<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by Registrant /X/
Filed by Party other than the Registrant / /
</TABLE>
Check the appropriate box:
<TABLE>
<C> <S>
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only(as permitted by Rule 14-6(e)(2)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
</TABLE>
BEAZER HOMES USA, INC.
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<C> <S>
/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 by registration 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:
</TABLE>
<PAGE>
[LOGO]
***
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF BEAZER HOMES USA, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Beazer
Homes USA, Inc. (the "Company") will be held at 9:00 a.m. on Thursday, February
4, 1999 at The Westin North Atlanta at Perimeter, 7 Concourse Parkway, Atlanta,
Georgia 30328 for the following purposes:
1) to elect seven members to the Board of Directors;
2) to consider and act upon a proposal to approve the Company's 1999 Value
Created Incentive Plan; and
3) to transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on December 7, 1998
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting. A copy of the Company's Proxy Statement and Annual
Report to Shareholders is being mailed to you together with this notice.
We encourage you to take part in the affairs of your Company either in
person or by executing and returning the enclosed proxy.
By Order of the Board of Directors,
/s/ Brian C. Beazer
NON-EXECUTIVE CHAIRMAN OF THE BOARD
Dated: December 23, 1998
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE PROMPTLY MARK, DATE, SIGN AND MAIL THE ENCLOSED PROXY. A RETURN ENVELOPE
WHICH REQURES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED
FOR THAT PURPOSE.
<PAGE>
TABLE OF CONTENTS:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Purpose.................................................................................................... 1
Voting Instructions........................................................................................ 1
Expenses of Solicitation................................................................................... 2
Principal Stockholder Listing.............................................................................. 2
Matters to be Voted Upon
Election of Directors.................................................................................. 3
Value Created Incentive Plan........................................................................... 7
Beneficial Ownership of Common Stock....................................................................... 10
Beneficial Ownership Reporting Compliance.................................................................. 11
Report of the Compensation Committee....................................................................... 11
Summary Compensation Table................................................................................. 15
Stock Options
Current Year Option Grants............................................................................. 16
Aggregated Option Exercises in 1998 and Value at End of Year........................................... 16
Employment Agreements...................................................................................... 17
Supplemental Employment Agreements......................................................................... 17
Comparative Stock Performance Graph........................................................................ 19
Independent Auditors....................................................................................... 20
</TABLE>
<PAGE>
BEAZER HOMES USA, INC.
5775 PEACHTREE DUNWOODY ROAD
SUITE 200
Atlanta, Georgia 30342
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is being furnished to you in connection with the
solicitation of proxies by the Board of Directors (the "Board") of Beazer Homes
USA, Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting
of Shareholders of the Company to be held on February 4, 1999 and at any
adjournment thereof (the "Annual Meeting"). Shareholders of record at the close
of business on December 7, 1998 are entitled to notice of and to vote at the
Annual Meeting. Each share so held entitles the holder thereof to one vote with
respect to each matter to be voted upon. On December 7, 1998, the Company had
outstanding 6,267,423 shares of Common Stock. The Common Stock is the Company's
only outstanding class of voting securities. This Proxy Statement and the
enclosed form of proxy are being mailed to shareholders, together with the
Company's Annual Report (which includes audited consolidated financial
statements for the Company's fiscal year ended September 30, 1998), commencing
on or about December 23, 1998.
VOTING INSTRUCTIONS
GENERAL--Shares represented by a proxy will be voted in the manner directed
by a shareholder. If no direction is made, the signed proxy will be voted
(i) for the election of the seven nominees for the Board of Directors named
in this Proxy Statement;
(ii) for the approval of the 1999 Value Created Incentive Plan; and
(iii) in accordance with the judgment of the persons named in the proxy as to
such others matters as may properly come before the Annual Meeting.
SIGNATURE REQUIREMENTS--If stock is registered in the name of more than one
person, each such person should sign the proxy. If the stockholder is a
corporation, the proxy should be signed in the corporation's name by a duly
authorized officer. If a proxy is signed as an attorney, trustee, guardian,
executor, administrator or a person in any other representative capacity, the
signer's full title should be given.
AUTHORITY WITHHELD OR NON VOTES--Shares represented by proxies as to which
the authority to vote has been withheld with respect to some or all matters
being acted upon will be deemed present and entitled to vote for purposes of
determining the existence of a quorum and calculating the votes cast, but will
be deemed not to have been voted in favor of the proposals or other matters with
respect to which the proxy authority has been withheld. Broker non-votes are
included in the determination of the number of shares present and voting for the
purpose of determining whether a quorum is present. In determining whether a
proposal has been approved, broker non-votes and abstentions are not counted for
or against a proposal or as votes present and voting on a proposal.
1
<PAGE>
REVOCATION--A shareholder giving the enclosed proxy may revoke it at any
time before the vote is cast at the Annual Meeting by executing and returning to
the Company either a written revocation or a proxy bearing a later date, in
either case received by the Secretary of the Company (David S. Weiss) or
Transfer Agent (First Chicago Trust Company of New York) prior to the Annual
Meeting. Any shareholder who attends the Annual Meeting in person will not be
deemed thereby to have revoked his or her proxy unless such shareholder
affirmatively indicates at the Annual Meeting his or her intention to vote the
shares represented by such proxy in person.
EXPENSES OF SOLICITATION
Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. Proxies are being solicited primarily by mail but, in
addition, officers and other employees of the Company may solicit proxies by
telephone, in person or by other means of communication but will receive no
extra compensation for such services. The Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 7, 1998 with
respect to the beneficial ownership of the Company's Common Stock by all persons
known by us to beneficially own more than 5% of our Common Stock. In order to
provide the most timely information available regarding principal stockholders,
we included ownership information as provided in the most recently available
(September 30, 1998) Form 13F filed by each respective holder, unless otherwise
indicated.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ----------------------------------------------------------------------------------- ------------------- -----------
<S> <C> <C>
Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109 781,900(1) 12.48%
Neuberger & Berman, LLC
605 Third Avenue
New York, New York 10158-3698 719,598(2) 11.48%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11(th) floor
Santa Monica, California 90401 493,500(3) 7.87%
Soundshore Holdings LTD
29 Richmond Road
Pembroke HM11
Bermuda, D0 463,678(4) 7.13%
</TABLE>
(1) Detailed information regarding voting and dispositive power is not included
on Form 13F. As of its most recent Schedule 13G filing (April 13, 1998),
however, Fidelity Management & Research Company had sole voting power on
0.01% and sole dispositive power on 100% of its then beneficially owned
shares (682,400 shares).
