<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-12
</TABLE>
Palm Harbor Homes, Inc.
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE> 2
PALM HARBOR HOMES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 28, 2000
To Our Shareholders:
You are invited to attend the annual meeting of shareholders of Palm
Harbor Homes, Inc. which will be held at the Colonnade Conference Center, 15303
Dallas Parkway, Addison, Texas, on Wednesday, June 28, 2000, at 10:00 a.m.,
Central Daylight Time. The purpose of the meeting is to vote on the following
proposals:
PROPOSAL 1: To elect nine directors to serve for a one year
term, and until their successors are duly elected
and qualified.
PROPOSAL 2: To ratify the selection of Ernst & Young LLP as
independent auditors for the fiscal year ending
March 30, 2001.
PROPOSAL 3: To transact any other business that may properly
be brought before the annual meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on May 15, 2000
as the record date for determining shareholders entitled to receive notice of
and to vote at the annual meeting. A form of proxy card and a copy of our
Annual Report to Shareholders for the fiscal year ended March 31, 2000 are
enclosed with this notice of annual meeting and proxy statement. You may also
vote by phone or via the Internet by following the steps detailed on the proxy
card.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY, OR VOTE BY PHONE OR VIA THE INTERNET,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU PLAN TO ATTEND THE
ANNUAL MEETING TO VOTE IN PERSON AND YOUR SHARES ARE REGISTERED WITH OUR
TRANSFER AGENT, AMERICAN STOCK TRANSFER & TRUST COMPANY, IN THE NAME OF A
BROKER OR BANK, YOU MUST SECURE A PROXY FROM THE BROKER OR BANK ASSIGNING
VOTING RIGHTS TO YOU FOR YOUR SHARES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ KELLY TACKE
Kelly Tacke
Chief Financial Officer,
Vice President - Finance and Secretary
June 9, 2000
Addison, Texas
<PAGE> 3
PROXY STATEMENT
-----------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 28, 2000
-----------------
PALM HARBOR HOMES, INC.
15303 DALLAS PARKWAY, SUITE 800
ADDISON, TEXAS 75001
The Board of Directors is soliciting proxies to be used at the 2000
annual meeting of shareholders to be held at the Colonnade Conference Center,
15303 Dallas Parkway, Addison, Texas, on Wednesday, June 28, 2000, at 10:00
a.m., Central Daylight Time. This proxy statement, accompanying proxy and
annual report to shareholders for the fiscal year ended March 31, 2000 are
first being mailed to shareholders on or about June 9, 2000. Although the
annual report is being mailed to shareholders with this proxy statement, it
does not constitute part of this proxy statement.
WHO CAN VOTE
Only shareholders of record as of the close of business on May 15,
2000 are entitled to notice of and to vote at the annual meeting. As of May 15,
2000, we had 23,020,840 outstanding shares of common stock, our only
outstanding voting security. Each shareholder of record of our common stock on
the record date is entitled to one vote on each matter properly brought before
the annual meeting for each share of common stock held. IF YOU HOLD SHARES OF
OUR COMMON STOCK THROUGH ANY OF OUR STOCK PURCHASE OR SAVINGS PLANS, YOU WILL
RECEIVE VOTING INSTRUCTIONS FROM THE PLANS' ADMINISTRATOR. PLEASE SIGN AND
RETURN THOSE INSTRUCTIONS PROMPTLY TO ASSURE THAT YOUR SHARES ARE REPRESENTED
AT THE ANNUAL MEETING.
In accordance with our Bylaws, a list of shareholders entitled to vote
at the annual meeting will be available at the annual meeting and for 10 days
prior to the annual meeting, between the hours of 9:00 a.m. and 4:00 p.m. local
time at our offices located at 15303 Dallas Parkway, Suite 800, Addison, Texas.
