliciting material" and is
not to be deemed "filed" with the Securities and Exchange Commission (the
"SEC").
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
$3,750 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 1, 2000 (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 for the election of those three
persons designated hereinafter as nominees for Class I directors of the
Company, for the ratification of KPMG LLP as the Company's Independent
Auditors for 2000, 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 will be counted for
purposes of constituting a quorum but 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 a total of 9,521,793 shares of Common
Stock outstanding, 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.
1
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
The Company's Board of Directors is divided into three classes. At the 2000
Annual Meeting, the following persons constituting Class I of the directors
have been nominated by the Board of Directors to be elected to hold office for
a three year term and until their successors are duly elected and qualified:
C. Scott Bartlett, Jr.
William A. Moran
Richard H. Norair, Sr.
Assuming the presence of a quorum, 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. Each nominee has
consented to serve as a director of the Company if elected. 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. Shareholders may
withhold their votes from the entire slate of nominees or from any particular
nominee by so indicating in the space provided on the attached proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" ALL 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)..... 58 1993/2002
C. Scott Bartlett, Jr. (1) (4).. 67 1993/2000
Manuel H. Johnson (1) (2) (4)... 51 1993/2001
William A. Moran (2) (3)........ 53 1993/2000
Richard H. Norair, Sr. (1) (4).. 71 1993/2000
David A. Preiser (2) (4)........ 43 1993/2001
George E. Slye (1) (3).......... 69 1993/2002
John M. Toups (2) (3)........... 74 1993/2001
</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 since September 30, 1993.
C. Scott Bartlett, Jr. has been a director of NVR since September 30, 1993.
Mr. Bartlett is a self-employed 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 1992 to 1994. Mr. Bartlett is also a director
of Janus Hotels and Resorts, Inc., Allstate Financial Corporation and Abraxas
Petroleum Corporation.
2
<PAGE>
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. Effective August 1,
1997, Dr. Johnson was elected chairman of the Board of Trustees and president
of the Financial Accounting Foundation, which oversees the Financial
Accounting Standards Board. Also during 1997, Dr. Johnson was named a member
of the Independence Standards Board formed jointly by the Securities and
Exchange Commission and the American Institute of Certified Public
Accountants. 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 Morgan Stanley Dean Witter
Funds, Trust Company of the West/Morgan Stanley Dean Witter Funds, and
Greenwich Capital Markets, Inc.
William A. Moran has been a director of NVR since September 30, 1993. 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 Craftstar, Inc. which
develops, invests in and periodically sells apartments, condominiums and
townhomes 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 49 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. Mr. Norair is a director
of Bay Woods Cooperative Management Services Corporation.
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"), and serves as managing partner of
Sunrise Capital Partners L.P., a distressed private equity fund affiliated
with Houlihan Lokey. Previously, Mr. Preiser had been active 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., Akrion, LLC
and Airwalk International, LLC.
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.
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 INOVA Health System
Foundation, Halifax Corporation, CACI International, Thermatrix, Inc. and
GTSI.
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.
3
<PAGE>
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 seven times in 1999. Also, during 1999 the Audit
Committee met four times, the Compensation Committee met four times, and the
Nominating Committee met once. The Executive Committee did not meet during
1999.
Each outside director of the Board was paid $6,500 per quarter for serving
as a director and fees of $1,250 for each meeting attended during 1999.
Incidental travel and out-of-pocket expenses are reimbursed as incurred.
Directors who are also officers of the Company receive no additional
compensation for their services as directors.
4
<PAGE>
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 1, 2000. 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>
Barclays Global Investors, N.A.......... 586,965(1) 6.2%
45 Fremont Street
San Francisco, CA 94105
</TABLE>
- --------
(1) Based solely upon information contained within a Schedule 13G filing by
such entity dated February 10, 2000.
