-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TW96qCFBmMn1KC+vDOrkqfsgFH99ZSacEFT7knj7dIPc3U0FeHTvT0jCLufQYncd IP91T8Ok/2ayNdRPONZ8tw== 0000101640-94-000004.txt : 19970924 0000101640-94-000004.hdr.sgml : 19970924 ACCESSION NUMBER: 0000101640-94-000004 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940211 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S HOME CORP /DE/ CENTRAL INDEX KEY: 0000101640 STANDARD INDUSTRIAL CLASSIFICATION: 1531 IRS NUMBER: 210718930 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 001-05899 FILM NUMBER: 94506495 BUSINESS ADDRESS: STREET 1: 1800 WEST LOOP SOUTH CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7138772311 MAIL ADDRESS: STREET 1: PO BOX 2863 CITY: HOUSTON STATE: TX ZIP: 77252 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES HOME & DEVELOPMENT CORP DATE OF NAME CHANGE: 19710713 PRE 14A 1 PRELIMINARY PROXY FOR US HOME FOR PERIOD 12/31/93 SCHEDULE 14A Information Required in Proxy Statement SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant X Filed by a Party other than the Registrant ___ Check the approximate box: X Preliminary Proxy Statement ___ Definitive Proxy Statement ___ Definitive Additional Materials ___ Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12. U.S. HOME CORPORATION __________________________________________________________ (Name of Registrant as Specified In Its Charter) U.S. Home Corporation __________________________________________________________ (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)91) or 14a-6(j)(2). ___$500 per each party to the controversy pursuant to Exchange Act Rules 14a-6(i)(3). ___Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: __________________________________________________________ 2) Aggregate number of securities to which transaction applies: __________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: __________________________________________________________ 4) Proposed maximum aggregate value of transaction: __________________________________________________________ ____ 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 filling. 2 1) Amount Previously Paid: _____________________________________________ 2) Form, Schedule or Registration Statement No.: _____________________________________________ 3) Filing Party: _____________________________________________ 4) Date Filed: _____________________________________________ 3 U.S. HOME CORPORATION 1800 West Loop South P. O. Box 2863 Houston, Texas 77252-2863 [U.S. HOME LOGO] NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT March 3, 1994 Dear Stockholders: On behalf of the officers and directors of the Company, you are cordially invited to attend the U.S. Home Corporation Annual Meeting of Stockholders to be held at 10:00 a.m., local time, on April 6, 1994 at the Omni Hotel, Four Riverway, Houston, Texas. At the meeting, Stockholders will be asked to consider and act upon the election of directors and ratification of auditors. Stockholders are also being requested to consider and approve the Non-Employee Directors' Stock Option Plan, the Employee Stock Payment Plan and an amendment to the Second Restated Certificate of Incorporation to eliminate a prohibition against issuance of non-voting equity securities. These matters are described in the formal Notice of Meeting and in the accompanying Proxy Statement. The Board of Directors of the Company unanimously recommends that all Stockholders vote in favor of each Proposal. Your vote is important regardless of the number of shares you may own. We strongly encourage all Stockholders to participate by voting their shares by Proxy whether or not they plan to attend the meeting. Please sign, date and mail the enclosed Proxy as soon as possible. If you do attend the meeting, you may still vote in person. Sincerely, /s/ Robert J. Strudler _______________________ Robert J. Strudler Chairman and Chief Executive Officer 4 [U.S. HOME LOGO] ________________________________________ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS April 6, 1994 ________________________________________ The Annual Meeting of the Stockholders of U.S. Home Corporation (the "Company") will be held on Wednesday, April 6, 1994, at 10:00 a.m., local time, at the Omni Hotel, Four Riverway, Houston, Texas for the purpose of considering and acting upon the following proposals as set forth in the accompanying Proxy Statement: 1. Election of Class I Directors. 2. Approval of the Company's Non-Employee Directors' Stock Option Plan. 3. Approval of the Company's Employee Stock Payment Plan. 4. Approval of an amendment to the Company's Second Restated Certificate of Incorporation to eliminate a prohibition against issuance of non-voting equity securities. 5. Ratification of the appointment of Arthur Andersen & Co. as auditors of the Company for the fiscal year ending December 31, 1994. 6. Transaction of such other business as may properly come before the meeting or any adjournment thereof. Only Stockholders of record at the close of business on February 10, 1994 are entitled to notice of and to vote at the meeting or any adjournment thereof. March 3, 1994 By Order of the Board of Directors /s/ Richard G. Slaughter ____________________________ RICHARD G. SLAUGHTER Secretary 5 U.S. HOME CORPORATION 1800 West Loop South P. O. Box 2863 Houston, Texas 77252 _________________________ PROXY STATEMENT _________________________ Accompanying this Proxy Statement is a Notice of Annual Meeting of Stockholders of U.S. Home Corporation (the "Company") and a form of Proxy (the "Proxy") for such meeting solicited by the Board of Directors of the Company (the "Board"). The Board has fixed the close of business on February 10, 1994 as the record date (the "Record Date") for the determination of stockholders ("Stockholders") who are entitled to notice of and to vote at the meeting or any adjournment(s) thereof (the "Meeting"). The holders of a majority of the aggregate outstanding shares of (i) common stock, $.01 par value per share, of the Company (the "Common Stock") and (ii) convertible redeemable preferred stock, $.10 par value per share, of the Company (the "Convertible Preferred Stock") (hereinafter, the Common Stock and the Convertible Preferred Stock shall be referred to collectively as the "Stock") present in person or represented by Proxy and entitled to vote shall constitute a quorum at the Meeting. As of the Record Date, there were outstanding 9,623,479 shares of Common Stock and 1,721,482 shares of Convertible Preferred Stock, or an aggregate of 11,344,954 shares of Stock, the holders of which are entitled to one vote per share. A Proxy that is properly submitted to the Company may be revoked at any time, before it is exercised, by written notice to the Secretary of the Company. Any Stockholder attending the Meeting may vote in person and by doing so revokes any Proxy previously submitted by him or her. Pursuant to Proposal 1, unless authority to vote for all nominees for Class I Director or any individual nominee is withheld, all the shares of Stock represented by the Proxy will be voted for the election as Class I Director of the nominees set forth in this Proxy Statement. Where a Stockholder has specified a choice on his or her Proxy with respect to other proposals or matters, that direction will be followed. If no direction is given, all of the shares of Stock represented by the Proxy will be voted in favor of such proposal or matter. However, shares of Stock represented by Proxies marked as abstentions on any matter will not be voted on that matter, although they will be counted for quorum purposes; shares held by brokers in "street name" and not voted by them will not be counted in tabulating votes. 6 The cost of soliciting Proxies will be paid by the Company, which will reimburse brokerage firms, custodians, nominees and fiduciaries for their expenses in forwarding proxy materials to the beneficial owners of Stock. Officers and regular employees of the Company may solicit Proxies personally and by telephone. In addition, the Company has retained D.F. King & Co., Inc., to aid in the solicitation from brokers, bank nominees and institutional holders for a fee of $6,500 plus out-of-pocket expenses. The Annual Report of the Company for the year ended December 31, 1993, containing audited financial statements for such year, is enclosed with this Proxy Statement. This Proxy Statement and the enclosed Proxy are being sent to Stockholders on or about March 3, 1994. IN ORDER THAT YOUR SHARES OF STOCK MAY BE REPRESENTED AT THIS MEETING, YOU ARE REQUESTED TO: PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY. 7 ELECTION OF CLASS I DIRECTORS (Proposal 1) The Company's Second Restated Certificate of Incorporation (the "Certificate of Incorporation"), which became effective on June 21, 1993, when it emerged from Chapter 11 of the United States Bankruptcy Code, provides that six individuals (the "New Directors") selected by the Official Committee of Unsecured Creditors in the Company's Chapter 11 bankruptcy case would be added to the Board , three directors would resign from the Board (such persons resigned on June 10, 1993), and five directors who were members of the Board during the pendency of the Company's Chapter 11 case would remain on the Board ("Continuing Directors") resulting in a Board consisting of 11 directors. The Certificate of Incorporation also provides that the directors will be divided, with respect to the time for which they hold office, into three classes: Class I, Class II and Class III. Class I consists of the three members named below who, if elected at the Meeting, will serve until the annual meeting of Stockholders in 1996 and until their successors are elected and qualified. Class II consists of the four members named below who will serve until the annual meeting of Stockholders in 1995 and until their successors are elected and qualified. Class III consists of the four members named below who will serve until the annual meeting of Stockholders in 1996 and until their successors are elected and qualified. Until the annual meeting of Stockholders to elect directors to be held in 1996, nominations for election to the Board due to expiring terms of Continuing Directors and New Directors will be made by a majority of the remaining Continuing Directors or New Directors, respectively. Effective with the annual meeting of Stockholders to be held in 1996, classification of directors will terminate and all directors will serve for one-year terms, and nominations for election of all directors will be made by the affirmative vote of a majority of the entire Board. Subject to the Certificate of Incorporation and the Company's Amended and Restated By-Laws (the "By-Laws"), the Nominating Committee of the Board will consider candidates for director recommended by Stockholders, if such recommendations are submitted in writing to the Secretary of the Company giving the background and qualifications of the candidates. At the Meeting the following persons constituting Class I of the Board ("Class I Directors") have been nominated for reelection to serve until the annual meeting of Stockholders in 1996, and until their successors are elected and qualified: George A. Poole, Jr. Herve Ripault James W. Sight Unless authority to vote on the election of all nominees for Class I Director or any individual nominee is specifically withheld by appropriate designation on the Proxy, it is the intention of the persons named in the accompanying Proxy to vote such Proxy for the election as Class I Directors of the persons named above. 8 All nominees have consented to serve, if so elected. The Company does not anticipate that any of the nominees for Class I Director will be unable to serve, but if such a situation should arise, it is the intention of the persons named in the accompanying Proxy to vote for the election of such other person or persons as the respective New Directors or Continuing Directors, as noted above, may nominate. The election of directors requires the affirmative vote of the holders of a plurality of the shares of Stock voting at the Meeting. NOMINEES FOR DIRECTOR Class I - Term Expiring at 1996 Annual Meeting