HOW YOU CAN VOTE
Shareholders cannot vote at the annual meeting unless they are present
in person or represented by proxy. After you have reviewed the information
contained in this proxy statement and in the annual report, please take a
moment to read the instructions and choose the way to vote that you find most
convenient and cast your vote as soon as possible. You may vote by completing
and returning the enclosed proxy. Your proxy will be voted in accordance with
your instructions. Alternatively, if you are a shareholder of record (that is,
if your stock is registered with the company in your own name), you may vote by
telephone or electronically through the Internet by following the instructions
set forth on your proxy card. The deadline for voting by telephone or
electronically through the Internet as a shareholder of record is 3:00 p.m.,
Central Daylight Time on June 27, 2000. Valid proxies will be voted at the
annual meeting and at any adjournments of the annual meeting as you direct in
the proxy.
<PAGE> 4
You may revoke your proxy or otherwise change your vote at any time
before it is exercised by:
o delivering a written notice of revocation to our Secretary,
Kelly Tacke, at Palm Harbor Homes, Inc., 15303 Dallas
Parkway, Suite 800, Addison, Texas 75001;
o timely delivering a properly executed, later-dated proxy;
o submitting a later-dated vote by telephone or via the
Internet; or
o voting in person at the annual meeting.
Voting by proxy or via the Internet will in no way limit your right to
vote at the annual meeting if you later decide to attend in person. If your
shares are held in the name of a bank, broker or other holder of record, you
must obtain a proxy, executed in your favor, to be able to vote at the annual
meeting. If no direction is given and the proxy is validly executed, the shares
represented by the proxy will be voted in favor of proposals one and two. The
persons authorized under the proxies will vote upon any other business that may
properly come before the annual meeting according to their best judgment to the
same extent as the person delivering the proxy would be entitled to vote. As of
the date of mailing of this proxy statement, we did not anticipate that any
other matters would be raised at the annual meeting.
REQUIRED VOTE
The presence, in person or represented by proxy, of the holders of a
majority of our outstanding common stock (11,510,421 shares) entitled to vote
at the annual meeting is necessary to constitute a quorum at the annual
meeting. However, if a quorum is not present at the annual meeting, the
shareholders, present in person or represented by proxy, have the power to
adjourn the annual meeting until a quorum is present or represented.
Abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of determining a quorum at the annual meeting. A broker "non-vote"
occurs when a nominee holding common shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner.
A plurality of the votes duly cast is required for the election of
directors (i.e., the nominees receiving the greatest number of votes will be
elected). Abstentions and broker non-votes are not counted for purposes of the
election of directors. All of the nominees for director, other than Jerry
Mallonee, served as our directors during the fiscal year ended March 31, 2000.
COST OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by us. Proxies may be
solicited on our behalf by our directors, officers or employees in person, by
telephone, facsimile or by other electronic means. They will not be separately
compensated for their services.
In accordance with SEC regulations and the regulations of The Nasdaq
Stock Market's National Market, we will also reimburse brokerage firms and
other custodians, nominees and fiduciaries for their expenses incurred in
sending proxies and proxy materials to the beneficial owners of shares of our
common stock and soliciting proxies from them.
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<PAGE> 5
GOVERNANCE OF THE COMPANY
Pursuant to the Florida Business Corporation Act, our Articles of
Incorporation and our Bylaws, our business, property and affairs are managed
under the direction of the Board of Directors. Members of the Board of
Directors are kept informed of our business through discussions with the
Chairman of the Board and officers, by reviewing materials provided to them and
by participating in meetings of the Board of Directors and its committees.
During the fiscal year ended March 31, 2000, the Board of Directors held three
meetings and each committee held one meeting. Each director attended 100% of
all meetings of the Board of Directors and each of the meetings of the
committees on which such director served.
COMMITTEES OF THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
COMPENSATION
NAME BOARD AUDIT COMMITTEE COMMITTEE
------------------------------------- ----------- ----------------- --------------------
<S> <C> <C> <C>
Lee Posey x*
Larry H. Keener x
Walter D. Rosenberg, Jr. x
William R. Thomas x x x
Frederick R. Meyer x x
John H. Wilson x x
A. Gary Shilling x
Scott W. Chaney x
</TABLE>
--------------
* Chairman
During the fiscal year ended March 31, 2000, the Board of Directors
had two ongoing committees: an audit committee and a compensation committee.