Directors and Management
<TABLE>
<CAPTION>
Name Number of Shares Percent of Class
---- ---------------- ----------------
<S> <C> <C>
Dwight C. Schar....................... 783,493(1) 8.2%
C. Scott Bartlett, Jr................. 13,000(2) *
Manuel H. Johnson..................... 41,215(3) *
William A. Moran...................... 30,750(4) *
Richard H. Norair, Sr................. 30,750(2) *
David A. Preiser...................... 11,000(2) *
George E. Slye........................ 30,750(4) *
John M. Toups......................... 38,900(5) *
William J. Inman...................... 153,996(6) 1.6%
James M. Sack......................... 1,114 *
Paul C. Saville....................... 250,092(7) 2.6%
Dennis M. Seremet..................... 45,914(8) *
---------
All directors and executive officers
as a group (12 persons).............. 1,430,974
</TABLE>
- --------
* Less than 1%.
(1) Includes 40,481 shares owned by his wife, 13,852 shares owned by his
children, 2,826 vested shares held by the NVR Employee Stock Ownership
Plan in trust, and 31,365 vested shares held as a discretionary investment
in the NVR, Inc. Profit Sharing Plan in trust.
(2) Includes 8,000 options issued under the 1996 Directors' Long Term Stock
Option Plan.
(3) Includes 22,750 options issued under the NVR Director's Long Term
Incentive Plan, 8,000 options issued under the 1996 Directors' Long Term
Stock Option Plan and 65 shares owned by his son.
(4) Includes 22,750 options issued under the NVR Directors' Long Term
Incentive Plan, and 8,000 options issued under the 1996 Directors' Long
Term Stock Option Plan.
(5) Includes 22,750 options issued under the NVR Director's Long Term
Incentive Plan, 8,000 options issued under the 1996 Directors' Long Term
Stock Option Plan and 43 shares owned by his wife.
(6) Includes 2,744 vested shares held by the NVR Employee Stock Ownership Plan
in trust.
(7) Includes 75,000 vested options, 2,000 shares owned by his children, 2,825
vested shares held by the NVR Employee Stock Ownership Plan in trust and
7,280 vested shares held as a discretionary investment in the NVR, Inc.
Profit Sharing Plan in trust.
(8) Includes 9,900 vested options, 2,682 vested shares held by the NVR
Employee Stock Ownership Plan in trust, and 7,311 vested shares held as a
discretionary investment in the NVR, Inc. Profit Sharing Plan in trust.
5
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of the Company's Common Stock to file reports of ownership and
changes in ownership of such stock with the SEC and the American Stock
Exchange. Directors, executive officers and greater than 10% shareholders are
required by SEC regulations to furnish the Company with copies of all such
forms filed. 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 directors, executive officers and
greater than 10% shareholders complied with all applicable Section 16(a)
filing requirements.
THE FOLLOWING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF
1934 OR INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
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 stock
awards ("Performance Shares"), non-qualified stock options and long-term cash
incentive plans (the "High Performance Plan"). This compensation package is
performance based and places a large portion of executive compensation at risk
by making it dependent upon the achievement of annual and long-term financial
objectives, which are tied to the Company's business plan and are intended to
enhance shareholder value. From time to time, the Company retains compensation
consultants from KPMG LLP, an independent and nationally known public
accounting and consulting firm, to review the reasonableness and
appropriateness of its executive compensation program. After their latest
analysis conducted in 1996, KPMG 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. There have been no material
changes to the Company's compensation programs during 1999.
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. All four of the employee executive officers' 2000 base salaries
were increased over their 1999 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
6
<PAGE>
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 consolidated pre-tax
profit. For 1999, 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
strongly encourage the retention of key executive personnel. Retention of a
loyal and experienced management team has been and continues to be a key
component of the Company's business strategy. In support of these objectives,
the Company's executive officers have historically participated in long-term,
cash and stock-based incentive programs which have a long-term vesting
schedule based upon certain cash flow, financial or employment objectives.
Because the Company substantially exceeded its earnings objectives for 1999,
the named executive officers earned an aggregate of 162,334 Performance Shares
in 1999 under the NVR, Inc. 1994 Management Equity Incentive Plan (the "Equity
Incentive Plan"). 1999 was the final year that Performance Shares were
eligible to vest for the executive officers.
The named executive officers also received grants of stock options under the
1998 Management Long-Term Stock Option Plan adopted by the Company's
Shareholders at the 1999 Annual Meeting. The options vest in one-third
increments in each of 2003, 2004, and 2005 (see Summary Compensation Table
below).