2
<PAGE>
(2) Detailed information regarding voting and dispositive power is not included
on Form 13F. As of its most recent Schedule 13G filing (February 12, 1998),
however, Neuberger & Berman, LLC had sole voting power on 52.6% and shared
dispositive power on 100% of its then beneficially owned shares (641,100
shares).
(3) Detailed information regarding voting and dispositive power is not included
on Form 13F. As of its most recent Schedule 13G filing (February 10, 1998),
however, Dimensional Fund Advisors, Inc. had sole voting power on 63.7% and
sole dispositive power on 100% of its then beneficially owned shares
(495,000 shares).
(4) Soundshore Holdings LTD ("Soundshore") has filed with the SEC a Schedule 13G
dated November 24, 1998 reporting that Soundshore may be deemed to
beneficially own 463,678 shares of the Company's Common Stock after giving
effect to the conversion of the shares of Series A Cumulative Convertible
Exchangeable Preferred Stock held by it. Soundshore reported that it has
sole voting and dispositive power with respect to 463,678 shares.
MATTERS BEING SUBMITTED TO A
VOTE OF THE SHAREHOLDERS
GENERAL
Our by-laws provide that the affirmative vote of a majority (plurality for
election of directors) of the shares of the Company's voting stock present or
represented by proxies is required to approve any matter presented for
shareholder approval. Please refer to page one of this Proxy Statement for
voting instructions.
Following is a discussion of the matters to be presented for shareholder
approval at the Annual Meeting.
1. ELECTION OF DIRECTORS
GENERAL
The proposal for you to vote upon is the election of each of the nominees
listed below as a director for the ensuing year or until their respective
successors are elected and have qualified. Each of the following nominees is
presently serving as a director of the Company. In the event any nominee should
not be available as a candidate for director, votes will be cast pursuant to
authority granted by the enclosed proxy for such other candidate or candidates
as may be nominated by management. The Board of Directors has no reason to
believe that any nominee will be unable or unwilling to serve as a director if
elected.
RECOMMENDATION
WE RECOMMEND THAT YOU VOTE YOUR SHARES TO ELECT THE FOLLOWING NOMINEES.
PLEASE SEE THE VOTING INSTRUCTIONS ON PAGE 1 OF THIS PROXY STATEMENT FOR
INSTRUCTIONS ON HOW TO CAST YOUR VOTE.
NOMINEES
The information appearing below with respect to each nominee has been
furnished to the Company by the nominee.
3
<PAGE>
BRIAN C. BEAZER, 63, is the Non-Executive Chairman of the Company's Board of
Directors and has served as a Director of the Company since its inception in
November 1993. Mr. Beazer began work in the construction industry in the late
1950's. He served as Chief Executive Officer of Beazer PLC, a company organized
under the laws of the United Kingdom, or its predecessors, from 1968 to 1991,
and Chairman of that company from 1983 to the date of its acquisition by an
indirect, wholly-owned subsidiary of Hanson PLC (effective December 1, 1991).
During that time, Beazer PLC expanded its activities to include homebuilding,
quarrying, contracting and real-estate, and became an international group with
annual revenue of approximately $3.4 billion, employing 28,000 people at
December 1991. Mr. Beazer was educated at Cathedral School, Wells, Somerset,
England. Mr. Beazer is also a Director of Beazer Japan, Ltd., Seal Mint, Ltd.,
Jade Holdings Pte. Ltd., Jade Technologies Singapore Pte. Ltd., FSM Europe B.V.,
United Pacific Industries Limited and U.S. Industries, Inc., and is a private
investor.
THOMAS B. HOWARD, JR., 70, was appointed a Director of the Company on November
2, 1995. Mr. Howard held various positions with Gifford-Hill & Company, a
construction and aggregates company, from 1969 to 1986 and served as its
Chairman and Chief Executive Officer from 1986 to 1989. Gifford-Hill & Company
was acquired by Beazer PLC in 1989 and Mr. Howard served as Chairman and Chief
Executive Officer of the successor company until 1992. During the period from
1957 to 1969, Mr. Howard held various positions with Vulcan Materials Company.
Mr. Howard holds a degree in Industrial Engineering from Georgia Institute of
Technology. Mr. Howard currently serves as a Director of Lennox International,
Inc. and on the Board of Trustees of the Methodist Hospitals Foundation. Mr.
Howard also previously served as a Director of the Dallas Chamber of Commerce
and as a member of the Dallas Citizens Council.
IAN J. MCCARTHY, 45, is the President and Chief Executive Officer of the
Company. Mr. McCarthy has served as President of predecessors of the Company
since January 1991 responsible for all United States residential homebuilding
operations in that capacity. During the period May 1981 to January 1991, Mr.
McCarthy was employed in Hong Kong and Thailand as a Civil Engineer becoming a
Director of Beazer Far East and from January 1980 to May 1981 was employed by
Kier, Ltd., a company engaged in the United Kingdom construction industry which
became an indirect, wholly-owned subsidiary of Beazer PLC. Mr. McCarthy is a
chartered civil engineer with a Bachelor of Science degree from The City
University, London. Mr. McCarthy currently serves as a Director of LADD
Furniture, Inc.
GEORGE W. MEFFERD, 71, has served as a Director of the Company since the
Company's initial public offering of common stock (the "IPO") in March 1994. Mr.
Mefferd had previously been retired since 1986. During the period 1974 to 1986,
Mr. Mefferd held various positions with Fluor Corporation, an engineering and
construction company, including Senior Vice President--Finance, Treasurer, Group
Vice President and Chief Financial Officer. Additionally, Mr. Mefferd served on
Fluor Corporation's Executive Committee and Board of Directors. Mr. Mefferd
earned a Bachelor of Science degree in Business Administration from the
University of California, Los Angeles.