The audit committee consists of two non-employee directors. The
functions of the audit committee include recommending to the Board of Directors
the appointment of independent auditors, reviewing with the independent
auditors both the plans for and the results of internal audits, approving the
services provided by the independent auditors, reviewing the range of audit and
non-audit fees and considering the adequacy of our internal accounting
controls. The audit committee met once during the fiscal year ended March 31,
2000. Effective on the date of the annual meeting, the members of the audit
committee shall be Messrs. Meyer, Wilson and Mallonee.
The compensation committee consists of two non-employee directors. The
functions of the compensation committee include establishing the compensation
of executive officers and administering management incentive compensation
plans. The compensation committee met once during the fiscal year ended March
31, 2000.
COMPENSATION OF DIRECTORS
During the fiscal year ended March 31, 2000, our non-employee
directors were entitled to receive compensation as follows:
<TABLE>
<S> <C>
Annual retainer fee...........................................................................$6,000
Fee for each Board meeting attended (other than telephonic)...................................$1,000
</TABLE>
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<PAGE> 6
Effective April 1, 2000, our non-employee directors will be entitled
to receive compensation as follows:
<TABLE>
<S> <C>
Annual retainer fee.................................................................................$8,000
Fee for each Board meeting attended (other than telephonic).........................................$2,000
Fee for each committee meeting (other than those on same day as board meeting)........................$500
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers served as a member of the compensation
committee of our Board of Directors. None of our executive officers served as a
director of any other entity whose executive officer served as a member of our
compensation committee.
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<PAGE> 7
SHARE OWNERSHIP OF MAJOR SHAREHOLDERS,
DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our shares of common stock as of May 15, 2000 by (1)
each person known by us to own beneficially more than 5% of our outstanding
common stock, (2) each current director, (3) each named executive officer, and
(4) all current directors and named executive officers as a group. Unless
otherwise indicated, the shares listed in the table are owned directly by the
individual or entity, or by both the individual and the individual's spouse.
Except as otherwise noted, the individual or entity had sole voting and
investment power as to shares shown or, in the case of the individual, the
voting power is shared with the individual's spouse.
Certain of the shares listed below are deemed to be owned beneficially
by more than one shareholder under SEC rules.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
NAME OWNERSHIP(1) PERCENT OF CLASS
------------------------------------------------------ --------------------------------- ----------------------
<S> <C> <C>
Lee Posey
15303 Dallas Parkway
Suite 800
Addison, Texas 75001 4,568,808 19.85%
Capital Southwest Corporation and
Capital Southwest Venture Corporation (2)
12900 Preston Road
Suite 700
Dallas, Texas 75230 7,855,121 34.12%
Larry H. Keener (3) 441,863 1.92%
Kelly Tacke (4) 54,161 *
W.D. Rosenberg, Jr. 213,624 *
William R. Thomas (2) (5) 268,953 1.17%
Frederick R. Meyer (6) 109,023 *
John H. Wilson (2) 1,250 *
A. Gary Shilling (7) 51,832 *
Scott W. Chaney 849,593 3.69%
All directors and executive officers as a group (10
persons) (2)(3)(4)(5)(6)(7) 6,569,804 28.54%
</TABLE>
----------------
* Beneficial ownership of less than 1% of the class is omitted.
(1) The information contained in this table with respect to common stock
ownership reflects "beneficial ownership" as defined in Rule 13d-3
under the Securities Exchange Act of 1934.
-5-
<PAGE> 8
(2) Mr. Thomas is President and Chairman of the Board of Capital Southwest
Corporation and Capital Southwest Venture Corporation, both of which
are our principal shareholders. Mr. Wilson is a member of the Board of
Directors of Capital Southwest Corporation and Capital Southwest
Venture Corporation. Mr. Thomas and Mr. Wilson may be deemed to share
voting and investment power with respect to the shares of common stock
beneficially owned by Capital Southwest Corporation and Capital
Southwest Venture Corporation. Mr. Thomas and Mr. Wilson each have
disclaimed beneficial ownership of such shares.