The named executive officers, as well as other key members of senior
management, also participate in the NVR, Inc. High Performance Compensation
Plan ("HP Plan"). The objective of the HP 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
annually 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 is equal to a percentage of earnings in excess of the threshold. The
aggregate value of the pool for the measurement period January 1, 1996 to
December 31, 1998, was established on December 31, 1998 (see the Summary
Compensation Table below for amounts allocated to the named executive
officers). Payments to participants under the HP Plan will be made in three
installments, with one-third payable in each of 2000, 2001, and 2002. Full
payment to participants of benefits earned under the HP Plan is generally
contingent upon continued employment by the participants through 2001. An
additional measurement period began January 1, 1999 and continues through
December 31, 2001 (see Long-Term Incentive Plan Awards). Payments to
participants under the new measurement period for any amounts earned will be
made in three installments, with one third payable in 2003, 2004 and 2005.
Full payment to participants earned under the new measurement period is
generally contingent upon continued employment by the participants through
2004.
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 and long-term
7
<PAGE>
cash 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 1999 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 1999,
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 also
earned 85,667 Performance Shares (as described above) under the Equity
Incentive Plan during 1999, and is a participant in the HP 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 CEO,
other executive officers and certain members of senior management
("Management") to acquire and continuously hold a specified minimum level of
Common Stock (the "Guidelines"). Under the Guidelines adopted by the Board,
Management must acquire and hold Common Stock with a total fair market value
ranging from one (1) to eight (8) times their annual base salaries, with the
CEO required to acquire and hold 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. The Guidelines became
effective January 31, 2000. In the event of non-compliance at January 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. All members of
Management met their specified holding requirements at January 31, 2000.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the corporate deduction
for compensation paid to the executive officers named in the Summary
Compensation Table to $1 million unless such compensation qualifies as
"performance-based compensation" which, among other things, requires approval
by the Company's stockholders. The Committee strives whenever possible to
structure compensation plans such that they are tax deductible by the Company.
To minimize the non-deductibility of executive compensation expense due to
the limitations of Section 162(m) and still maintain the ability to
competitively compensate the Company's named executive officers, during 1999
the Company established a deferred compensation plan (Deferred Comp Plan). The
specific purpose of the Deferred Comp Plan was to establish a vehicle whereby
the named executive officers could defer the receipt of compensation that
otherwise would be nondeductible for tax purposes into a period where the
Company would realize a tax deduction for the amounts paid. To encourage the
named executive officers to participate in the Deferred Comp Plan, the
Deferred Comp Plan provides for a deferral incentive equal to twenty percent
of the amounts deferred that would not otherwise be deductible by the Company.
Amounts deferred into the Deferred Comp Plan are invested in NVR common stock
and are paid out in a fixed number of shares upon expiration of the deferral
period.
During 1999, each of the named executive officers deferred their respective
receipt of performance shares under the Equity Incentive Plan. In addition,
Mr. Schar deferred the receipt of his first installment under the HP Plan. See
the Summary Compensation Table below for individual amounts.
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.
8
<PAGE>
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. Johnson, Preiser and
Toups.
The Compensation Committee of the Board of Directors:
John M. Toups, Chairman, Manuel H. Johnson, William A. Moran, David A.
Preiser, and Dwight C. Schar
9
<PAGE>
EXECUTIVE COMPENSATION
Shown below is certain information concerning the compensation for services
in all capacities to NVR for the years ended December 31, 1999, 1998 and 1997
of those persons who were, at December 31, 1999, (i) the Chief Executive
Officer, and (ii) the three other employee 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 Compensation(6)
- ------------------ ---- -------- --------------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dwight C. Schar......... 1999 $850,000 $850,000 $-- 250,000 $5,044,909(5) $10,100
Chairman of the 1998 750,000 750,000 -- -- 4,976,943(4) 8,500
Board, Chief Executive 1997 681,000 681,000 -- -- 1,873,944(3) 8,000
Officer and President
William J. Inman........ 1999 $304,000 $304,000 $-- 50,000 $1,983,625(5) $ 9,600
President of NVR 1998 289,000 289,000 -- -- 2,293,613(4) 8,000
Mortgage Finance, Inc. 1997 289,000 289,000 -- -- 765,625(3) 7,500
Paul C. Saville......... 1999 $300,000 $300,000 $-- 87,500 $1,983,625(5) $10,100
Senior Vice President, 1998 270,000 270,000 -- -- 2,649,360(4) 8,500
Chief Financial Officer 1997 244,000 244,000 -- -- 765,625(3) 8,000
and Treasurer
Dennis M. Seremet....... 1999 $160,000 $160,000 $-- 30,000 $ 377,852(5) $10,100
Vice President and 1998 144,000 144,000 -- -- 1,019,634(4) 8,500
Controller 1997 130,000 130,000 -- -- 145,819(3) 8,000
</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, 2003, 2004 and 2005
with vesting based upon continued employment. The options expire in May
2009 and are exercisable at $47.625 per share.