Name, Age, Principal Served as Board Occupation, Director Committee Other Directorships (1) Since Membership ________________________________ ________ __________ George A. Poole, Jr. (62 yrs.) Private investor for more than the Audit and last five years (2) 1993 Nominating Herve Ripault (53 yrs.) Associate of Optigestiom S.A., a French Finance and fund management company since November 1991 (3) 1982 Nominating James W. Sight (38 yrs.) Private investor for more than the last Compensation and last five years (4) 1993 Stock Option, Conflict of Interest and Nominating
INFORMATION ON OTHER DIRECTORS Class II - Term Expiring at 1995 Annual Meeting
Served as Board Name, Age, Principal Occupation, Director Committee Other Directorships (1) Since Membership ___________________________ ________ ____________ Glen Adams (55 yrs.) Chairman, President and Chief Executive Conflict of Interest Officer of Southmark Corporation since August 1993 (5) 1993 and Nominating Steven L. Gerard (48 yrs.) Chairman and Chief Executive Finance and Officer of Triangle Wire & Cable Inc. since September 1992 (6) 1993 Compensation and Stock Option Kenneth J. Hanau, Jr. (67 yrs.) Chairman of K & H Corrugated Audit, Case Corporation (7) 1976 Compensation and Stock Option and Executive Charles A. McKee (75 yrs.) Former Chairman and Chief Executive Audit and Officer of Electrolux Corporation (8) 1978 Compensation and Stock Option
9 Class III _ Term Expiring at 1996 Annual Meeting
Served as Board Name, Age, Principal Occupation, Director Committee Other Directorships (1) Since Membership Isaac Heimbinder (50 yrs.) President and Chief Operating Officer Conflict of of the Company (9) 1984 Interest, Executive and Finance Malcolm T. Hopkins (65 yrs.) Private investor and a director of Audit and companies for more than the last five years (10) 1993 Executive Jack L. McDonald (60 yrs.) Private investor and consultant for Conflict of Interest more than the last five years (11) 1993 and Finance Robert J. Strudler (51 yrs.) Chairman and Chief Executive Officer Executive of the Company (12) 1984
(1) Unless otherwise indicated, directors have held the position with the Company or have been engaged in the principal occupation indicated for at least five years. (2) Mr. Poole has been a private investor for more than the past five years. Mr. Poole serves as a director of Spreckels, Inc. and Darling International, Inc. (3) Mr. Ripault has been an Associate of Optigestiom S.A., a French fund management company since November 1991. Mr. Ripault retired in October 1991 as Chairman of the Board of Delahaye - Ripault, S.A., Agent de Change, a member of the Paris Stock Exchange, Paris, France. Mr. Ripault had been associated with such firm from June 1985 until his retirement. Mr. Ripault was associated with Societe des Maisons Phenix from 1979 to 1985, during which time he was Executive Vice President - Finance. (4) Mr. Sight has been a private investor for more than the past five years. He has also served as Vice President and director of Sight Leasing Co. Inc., a car leasing company, from 1978 until its dissolution in December 1992. Since December 1992, Mr. Sight has been Co-Chairman and a director of Metro Airlines, Inc., a former regional feeder airline which is in the process of liquidation. (5) Mr. Adams has been Chairman, President and Chief Executive Officer of Southmark Corporation since August 1990. Southmark, a real estate and financial services company, is engaged in the liquidation of its assets pursuant to a Chapter 11 plan of reorganization which became effective in August 1990. Prior to joining Southmark, Mr. Adams served as Chairman, President and Chief Executive Officer of The Great Western Sugar Company, a sugar manufacturer, from 1986 to 1989 during its bankruptcy case. He previously served from 1983 to 1986 as Vice President and General Counsel of Hunt International Resources Corp., a holding company for Great Western and other entities. Mr. Adams serves as a director of Southmark San Juan, Inc., Thousand Trails, Inc. and Zale Corporation. 10 (6) Mr. Gerard has been Chairman and Chief Executive Officer of Triangle Wire & Cable Inc., a manufacturer of insulated wire and cable, since September 1992. Mr. Gerard was previously Chief Executive Officer and Director of Mountleigh Group, PLC, a London-based company engaged in property management and retailing, from April 1992 to July 1992. Mr. Gerard was hired in connection with the restructuring of Mountleigh. In connection with the restructuring, Mountleigh was placed in U.K. receivership on May 23, 1992. From July 1990 until April 1992, Mr. Gerard was a Senior Managing Director of Citibank, N.A. responsible for credit, portfolio and risk management for Citibank's corporate and investment banking activities in the United States, Japan, Europe and Australia; from August 1987 to July 1990, he was Division Executive for the National Corporate Finance Division of Citibank and prior thereto, he was the Senior Corporate Workout Officer of the Institutional Recovery Management Division of Citibank. Mr. Gerard is also a director of Banner Aerospace, Inc. and KEMET Corporation. (7) Mr. Hanau is Chairman of K&H Corrugated Case Corporation, manufacturer of corrugated packaging materials, Walden, New York, and has been associated with such company for more than five years. Mr. Hanau is also a director of Cosco Industries and Tinque, Brown, Inc. (8) Mr. McKee retired as Chairman and Chief Executive Officer of Electrolux Corporation, manufacturer of vacuum cleaners and floor care products, Stamford, Connecticut on June 30, 1983 and as Executive Vice President and Director of Sara Lee Corporation (formerly Consolidated Foods Corporation) on October 31, 1983 after having served in such capacities for more than five years. Mr. McKee is a director of Magneyic Analysis Corp. (9) Mr. Heimbinder has served as President and Chief Operating Officer of the Company since May 12, 1986; prior thereto he had been Senior Vice President and Chief Financial Officer of the Company since December 14, 1979 and Secretary from August 23, 1984 until June 26, 1986, and from October 13, 1976 until January 26, 1984. (10) Mr. Hopkins has been a private investor and a director of several companies for more than the past five years. He served as Vice Chairman and Chief Financial Officer of the former St. Regis Corporation, a paper and forest products company with interests in oil and gas and insurance, from 1980 to 1984. Mr. Hopkins is a director of The Columbia Gas System, Inc., MAPCO, Inc., KinderCare Learning Centers, Inc., The Metropolitan Series Fund, Inc. and MetLife Portfolios, Inc.; he is also a trustee of The Biltmore Funds. (11) Mr. McDonald has been a private investor and consultant for more than the past five years. He served as President and Chief Operating Officer of Centex Corporation, which is a homebuilding, general construction and cement-making company from 1978 to 1984, and as a director of that company from 1974 until 1985. He is also a director of Amre, Inc., Bally's Grand Inc. and Triangle Pacific, Inc. (12) Mr. Strudler has served as Chairman and Chief Executive Officer of the Company since May 12, 1986; prior thereto he had been President and Chief Operating Officer of the Company since August 23, 1984, Senior Vice President, Asset Management, and Secretary of the Company from January 26, 1984 to August 23, 1984 11 and Senior Vice President of the Company since December 15, 1978. Mr. Strudler also served as a director of the Company from January 27, 1983 until March 22, 1984. COMMITTEES OF THE BOARD OF DIRECTORS The committees of the Board include the following: The Audit Committee reviews and approves the scope of the annual audit undertaken by the Company's independent public accountants and meets with them on a regular basis to review the progress and results of their work as well as any recommendations they may make. The Audit Committee also reviews the fees of the independent public accountants, and reviews and approves the annual financial statements of the Company prior to issuance of such statements. In addition, the Audit Committee reviews and approves any significant non-audit services undertaken by the Company's independent public accountants. In connection with the internal accounting controls of the Company, the Audit Committee reviews internal audit procedures and reporting systems, as well as reports of the Audit Department of the Company and the management action taken in response to such reports. The Compensation and Stock Option Committee (the "Compensation Committee") reviews the salaries and all compensation plans for corporate officers, presidents of operations and division chairmen and presidents, and makes specific recommendations to the Board for such salaries and plans. The Compensation Committee also has the authority to administer the Company's 1993 Employees' Stock Option Plan, and the Directors' Plan (as herein defined, including the grant of options and approval of loans to finance the purchase of shares, and, if approved by the Stockholders at the Meeting the Employee Stock Payment Plan, including the determination of the amount, allocation and vesting of shares. The Conflict of Interest Committee makes determinations concerning potential conflicts of interest involving the Company and its subsidiaries and any directors, corporate officers, beneficial owners of more than 10% of the Company's outstanding shares of Stock, presidents of operations, division chairmen and presidents and members of conflict of interest committees reporting to presidents of operations. The Executive Committee is empowered to exercise all powers of the full Board to the extent permitted by, and subject to the limitations imposed by, the Delaware General Corporation Law and the Certificate of Incorporation and By-Laws. The Executive Committee exercises the powers of the full Board in the management of the business and affairs of the Company during the intervals between regular and special meetings of the Board. The Finance Committee reviews and approves capital funding (debt or equity) plans for the Company and major land policies in coordination with established corporate strategic objectives, and reviews and recommends corporate strategic objectives for the Company. The Nominating Committee advises on compensation of directors and makes, subject to the Certificate of Incorporation and By-Laws, recommendations to the Board for the election of directors, the succession in the office of chief executive 12 officer and the election of corporate officers. Subject to the Certificate of Incorporation and By-Laws, the Nominating Committee will consider candidates for director recommended by Stockholders, if such recommendations are submitted in writing to the Secretary of the Company giving the background and qualifications of the candidates. Members of the committees of the Board are as follows: Audit Committee - Messrs. Hanau, Hopkins (Chair), McKee and Poole; Compensation and Stock Option Committee - Messrs. Gerard, Hanau, McKee (Chair) and Sight; Conflict of Interest Committee - Messrs. Adams, Heimbinder, McDonald (Chair) and Sight; Executive Committee - Messrs. Hanau (Chair), Heimbinder, Hopkins and Strudler; Finance Committee - Messrs. Gerard (Chair), Heimbinder, McDonald and Ripault; Nominating Committee - Messrs. Adams (Chair), Poole, Ripault and Sight. During 1993, there were a total of 8 meetings of the Board, 2 meetings of the Audit Committee, 3 meetings of the Compensation Committee, 3 meetings of the Finance Committee, 1 meeting of the Nominating Committee and 1 meeting of the Executive Committee. No meetings of the Conflict of Interest Committee were held during 1993. The Company's normal practice is that committee meetings are held the day preceding the regular meetings of the Board. All of the directors, for the time they were directors during 1993, attended at least 75 percent of the Board meetings and meetings of committees of which they were members that were held during 1993. EXECUTIVE COMPENSATION The following table sets forth a summary of annual and long- term compensation (for 1993, 1992 and 1991) awarded to, earned by, or paid to the Chief Executive Officer of the Company and each of the four most highly compensated executive officers of the Company (other than the Chief Executive Officer) whose total annual salary and bonus for the year ended December 31, 1993, was in excess of $100,000: 13