(3) Includes an aggregate of 120,822 shares owned by Mr. Keener's spouse
and three daughters, over which shares he exercises voting and
investment power.
(4) Includes 4,161 restricted shares received under the Fiscal Year 2001
and 2000 Long Term Incentive Plans. 1,760 shares are restricted until
March 29, 2002 and 2,401 shares are restricted until March 28, 2003.
All of these shares may be currently voted by Ms. Tacke.
(5) Mr. Thomas has sole voting and investment power with respect to
113,282 shares personally held by Mr. Thomas. Mr. Thomas also has sole
voting and investment power with respect to 80,674 shares held by a
family partnership. Mr. Thomas is a trustee of certain trusts pursuant
to employee stock ownership plans for employees of Capital Southwest
Corporation and its wholly-owned subsidiaries owning 74,997 shares,
with the power as one of three trustees to participate in the voting
of such shares. Under the rules and regulations of the SEC, Mr. Thomas
is deemed to be the beneficial owner of such 74,997 shares which are
included in the shares owned by Mr. Thomas.
(6) Includes 48,829 shares owned by a family partnership over which Mr.
Meyer exercises voting and investment power.
(7) Dr. Shilling is one of five members of an investment committee to
participate in the voting and investment decisions relating to 25,867
shares owned by clients of A. Gary Shilling & Co., Inc. Under the
rules and regulations of the SEC, Dr. Shilling is deemed to be the
beneficial owner of 25,793 shares which are included in the shares
owned by Dr. Shilling.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of our
common stock, to file reports of holdings and transactions in our securities
with the SEC and to furnish us with copies of all such reports. Based solely
upon a review of the reports furnished to us with respect to the fiscal year
ended March 31, 2000, we believe that all SEC filing requirements applicable to
our directors and executive officers were satisfied.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the annual meeting, nine directors will be elected by the
shareholders to serve until their successors have been duly elected and
qualified, or until the earliest of their death, resignation or retirement.
The persons named in the enclosed proxy will vote your shares as you
specify on the enclosed proxy form. If you return your properly executed proxy
but fail to specify how you want your shares voted, the shares will be voted in
favor of the nominees listed below. The Board of Directors has proposed the
following nominees for election as directors at the annual meeting. Each of the
nominees is currently a member of the Board of Directors.
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<PAGE> 9
NOMINEES
LEE POSEY, Chairman of the Board of Directors since December 1977.
Chief Executive Officer from December 1977 to June 1997. President from
December 1977 to December 1993. President of Redman Industries, Inc. from 1967
to 1977. Director of Monaco Coach Corporation. Age: 65.
LARRY H. KEENER, Director since 1995. Chief Executive Officer since
June 1997 and President since June 1994. Chief Operating Officer from June 1994
to June 1997. Division President from June 1989 to May 1994. Director from 1980
to May 1994. Age: 50.
WILLIAM R. THOMAS, Director since 1982 pursuant to an agreement among
us, Capital Southwest Corporation and Capital Southwest Venture Corporation.
Chairman of the Board since 1982 and President since 1980 of Capital Southwest
Corporation. President of Capital Southwest Venture Corporation since 1980.
Director of Alamo Group, Inc., Encore Wire Corporation and Mail-Well, Inc. Age:
71.
WALTER D. ROSENBERG, JR., Director since 1977. Managed his personal
portfolio since June 1991. Chairman of the Board and Chief Executive Officer of
Duro Metal Manufacturing Company, Inc. from December 1957 to June 1991. Age:
73.
FREDERICK R. MEYER, Director since 1994. Chairman of the Board of
Aladdin Industries LLC since July 1985. President and Chief Executive Officer
of Aladdin Industries LLC from October 1995 to May 1999 and from May 1987 to
September 1994. President of Tyler Corporation from July 1983 to December 1986.