(3) For the year ended December 31, 1997, the column represents the vested
portion of the performance shares awarded pursuant to the 1994 Management
Equity Incentive Plan. For this table, the performance shares were
assigned a value of $21.875 per share (which equaled the closing price of
NVR's common stock as listed on the American Stock Exchange on the vesting
determination date).
(4) For the year ended December 31, 1998, the column includes amounts for both
the vested portion of performance shares, valued at $24.875 per share
(which equaled the closing price of NVR's common stock as listed on the
American Stock Exchange on the vesting determination date), awarded
pursuant to the 1994 Management Equity Incentive Plan, and to earned
benefits pursuant to the HP Plan. The amounts pertaining to the 1994
Management Equity Incentive equal $2,130,967; $870,625; $870,625 and
$165,842 for Messrs. Schar, Inman, Saville and Seremet, respectively. The
amounts pertaining to the HP Plan equal $2,845,976; $1,422,988; $1,778,735
and $853,792 for Messrs. Schar, Inman, Saville and Seremet, respectively.
Amounts earned under the HP Plan will be paid out in one-third increments
on each of January 2, 2000, 2001 and 2002 for Messrs. Inman, Saville and
Seremet, as long as the respective executive officer remains in the
Company's employ through December 31, 2001. Mr. Schar deferred his January
2, 2000 payment under the HP Plan into the Deferred Comp Plan. Mr. Schar
is scheduled to receive one-third of his total HP award on each of January
2, 2001 and 2002. Termination of employment with the Company prior to
December 31, 2001 will result in the forfeiture of any unpaid benefits at
the time of termination.
(5) For the year ended December 31, 1999, the column includes amounts for both
the vested portion of performance shares, valued at $47.25 per share
(which equaled the closing price of NVR's common stock as listed on the
American Stock Exchange on the vesting determination date), awarded
pursuant to the 1994 Management Equity Incentive Plan, and a deferral
incentive earned for deferring otherwise nondeductible compensation into a
period where the amounts paid will be deductible for tax purposes. The
amounts pertaining to the 1994 Management Equity Incentive equal
$4,047,766; $1,653,750; $1,653,750 and
10
<PAGE>
$315,016 for Messrs. Schar, Inman, Saville and Seremet, respectively. The
amounts pertaining to the deferral incentive equal $997,143; $329,875;
$329,875 and $62,836 for Messrs. Schar, Inman, Saville and Seremet,
respectively.
(6) Amount contributed to the Profit Sharing Trust Plan and the Employee Stock
Ownership Plan.
Stock Option Grants, Exercises and Year-End Values
Stock Option Grants In 1999
<TABLE>
<CAPTION>
Percent of
Total Options
Granted to Option
Stock Employees For Exercise Potential Realizable Value
Options the Fiscal Price Expiration Using the Black-Scholes Option
Name Granted (#) Year ($/Share) Date Pricing Model(1)
- ---- ----------- ------------- --------- ---------- ------------------------------
<S> <C> <C> <C> <C> <C>
Dwight C. Schar......... 250,000 27.0% $47.625 5/26/09 $7,482,500
William J. Inman........ 50,000 5.4% 47.625 5/26/09 1,496,500
Paul C. Saville......... 87,500 9.4% 47.625 5/26/09 2,618,875
Dennis M. Seremet....... 30,000 3.2% 47.625 5/26/09 897,900
</TABLE>
- --------
(1) The fair value per share was calculated under the following assumptions:
i) the estimated option life is equal to ten years, ii) the risk free
interest rate was 5.972% (based on a U.S. Treasury Strip due in a number
of years equal to the stock option term), iii) the expected volatility
equals 40.189%, and iv) the estimated dividend yield is equal to 0%.