D. E. MUNDELL, 66, has served as a Director of the Company since the
consummation of the IPO in March 1994. Mr. Mundell has served as Chairman of
ORIX USA Corporation, a financial services company, since January 1991. During
the period from 1959 to 1990, Mr. Mundell held various positions within United
States Leasing International, Inc., retiring as Chairman in 1990. Mr. Mundell
attended the Royal Military College of Canada, McGill University and Harvard
Business School. Mr. Mundell is also a Director of Varian Associates, Inc.,
Stockton Holdings LTD and ORIX USA Corporation.
4
<PAGE>
LARRY T. SOLARI, 56, has served as a Director of the Company since the
consummation of the IPO in March 1994. Mr. Solari is the Chairman and CEO of BSI
Holdings, Inc., Carmel, California. Mr. Solari was the Chairman and CEO of
Sequential, Inc. from 1996 to 1997. Mr. Solari was the President of the Building
Materials Group of Domtar, Inc. from 1994 to 1996. Mr. Solari was the President
of the Construction Products Group of Owens-Corning Fiberglass from 1986 to
1994. In that capacity he had been the Chief Operating Officer responsible for
key company lines, such as building insulation and roofing materials. Mr. Solari
held various other positions with Owens-Corning Fiberglass since 1966. Mr.
Solari earned a Bachelor of Science degree in Industrial Management and a Master
of Business Administration degree from San Jose State University. Mr. Solari is
a Director of BSI Holdings, Inc., Pacific Coast Building Products, Inc. and
Therma-Tru, Inc. and has been a Director of the Policy Advisory Board of the
Harvard Joint Center for Housing Studies and an Advisory Board Member of the
National Home Builders Association.
DAVID S. WEISS, 38, is the Executive Vice President and Chief Financial Officer
of the Company. Mr. Weiss Served as the Assistant Corporate Controller of Hanson
Industries, the United States arm of Hanson PLC, for the period from February
1993 to March 1994. Mr. Weiss was Manager of Financial Reporting for
Colgate-Palmolive Company from November 1991 to February 1993 and was with the
firm of Deloitte & Touche from 1982 to November 1991, at which time he served as
a Senior Audit Manager. Mr. Weiss holds a Master of Business Administration
degree from the Wharton School and undergraduate degrees in Accounting and
English from the University of Pennsylvania. Mr. Weiss is a licensed Certified
Public Accountant.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
For Fiscal Year 1998 our Board of Directors had two committees--the
Compensation Committee and the Audit Committee, and one subcommittee of the
Compensation Committee--the Stock Option Committee (renamed the Stock Option and
Incentive Committee in Fiscal Year 1999). We have no standing nominating
committee. In Fiscal Year 1998 the Board of Directors had four meetings for
which attendance at those meetings was 100%. Membership in the committees and
subcommittee is as follows:
<TABLE>
<CAPTION>
Compensation Audit Stock Option
Committee Committee Committee (I)
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Brian C. Beazer Thomas B. Howard, Jr. Thomas B. Howard, Jr.
Thomas B. Howard, Jr. George W. Mefferd George W. Mefferd
George W. Mefferd D.E. Mundell D.E. Mundell
D.E. Mundell Larry T. Solari Larry T. Solari
Larry T. Solari
</TABLE>
(I) Renamed the Stock Option and Incentive Committee in Fiscal Year 1999
- The Compensation Committee makes recommendations to the Board of Directors
regarding remuneration of employees and officers of the Company and its
subsidiaries from time to time as it deems appropriate. This committee met
two times during Fiscal Year 1998 and each meeting was attended in full.
5
<PAGE>
- The Stock Option Committee (renamed the Stock Option and Incentive
Committee in Fiscal Year 1999) has been appointed to administer the
Company's 1994 Stock Incentive Plan as well as any other bonus or
incentive compensation plans, including the current Value Created
Incentive Plan (the "VCIP"). This committee will also administer the 1999
Value Created Incentive Plan (the "1999 VCIP") that is being submitted for
shareholder approval. This committee met two times during Fiscal Year 1998
and these meetings were attended in full.
- The Audit Committee reviews and makes recommendations to the Board of
Directors with respect to designated financial and accounting matters.
This committee met three times during Fiscal Year 1998 and each meeting
was attended in full.
DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTORS (EXCLUDING BRIAN C. BEAZER): The directors receive
annual compensation of $22,500 for services to the Company as members of the
Board of Directors and, in addition thereto, receive $1,000 for each meeting of
the Board of Directors or any of its committees and an additional $500 for
attending any second committee meeting held on the same day. Directors may elect
to defer receipt of all or part of such compensation, which deferrals accrue
interest payable by the Company. Mr. Mefferd elected to defer receipt of his
Director's compensation for Fiscal Year 1998. Pursuant to the Company's
Non-Employee Director Stock Option Plan, each director received a grant of
10,000 options to acquire Common Stock of the Company on the date of each
director's initial election to the Board. In addition, during Fiscal Year 1998,
the Board granted 3,000 stock options to each non-employee Director (excluding
Mr. Beazer) pursuant to the 1994 Stock Option Plan. All directors receive
reimbursement for reasonable out-of-pocket expenses incurred by them in
connection with participating in meetings of the Board of Directors and any
committees thereof. Other than described in the next succeeding paragraph, no
Director otherwise receives any compensation from the Company for services
rendered as a Director.
BRIAN C. BEAZER: For Fiscal Year 1998, the Company paid its Non-Executive
Chairman of the Board $162,000 and granted him 10,000 stock options pursuant to
the 1994 Stock Incentive Plan. Mr. Beazer received no incentive compensation for
Fiscal Year 1998 based upon the performance of the market price of the Company's
Common Stock in Fiscal Year 1998. For Fiscal Year 1999, the Compensation
Committee of the Board (excluding Mr. Beazer) recommended and the Company has
agreed to pay Mr. Beazer $170,000 for his services. In addition, the Company has
agreed to pay an amount up to 200% of Mr. Beazer's base compensation based on
predetermined criteria relating to, among other things, the performance of the
market price of the Company's Common Stock, the total return to the Company's
shareholders relative to a selected peer group and his personal commitments to
the Company.
6
<PAGE>
2. APPROVAL OF VALUE CREATED INCENTIVE PLAN
GENERAL
The proposal for you to vote upon is the approval of the 1999 Value Created
Incentive Plan.