Director of Tylor Corporation, Arvin Industries, Inc. and Southwest Securities
Group, Inc. Age: 72.
JOHN H. WILSON, Director since 1994. President of U.S. Equity
Corporation since 1983. Director of Capital Southwest Corporation and Encore
Wire Corporation. Age: 57.
A. GARY SHILLING, Director since 1995. President of A. Gary Shilling &
Co., Inc. since 1978. Senior Vice President and Chief Economist of White, Weld
& Co., Inc. from 1972 to 1978. Director of National Life of Vermont and The
Heartland Group. Age: 62.
SCOTT A. CHANEY, Director since 1996. Executive Vice President since
March 28, 1997. President of our retail operations since July 1, 1996.
President of Newco Homes, Inc. from March 1986 to June 1996. Age: 42.
JERRY D. MALLONEE, Retired from Arthur Andersen & Co. in December 1999
as the Tax Managing Partner of Pacific Northwest. Mr. Mallonee had been
employed by Arthur Andersen from February 1967 until his retirement. Mr.
Mallonee currently manages his personal investments. Age: 59.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF DIRECTORS AS SET FORTH IN PROPOSAL ONE.
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<PAGE> 10
EXECUTIVE OFFICERS
Our executive officers serve at the discretion of the Board of
Directors and are chosen annually by the Board of Directors. Set forth below
are the names, ages and positions of our executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Lee Posey 65 Chairman of the Board and Director
Larry H. Keener 50 President, Chief Executive Officer and Director
Scott Chaney 42 Executive Vice President and Director
Kelly Tacke 42 Chief Financial Officer, Vice President-Finance
and Secretary
</TABLE>
Information concerning the business experience of Messrs. Posey,
Keener and Chaney is provided in "Proposal One: Election of Directors." Set
forth below is a description of the background of Ms. Tacke. There is no family
relationship between any of our directors or executive officers.
KELLY TACKE has served as Vice President-Finance and Chief Financial
Officer since October 1993, and as Secretary since March 1997. From August 1979
through September 1993, Ms. Tacke was employed by PriceWaterhouseCoopers LLP
where she most recently served as a Senior Audit Manager.
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation paid by us for the
fiscal years ended March 31, 2000, March 26, 1999 and March 27, 1998 to the
Chief Executive Officer and the other four most highly compensated executive
officers who received a total annual salary and bonus in excess of $100,000 in
fiscal year ended March 31, 2000.
-8-
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1)
---------------------------------------------
Name and Fiscal All Other
Principal Location Year Salary Bonus Compensation
------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Lee Posey 2000 $400,000 $ 0 $ 6,751(2)
Chairman of the Board 1999 250,000 663,989 9,652(2)
1998 225,000 1,015,821 12,035(2)
Larry H. Keener 2000 200,000 661,841 11,250(3)
President and Chief 1999 200,000 1,059,926 11,000(3)
Executive Officer 1998 200,000 958,907 11,000(3)
Scott Chaney 2000 175,000 590,931 5,250(5)
Executive Vice President 1999 175,000 956,697 5,000(5)
1998 175,000 856,167 6,333(5)
Kelly Tacke 2000 100,000 201,736 4,540(4)
Chief Financial Officer, Vice 1999 100,000 298,125 4,886(4)
President-Finance and 1998 100,000 260,274 5,499(4)
Secretary
</TABLE>
-------------
(1) The named executive officers did not receive any annual compensation
not properly categorized as salary or bonus, except for certain
perquisites and other personal benefits which are not shown because
the aggregate incremental costs of these benefits to us for each
officer did not exceed the lesser of either $50,000 or 10% of the
total of annual salary and bonus reported for each such officer.
(2) Includes $3,000, $4,654 and $8,625 contributed in fiscal year 2000,
1999 and 1998, respectively, by us pursuant to the employee savings
plan and $3,751, $5,000 and $3,410 paid in fiscal year 2000, 1999 and
1998, respectively, by us as a car allowance.