SUMMARY COMPENSATION TABLE Long Term Compensation Annual Compensation Awards Payouts (a) (b) (c) (d) (e) (f) (g) (h) (i) Other Annual Restricted Name and Compen- Stock Options/ LTIP All Other Principal Salary Bonus sation Awards SARs Payouts Compensation Position Year ($)(1) ($)(2) ($) ($) (#)(3) ($) ($)(4)(5)(6) ____________ ____ ________ _______ ________ ________ _______ ______ ___________ Robert J. Strudler; 1993 $368,225 $568,225 $---- $---- 45,000 $---- $845,048(7) Chairman and Chief 1992 368,225 135,135 ---- ---- ---- ---- 4,943 Executive Officer 1991 357,500 ---- ---- ---- ---- ---- N/A Isaac Heimbinder; 1993 $360,000 $560,000 $---- $---- 45,000 $---- $845,048(8) President and Chief 1992 339,900 135,135 ---- ---- ---- ---- 4,943 Operating Officer 1991 330,000 ---- ---- ---- ---- ---- N/A Chester P. Sadowski; 1993 $145,000 $ 75,000 $---- $---- 10,000 $---- $213,900(9) Vice President -- 1992 139,050 60,000 ---- ---- ---- ---- 3,312 Controller and Chief 1991 135,000 25,000 ---- ---- ---- ---- N/A Accounting Officer Richard G. Slaughter; 1993 $145,000 $ 75,000 $---- $---- 10,000 $---- $214,028(10) Vice President-- 1992 139,050 60,000 ---- ---- ---- ---- 3,440 Planning and 1991 135,000 25,000 ---- ---- ---- ---- N/A Secretary Craig M. Johnson; 1993 $135,000 $ 75,000 $---- $---- 10,000 $---- $318,545(11) Vice President -- 1992 122,777 62,500 ---- ---- ---- ---- 2,863 Community 1991 115,000 30,000 ---- ---- ---- --- N/A Development
________ (1) Amounts shown include the dollar value of base salary (cash and non-cash) earned by the executive officers named above. (2) Amounts shown include the dollar value of bonuses (cash and non-cash) earned by the executive officers named above. Pursuant to the 1993 Corporate Officers' Incentive Compensation Program, the Board, on the recommendation of the Compensation Committee, approved, on December 10, 1993, payment of incentive compensation to Messrs. Sadowski, Slaughter, and Johnson for services rendered in 1993. In addition, the Board, on the recommendation of the Compensation Committee, approved on December 10, 1993 payment of supplemental incentive compensation of $200,000 to each of Messrs. Strudler and Heimbinder for their extraordinary services rendered during the pendency of the Company's Chapter 11 proceedings, its successful emergence from Chapter 11, the enhancement of Stockholder value and the related public debt offerings, as well as the Company's sustained profitability. Payment of contractual incentive compensation to Messrs. Strudler and Heimbinder was made pursuant to the terms and conditions of their respective Employment and 14 Consulting Agreements (described below). The amounts of such contractual and supplemental incentive bonuses are included in Column (d) above. See "Executive Compensation - Employment Contracts and Termination of Employment and Change of Control Arrangements - Employment Agreements of Robert J. Strudler and Isaac Heimbinder." (3) As of June 21, 1993, in accordance with the Company's plan of reorganization and pursuant to the Company's 1993 Employees' Stock Option Plan and in satisfaction of the interests of the holders of options under the Company's 1981 Employees' Stock Option Plan and 1989 Employees' Stock Option Plan, options were granted to acquire shares of Common Stock to certain officers of the Company. On December 9, 1993, pursuant to the Company's 1993 Employees' Stock Option Plan, additional options were granted to acquire shares of Common Stock to certain officers and certain other employees of the Company. See "Executive Compensation." (4) Information for years ended prior to December 15, 1992 has been omitted in accordance with the Securities and Exchange Commission's transition rules for the Summary Compensation Table. (5) On June 21, 1993, in accordance with the Company's plan of reorganization and pursuant to the Company's Amortizing Incentive Plan, the Company issued 140,000 shares of Common Stock to certain corporate officers and other employees, including 40,000 shares to Mr. Strudler; 40,000 shares to Mr. Heimbinder; 10,000 shares to Mr. Sadowski; 10,000 shares to Mr. Slaughter and 15,000 shares to Mr. Johnson. The market value of the Common Stock at the time of issuance was $21.00 per share. (6) The Company has a qualified profit sharing plan for the benefit of its employees. The amounts shown above for 1992 include the contributions made by the Company during the year ended December 31, 1992, as well as the premium for a universal life insurance policy (with a cash surrender value). Mr. Strudler and Mr. Heimbinder are also entitled to retirement benefits under their respective Employment and Consulting Agreements on the terms and conditions specified therein. See "Executive Compensation - Employment Contracts and Termination of Employment and Change of Arrangements - Employment Agreements of Robert J. Strudler and Isaac Heimbinder." (7) Amount shown is comprised of the following: (i) market value of the Common Stock issued pursuant to the Company's Amortizing Incentive Plan ($840,000); (ii) contributions to the Company's Company's profit sharing Plan ($3,538),and (iii) premium for universal life insurance policy with a cash surrender value ($1,510). (8) Amount shown is comprised of the following: (i) market value of the Common Stock issued pursuant to the Company's Amortizing Incentive Plan ($840,000); (ii) contributions to the Company's profit sharing plan ($3,538), and (iii) premium for universal life insurance policy with a cash surrender value ($1,510). 15 (9) Amount shown is comprised of the following: (i) market value of the Common Stock issued pursuant to the Company's Amortizing Incentive Plan ($210,000); (ii) contributions to the Company's profit sharing plan ($2,172); (iii) 401(k) contributions by the Company ($500), and (iv) premium for universal life insurance policy with a surrender value ($1,228). (10)Amount shown is comprised of the following: (i) market value of the Common Stock issued pursuant to the Company's Amortizing Incentive Plan ($210,000); (ii) contributions to the Company's profit sharing plan ($2,172); (iii) 401(k) contributions by the Company ($500), and (iv) premium for universal life insurance policy with a cash surrender value ($1,356). (11)Amount show is comprised of the following: (i) market value of the Common Stock issued pursuant to the Company's Amortizing Incentive Plan ($315,000); (ii) contributions to the Company's profit sharing plan ($2,020); (iii) 401(k) contributions by the Company ($500), and (iv) premium for universal life insurance policy with a cash surrender value ($1,025). STOCK OPTIONS The following table contains information concerning grants of options to acquire shares of Stock made during the year ended December 31, 1993 to the Chief Executive Officer of the Company and each of the four most highly compensated executive officers of the Company (other than the Chief Executive Officer) whose total annual salary and bonus for the year ended December 31, 1993, was in excess of $100,000: 16
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term (a) (b) (c) (d) (e) (f) (g) % of Total Number of Options/ Securities SARs Underlying Granted to Exercise Options/ Employees or Base SARs Granted in Fiscal Price Expiration Name (#) (1) Year ($/Sh) Date 5%($) 10%($) Robert J. Strudler 35,000(2) 13.16% $23.29 6/21/03 $481,000 $1,201,000 10,000(3) 3.76% 26.50 12/9/03 167,000 422,000 Isaac Heimbinder 35,000(2) 13.16% $23.29 6/21/03 $481,000 $1,201,000 10,000(3) 3.75% 26.50 12/9/03 167,000 422,000 Chester P. Sadowski 8,000(2) 3.01% $23.29 6/21/03 $110,000 $274,000 2,000(3) 0.75% 26.50 12/9/03 33,000 84,000 Richard G. Slaughter 8,000(2) 3.01% $23.29 6/21/03 $110,000 $274,000 2,000(3) 0.75% 26.50 12/9/03 33,000 84,000 Craig M. Johnson 8,000(2) 3.01% $23.29 6/21/03 $110,000 $274,000 2,000(3) 0.75% 26.50 12/9/03 33,000 84,000
________ (1) The Board adopted the Company's 1993 Employees' Stock Option Plan, which became effective on the June 21, 1993, in connection with the Company's plan of reorganization. The purpose of the Company's 1993 Employees' Stock Option Plan is to provide an incentive to key employees, including officers and managerial or supervisory employees who are salaried employees of the Company and its subsidiaries or divisions, to remain in the employ of the Company and its subsidiaries and divisions and to have a proprietary interest in the Company. 500,000 shares of Common Stock have been reserved for issuance in accordance with the provisions of the Company's 1993 Employees' Stock Option Plan. Options granted under the Company's 1993 Employees' Stock Option Plan are intended to be designated as (i) "Incentive Stock Options" as defined in Section 422 of the Internal Revenue Code of 1986, as amended, (the "Tax Code"), (ii) non qualified stock options or (iii) any combination of Incentive Stock Options and non qualified stock options. In the event that a portion of an option cannot be exercised as an Incentive Stock Option by reason of the limitations contained in Section 422 of the Tax Code, such portion will be treated as a non qualified stock option. 17 For Incentive Stock Options and/or non qualified stock options granted on, or effective during the period commencing on, June 21, 1993 and ending on August 20, 1993, the exercise price of such options was the greater of the (i) closing price of the Common Stock on the New York Stock Exchange ("NYSE") on June 21, 1993 or later date of grant, whichever is applicable, and (ii) average closing price of the Common Stock on the NYSE for the 10 consecutive trading days ending on August 20, 1993. In the event that an Incentive Stock Option and/or a non qualified stock option is granted after August 20, 1993, the exercise price of such option will be the closing price of the Common Stock on the NYSE on the date that such option is granted. The options become exercisable for 1/3rd of the shares purchasable thereunder on the first anniversary of the date of grant, 2/3rds of the shares purchasable thereunder on the second anniversary date and all of the shares purchasable thereunder on the third anniversary date. No option granted under the Company's 1993 Employees' Stock Option Plan may be exercised more than 10 years from the date such option is granted. (2) As of June 21, 1993, pursuant to the Company's 1993 Employees' Stock Option Plan and in satisfaction of the interests of the holders of options under the Company's 1981 Employees' Stock Option Plan and 1989 Employees' Stock Option Plan, options to acquire 200,000 shares of Common Stock were granted to certain employees of the Company including certain officers. (3) As of December 9, 1993, pursuant to the Company's 1993 Employees' Stock Option Plan, options to acquire 66,000 shares of Common Stock were granted to certain employees of the Company including certain officers. ________ The following table sets forth, with respect to those persons named in the Summary Compensation Table, information concerning the exercise of stock options during the fiscal year ended December 31, 1993, and the fiscal year-end value of unexercised options. 18
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION/SAR VALUE (a) (b) (c) (d) (e) Number of Securities Underlying Value of Unexercised Unexercised In-the-Money Options/SARs at Options/SARs at FY-End (#) FY-End ($) Shares Acquired Value Realized Exercisable/ Exercisable/ Name on Exercise (#) ($) Unexercisable Unexercisable/ _____________________________________________________________________________________________ Robert J. Strudler - - 0/45,000 $0/$107,975 Isaac Heimbinder - - 0/45,000 $0/$107,975 Chester P. Sadowski - - 0/10,000 $0/$24,680 Richard G. Slaughter - - 0/10,000 $0/$24,680 Craig M. Johnson - - 0/10,000 $0/$24,680