SUMMARY
The Company pays incentive compensation to its corporate executives and
certain key employees under our current VCIP. The awards under this plan are
made based upon the Company and its operating divisions making operating profit
in excess of its cost of capital. The amount of operating profit in excess of
cost of capital is referred to as "Value Created".
Employees participating in the existing VCIP, and proposed 1999 VCIP, each
year are paid a set percentage of Value Created and a set percentage of the
increase in Value Created over the prior year, referred to as "Incremental Value
Created." In addition the same percentages of Value Created and Incremental
Value Created are put into a "bank", which may be paid out over three years,
based upon future performance. For a more complete description of the 1999 VCIP,
see the 1999 VCIP Plan Description below.
RECOMMENDATION
The Company and its Board of Directors believe that the 1999 VCIP:
- rewards employees for Company performance that exceeds the Company's cost
of capital;
- rewards profitable growth, through the use of Incremental Value Created;
and
- encourages long-term management incentives through the use of the bank.
THE COMPANY AND ITS BOARD OF DIRECTORS BELIEVE THAT ALL THREE OF THESE
OBJECTIVES ARE CONSISTENT WITH THE COMPANY'S FINANCIAL GOALS AND THEREFORE
RECOMMEND THAT SHAREHOLDERS VOTE FOR THIS PLAN. PLEASE SEE THE VOTING
INSTRUCTIONS ON PAGE 1 OF THIS PROXY STATEMENT FOR INSTRUCTIONS ON HOW TO CAST
YOUR VOTE.
1999 VCIP PLAN DESCRIPTION
THE 1999 VCIP AS PERFORMANCE-BASED COMPENSATION
The Internal Revenue Code of 1986, as amended (the "Code"), generally
provides that corporate deductions will be disallowed for annual compensation in
excess of $1,000,000 paid to certain executive officers. The Stock Option and
Incentive Committee's (formerly the Option Committee) policy is to design and
administer the Company's executive compensation program to minimize any loss of
tax deductibility, while at the same time ensuring that the Company's
compensation program remains competitive. The Company's incentive plans are
intended to qualify payments under the plans as "performance-based
compensation," which is not subject to the $1,000,000 cap on deductibility.
The existing VCIP and the 1999 VCIP were designed to align annual cash
incentive compensation opportunities with the Company's financial strategy. The
Company uses "Value Created," a variation of the economic value financial
concept, which measures the Company's ability to generate a return on capital in
excess of its weighted average cost of capital for the year, as determined by
the Stock Option and
7
<PAGE>
Incentive Committee (currently 14%), as its principal financial measure to
evaluate its performance and determine the "annual" cash bonus incentives under
the VCIP.
HISTORY OF VCIP
In Fiscal Year 1997, the Company began compensating certain corporate
executives under the existing VCIP. In Fiscal Year 1998 the Company extended the
existing VCIP to other members of both corporate and operating management.
In December 1998, the Stock Option and Incentive Committee of the Board of
Directors approved an amended version of the VCIP (the "1999 VCIP") to be used
to determine incentive compensation for all executive officers and members of
management of the Company for Fiscal Year 1999 and thereafter.
The Company believes that the 1999 VCIP provides incentive compensation
opportunities for superior Company and business unit performance based upon
earnings in excess of the Company's cost of capital, a gauge that the Company
believes is consistent with its shareholders' objectives.
DEFINITION OF "VALUE CREATED"
Under the 1999 VCIP, incentive compensation is based upon "Value Created".
Value Created is defined as earnings before interest and taxes (EBIT) minus a
capital charge. The capital charge is equal to the total capital employed
multiplied by an estimate of the weighted average pre-tax cost of capital. The
calculation of Value Created is represented below:
VALUE CREATED = EBIT--(CAPITAL EMPLOYED X WEIGHTED AVERAGE COST OF CAPITAL)
Value Created may be determined for an individual business unit as well as
for the Company as a whole, and can be either positive or negative.
DETERMINATION OF VALUE CREATED INCENTIVE PAYMENTS AND BANK
At the end of each fiscal year, each participant in the 1999 VCIP would be
paid a predetermined percentage of Value Created and a predetermined percentage
of the change in Value Created compared to the prior year ("Incremental Value
Created"). In the case of Ian McCarthy, the Chief Executive Officer, the
predetermined percentages of each of Value Created and Incremental Value Created
is 3.0%. Each of such payments is made only if Value Created or Incremental
Value Created is positive.
In addition, each participant has a "bank", which helps determine a portion
of the annual bonus. The initial amount in each participant's bank is determined
as a set percentage of salary. Each year fifty percent of a set percentage of
each of Value Created and Incremental Value Created, if positive, is paid
immediately to that participant. The remaining fifty percent of such set
percentage of each of Value Created and Incremental Value Created, positive or
negative, is put into that participant's bank. The amounts put into the bank may
be positive or negative and the bank balance, as a whole, can become negative.
At the end of each fiscal year, one-third of the bank is paid out, if the bank
is positive after increasing or reducing it by the current year's Value Created
and Incremental Value percentages. The remaining balance in the bank is carried
forward to the subsequent year to help determine that year's
8
<PAGE>
incentive payment, and thus represents a portion of future bonus potential. The
bank balance is not vested and is not intended to represent incentive
compensation due to employees for past service. The bank is forfeited upon
severance, resignation, retirement, death or termination for any reason.
ANNUAL MAXIMUM PAYMENT
The maximum annual incentive compensation paid out under the 1999 VCIP is
determined as a set percentage of the employee's annual salary for that year,
provided however that in no event shall the amount paid out to any individual in
one fiscal year under the 1999 VCIP, prior to and including the year ending
September 30, 2001, exceed $1,500,000. Any excess amount over the maximum
remains in the bank.
Under its terms, the 1999 VCIP will be null and void from its inception
unless it is adopted by the Board and approved, in a separate vote, by the
affirmative vote of shareholders. Shareholder approval of the 1999 VCIP is
necessary to preserve the full deductibility for federal income tax purposes of
amounts paid by the Company under such plan. The Stock Option and Incentive
Committee believes that the 1999 VCIP is an integral part of a compensation
program that provides officers and other key employees of the Company annual and
long-term performance incentives that should enhance shareholder value.
Nonetheless, if at least a majority of the shareholders does not approve the
VCIP, the Stock Option and Incentive Committee may make bonus payments, which
may exceed the $1,000,000 cap on deductibility, in whole or in part, to the
employees of the Company.