(3) Includes $5,250, $5,000 and $5,000 contributed in fiscal year 2000,
1999 and 1998, respectively, by us pursuant to the employee savings
plan and $6,000 paid in fiscal year 2000, 1999 and 1998 by us as a car
allowance.
(4) Represents contributions by us pursuant to the employee savings plan.
COMPENSATION ARRANGEMENTS
Effective March 27, 1999, we entered into a compensation agreement
with Lee Posey, our Chairman of the Board. The agreement is for a term of eight
years. Mr. Posey will provide 100 days of service per year for three years and
receive $400,000 per year for his services. He will provide 75 days of service
per year for five years and receive $300,000 per year for his services. If the
agreement terminates for any reason, Mr. Posey or his estate, as applicable, is
entitled to receive a payment equal to the lesser of (1) $1,000,000 or (2)
$16,667 multiplied by the remainder of 96 minus the number of months Mr. Posey
provided services as an employee under the agreement. This agreement replaced
an agreement between us and Mr. Posey entered into on April 1, 1995.
-9-
<PAGE> 12
Our corporate bonus plan, which was amended effective March 28, 1998
and was effective in fiscal 1999 and fiscal 2000, defines the basis for
determining a potential bonus pool in each fiscal quarter equal to an annual
rate of 22.5% of the excess of actual earnings (as defined in the plan) over
base earnings (as defined in the plan). The plan defines actual earnings in
each fiscal period to be consolidated earnings before deducting bonuses
determined pursuant to the plan and before state and federal income taxes.
Bonuses under the plan are paid promptly following each quarter.
Mr. Keener received 14.0% of the bonus pool under the Plan, Mr. Chaney
received 12.5% and Ms. Tacke received 4.0% of the bonus pool for fiscal 2000.
There are no dollar limits on bonus amounts awarded.
Sections 162(m) of the Internal Revenue Code of 1986, as amended,
enacted in 1993, precludes a public corporation from taking a deduction in 1994
or subsequent years for compensation in excess of $1 million paid to its chief
executive officer or any of its four other highest-paid officers unless such
compensation is performance-based compensation as defined in Section 162(m) of
the Code. Our corporate bonus plan is a performance-based plan.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with certain of our
officers and each of our directors, requiring us to indemnify such persons
against judgments, claims, damages, losses and expenses incurred as a result of
the fact that such officer or director, in his or her capacity as such, is made
or threatened to be made a party to any suit or proceeding, to the maximum
extent permitted by Florida law. The indemnification agreements provide for the
advancement of expenses to such officers and directors in connection with any
such suit or proceeding.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
Effective the 2000 fiscal year, we adopted a Long Term Incentive Plan.
We have also adopted such a plan for fiscal 2001. Each plan has a term of one
year. All key employees and executive officers (excluding the chairman,
president and chief executive officer and executive vice president are eligible
for consideration for grants under the plan. Subject to their continued
employment, plan participants are entitled to receive shares of our common
stock in an amount equivalent to 10% of the cash compensation that each
participant received during the applicable fiscal year. The shares do not vest
for three years.
<TABLE>
<CAPTION>
PERFORMANCES
NUMBER OF SHARES OR OTHER PERIOD UNTIL
NAME OF COMMON STOCK MATURATION OR PAYOUT
----------------------------------------- --------------------------------- -----------------------------------
<S> <C> <C>
Kelly Tacke 1,760 March 29, 2002(1)
Chief Financial Officer, Vice 2,401 March 28, 2003(1)
President-Finance and Secretary
</TABLE>
-------------
(1) The shares of common stock issued under our Fiscal Year 2001 and 2000
Long Term Incentive Plans may not be transferred until they are fully
vested. The grants of shares vest on the third anniversary of the date
of grant. Recipients of stock grants under these plans have the right
to currently vote these shares.