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN- CONTROL ARRANGEMENTS Employment Agreements of Robert J. Strudler and Isaac Heimbinder Mr. Strudler entered into an Employment and Consulting Agreement with the Company on May 12, 1986 (as amended, the "Chairman's Employment Agreement") and Mr. Heimbinder entered into a similar Employment and Consulting Agreement with the Company on May 12, 1986 (as amended, the "President's Employment Agreement," and together with the Chairman's Employment Agreement, the "Employment Agreements"). The Employment Agreements provide for their continued employment with the Company as Chairman and Chief Executive Officer and President and Chief Operating Officer, respectively, until the later of (i) May 11, 1996 or (ii) such date when the Employment Agreements are not renewed for successive one-year terms (the "Employment Term"). Under the Employment Agreements, during 1993, Messrs. Strudler and Heimbinder were paid annual base salaries of $368,225 and $360,000, respectively. Messrs. Strudler and Heimbinder are also to be paid incentive compensation for each fiscal year that the Company is profitable based upon certain formulas set forth in the Employment Agreements and subject to annual review by the Board. In addition, Messrs. Strudler and Heimbinder agreed to serve as consultants to the Company for a period of five years after the Employment Term ceases, with consulting fees payable at 1993 rates of $134,000 and $128,700 per year, respectively, subject to cost of living adjustments, and will receive retirement benefits upon attainment of age 58 equal to 50 percent 19 of their highest monthly base salaries during the Employment Term. In accordance with past practice, these retirement benefits have been substantially provided for by annuities held in trust for their benefit. Messrs. Strudler and Heimbinder may be terminated for cause, as defined in the Employment Agreements. If either Mr. Strudler or Mr. Heimbinder is terminated without cause during the Employment Term, he will be entitled to receive (i) the balance of the base salary which would have been paid during the remainder of the Employment Term (but not less than three years), (ii) a bonus for each year remaining (but not less than three years) during the Employment Term based upon average historical incentive compensation, (iii) the actuarial present value of retirement benefits payable under the Employment Agreement (less amounts previously contributed to fund retirement annuities) and (iv) an amount equal to any consulting fee payable under the Employment Agreements. If a "Control Change" (as defined below) is followed within two years by a "Material Change" (as defined below), each of Mr. Strudler and Mr. Heimbinder may terminate his employment and receive the payments referred to in clauses (i), (ii) and (iv) of the preceding paragraph. A "Material Change" occurs if (x) Mr. Strudler's or Mr. Heimbinder's employment is terminated without cause, (y) Mr. Strudler's or Mr. Heimbinder's functions, duties, responsibilities or base salaries are adversely changed or (z) Mr. Strudler or Mr. Heimbinder is assigned to a place of employment which is more than 10 miles from his present place of employment and which is not the corporate headquarters of the Company. In addition, if a Control Change occurs, each of Mr. Strudler and Mr. Heimbinder may terminate his employment. In such event, he will serve as a consultant to the Company and be compensated at the 1993 rate of $134,000 (for Mr. Strudler) or $128,700 (for Mr. Heimbinder) per annum (subject to cost of living increases), for five years thereafter and will be entitled to have the payment of the retirement benefits due under the Employment Agreements commence on the earlier of (i) May 11, 1996 or (ii) when Mr. Strudler or Mr. Heimbinder attains the age of 58, respectively. A Control Change occurs under the following circumstances: (i) a report on Schedule 13D is filed pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), indicating that any person has become a beneficial owner of 15% or more of the combined voting power of the outstanding securities of the Company, (ii) the purchase by any person of securities pursuant to a tender offer or exchange offer to acquire any Common Stock of the Company (or securities convertible into such Common Stock), if after the consummation of the offer the person would be the beneficial owner of 15% or more of the combined voting power of the then outstanding securities of the Company, (iii) a consolidation or merger of the Company in which the Company is not the surviving corporation, or pursuant to which shares of Common Stock would be converted into cash, securities or other property (other than a merger of the Company in which holders of Common Stock prior to the merger have the same proportionate ownership of Common Stock of the surviving corporation immediately after the merger as immediately before), (iv) any sale, lease, exchange or other transfer of all or substantially all of the assets of the Company, or (v) a change of a majority of the members of the Board within a 12-month 20 period, unless the election or nomination for election by the Stockholders of each new director during such 12-month period was approved by a vote of two-thirds of the directors then still in office who were on the Board at the beginning of such 12-month period. Failure to elect Mr. Heimbinder to the office of Chief Executive Officer in the event of a vacancy in that office for any reason will be deemed a termination without cause, entitling Mr. Heimbinder to resign within 180 days of such vacancy, in which event he will be entitled to the severance pay and other termination payments he would have received pursuant to the President's Employment Agreement in the event he had been terminated without cause thereunder. In addition, prior to April 21, 1994, Mr. Strudler and Mr. Heimbinder may be removed from the offices of Chairman and President, respectively, only for "cause" by the affirmative vote of the entire Board and the duties, functions and responsibilities of such officers as in effect prior to June 21, 1993 may not be altered. Key Employees' Separation Pay Plan The Board adopted the Company's Key Employees' Separation Pay Plan (the "Separation Plan"), which became effective on June 21, 1993. The executive officers of the Company (other than Messrs. Heimbinder and Strudler), the Presidents of Operations, and Division Chairmen and Division Presidents of the Company are participants in the Separation Plan. Under the terms of the Separation Plan, a participant whose employment with the Company is terminated, other than for Cause (as defined below), or whose employment is Constructively Terminated (as defined below) on or after June 21, 1993 through and including June 21, 1994 will be entitled to receive (i) an amount equal to the greater of (a) 12 months of such participant's base salary or (b) one month of such participant's base salary for each year during which such participant was employed by the Company or its subsidiaries or divisions; provided, however, that any Division Chairman or Division President will only be entitled to receive an amount equal to six months of such participant's base salary, and (ii) insurance and medical benefits up to one year after date of termination of employment. The benefits under the Separation Plan are to be paid to a participant in a single lump sum in cash as soon as practicable (but in no event later than 30 days) after the participant's termination of employment. In no event will the benefits payable under the Separation Plan and any other termination benefits, excluding any payments under the Company's profit sharing plan, to which a participant may be entitled under any other plan, program or arrangement maintained by the Company, exceed the maximum amount payable under the Separation Plan. Under the Separation Plan, "Constructively Terminated" means a (i) a reduction in an amount equal to or greater than 15% of a participant's base salary, (ii) material reduction in a participant's job function, duties or responsibilities or (iii) required relocation of a participant of more than 50 miles from such participant's current job location; provided, however, that the employment with the Company or its subsidiaries or divisions of a President of Operations who is a participant will not be 21 deemed to be Constructively Terminated in the event he or she is required to be a Division Chairman or Division President with the Company or its subsidiaries or division and has job functions, duties or responsibilities of a Division Chairman or Division President and/or is required to relocate in connection with such change in position; provided further, that the employment with the Company or its subsidiaries or divisions of a Division Chairman or Division President who is a participant will not be deemed to be Constructively Terminated in the event he or she is required to be a Division Chairman or Division President of a division other than the division he or she is currently employed by and has job functions, duties or responsibilities of a Division Chairman or Division President and/or is required to relocate in connection with such change in position; provided further, that the employment of a participant will not be deemed Constructively Terminated unless such participant actually terminates his or her employment with the Company within 60 days after the occurrence of an event specified in clauses (i), (ii) or (iii) above. Under the Separation Plan, "Cause" means (i) a participant's continuing willful failure to perform his or her duties (other than as a result of total or partial incapacity due to physical or mental illness), (ii) gross negligence or malfeasance by a participant in the performance of his or her duties, (iii) an act or acts on the part of a participant constituting a felony under the laws of the United States, or any state thereof, which results or was intended to result directly or indirectly in gain or personal enrichment by such participant at the expense of the Company or its subsidiaries or divisions or (iv) breach of any of the provisions of the Separation Plan pertaining to confidentiality and competitive activities. DIRECTOR COMPENSATION Directors, other than those who are officers of the Company, receive the following compensation: membership on the Board - $24,000 per annum; each committee membership - $1,600 per annum; each committee chairmanship - $1,600 per annum; attendance at each Board and committee meeting - a per diem fee of $1,000. Directors who are officers of the Company receive no compensation for their services as directors. On August 19, 1993, the Board approved, subject to approval by the Stockholders at the Meeting, the Non-Employee Directors' Stock Option Plan. See "Non-Employee Directors' Stock Option Plan." REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION The Compensation Committee administers the Company's executive compensation program and makes specific recommendations to the Board for salaries, incentive bonuses and stock option plans. The Committee , which was reorganized on August 19, 1993 following the Company's emergence from Chapter 11, is composed of four independent, non-employee directors. See "Committees of the Board of Directors." 