The following table sets forth for the Named Executives (see "Executive
Compensation, Summary Compensation Table") and other eligible persons the
benefits to be received under the 1999 VCIP to be acted upon by you with your
vote. The amounts shown represent the actual compensation received during the
respective period under the existing VCIP which is consistent with those that
would have been received if the 1999 VCIP was in place for the periods
specified.
NEW PLAN BENEFITS--1999 VCIP
<TABLE>
<CAPTION>
FISCAL 1997
DOLLAR VALUE FISCAL 1998
PARTICIPANTS (1)(3) DOLLAR VALUE
- ----------------------------------------------------------------------------------- --------------- ------------
<S> <C> <C>
Ian J. McCarthy.................................................................... -- $ 503,780
Michael H. Furlow.................................................................. -- (2) 336,580
David S. Weiss..................................................................... -- 250,640
John Skelton....................................................................... -- 119,256
Peter S. Simons.................................................................... -- 114,923
------ ------------
Total Named Executives........................................................... -- 1,325,179
Other Corporate and Operating Management (29 persons).............................. -- 3,524,275
------ ------------
Total.............................................................................. -- $ 4,849,454
------ ------------
------ ------------
</TABLE>
- ------------------------
(1) For Fiscal Year 1997 Messrs. McCarthy, Weiss, Skelton and Simons
participated in the existing VCIP and received no compensation under the
VCIP.
(2) Michael H. Furlow was not an employee of the Company during Fiscal Year
1997.
(3) For Fiscal Year 1997 only the Named Executives except Mr. Furlow
participated in the VCIP.
9
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of December 7, 1998 with
respect to the beneficial ownership of the Company's Common Stock by individual
Directors and nominees for the Board of Directors, executive officers named in
the Summary Compensation Table below, and all Directors and executive officers
as a group. Except as otherwise indicated, each beneficial owner possesses sole
voting and investment power with respect to all shares.
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED (1) (2) (3) OF OUTSTANDING
- ------------------------------------------------------------ ------------------ ---------------
<S> <C> <C>
Brian C. Beazer
Non-Executive Chairman of the Board of Directors.......... 73,500 1.1%
Ian J. McCarthy
President, Chief Executive Officer and Director........... 203,891 3.1%
Thomas B. Howard, Jr.
Director.................................................. 500 *
George W. Mefferd
Director.................................................. 11,000 *
D. E. Mundell
Director.................................................. 13,000 *
Larry T. Solari
Director.................................................. 11,500 *
David S. Weiss
Executive Vice President, Chief Financial Officer and
Director................................................ 82,916 1.3%
Michael H. Furlow
Executive Vice President, Chief Operating Officer......... 30,065 *
John Skelton
Senior Vice President..................................... 52,189 *
Peter S. Simons
Senior Vice President, Corporate Development 25,118 *
Directors and Executive Officers as a Group (10 persons).... 503,679 7.74%
</TABLE>
- ------------------------
* Less than 1%
(1) The number of shares for Messrs. Beazer, McCarthy, Weiss, Furlow, Skelton
and Simons includes 3,375, 108,375, 32,375, 30,000, 15,375 and 16,000 shares
of restricted stock, respectively. All such shares of restricted stock were
awarded under the 1994 Stock Incentive Plan. Such shares of restricted stock
will vest unconditionally on dates ranging from March 2001 to September 2005
but certain awards may vest earlier based on certain performance criteria.
See footnote 3 to "Executive Compensation--Summary Compensation Table"
below.
(2) The number of shares for Messrs. McCarthy, Weiss, Furlow, Skelton and Simons
does not include the right to receive 20,185, 8,668, 10,199, 4,166 and 6,870
shares of restricted stock, respectively, which each of Messrs. McCarthy,
Weiss, Furlow, Skelton and Simons is entitled to receive three years from
the award date in lieu of a portion of their respective Fiscal Year 1996 and
1998 cash bonuses. See footnote 1 to "Executive Compensation--Summary
Compensation Table" below.
10
<PAGE>
(3) The number of shares for Messrs. McCarthy, Weiss, Furlow, Simons and Skelton
includes 919, 1,527, 65, 829 and 839 shares of the Company's Common Stock,
respectively, held through the Company's 401(k) plan.
(4) The number of shares for Messrs. Beazer, McCarthy, Mefferd, Mundell, Solari,
Weiss, Skelton and Simons includes 50,000, 81,000, 10,000, 10,000, 10,000,
40,000, 29,000, 8,000 stock options which were fully vested and exerciseable
at December 7, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended requires
the Company's executive officers and directors and persons who own more than ten
percent of the Company's stock, as well as certain affiliates of such persons,
to file initial reports of ownership and changes of ownership with the SEC and
the NYSE. These parties are required to furnish the Company with copies of such
forms they file. Based solely on a review of the copies of the Section 16(a)
forms and amendments thereto received by the Company and on written
representations that no other reports were required, the Company believes that
all reports required pursuant to Section 16(a) for Fiscal Year 1998 were timely
filed by all persons known by the Company to be required to file such reports
with respect to the Company's securities.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Company's Compensation Committee of the Board (the "Committee") in
Fiscal Year 1998 consisted of Messrs. Beazer, Howard, Mefferd, Mundell and
Solari, none of whom is an employee of the Company. Mr. Beazer is the
Non-Executive Chairman of the Company and Chairman of the Committee; however, he
is not a member of the Stock Option Committee (renamed the Stock Option and
Incentive Committee in Fiscal Year 1999), which in Fiscal Year 1998 consisted of
four independent directors, Messrs. Howard, Mefferd, Mundell and Solari. The
Stock Option and Incentive Committee has been appointed to administer the
Company's 1994 Stock Incentive Plan as well as any other bonus or incentive
compensation plans, including the current VCIP. This committee will also
administer the 1999 VCIP that
is being submitted for shareholder approval. The Committee (excluding Mr.
Beazer), also recommends the Committee Chairman's compensation arrangement to
the Company.