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<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Report of the Compensation Committee on Executive
Compensation and the performance graph shall not be deemed incorporated by
reference by any general statement incorporating this proxy statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under either Act.
Decisions on compensation of our executive officers are made by the
two member compensation committee of the Board of Directors. Each member of the
compensation committee is an outside director. None of the members of the
compensation committee has ever been an officer or employee of Palm Harbor or
any of its subsidiaries. The compensation committee, in consultation with the
Chairman of the Board, is responsible for establishing the policies that govern
compensation of executive officers and key employees at the corporate level.
The goals of our compensation program are to attract, retain and
motivate competent executive officers and key employees who have the experience
and ability to contribute materially to our long-term success. Our compensation
philosophy for our executive officers and key employees is predicated on base
salaries which are in most instances below salaries for comparable industry
positions and potential bonuses which, depending on our earnings performance in
relation to pre-established base levels, may be relatively high or relatively
low in comparison with bonus payments by companies of comparable size and type.
Base salaries are determined for each of the executive officers on an
individual basis, taking into consideration the level of responsibility,
individual contributions to our performance, length of tenure with us,
compensation levels of comparable positions and internal equities among
positions. In most instances, base salaries are set at subjectively-determined
levels substantially below base salaries paid to executives in similar
positions in companies of comparable size in the same industry or similar
industries. For the fiscal year ended March 31, 2000, Lee Posey, our Chairman
of the Board, received a salary of $400,000. Effective March 27, 1999, Mr.
Posey's base salary became $400,000 per year pursuant to a compensation
agreement which among other things established Mr. Posey's annual salary at
$400,000 for 100 days of service in each of the first three years of the
agreement and did not provide for Mr. Posey's participation in the corporate
bonus plan. The base salary of our President and Chief Executive Officer, Larry
H. Keener, was $200,000 for the fiscal year ended March 31, 2000, and is
currently at an annual rate of $200,000 for the fiscal year ending March 30,
2001.
Bonuses were determined largely on the basis of a bonus plan which
provides for a corporate level bonus pool to be distributed on a predetermined
basis among those executives and key employees specified by the compensation
committee. The amount of the bonus pool in the year ended March 31, 2000 was
based on the extent to which annual earnings exceed a base level equivalent to
a 22.5% pre-tax return on shareholders' equity at the beginning of the period.
Individual participation in the bonus pool is based on a percentage amount
specified for each participant. For fiscal 2000, Larry H. Keener received a
bonus of $661,841, which was 37.6% below his bonuses in the previous fiscal
year.
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<PAGE> 14
The combined effect of low base salaries and a profit-sharing plan
which generates bonuses only after earnings exceed an annual hurdle level,
results in relatively low executive compensation if our performance is
unfavorable and a significantly higher level if performance is favorable,
thereby increasing the importance of performance-based bonuses as a material
determinant of total compensation.
We do not have a stock option plan for our key employees and executive
officers and have not had a stock option plan since our company was founded.
COMPENSATION COMMITTEE
William R. Thomas, Chairman
Frederick R. Meyer
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<PAGE> 15
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
us, the Standard & Poor's MidCap 400 Composite Stock Index and our peer group,
assuming the investment of $100 on July 31, 1995 (the date our common stock
began trading) and the reinvestment of dividends. The companies in our peer
group are as follows: American Homestar, Inc., Cavalier Homes, Inc., Champion
Enterprises, Inc., Clayton Homes, Inc., Fleetwood Enterprises, Inc., Liberty
Homes, Inc., Oakwood Homes Corporation and Skyline Corporation.
<TABLE>
<CAPTION>
7/95 3/96 3/97 3/98 3/99 3/00
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Palm Harbor Homes, Inc. $100 $215 $229 $229 $488 $354
S&P MidCap 400 $100 $112 $124 $185 $186 $257
Peer Group $100 $139 $118 $204 $128 $ 75
</TABLE>
The foregoing price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporation by reference
of this proxy statement into any filing under the Securities Act or Securities
Exchange Act, except to the extent that we specifically incorporate this graph
by reference, and shall not otherwise be deemed filed under the Acts.