22 The Company's executive compensation program (which excludes the Chairman and President of the Company, whose respective Employment Agreements provide for the terms of their compensation) is intended to attract, retain and motivate highly qualified executives for the Company and to create an incentive to increase Stockholder value. This policy is implemented through payment of salaries and bonuses and the granting of stock options, as well as, medical benefits and profit sharing plan contributions which are available to employees of the Company. Salaries. The Compensation Committee is responsible for recommending for each fiscal year the base salary levels for the executive officers of the Company. In developing salary recommendations for the year ending December 31, 1994, the Compensation Committee reviewed the salaries for similar positions in similarly-sized companies which engage in the Company's businesses. The Committee confirmed that the base salaries for the executive officers were consistent with its objective of setting base salaries within reasonable ranges for similar positions in competitive companies. In recommending base salary levels, the Compensation Committee also considers each executive officer's experience level and potential for significant contributions to the Company's profitability and the Company's goal of retaining and motivating highly qualified executive officers in a highly competitive and mobile industry. Bonuses. An annual incentive bonus plan for the executive officers (other than Messrs. Strudler and Heimbinder) has been structured to provide financial incentives which are related to the Company's profitability and are utilized to recognize the executive's individual contributions to the Company. The annual bonus plan is also intended to reward executive officers for exceptional performance. Under the 1994 incentive plan, an incentive compensation pool (in an amount equal to the lesser of $600,000 or 2 % of the Company's pre-tax income for the fiscal year ending December 31, 1994 has been established to be distributed to the executive officers based upon evaluation of the following factors: 1) A review of the profit and loss of the Company as compared to the projected profit and loss for the fiscal year as set forth in the Company's business plan. 2) A review of the cash flow of the Company as compared to the projected cash flow for the fiscal year as set forth in the Company's business plan. 3) The overall performance of the Company in comparison to competitive industry performance, taking into consideration an analysis of rates of growth, return on equity and return on sales. 4) The incentive bonus payments by competitors in relation to the proposed bonus payments to the Company's executive officers. 5) All other actions and activities by the executive officers in the fulfillment of their tasks as an officer to maximize Stockholder value. 23 The amount of the payments allocated to each executive officer from the incentive pool is determined by the Board (upon the recommendation of the Compensation Committee) in its sole discretion; provided that the maximum incentive compensation payable to any officer for fiscal year 1994 will not exceed 75% of the base salary of such officer. An executive officer will only be entitled to receive incentive compensation from the incentive pool if the officer is employed by the Company during the entire fiscal year. Subject to approval of the Employee Stock Payment Plan by Stockholders at the Meeting, up to 25% of the incentive bonuses payable to executive officers will be payable shares of Common Stock. See "Employee Stock Payment Plan." Stock Options. Long-term incentives are provided through grants of stock options to key employees, including officers and managerial or supervisory employees who are salaried employees of the Company and its subsidiaries or divisions, to remain in the employ of the Company and its subsidiaries and divisions. The amount of the awards reflect the officer's position and ability to influence the Company's overall performance. Options are intended to provide officers with an increased incentive to make contributions to the long-term performance and growth of the Company, to join the interests of officers with the interests of Stockholders and to attract and retain qualified employees. Compliance with Internal Revenue Code Section 162M. With respect to Section 162(m) of the Tax Code, the Compensation Committee does not expect "applicable employee remuneration" for any "covered employee" (as such terms are defined in the Tax Code) of the Company to exceed $1,000,000 for the year ending December 31, 1994. To the extent that total compensation to a covered employee exceeds $1,000,000 in any taxable year, the Compensation Committee expects that the excess amount over $1,000,000 will be deductible in accordance with the provisions of the Tax Code. CEO and COO Compensation. The compensation for Mr. Strudler, the Chairman and Chief Executive Officer of the Company, and Mr. Heimbinder, the President and Chief Operating Officer of the Company, is based on their Employment Agreements, which have been in effect since 1986, as amended from time to time. Mr. Strudler's base salary for 1994 is $400,000 and Mr. Heimbinder's base salary for 1994 is $390,000. Such base salaries were determined by the Board (based on a recommendation of the Compensation Committee), after reviewing the base salary increases for Messrs. Strudler and Heimbinder over the past several years, the comparable salaries of chief executive officers and chief operating officers of other homebuilding companies and the Company's performance during 1993. 24 Pursuant to the Employment Agreements, Messrs. Strudler and Heimbinder are entitled to receive incentive compensation, not to exceed 100% of their respective base salaries, equal to the sum of the following: (i) one-half (1/2) of one percent (1%) of the first $10,000,000 of the Company's pre-tax income for such year, plus (ii) three-fourths (3/4) of one percent (1%) of the next $10,000,000 of the Company's pre-tax income for such year, plus (iii) one percent (1%) of the Company's pre-tax income for such year in excess of $20,000,000. In 1993, the incentive bonus paid to Mr. Strudler was approximately $368,000 and the incentive bonus paid to Mr. Heimbinder was approximately $360,000. In addition, in 1993, Mr. Strudler and Mr. Heimbinder each received a supplementary bonus in the amount of $200,000. In awarding such bonus and compensation, the Board (based on the recommendation of the Compensation Committee) reviewed Mr. Strudler's and Mr. Heimbinder's extraordinary performances during 1993 and their contribution to the Company's results during 1993, including the Company's successful emergence from Chapter 11, the refinancing of debt on a long-term basis on favorable terms, the retention of a strong and experienced management group and the Company's return to sustained profitability exceeding the 1993 business plan. These and other actions re-established the Company as a financially stable, strongly capitalized, profitable and viable national homebuilder. Compensation and Stock Option Committee Charles A. McKee, Chairman Steven L. Gerard Kenneth J. Hanau, Jr. James W. Sight 25 STOCK PERFORMANCE GRAPH The following graph compares on a cumulative basis, the year percentage change during the five years ending December 31, 1993 in (i) the total Stockholder return on the common stock of the Company with(ii) the total return on the Standard & Poor Composite Stock Price Index and with (iii) the total stockholder return on the common stock of a peer group consisting of 11 companies engaged in homebuilding activities. Such yearly percentage change has been measured by dividing (i) the sum of (a) the amount of dividends for the measurement periods, assuming dividend reinvestment, and (b) the price per share at the end of the measurement period less the price per share at the beginning of the measurement period, by the (ii) the price per share at the beginning of the measurement period. The price of each unit has been set at $100 on December 31, 1988 for the preparation of the graph. STOCK PERFORMANCE GRAPH COMPARING U.S. HOME TO S & P 500 AND PEER GROUP
1988 1989 1990 1991 1991 6/21/93 6/22/93 12/31/93 U S Home Corporation 100 70.59 19.11 14.68 35.29 93.52 100 127.38 S & P 500 100 131.69 127.60 166.47 179.15 186.05 100 109.09 Peer Group 100 114.07 81.37 163.09 192.04 194.89 100 128.02
The first period shown on the graph (left of the vertical bar) is from December 31, 1998 to June 21, 1993 and includes the Company's shares of common stock, $0.10 par value, that were outstanding and traded prior to the effective date of the Company's plan of reorganization. Pursuant to the provisions of the Company's plan of reorganization, all shares of such common stock were cancelled on June 21, 1993 and .077480 shares of Common Stock and .042036 shares of Class B Warrants were issued for each share of common stock. The second period shown on the graph (right of the vertical bar) is from June 22, 1993 to December 31, 1993 and includes the Company's current shares of Common Stock. Such graph does not include the value of the Class B Warrants which increased 84.5% during this period. The peer group index is composed of the following homebuilding companies: Centex Corporation, Continental Homes Holding Corp., Hovnanian Enterprises, Inc., Kaufman & Broad Home Corporation, Lennar Corporation, MDC Holdings, Inc., Pulte Corporation, Ryland Group, Inc., Standard Pacific Corp., UDC Homes, Inc. and Del Webb Corp. Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee during the year ended December 31, 1993 were (i) from January 1, 1993 to June 29, 1993 - Messrs. Hanau, McKee, Smith (until June 10, 1993, when Mr. 26 Smith resigned from the Board) and Ripault, (ii) from June 29, 1993 to December 31, 1993 - Messrs. Gerard, Hanau, McKee and Sight. No such person was an officer or employee of the Company during the year ended December 31, 1993 or was formerly an officer of the Company. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS The following table sets forth certain information regarding the Company's outstanding shares of Common Stock and Convertible Preferred Stock beneficially owned as of February 1, 1994, by (i) each director of the Company, (ii) all directors and executive officers of the Company as a group and (iii) each person who owns more than five percent of the Common Stock or the Convertible Preferred Stock. All information with respect to beneficial ownership has been furnished to the Company by the parties below.