The Committee is accountable to the Board of Directors for developing,
monitoring and managing the executive compensation programs at the Company. More
specifically, the Committee administers cash-based compensation programs for all
Management Committee members, which includes all of the executive officers named
in the Summary Compensation Table below (the "Named Executives"). The Stock
Option and Incentive Committee administers the VCIP and the Stock Incentive
Plan, which provides for grants of stock options and other forms of equity and
equity-based compensation.
The Company's compensations programs have been aligned with the Committee's
beliefs that:
- base salaries should be at or below median practices for similar jobs in
the homebuilding industry;
- annual incentive opportunities should represent a significant portion of
total cash compensation for executives, and provide meaningful downside
risk and upside opportunity for variations in performance from budgets
and relative to the Company's peers; and
11
<PAGE>
- stock incentives should include executive ownership of Company equity as
well as ownership of stock options in order to link executives' rewards
directly with shareholders' risks and opportunities.
It is the Committee's further belief that managing a compensation program
around these principles will place executives' and shareholders' interests
together and enhance the financial returns to the Company's shareholders
relative to the group of comparable homebuilding companies (the "Peer Group"),
consisting of Centex, D.R. Horton, Hovnanian, Kaufman & Broad, Lennar, Pulte,
Ryland, Toll Brothers and U.S. Home. During Fiscal Year 1998, the Committee
reviewed the total compensation provided to executives and confirmed that it is
consistent with the Company's performance-based principles and competitive
practices among the Peer Group. Each component of compensation is described more
fully below.
BASE SALARY
Base salaries for executives are determined by the Committee based on
comparisons of industry salary practices for positions of similar
responsibilities and size, and on individual and business unit performance as
presented by the Committee's Chairman, Mr. Beazer, based upon input from the
Chief Executive Officer, Mr. McCarthy (the "CEO"), other than for himself. It is
the Committee's objective and practice to set base salaries at levels equivalent
to the median (50(th) percentile) salary of comparable jobs in the Peer Group.
Effective October 1998, the Committee approved salary increases for the Named
Executives, other than the CEO, that ranged from 3.6% to 8.5% and averaged 5.2%.
ANNUAL INCENTIVES--THE VCIP
See "Matters Being Submitted to a Vote of the Shareholders, Item 2, Approval
of 1999 Value Created Incentive Plan" for a full description and discussion of
the VCIP.
Based upon the Company's financial performance, incentive payments under the
VCIP in Fiscal Year 1998 were $503,780 to Mr. McCarthy and $821,399 to the other
four Named Executives. Such amounts include $141,512 and $328,206, respectively,
which was deposited into a bookkeeping account (the "Account") as restricted
stock units ("RSUs") issuable in three years, under the Company's Executive
Stock Purchase Plan (see below). The number of shares related to these amounts,
8,576 and 19,891, respectively, is based upon a stock price of $16.50 per share,
which is a 20% discount from the actual stock price ($20.625 per share) at
September 30, 1998.
ANNUAL INCENTIVES--THE ESPP
In order to promote ownership of the Company's stock by key executives, the
Company maintains an Executive Stock Purchase Plan ("ESPP"). Under this program,
certain key executives may, at their option, have a portion of their bonuses
deposited into the Account as RSUs to purchase shares of the Company's Common
Stock at a 20% discount from the closing fair market value of the Company's
Common Stock on the date of deposit. Such shares are issuable three years from
the date of deposit into the Account. In addition, employees may elect, one year
prior to vesting of the RSUs, to defer receipt of such shares.
12
<PAGE>
EQUITY-BASED INCENTIVES
The Company utilizes two equity-based, longer-term incentive programs: stock
options and performance accelerated restricted stock ("PARS"). It is anticipated
that grants of stock options will not be made more often than every year and
grants of PARS every three years to key executives. Interim grants are made for
new executive appointments. During Fiscal Year 1998, an aggregate of 226,000
stock options and 238,000 PARS were granted to members of the Company's
management, of which 121,750 stock options and 133,750 PARS were granted to the
Named Executives.
Stock options are granted at 100% of fair market value on the date of grant,
fully vest after three years from grant and expire 10 years after grant. PARS
are restricted from use or sale for seven years from grant, provided, however,
that if the Company's stock price appreciation and dividend payments, if any,
reach certain targeted goals, the restrictions can lapse as early as three years
(50%) and four years (50%) from the date of grant. Executives who resign from
the Company, or are terminated for cause before grants are vested, forfeit their
options and PARS.
Grants of stock options and PARS are based on the Stock Option and Incentive
Committee's assessment of competitive practices, past award histories and
recommendations from the Company's Non-Executive Chairman of the Board and CEO.
CEO COMPENSATION
In determining Mr. McCarthy's compensation the Committee considers the
Company's financial and non-financial performance, as well as an analysis of Mr.
McCarthy's total compensation in relation to other CEOs in the homebuilding
industry.
Mr. McCarthy's base salary at the end of Fiscal Year 1998 was $445,000,
which the Company believes was below the median salary level for CEOs in the
Peer Group based on publicly available data. In light of this salary
relationship and his leadership in positioning the Company for future growth and
profitability, the Committee granted Mr. McCarthy a salary increase of 4.5%
effective October 1998, raising his annual salary to $465,000, which the
Committee recognizes remains below the industry median salary for CEOs in the
Peer Group.
Under the VCIP, Mr. McCarthy receives 3% each of Value Created and
Incremental Value Created as a bonus and has the same percentage put into his
bank. Based upon the Company's financial performance in Fiscal Year 1998, Mr.
McCarthy received $503,780 (of which $141,512 was paid in Company stock under
the ESPP) under the VCIP and his ending bank balance was $60,280.
Mr. McCarthy received 60,000 stock options and72,000 PARS in September 1998.
This award was based on the Committee's assessment of competitive practices and
past award history regarding long-term compensation awards for the CEO.
The Committees in 1998 were advised by Watson Wyatt & Company on all of the
above mentioned executive compensation issues and in their opinion the measures
taken conform with the Company's stated compensation objectives and are
competitive when measured against the Company's Peer Group.