There can be no assurance that our share performance will continue
into the future with the same or similar trends depicted in the graph above. We
will not make or endorse any predictions as to future share performance.
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<PAGE> 16
PROPOSAL TWO
RATIFICATION OF INDEPENDENT AUDITORS
Based upon the recommendation of the audit committee, the shareholders
are urged to ratify the appointment by the Board of Directors of Ernst & Young
LLP as independent auditors for the fiscal year ending March 30, 2001. Ernst &
Young has served as our independent auditors since our inception and is
familiar with our affairs and financial procedures.
A representative of Ernst & Young is expected to be present at the
annual meeting and will have an opportunity to make a statement, if he desires
to do so, and to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the annual
meeting in the year 2001, and who wishes to have the proposal included in our
proxy statement for that meeting, must deliver the proposal to our corporate
secretary, Kelly Tacke, at 15303 Dallas Parkway, Suite 800, Addison, Texas
75001 by February 9, 2001. All proposals must meet the requirements set forth
in the rules and regulations of the SEC in order to be eligible for inclusion
in the proxy statement for that meeting.
ANNUAL REPORT
We have provided without charge a copy of the annual report to
shareholders for fiscal year ended March 31, 2000 to each person being
solicited by this proxy statement. UPON THE WRITTEN REQUEST BY ANY PERSON BEING
SOLICITED BY THIS PROXY STATEMENT, WE WILL PROVIDE WITHOUT CHARGE A COPY OF THE
ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SEC (EXCLUDING EXHIBITS, FOR WHICH
A REASONABLE CHARGE SHALL BE IMPOSED). All requests should be directed to:
Kelly Tacke, Chief Financial Officer, Vice-President Finance and Secretary, at
Palm Harbor Homes, Inc., 15303 Dallas Parkway, Suite 800, Addison, Texas 75001.
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<PAGE> 17
PALM HARBOR HOMES, INC.
The undersigned shareholder of Palm Harbor Homes, Inc. does hereby
nominate, constitute and appoint Kelly Tacke and Colleen Rogers, or either one
of them, as Proxies, each with full power to appoint her substitute, to
represent and vote all of the shares of Common Stock of Palm Harbor Homes, Inc.
held of record by the undersigned at the Annual Meeting of shareholders to be
held at 10:00 a.m. Dallas time on June 28, 2000 at The Colonnade Conference
Center, 15303 Dallas Parkway, Addison, Texas, 75001, and at any adjournments
thereof, as follows:
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON REVERSE SIDE)
<PAGE> 18
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
PALM HARBOR HOMES, INC.
JUNE 28, 2000
o PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED o
<TABLE>
<S> <C> <C> <C> <C> <C>
PLEASE MARK YOUR
A[X] VOTES AS IN THIS
EXAMPLE.
For all nominees WITHHOLD NOMINEES:
listed at the right AUTHORITY Lee Posey
(except as marked below to vote for all nominees Larry H. Keener
to the contrary) listed at right William R. Thomas
[ ] [ ] Walter D. Rosenberg, Jr.
Frederick R. Meyer
1 ELECTION John H. Wilson
OF A. Gary Shilling
DIRECTORS Scott W. Chaney
(INSTRUCTION: To withhold authority to vote for any Jerry Mallonee
individual nominee, strike a line through that
nominee's name at right)
2. RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT FOR AGAINST ABSTAIN
AUDITORS FOR THE FISCAL YEAR ENDING MARCH 30, 2001. [ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ABOVE. IF A CHOICE IS NOT INDICATED WITH
RESPECT TO ITEMS (1) AND (2) ABOVE, THIS PROXY WILL BE VOTED "FOR" SUCH
PROPOSALS. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
</TABLE>
(Signature of Shareholder(s)) Dated: , 2000
------------------------------- -------
NOTE: (Joint owners must each sign. Please sign exactly as your name(s)
appear(s) on this card. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please give your full
title.)