Common Stock Convertible Preferred Stock _________________________ ____________________________ Number of Percent Number of Percent Beneficial Owners Shares (1)(2)(3) of Class Shares of Class ______________________________ ________________ _______ __________ ___________ Glen Adams _ _ _ _ Steven L. Gerard _ _ _ _ Kenneth J. Hanau, Jr. 290 * _ - Isaac Heimbinder 58,609(4) * 733(4) * Malcolm T. Hopkins _ _ _ _ Jack L. McDonald _ _ _ _ Charles A. McKee 2,035(5) * _ _ George A. Poole, Jr. _ _ _ _ Herve Ripault 570 * 295 * James W. Sight _ _ _ _ Robert J. Strudler 50,359 * 2,877 * Craig M. Johnson 15,500 * _ _ Chester P. Sadowski 10,065 * _ _ Richard G. Slaughter 10,083 * _ _ All directors and executive officers of the Company as a group 166,552 * _ _ Loomis, Sayles & Company, L.P., as investment manager of third party accounts One Financial Center, 34th Floor 34th Floor Boston, MA 021119(6) 1,821,337 18.9% _ _ Friess Associates, Inc. P. O. Box 4166 Greenville, DE 19807 500,000 5.2% - - Fidelity Management & Research Corp. 84 Devonshire Street Boston, MA 02109 484,906 5.0% - -
________________ * Less than 1%. 27 (1) No person will have the right to acquire beneficial ownership of shares of Common Stock purchasable under options granted pursuant to the Company's 1993 Employees' Stock Option Plan until June 21, 1994. None of these options are included in the table set forth above. (2) On August 19, 1993, the Board adopted the Company's Non- Employee Directors' Stock Option Plan (the "Directors' Plan"). Pursuant to the Directors' Plan, no person will have the right to acquire beneficial ownership of shares of Common Stock pursuant to such Directors' Plan unless the Directors' Plan is approved by the Stockholders within 12 months after its adoption by the Board. None of these options are included in the table set forth above. Under the Directors' Plan, Messrs. Hanau, McKee and Ripault each received options to acquire of 7,500 shares Common Stock, and Messrs. Adams, Gerard, Hopkins, McDonald, Poole and Sight each received options to acquire 5,000 shares of Common Stock. (3) Includes Class B Warrants, exercisable at $20 per share, to acquire the following number of shares of Common Stock: Mr. Hanau - 102; Mr. Heimbinder - 6,108; Mr. McKee - 710; Mr. Ripault - 21; Mr. Strudler - 1,893; Mr. Sadowski - 23; Mr. Slaughter - 29, and all directors and executive officers of the Company as a group - 10,219. (4) Excludes 4,004 shares of Common Stock, 4,192 shares of Convertible Preferred Stock and Class B Warrants exercisable at $20 per share, to purchase 8 shares of Common Stock held in trust for Mr. Heimbinder's children. Mr. Heimbinder disclaims beneficial ownership of such shares and Warrants. On August 9, 1993, Mr. Heimbinder transferred 25 shares of Common Stock as a gift to a nephew. A Form 4 reporting this transaction was filed on January 10, 1994. (5) Excludes 775 shares of Common Stock and Class B Warrants exercisabe at $20 per share, to purchase 420 shares of Common Stock owned by Mr. McKee's wife. Mr. McKee disclaims beneficial ownership of such shares. (6) Loomis, Sayles and Company, L.P. may be deemed to be the beneficial owner of such shares held by third party accounts under reporting requirements of the Exchange Act; however, Loomis, Sayles and Company, L.P. expressly disclaims beneficial ownership of such shares. NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN (Proposal 2) On August 19, 1993, the Board adopted the Directors' Plan for the purpose of attracting and retaining qualified persons for service as members of the Board. There are reserved for issuance 100,000 shares of Common Stock in accordance with the provisions of the Directors' Plan. The Director's Plan will be administered by the (Nominating Committee). The full text of the Directors' Plan is set forth as Exhibit A to this Proxy Statement. The principal features of the Directors' Plan are summarized below. 28 Under the Directors' Plan, options are granted only to non- employee members of the Board. No individual who is, at the time of grant, an employee of the Company will be eligible to receive options. No options granted under the Directors' Plan are entitled to special tax treatment under Section 422 of the Tax Code. No option may be exercised more than 10 years after the date such option is granted. Furthermore, in the event of the resignation of an optionee as a director of the Company or the removal of an optionee as a director of the Company, the optionee shall have the right, not later than the earlier of (i) three months after such resignation or removal or (ii) the termination date of the option, to exercise the option. If an optionee shall retire because of age, die or become disabled while a director of the Company, the personal representative of the optionee or the person to whom such options have been transferred by will or by laws of descent and distribution, or the disabled optionee, shall have the right, not later than the earlier of (i) three years of such optionee's retirement, death or disability, or the number of months such Director has served as a non-employee Director, whichever is less, or (ii) the termination date of the option, to exercise such option. A director who receives an option grant under the Directors' Plan will not have to recognize any income at the time the option is granted. At the time the option is exercised, the director will recognize taxable income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. The company will be entitled to a deduction at the time and in the same amount as the director recognizes income. The directors' tax basis in the shares they receive will be equal to the fair market value of the shares on the date of exercise, and their holding period for securities purposes will begin on the day following the exercise date. The grant of options to non-employee directors is non discretionary under the Directors' Plan. Each non-employee director of the Company at the time of adoption of the Directors' Plan was granted options to acquire 5,000 shares of Common Stock at $23.29 per share (an "Initial Stock Option Grant"). Each person who becomes a non-employee director of the Company after the adoption of the Director's Plan shall be granted options to acquire 5,000 shares of Common Stock at the time such person becomes a non-employee director of the Company (a "New Director Stock Option Grant"). On the date of each annual meeting or special meeting in lieu of annual meeting of Stockholders, each person who continues to serve as a non-employee director of the Company immediately after such meeting shall be granted options to acquire 1,000 shares of Common Stock (an "Annual Stock Option Grant"); provided, that he or she has served as a non-employee director for at least six months prior to such meeting. In addition to the Initial Stock Option Grant, each person who (i) was a non-employee director of the Company at the time of adoption of the Directors' Plan and (ii) served as a non-employee director of the Company prior to June 21, 1993 was granted options to acquire 2,500 shares of Common Stock at $23.29 per share, the aggregate of such grant and the grant of options to acquire 5,000 shares of Common Stock shall be deemed an Initial Stock Option Grant for such director. 29 The exercise price of the Initial Stock Option Grant is the greater of the (i) closing price of the Common Stock on the NYSE on June 21, 1993 and (ii) average closing price of the Common Stock on the NYSE for the 10 consecutive trading days ended August 20, 1993. Notwithstanding the foregoing, the exercise price of such option cannot be less than 95% of the average closing price of the Common Stock on the NYSE for the 20 consecutive trading days immediately prior to August 19, 1993. Under this formula, the exercise price of the options granted under the Initial Stock Option Grant was $23.29 per share. The exercise price of any New Director Stock Option Grant and the Annual Stock Option Grant shall be the average closing price of the Common Stock on the NYSE for the 10 consecutive trading days immediately prior to the date of any such stock option grant. Notwithstanding the foregoing, the exercise price of any such option will in no event be less than 95% of the average closing price of the Common Stock on the NYSE for the 20 consecutive trading days immediately prior to the date of any such stock option grant. The Directors' Plan became effective on August 19, 1993 (the date of its adoption by the Board), and options were deemed granted at the close of business that day to all non-employee directors of the Company serving on the Board at that time. No option granted under the Directors' Plan may be exercised unless and until such Plan has been approved by the Stockholders prior to August 19, 1994. If the Directors' Plan is not so approved by the Stockholders, all options granted thereunder shall be null and void. The administrator of the Directors' Plan may at any time terminate, amend or modify the Directors' Plan in any respect it deems suitable; provided, however, that no such action may (i) increase the total amount of Stock on which options may be granted under the Plan, (ii) change the manner of determining the option price, (iii) change the class of individuals eligible to receive options, (iv) change the number of options which may be granted to each director, or (v) change the times when such options are granted; provided, further, that no amendment, modification or termination of the Directors' Plan may in any manner affect any option theretofore granted under the Directors' Plan without the consent of the then holder. The Common Stock issuable upon the exercise of the options granted under the Directors' Plan will be registered pursuant to a Registration Statement on Form S-8 under the Securities Act of 1933, as amended ("Securities Act"). Under the Directors' Plan, Messrs. Hanau, McKee and Ripault were each granted options to acquire 7,500 shares of Common Stock, at $23.29 per share, and Messrs. Adams, Gerard, Hopkins, McDonald, Poole and Sight were each granted options to acquire 5,000 shares of Common Stock at $23.29 per share. The Board recommends that Stockholders vote FOR approval of the Directors' Plan, and it is intended that Proxies not marked to the contrary will be so voted. The affirmative vote of a majority of the shares of Stock present in person or by proxy and entitled to vote at the Meeting is required for approval of Proposal 2. 30 EMPLOYEE STOCK PAYMENT PLAN (Proposal 3) On December 10, 1993, the Board adopted the Company's Employee Stock Payment Plan (the "Employee Plan") for the purpose of increasing the ownership stake of key employees of the Company and its subsidiaries and divisions by paying a percentage of such employees' annual incentive compensation in shares of Common Stock. There are 250,000 shares of Common Stock reserved for issuance under the Employee Plan. The full text of the Employee Plan is set forth as Exhibit B to this Proxy Statement. The principal features of the Employee Plan are summarized below. The Employee Plan has a term of five years, commencing on January 1, 1994 and Common Stock may be allocated thereunder until December 31, 1998. All employees of the Company and its subsidiaries and divisions, including, but not limited to, corporate officers, presidents of operations and division presidents, are eligible to receive shares of Common Stock under the Employee Plan. Under the Employee Plan, up to 25% of an employee's annual incentive compensation earned (i.e., compensation other than base salary) may be payable in shares of Common Stock. Of such shares, up to 50% may vest not later than two years after the end of the incentive compensation year applicable to the award of Common Stock, and delivery of any such Common Stock will be conditioned on the employee remaining in the employ of the Company, except in the case of death or retirement after age 65. An employee eligible to receive Common Stock under the Employee Plan will have no rights as a Stockholder with respect to such Common Stock until such employee has become the holder of record of such Common Stock upon vesting. Shares of Common Stock to be issued or allocated under the Employee Plan will be valued based on (i) with respect to the Company's incentive compensation programs or incentive agreements which are based on the financial results of the Company's fiscal year, the average of the closing prices of the Common Stock on the NYSE for the 10 trading days immediately following release by the Company of its results for the fiscal year with respect to incentive plans which are based on such fiscal year or (ii) with respect to any other incentive compensation programs of the Company, the average of the closing prices of the Common Stock on the NYSE (A) for the last 10 trading days of the month following the end of any other incentive program year or (B) for the 10 trading days immediately release by the Company of its results for the most recent fiscal year, whichever is the later. Under the present provisions of the Tax Code, the Federal income tax consequences of the Employee Plan should be as follows: To the extent the Common Stock received by an employee is not subject to vesting, the employee must recognize the fair market value of the Common Stock as compensation income in the year he or she receives it. The Company will receive a deduction at the same time. 31 To the extent the Common Stock received by an employee is subject to forfeiture, the employee will recognize compensation income equal to the fair market value of the Common Stock when the forfeiture restrictions lapse, unless such employee is subject to six-month restriction on sale from the date or grant imposed by Section 16(b) of the Exchange Act. In that case, the employee will recognize compensation income on the later of the lapse of the forfeiture restrictions under the Employee Plan or the end of such six-month period in an amount equal to the fair market value of the Common Stock at that