13
<PAGE>
TAX DEDUCTIBILITY OF COMPENSATION
It is the Committee's general policy to consider whether particular payments
and awards are deductible to the Company for Federal income tax purposes, along
with other factors which may be relevant in setting executive compensation
practices. In accordance with recently enacted Federal income tax legislation,
beginning in 1994, the Internal Revenue Service limits the deductibility for
Federal income tax purposes of certain executive compensation payments in excess
of $1 million. During Fiscal Year 1998, the salary, bonus and vesting of
restricted stock for Mr. McCarthy exceeded such limitation by $132,478. The
Company is evaluating various alternatives to minimize the future impact of this
limitation, including soliciting the approval of the shareholders of the 1999
VCIP, as described in "Matters Being Submitted to a Vote of the Shareholders,
Item 2", and will take appropriate action as it determines to be advisable.
Brian C. Beazer
Thomas B. Howard, Jr.
George W. Mefferd
D.E. Mundell
Larry T. Solari
THE MEMBERS OF THE COMMITTEE
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for each
of the Company's last three fiscal years awarded to or earned by the Company's
Chief Executive Officer and four other most highly paid executive officers whose
salary and bonus earned in Fiscal Year 1998 for services rendered to the Company
exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------------------------
OTHER RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL ANNUAL STOCK UNDERLYING
POSITION YEAR SALARY BONUS (1) COMPENSATION (2) AWARDS (3) OPTIONS (#)
- ------------------------------ ----------- --------- ----------- ------------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ian J. McCarthy:.............. 1998 $ 445,000 $ 503,780 -- $ 1,453,500 60,000
President and Chief 1997 $425,000 -- -- -- 100,000
Executive Officer 1996 $405,000 $ 453,600 -- -- --
Michael H. Furlow:............ 1998 $ 308,959 $ 336,580 -- $ 605,625 30,000
Executive Vice President and
Chief Operating Officer
David S. Weiss:............... 1998 $ 220,000 $ 250,640 -- $ 363,375 18,000
Executive Vice President and 1997 $210,000 -- -- -- 50,000
Chief Financial Officer 1996 $200,000 $ 224,000 -- -- --
John Skelton:................. 1998 $ 183,000 $ 119,256 -- $ 95,891 4,750
Senior Vice President 1997 $183,000 -- -- -- 22,500
1996 $175,000 $ 108,500 -- -- --
Peter S. Simons:.............. 1998 $ 175,000 $ 114,923 -- $ 181,688 9,000
Senior Vice President of 1997 $170,000 -- -- -- 20,000
Corporate Development 1996 $160,000 $ 99,200 -- -- --
<CAPTION>
PAYOUTS
-----------
NAME AND PRINCIPAL LTIP ALL OTHER
POSITION PAYOUTS COMPENSATION (4)
- ------------------------------ ----------- -------------------
<S> <C> <C>
Ian J. McCarthy:.............. -- $ 4,800
President and Chief -- $4,800
Executive Officer -- $4,500
Michael H. Furlow:............ -- $ 4,800
Executive Vice President and
Chief Operating Officer
David S. Weiss:............... -- $ 4,800
Executive Vice President and -- $4,800
Chief Financial Officer -- $4,500
John Skelton:................. -- $ 4,800
Senior Vice President -- $4,800
-- $4,500
Peter S. Simons:.............. -- $ 4,800
Senior Vice President of -- $4,800
Corporate Development -- $4,500
</TABLE>
- ------------------------
(1) For Messrs. McCarthy, Furlow, Weiss, Skelton and Simons, includes $141,512,
$168,290, $62,660, $29,814 and $67,442, respectively, which was deposited
into the Account pursuant to the ESPP in 1998, and $133,400, $0, $56,000,
$27,100 and $32,000, respectively, in 1996.
(2) The aggregate amount of certain perquisites and other benefits provided to
each of the officers listed above did not exceed 10% of his total annual
salary and bonus in any of the years reported and so is not required to be
included in the table.
(3) Dollar value based on the closing price per share ($20.1875) of the
Company's unrestricted Common Stock on the award date. All shares of PARS
will vest unconditionally seven years from the grant date, but could vest
earlier if total return to shtockholders of the Company exceeds 15% per year
over a rolling three year periods.
(4) Represents matching contributions by the Company under its 401(k) plan.
15
<PAGE>
STOCK OPTIONS
The following tables summarize option grants and exercises during Fiscal
Year 1998 to or by the executive officers named in the Summary Compensation
Table above, and the grant date present values of the options held by such
persons at the end of Fiscal Year 1998.
OPTION GRANTS FOR FISCAL YEAR 1998 (1)
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE OR GRANT DATE
UNDERLYING OPTIONS EMPLOYEES IN BASE PRESENT VALUE
NAME GRANTED FISCAL YEAR 1998 PRICE EXPIRATION DATE (2)
- ------------------------ ------------------- ----------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Ian J. McCarthy......... 60,000 26.5% $ 20.1875 9/18/08 $ 511,635
Michael H. Furlow....... 30,000 13.3 20.1875 9/18/08 255,818
David S. Weiss.......... 18,000 8.0 20.1875 9/18/08 153,491
John Skelton............ 4,750 2.1 20.1875 9/18/08 40,504
Peter S. Simons......... 9,000 4.0 20.1875 9/18/08 76,745
</TABLE>
- ------------------------------
(1) All such options were granted on September 18, 1998. No such option is
exercisable before September 18, 2001.
(2) Grant date present values were calculated using the Black-Scholes pricing
model. The model used by the Company employed the following assumptions: (i)
expected volatility of 29.67%; (ii) risk-free rate of return of 5.3%; (iii)
dividend yield of 0%; (iv) expected life of 6.5 years; and (v) an annual
forfeiture rate of 1.91%. No discount for nontransferability was applied.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND VALUE AT END OF FISCAL YEAR
1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS HELD THE-MONEY
AT END OF FISCAL OPTIONS AT END OF FISCAL
YEAR 1998 YEAR 1998 (1)
SHARES ACQUIRED -------------------------- --------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ------------------- ------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ian J. McCarthy................... -- -- 81,000 160,000 $ 381,250 $ 82,500
Michael H. Furlow................. -- -- -- 30,000 -- 13,125
David S. Weiss.................... -- -- 40,000 68,000 171,875 36,000
John Skelton...................... -- -- 29,000 27,250 118,750 14,734
Peter S. Simons................... -- -- 8,000 29,000 50,000 15,188
</TABLE>
- ------------------------
(1) Represents the difference between the closing price per share of Common
Stock on September 30, 1998 ($20.625) as reported by the NYSE and the
exercise price of the options.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with each of the executive officers included in the Summary
Compensation Table. The Employment Agreements set forth the basic terms of
employment for each Executive, including base salary, bonus, and benefits,
16
<PAGE>
including benefits to which each Executive is entitled if his employment is
terminated for various reasons. Each Employment Agreement is effective for
one-year periods and will be extended in each successive year unless earlier
terminated by the Company or the Executive or otherwise terminated in accordance
with the respective Employment Agreement. In addition, each Employment Agreement
contains certain non-competition and confidentiality provisions.