Aggregated Stock Option Exercises In 1999 And Year-end Stock Option Values
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Unexercised the-Money Options at Year-
Stock Options at Year-End End
Shares Acquired --------------------------- --------------------------
Name on Exercise Value Realized Exerciseable Unexerciseable Exercisable Unexerciseable
- ---- --------------- -------------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dwight C. Schar......... 313,000 $11,876,002 -- 750,000 $ -- $18,593,750
William J. Inman........ -- -- 75,000 150,000 3,009,750 3,718,750
Paul C. Saville......... -- -- 75,000 262,500 3,009,750 6,507,813
Dennis M. Seremet....... 5,000 154,400 9,900 90,000 397,287 2,231,250
</TABLE>
Long-Term Incentive Plan Awards in Current Year
A new measurement period was added to the HP Plan during 1999. The awards
made under the HP Plan in the current year are similar to the previous HP Plan
awards that were established in 1996 (see the Summary Compensation Table
above). Each of the Company's employee executive officers, as well as certain
other members of senior management, participate in the HP Plan. The purpose of
the HP Plan is to retain executive officers and other key employees, to
support the achievement of NVR's strategic business objectives, and to provide
executive officers and other key employees competitive long-term incentive
opportunities that are linked to the profitability of the Company's business,
growth in earnings per share and the creation of long-term shareholder value.
The HP Plan participants will be allocated a specified percentage of an
Incentive Pool. The Incentive Pool equals twenty-five (25%) percent of the
three-year aggregate growth in diluted earnings per share for the years 1999,
2000 and 2001 in excess of 1998 diluted earnings per share (before
extraordinary loss) compounded annually by ten percent over the same three-
year period (the threshold), multiplied by the average number of shares used
to calculate diluted earnings per share over the three year measurement
period. The Incentive Pool will not be established until December 31, 2001.
Payments to participants under the HP Plan, if any, will be made in three
installments, with one-third payable in cash in each of January 2003, 2004,
and 2005. Full payment, if any, to participants of benefits earned under the
HP Plan is contingent upon continued employment
11
<PAGE>
by the participants through 2004. Termination of employment from the Company
prior to the receipt of all of the benefits under the HP Plan results in the
forfeiture of any unpaid awards earned under the HP Plan.
Compensation Committee Interlocks and Insider Participation
The compensation committee is comprised of Mr. Schar, Mr. Johnson, Mr.
Moran, Mr. Toups, and Mr. Preiser, all of whom, except Mr. Schar, are outside
directors of the Company. No executive officer of NVR served as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of the Board's Compensation
Committee; accordingly, there were no interlocks with other companies within
the meaning of the SEC's proxy rules during 1999.
Certain Transactions
During the year ended December 31, 1999, NVR entered into new agreements to
purchase lots for a total purchase price of approximately $14,000,000 with Elm
Street Development, which is controlled by Mr. Moran. These transactions were
approved by a disinterested majority of the Board of Directors. During 1999,
NVR purchased developed lots at market prices from Elm Street for
approximately $19,000,000.
During the year ended December 31, 1999 the law firm of Sack & Associates
billed NVR approximately $471,000 in fees and expenses for legal services. Mr.
Sack, a non-employee executive officer of NVR, was a principal of Sack &
Associates during that period.
NVR periodically leases, at market rates, an airplane owned by Mr. Schar for
Company travel when the use of the airplane lends itself to travel
efficiencies. The Company paid approximately $73,000 for use of the airplane
during 1999.
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. There have been subsequent adjustments to Mr. Schar's salary made by
the Compensation Committee to reflect merit increases. Mr. Schar's salary is
now $950,000. 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, as defined below.
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 $330,000. 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 two years if he is terminated for cause, as defined
below.
12
<PAGE>
NVR has an employment agreement effective November 13, 1995 with Mr. Inman
to serve as president of NVR Mortgage Finance, Inc. 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
have been subsequent adjustments to Mr. Inman's salary made by the
Compensation Committee to reflect merit increases. Mr. Inman's base salary is
now $316,000. 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 two years if he is
terminated for cause, as defined below.
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.