time. Alternatively, within 30 days after the date the Common Stock is considered to be transferred to an employee for tax purposes, the employee may elect under Section 83(b) of the Tax Code to recognize compensation income at the time of transfer in an Amount equal to the fair market value of the shares at such time, in which case (a) if the Common Stock is subsequently forfeited, no deduction for the amount so taken into account will be allowed, and (b) no additional compensation income will be recognized when the Common Stock becomes vested, irrespective of appreciation in the Common Stock during such period. A recipient's holding period for the Common Stock begins when the employee recognizes taxable income under these rules, and the employee's basis in the Common Stock for tax purposes will be the amount of compensation income so recognized. Moreover, any dividends received on the Common Stock while it is restricted will, unless a Section 83(b) election has been made, be taxable compensation income when received. The Company is entitled to deduct amounts equal to the amounts of income recognized by an employee at the time it is recognized, provided that the Company appropriately withholds from the employee for income tax purposes. The Employee Plan is not subject to Section 401(a) of the Tax Code. Common Stock issuable under the Employee Plan will be registered pursuant to a Registration Statement on Form S-8 under the Securities Act of 1933, as amended (the "Securities Act"). However, such Common Stock cannot be transferred until vested in accordance with the terms of the Employee Plan other than by will or the laws of descent and distribution. Thereafter, the transfer of Common Stock by employees of the Company who are, or who may be deemed to be, "affiliates" of the Company will be subject to certain restrictions under the Securities Act. The Employee Plan will be administered by the Compensation Committee, comprised of at least three members, all of whom are to be "disinterested persons" for purposes of Rule 16b-3 of the Exchange Act. The administrator of the Employee Plan may at any time terminate, amend or modify the Employee Plan in any respect it deems suitable; provided, however, that, solely with respect to persons subject to Section 16 of the Exchange Act, no action of the administrator, without the approval of the Stockholders, may (i) materially increase the benefits accruing to employees eligible to receive Common Stock under the Plan, (ii) materially increase the total amount of Common Stock which may be awarded 32 under the Employee Plan or (iii) materially modify the requirements in the Employee Plan; provided, further, that no amendment, modification or termination of the Employee Plan may in any manner affect (A) any Common Stock (whether vested or not) theretofore awarded under the Employee Plan without consent of the employee to whom Common Stock has been awarded or (B) modify the award of Common Stock to the employee by the administrator. Common Stock may not be issued or allocated under the Employee Plan to employees of the Company subject to Rule 16b-3 of the Exchange Act unless and until the Employee Plan shall have been approved by the Stockholders at the Meeting. When so approved, the Employee Plan shall be deemed to have been in effect as of January 1, 1994 and shall terminate at the close of business on December 31, 1998. The Board recommends that Stockholders vote FOR approval of the Employee Stock Payment Plan, and it is intended that Proxies not marked to the contrary will be so voted. The affirmative vote of a majority of the shares of Stock present in person or by proxy and entitled to vote at the Meeting is required for approval of Proposal 3. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO ELIMINATE A PROHIBITION AGAINST ISSUANCE OF NON-VOTING EQUITY SECURITIES (Proposal 4) The second paragraph of Article FOURTH of the Certificate of Incorporation provides as follows: "The Company will not issue any non-voting equity securities; provided, however, that this provision, included in this Second Restated Certificate of Incorporation in compliance with Section 1123(a)(6) of title 11 of the United States Code, as amended (the "Bankruptcy Code"), will have no force and effect beyond that required by section 1123(a)(6) of the Bankruptcy Code and will be effective only for so long as section 1123(a)(6) of the Bankruptcy Code is in effect and applicable to the Company." Pursuant to the order of the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") confirming the Company's plan of reorganization, the Company was directed to amend and restate its certificate of incorporation to prohibit the issuance of non-voting equity securities to the extent required by section 1123(a)(6) of the Bankruptcy Code. After the effective date of the Company's plan of reorganization, the Company may further amend the Certificate of Incorporation with the Certificate of Incorporation and the Delaware General Corporation Law. 33 The proposed amendment would delete the second paragraph of Article FOURTH of the Certificate of Incorporation, thereby removing the technical prohibition against issuing non-voting securities which was, but no longer is, required by the Bankruptcy Court and the Bankruptcy Code. The effect of the amendment would be to restore to the Company the flexibility to issue non-voting equity securities. The Company presently has no intention to issue any non-voting equity securities. The Board recommends that Stockholders vote FOR approval of an amendment to the Certificate of Incorporation to eliminate a prohibition against issuance of non-voting equity securities, and it is intended that Proxies not marked to the contrary will be so voted. The affirmative vote of a majority of the shares of Stock present in person or by proxy and entitled to vote at the Meeting is required for approval of Proposal 4. NEW PLAN BENEFITS The following table sets forth the amounts to which certain participants in the Directors' Plan would have been entitled if such Plan had been in effect for the year ended December 31, 1993. Dollar values for options set forth in the table are based upon the difference between the closing price of the Common Stock on the NYSE on the last day of trading in 1993 ($26.63 per share of Common Stock) and the exercise price ($23.29 per share of Common Stock) of the shares purchasable under the options granted in connection with the Initial Stock Option Grant. The benefits or amounts to be received by or allocated to executive employees under the Employee Plan or which would have been received by or allocated to executive employees under the Employee Plan for the Company's last completed fiscal year if the Employee Plan had been in effect are no determinable because the amount of incentive compensation and the number of shares of Common Stock payable to such employees is subject to the discretion of the Board. Therefore, the number of units and dollar value data has been omitted. Directors' Plan Employee Plan Dollar Number Dollar Number Value Of Units Value of Units Robert J. Strudler N/A N/A Isaac Heimbinder N/A N/A Chester P. Sadowski N/A N/A Richard G. Slaughter N/A N/A Craig M. Johnson N/A N/A All Executive Officers as a Group N/A N/A Non-Executive Directors $175,350 52,500 N/A Non-Executive Employees N/A N/A 34 RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS AUDITORS (Proposal 5) The Board, upon recommendation of the Audit Committee of the Board, has appointed, subject to ratification by Stockholders, the firm of Arthur Andersen & Co., independent public accountants, to examine the financial statements of the Company for 1994. Arthur Andersen & Co. has been employed by the Company as its independent auditors for more than 25 years. Stockholders are asked to ratify the action of the Board in making such appointment. Representatives of Arthur Andersen & Co. will attend the Meeting and may make a statement if they so desire. They also will be available to respond to appropriate questions. The Board recommends that Stockholders vote FOR ratification, and it is intended that Proxies not marked to the contrary will be so voted. The affirmative vote of a majority of the outstanding shares of Stock entitled to vote thereon is required for the ratification of the appointment of auditors. OTHER BUSINESS Management of the Company knows of no business to be brought before the Meeting other than the election of Class I Directors, the adoption of the Directors' Plan, adoption of the Employee Plan, adoption of an amendment to the Certificate if Incorporation to eliminate a prohibition against issuance of non-voting equity securities and ratification of the appointment of auditors as set forth in the Notice of Annual Meeting. If any other proposals come before the Meeting, it is intended that the shares of Stock represented by Proxies shall be voted in accordance with the judgment of the person or persons exercising the authority conferred by the Proxies. STOCKHOLDER PROPOSALS Proposals by Stockholders intended to be presented at the 1995 Annual Meeting of Stockholders must be received by the Company on or before November 3, 1994 in order to be included in the Proxy Statement and Proxy for that meeting. The mailing address of the Company for submission of any such proposal is given on the first page of this Proxy Statement. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS ARE REQUESTED TO SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON. Houston, Texas March 3, 1994 By Order of the Board of Directors /s/ Richard G. Slaughter _________________________ RICHARD G. SLAUGHTER Secretary 35 U.S. HOME CORPORATION ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned hereby appoints ROBERT J. STRUDLER and ISSAC HEIMBINDER and each of them, with full power of substitution, the proxies of the undersigned to vote all of the shares of Stock of U. S. Home Corporation the undersigned is entitled to vote, with all powers the undersigned would possess if personally present, at the Annual Meeting of Stockholders of U. S. Home Corporation, a Delaware corporation, to be held at the Omni Hotel, Four Riverway, Houston, Texas at 10:00 am local time, on Wednesday, April 6, 1994, and at any adjournment hereof on the matters described on the reverse hereof and, in their discretion, on such other matters as may properly come before the meeting. Unless authority to do so is withheld by appropriate designation this Proxy shall be deemed to have granted authority to vote FOR the election of all Class I Directors as set forth in the Proxy Statement, and will be so voted. If no directions are given, this Proxy will be voted FOR Proposals 2,3,4 and 5. Please sign, date and return this Proxy Promptly. No postage is required if returned in the enclosed envelope and mailed in the United States. (continued and to be signed on reverse side) 36 PROPOSAL 1. ELECTION OF CLASS I DIRECTORS __ FOR all nominees listed below (except as marked to the contrary below) __ WITHHOLD AUTHORITY to vote for all nominees listed below George A. Poole, Jr.; Herve Ripault; James W. Sight (INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name in the space provided below.) FOR __ AGAINST __ ABSTAIN __ PROPOSAL 2. Approval of the Non-Employee Directors' Stock Option Plan. FOR __ AGAINST __ ABSTAIN __ PROPOSAL 3. Approval of the Employee Stock Payment Plan. FOR __ AGAINST __ ABSTAIN __ PROPOSAL 4. Amendment to the Second Restated Certificate of Incorporation to eliminate a prohibition against issuance of non-voting equity securities. FOR __ AGAINST __ ABSTAIN __ PROPOSAL 5. Ratification of Arthur Andersen & Co. as auditors. X .......................................................... (Signature of Stockholder) X .......................................................... (Signature of Stockholder) YOUR RECORD DATE SHARES ARE:___________ Please sign exactly as name appears on this Proxy. If shares are registered in more than one name, all such persons should sign this Proxy. A corporation should sign in its full corporate name by a duly authorized officer, stating his title. Trustees, guardians, executors and administrators should sign in their official capacity giving their full title as such. If a partnership, please sign in partnership name by authorized person. Dated ..................................................,1994 EX-99 2 EMPLOYEE STOCK PAYMENT PLAN 37 U.S. HOME CORPORATION EMPLOYEE STOCK PAYMENT PLAN 1. Purpose. The purpose of the U.S. Home Corporation Employee Stock Payment Plan (the "Plan") is to increase the ownership stake of key employees of U.S. Home Corporation and its subsidiaries or divisions (the "Company") by paying a percentage of such employees' annual incentive compensation in shares of Stock (as defined herein) in lieu of cash. 2. Administration. (a) The board of directors of the Company (the "Board") will (i) administer the Plan, (ii) establish, subject to the provisions of the Plan, such rules and regulations as it may deem appropriate for the proper administration of the Plan and (iii) make such determinations under, and such interpretations of, and take such steps in connection with, the Plan or the Stock issued thereunder as it may deem necessary or advisable. (b) The Board may from time to time appoint a Committee (the "Committee"), which shall initially be the Compensation and Stock Option Committee of the Board, which will be comprised of at least three members, all of whom are disinterested persons (as defined herein), and may delegate to the Committee full power and authority to take any and all action required or permitted to be taken by the Board under the Plan, whether or not the power and the authority of the Committee is hereinafter fully set forth. The members of the Committee may be appointed from time to time by the Board and serve at the pleasure of the Board. The Board, if each member is a disinterested director, or the Committee, as applicable, will hereinafter be referred to as the "Administrator." (c) For the purposes of this Section 2, a "disinterested person" is a person who, on a given date, is disinterested within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 3. Stock. The stock (the "Stock") which is the subject of the Plan will be the shares of common stock of the Company, $.01 par value per share, whether authorized and unissued or treasury stock. The total number of shares of Stock which may be issued under the Plan will not exceed, in the aggregate, 250,000, subject to adjustment in accordance with the provisions of Section 7 hereof. 