Generally, if an Executive's employment is terminated by the Company for
"cause" (as defined in the Employment Agreements) or as a result of the
Executive's incapacity or death, the Executive will be entitled to receive an
amount equal to his base salary through the effective date of termination, and
all other amounts to which the Executive may be entitled under his Employment
Agreement to the effective date of termination, including bonus amounts (for the
termination reasons described, other than for "cause"), which will be prorated
to the date of termination.
In the event the Executive's employment is terminated for any other reason
(including without cause), or by reason of retirement, the Executive will be
entitled to receive an amount equal to his base salary for the remainder of the
term of his Employment Agreement then in effect, bonus amounts to which the
Executive would have been entitled under his Employment Agreement for the
remainder of the term of his Employment Agreement (subject to the prior approval
of the Compensation Committee of the Board of Directors), and all other amounts
to which the Executive may be entitled under his Employment Agreement to the
effective date of termination.
SUPPLEMENTAL EMPLOYMENT AGREEMENTS
Each of the executives included in the preceding Employment Agreement
discussion (each a "Designated Executive") has entered into supplemental
employment agreements (which in the case of Mr. Furlow is combined with and
forms part of his Employment Agreement) (the "Supplemental Employment
Agreements"). Each Supplemental Employment Agreement supersedes the terms and
provisions of each Designated Executive's Employment Agreement in the event of a
Change of Control (as defined in the Supplemental Employment Agreements). The
Supplemental Employment Agreements automatically renew every year for a
successive two-year period.
Pursuant to the Supplemental Employment Agreements, the Company will
continue to employ the Designated Executive for a period of two years from the
date the Change of Control occurs (the "Effective Date"). During this two-year
period, the Designated Executive will be entitled to receive an amount
approximating his most recent annual base salary ("Annual Base Salary"). In
addition, the Designated Executive shall be awarded an annual bonus at least
equal to the highest bonus for the last three years ("Annual Bonus").
If the Designated Executive's employment is terminated by the Company during
any period that the Supplemental Employment Agreement is in effect for any
reason other than Good Reason (as defined in the Supplemental Employment
Agreements) or as a result of the Designated Executive's death or disability,
the Designated Executive will be entitled to receive an amount equal to the
portion of his Annual Base Salary and Annual Bonus accrued through the effective
date of termination and any deferred compensation previously deferred (the
"Accrued Obligations") and all other accrued amounts to which the
17
<PAGE>
Designated Executive may be entitled under other Company benefit plans as
specified in his Supplemental Employment Agreement.
If the Designated Executive's employment is terminated by the Company during
any period that the Supplemental Employment Agreement is in effect for any
reason other than for cause, as a result of the Designated Executive's death or
disability or by the Designated Executive for Good Reason, the Designated
Executive shall be entitled to receive an amount equal to the sum of (i) the
Accrued Obligations; (ii) the product of (A) a multiple ranging from 1.5 to 3.0
and (B) the sum of his Annual Base Salary and Annual Bonus; (iii) certain excess
pension benefits; and (iv) all other amounts to which the Designated Executive
may be entitled under his Supplemental Employment Agreement. In addition, the
Company must provide the Designated Executive and his family certain benefits
for a three-year period following the effective date of termination.
18
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Company's Common
Stock with the cumulative total return of the Standard and Poor's 500 Stock
Index and the Standard and Poor's Homebuilding Index for the period beginning
February 23, 1994 (the date on which the Common Stock commenced trading on the
NYSE) and including each fiscal year end date through September 30, 1998
(assuming the investment of $100 in each vehicle on February 23, 1994 and the
reinvestment of all dividends).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF 55 MONTH CUMULATIVE TOTAL RETURN*
<S> <C> <C> <C>
AMONG BEAZER HOMES USA, INC., THE S & P 500 INDEX
AND THE S & P HOMEBUILDING INDEX
DOLLARS
BEAZER HOMES USA, INC. S & P 500 S & P HOMEBUILDING
2/23/94 100.00 100.00 100.00
9/94 83.57 98.00 57.44
9/95 96.43 127.16 69.02
9/96 82.14 153.02 71.34
9/97 112.50 214.91 106.57
9/98 117.86 234.35 119.42
*$100 INVESTED ON 2/23/94 IN STOCK OR ON 1/31/94
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
</TABLE>
19
<PAGE>
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
selected the firm of Deloitte & Touche LLP to serve as the Company's independent
auditor for the Fiscal Year ending September 30, 1999. Deloitte & Touche LLP
served as independent auditor for the Company's Fiscal Year ended September 30,
1998. Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from shareholders.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next annual meeting of
shareholders must be received at the Company's principal executive offices, 5775
Peachtree Dunwoody Road, Suite 200, Atlanta, Georgia 30342, by not later than
September 1, 1999.
By Order of the Board of Directors,
/s/ Brian C. Beazer
NON-EXECUTIVE CHAIRMAN OF THE BOARD
Dated: December 23, 1998
20
<PAGE>
[X] Please mark your votes as in this example. 6669
FOR WITHHOLD AUTHORITY
1. Election of Directors [ ] [ ]
For, except vote withheld from the following nominee(s):
________________________________________________________
NOMINEES FOR ELECTION AS DIRECTORS:
Brian C. Beazer, Thomas B. Howard, Jr., Ian J. McCarthy, George W. Mefferd,
D.E. Mundell, Larry T. Solari, David S. Weeks.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR Proposal 1 and Proposal 2.
FOR AGAINST ABSTAIN
2. Approval of 1999 Value [ ] [ ] [ ]
Created Incentive Plan.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by the President or other authorized
officer separately stating full name and
title. If a partnership, please sign in
partnership name by authorized person.
----------------------------------------------
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SIGNATURE(S) DATE
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