13
<PAGE>
STOCK PERFORMANCE GRAPH
THE FOLLOWING STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED TO BE "SOLICITING
MATERIAL" OR TO BE "FILED" WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
COMPARISON OF CUMULATIVE TOTAL EQUITYHOLDER RETURN ON EQUITY
The following chart graphs NVR's performance in the form of cumulative total
return to equityholders of NVR's common stock since December 31, 1994 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, Walter Industries, Inc., Centex Corp., Clayton Homes, Kaufman and Broad
Home Corp., Champion Enterprises, Inc., Lennar Corp., DR Horton, Inc. and Toll
Brothers, Inc.
[PERFORMANCE GRAPH APPEARS HERE]
1994 1995 1996 1997 1998 1999
------- ------ ------ ------ ------ ------
NVR $100.00 $182 $236 $397 $867 $868
Down/Homes $100.00 $148 $142 $220 $235 $148
Dow Jones Ind. Avg. $100.00 $136 $176 $220 $260 $330
(a) Assumes that $100 was invested in NVR stock and the indices on December
31, 1994.
14
<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 LLP as independent
auditors for the Company for the year 2000. Representatives of KPMG LLP are
expected to be present at the meeting to respond to Shareholders' questions
and will have an opportunity to make a statement if they so desire.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE APPROVAL OF KPMG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR 2000.
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 November 22, 2000, 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 2001 annual meeting of
shareholders. In addition, management intends to exercise discretionary
authority with respect to any proposal made by holders of Common Stock that
does not comply with applicable rules of the Securities and Exchange
Commission of which NVR does not have notice on or before February 20, 2001
that is intended to be presented at the next annual meeting of Shareholders of
the Company.
OTHER MATTERS
Management knows of no other business to be presented for action at the
meeting, other than those items listed in the notice of the Meeting referred
to herein. If any other business should properly come before the Meeting, or
any adjournment thereof, it is intended that the proxies will be voted in
accordance with the best judgment of the persons acting thereunder.
NVR's Annual Report on Form 10-K for 1999, including consolidated financial
statements and other information, accompanies this Proxy Statement but does
not form a part of the proxy soliciting material. A complete list of the
stockholders of record entitled to vote at the Annual Meeting will be open and
available for examination by any stockholder, for any purpose germane to the
Annual Meeting, between 9:00 a.m. and 5:00 p.m. at NVR's offices at 7601
Lewinsville Road, McLean, Virginia 22102, from April 21, 2000 through May 2,
2000 and at the time and place of the Annual Meeting.
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 SEC, 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. The Company's SEC
filings are also available to the public from the SEC's World Wide Web site at
http://www.sec.gov.
By Order of the Board of Directors
/s/ James M. Sack
James M. Sack
Vice President, Secretary and
General Counsel
McLean, Virginia
March 21, 2000
15
<PAGE>
SKU # 3570-PR-00
<PAGE>
DETACH HERE
PROXY
NVR, INC.
Proxy for Annual Meeting of Shareholders
May 3, 2000
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 (and if the undersigned is a proxy, as
substitute proxies), each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated on the reverse,
all of the shares of common stock of NVR, INC. held of record by the undersigned
at the close of business on March 1, 2000 at the Annual Meeting of Shareholders
to be held at NVR Corporate Headquarters, 7601 Lewinsville Road, McLean,
Virginia, 22102, on Wednesday, May 3, 2000 at 11:30 A.M. or at any adjournment
thereof.
- ------------- -------------
SEE REVERSE PLEASE VOTE, DATE AND SIGN ON THE REVERSE AND SEE REVERSE
SIDE RETURN PROMPTLY IN THE ENCLOSED ENVELOPE SIDE
- ------------- -------------
<PAGE>
DETACH HERE
[X] Please mark votes
as in this example.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. If no direction is given, this proxy will be deemed to grant
authority to vote FOR ALL director nominees, to vote FOR the proposal to ratify
the appointment of KPMC LLP as independent auditors for the year 2000 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: (01) C. Scott Bartlett, Jr., (02) William A. Moran
and (03) Richard H. Norair, Sr.
FOR WITHHELD
ALL FROM ALL
NOMINEES [_] [_] NOMINEES
[_]_______________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of [_] [_] [_]
KPMG LLP as independent auditors
for the year 2000.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
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