38 4. Award of Stock. (a) All employees of the Company, including, but not limited to, corporate officers, presidents of operations and division presidents (each an "Employee" and collectively, "Employees"), are eligible to receive Stock in accordance with the terms hereof. (b) Up to 25%, which amount may be subject to change from time to time by the Administrator, of the annual incentive compensation (i.e., all amounts other than Base Salary (as defined herein)) payable to an Employee pursuant to any incentive compensation plans or the incentive compensation provisions of any employment or compensation agreement may be payable in shares of Stock under the Plan. (c) (i) Up to 50%, which amount may be subject to change from time to time by the Administrator, of the annual amount of Stock awarded to an Employee pursuant to Section 4(b) hereof may, at the sole discretion of the Administrator, vest not later than two years after the end of the incentive compensation year applicable to such award of Stock and, unless otherwise specified by the Administrator, shall not vest and will expire in the event the Employee is not employed by the Company on or prior to the date on which the Stock vests with the Employee due to (A) voluntary termination by the Employee or (B) termination by the Company for Cause (as defined herein). Notwithstanding the foregoing, stock awarded to an Employee which remains subject to a vesting period hereunder will immediately vest upon the retirement of such Employee after attaining the age of 65. (ii) For purposes of the Plan, a voluntary termination by an Employee will not be deemed to occur in the event such Employee is Constructively Terminated (as defined herein). (iii) In the event an Employee dies while in the employ of the Company, all Stock awarded to such Employee which remains subject to a vesting period hereunder will immediately vest and be delivered to such Employee's estate as soon as practicable after such Employee's death. (iv) For purposes of the Plan: (A) "Cause" shall mean (1) an Employee's continuing willful failure to perform his duties with respect to the Company (other than as a result of total or partial incapacity due to physical or mental illness), (2) gross negligence or malfeasance by an Employee in the performance of his duties with respect to the Company, (3) an act or acts on an Employee's part constituting a felony under the laws of the United States or any state thereof which results or was intended to result directly or indirectly in gain or personal enrichment by such Employee at the expense of the Company or (4) any other circumstances set forth in an employment agreement between the Company and such Employee which would constitute grounds for the Company to terminate the employment of such Employee for cause (as defined in the applicable employment agreement). 39 (B) "Constructively Terminated" shall mean (1) a reduction in an amount equal to or greater than 15 percent of an Employee's Base Salary (as defined herein), (2) a material reduction in an Employee's job function, duties or responsibilities or (3) a required relocation of an Employee of more than 50 miles from such Employee's current job location; provided, however, that the employment with the Company or its divisions or subsidiaries of a President of Operations will not be deemed to be Constructively Terminated in the event he or she is required to be a Division Chairman or Division President with the Company or its divisions or subsidiaries and has job functions, duties or responsibilities of a Division Chairman or Division President and/or is required to relocate in connection with such change in position; provided, further, that the employment with the Company or its divisions or subsidiaries of a Division Chairman or Division President will not be deemed to be Constructively Terminated in the event he or she is required to be a Division Chairman or Division President of a division other than the division he or she is currently employed by and has job functions, duties or responsibilities of a Division Chairman or Division President and/or is required to relocate in connection with such change in position; provided, further, that the employment of an Employee will not be deemed Constructively Terminated unless such Employee actually terminates his or her employment with the Company within 60 days after the occurrence of an event specified in clause (1), (2) or (3) above. (C) "Base Salary" shall mean an amount equal to an Employee's maximum annual base salary in effect at any time after the effective date of the Plan, excluding any incentive compensation or bonus payable or paid to an Employee. (d) (i) All Stock awarded to Employees hereunder but not subject to vesting pursuant to Section 4(c) hereof shall be delivered to such Employees within 30 days after the determination of the price of the Stock pursuant to Section 5 hereof. (ii) Subject to Section 4(c) hereof, all Stock awarded to Employees hereunder which is subject to a vesting period hereunder shall be delivered to such Employees within 31 days after the expiration of such vesting period. (e) In the event the Company is subject to an extraordinary corporate transaction, including, without limitation, a merger, consolidation or tender offer, the Administrator shall have the right, in its sole discretion, to accelerate the vesting period of any or all Stock subject to vesting hereunder. 5. Price and Valuation. (a) The Stock will be issued to Employees in consideration of services rendered to the Company by such Employees as reflected in any incentive compensation plans or the incentive compensation provisions of any employment or compensation agreement. 40 (b) For purposes of determining the number of shares of Stock to be issued to an Employee hereunder in lieu of cash compensation, the Administrator shall divide the amount of cash that would otherwise be distributed to such Employee by: (i) with respect to the incentive compensation plans of the Company or incentive agreements which are based on the financial results of the Company's fiscal year, the average closing price of the Stock on the New York Stock Exchange (the "NYSE") for the 10 consecutive trading days immediately following the date on which the Company releases such financial results for such fiscal year; or (ii) with respect to any other incentive compensation plans of the Company or incentive agreements, the average closing price of the Stock on the NYSE for the later to occur of the (A) last 10 trading days of the month immediately following the conclusion of the specified period for such incentive compensation program and (B) 10 consecutive trading days immediately following the date on which the Company releases its financial results for its most recent fiscal year. (c) The closing price of the Stock, as of any particular day, will be as reported in The Wall Street Journal; provided, however, that if the Stock is not listed on the NYSE on any applicable day, the closing price for such day will be not less than the fair market value of the Stock on such day, as determined by the Administrator based on such empirical evidence as it deems to be necessary under the circumstances. 6. Term and Effective Date. The Plan will become effective upon (i) approval by the Board, and (ii) solely with respect to Employees subject to Section 16 of the Exchange Act, approval by the affirmative vote of a majority of the shares of voting capital stock of the Company present or represented and entitled to vote at the 1994 annual meeting of the Company's stockholders. When so approved, the Plan shall be deemed to have been in effect as of January 1, 1994 and shall terminate on December 31, 1998. 7. Stock Adjustments. (a) The total amount of Stock reserved and issuable under the Plan and Stock awarded but not yet vested will be appropriately adjusted for any increase or decrease in the number of outstanding shares of Stock resulting from payment of a stock dividend on the Stock, a subdivision or combination of the Stock, a reclassification of the Stock, consolidation or a merger in which the Company will be the surviving corporation. 41 (b) After any merger of one or more corporations into the Company in which the Company will not be the surviving corporation, or after any consolidation of the Company and one or more other corporations, each Employee who is entitled to Stock hereunder will be entitled to receive, in lieu of the number of shares of Stock as to which such Employee was previously entitled, the number and class of shares of stock or other securities or other consideration to which such Employee would have been entitled pursuant to the terms of the applicable agreement of merger or consolidation if at the time of such merger or consolidation such Employee had been a holder of record of a number of shares of Stock equal to the number of shares for which such Employee was then entitled to receive subject to vesting. Comparable rights will accrue to each Employee in the event of successive mergers or consolidations of the character described above. (c) The adjustments described in this Section 7 and the manner of application of the foregoing provisions will be determined by the Administrator in its sole discretion. Any such adjustment may provide for the elimination of fractional shares. 8. Transferability. An Employee who acquires Stock hereunder will only transfer such Stock in compliance with applicable federal and state securities laws. Employees who are affiliates of the Company may generally dispose of their shares in accordance with Rule 144 promulgated under the Securities Act of 1933, as amended. Employees may not transfer or assign any interest in any Stock awarded hereunder until such Stock is vested with such Employee other than by will or the laws of descent and distribution. 9. Rights as a Stockholder. Any Employee entitled to receive Stock hereunder will have no rights as a stockholder with respect to any share of Stock until such Employee has become the holder of record of such share of Stock upon vesting, and, except for stock dividends as provided in Section 7 hereof, no adjustment will be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights in respect of such Stock for which the record date is prior to the date on which such Employee will become the holder of record thereof. 10. Investment Purpose. At the time of issuance of any Stock, the Company may, if it will deem it necessary or desirable for any reason, require an Employee to represent in writing to the Company that (a) it is such Employee's then intention to acquire the Stock for investment purposes and not with a view to the distribution thereof and/or (b) upon acquisition of the Stock, the Employee will not beneficially own in excess of 4.9 percent of the value of the equity securities (as defined in Rule 3a11-1 under the Exchange Act) of the Company; provided that for purposes of this 42 Section 10(b), all outstanding options and convertible securities to acquire Stock shall be deemed to be exercised or converted; provided, further, that this Section 10(b) shall be inoperative after June 21, 1995. 11. Right to Terminate Employment. Nothing contained herein will restrict the right of the Company to terminate the employment of any Employee at any time. 12. Finality of Determinations. Each determination, interpretation, or other action made or taken pursuant to the provisions of the Plan by the Administrator will be final and be binding and conclusive for all purposes. 13. Subsidiary and Parent Corporations. Unless the context requires otherwise, references under the Plan to the Company will be deemed to include any subsidiary corporations and parent corporations of the Company, as those terms are defined in Section 425 of the Internal Revenue Code, as amended. 14. Governing Law. The Plan will be governed by the laws of the State of Delaware. 15. Amendment and Termination. The Administrator may at any time terminate, amend or modify the Plan in any respect it deems suitable; provided, however, that, solely with respect to persons subject to Section 16 of the Exchange Act, no such action of the Administrator, without the approval of the stockholders of the Company, may (i) materially increase the benefits accruing to employees eligible to receive Stock under the Plan, (ii) materially increase the total amount of Stock which may be awarded under the Plan or (iii) materially modify the requirements for participation in the Plan; provided, further, that no amendment, modification or termination of the Plan may in any manner affect (A) any Stock (whether vested or not) theretofore awarded under the Plan without the consent of the Employee to whom Stock has been awarded or (B) modify the award of Stock to the Employee designated by the Administrator. 16. Override. (a) With respect to persons subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Administrator fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Administrator. 43 (b) All transactions pursuant to terms of the Plan, including, without limitation, awards and vesting of Stock, shall only be effective at such time as counsel to the Company shall have determined that such transaction will not violate federal or state securities or other laws. The Administrator may, in its sole discretion, defer the effectiveness of such transaction to pursue whatever actions may be required to ensure compliance with such federal or state securities or other laws. -----END PRIVACY-ENHANCED MESSAGE-----